11 Simple Steps to Creating a Successful Investment Memo

At Fort, we have written countless investment memos to raise capital over the last 15 years. A great investment memo should be written in a fashion that virtually anyone with basic business knowledge can understand. Warren Buffett often talks about writing his annual letters with the intended audience being his two sisters—both of who are savvy, but certainly not financial wizards. Keeping the memo simple, transparent, consistent, and to the point is always the best policy. 

We are constantly learning and evolving better ways to present information to our investors, and we treat our memos as a representation of who we are as a company. We take a lot of pride in making these the best possible, and we highly encourage others to do the same, especially for those raising capital for the first or second time. A polished memo goes a long way! 

Here are the 11 things we always include in our memos:

1. Company Overview / Track Record
Who the hell are we, and why do we deserve your trust and hard-earned dollars? Think executive/core team overview and a track record that shows your performance history, asset by asset.

2. Investment Overview
For those that only like to read Page 1, they can leave with all of the highlights of the deal, financial summary/returns, and why we are buying it. This is our ‘Executive Summary’ of the next nine steps.

3. Reasons to Acquire
What are four to five key reasons we are acquiring the property? What is already working for the property? What are we going to improve? How are we going to add value?

4. Location Overview
Details about the sub-market. What is going on in the market where our property sits? Absorption, occupancy, key deals, growth, etc. Ideas here include: 

  • New construction in the market
  • Sale and lease comps
  • Market occupancy and absorption
  • Any key deals or additional marketing info 
  • Competitor analysis and current listings

5. Property Overview / Specs
Details about the property and its specs. What makes the property valuable to tenants, and therefore valuable to investors? Think square footage, office space, roof age, and construction type.

6. Tenant Overview
Details and characteristics of current and future tenants (if applicable). Are the current tenants locked into a below-market rate for the next five years? What is the risk level of the current tenants from a credit perspective?

7. Sources and Uses of Funds
Where is the money coming from, what are the terms of that money, and how will it be used during the investment period? 

8. Financial Summary
If all goes as planned (and it rarely ever works out exactly as planned), what can investors expect in return? Provide your ideal return as well as a base return to get realistic expectations. Also, provide visibility based on the length of the ownership. A five-year plan will look different than a seven-year plan.

9. Partnership Terms
What is the legal structure, waterfall structure, risks, fees, our skin in the game, etc.?

10. Return Summary
This is our detailed Pro-forma that shows the cash flow summary and inputs over the intended holding period. Think operations, expenses, reserves, sunk cost, and financing. 

11. Property Photos / Map
We show detailed photos and a map of the sub-market with critical market information.

What other information have you found helpful to include in Investor Memos? We’d love to hear in the comments below!

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