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Underwriting

Investment Committee Memos and Deal Screening

The IC process exists to decide whether a deal deserves scarce time, credibility, and capital. The memo is not the decision itself. It is the structured artifact that forces the deal team to show its reasoning clearly enough for challenge.

Also known as: Deal Screening, IC Memo, Investment Committee Process

Updated

This is a best-practice screening and memo framework, not a mandatory market-wide template. The strongest public support behind it comes from INREV due-diligence structure, CREFC underwriting discipline, and one manager-specific staged-approval example from CBRE Investment Management. Those sources support structured screening, downside discipline, and clearer challenge logic, but they do not prove that every private real estate manager runs the same IC memo format.

What This Page Covers

This page covers the gate between opportunity discovery and formal approval:

  • the quick screen that determines whether a deal belongs in the live funnel
  • the memo structure that turns a live opportunity into a challengeable investment case
  • the kill criteria that stop weak opportunities before process prestige takes over

Use CRE Deal Sourcing and Origination for how opportunities enter the funnel. Use CRE Due Diligence Framework once the deal is already under LOI or PSA. Use Sensitivity and Scenario Analysis when the IC memo needs to show how fragile or resilient the underwriting really is.

Use Acquisition-to-Asset-Management Handoff after approval so the IC memo's thesis, hinge assumptions, downside cases, and kill criteria become asset-management monitoring items rather than disappearing after closing.

Use Industrial IC Narrative and Deal Memo Framework when the IC question is industrial-specific and the memo must translate subtype, tenant universe, physical specs, MTM, rollover probability, cap-rate support, CapEx, environmental risk, and exit buyer pool into an approval-ready narrative.

First-Pass Screen

The first-pass screen should be designed to reject quickly, not to produce polished prose around weak opportunities.

At minimum, the screen should answer:

  • does the deal fit mandate, geography, and strategy
  • is the basis plausibly defensible
  • is there a clear source of return rather than just a hope for market recovery
  • is the sponsor or operating plan credible enough to justify deeper work
  • does the risk sit inside the current portfolio budget

If those questions cannot be answered cleanly, the right outcome is usually to stop early. The purpose of the first-pass screen is to protect time and decision quality, not to create the appearance of pipeline volume.

Standardized diligence frameworks support this kind of gate because they force early fit-to-objective review rather than letting every opportunity become a custom narrative exercise. The point is not to prove the deal in round one. The point is to know whether it deserves deeper work at all.

IC Memo Structure

A strong IC memo is short enough to force prioritization but complete enough to support challenge. The exact section order is not standardized by the public sources used in this pass. The safer rule is that the memo should make a few things unavoidable to confront:

  • what the deal thesis is
  • why the basis is defensible
  • what has to happen operationally
  • which leverage, liquidity, or refinance assumptions are carrying the return
  • what breaks first in the downside case
  • why the deal belongs in the portfolio now

The memo should also separate facts from assumptions. If rent growth, exit timing, or refinance terms are doing the real work, that should be obvious rather than buried inside the spreadsheet.

Kill Criteria

Kill criteria are the discipline that prevents memo-writing from turning into a sunk-cost trap.

Common kill criteria include:

  • mandate mismatch
  • basis that only works under a heroic exit
  • operational plan that exceeds the sponsor's demonstrated capability
  • capital structure that creates a narrow refinance path
  • weak downside protection relative to the stated return target
  • concentration that worsens the portfolio even if the asset looks attractive in isolation

The goal is not to eliminate risk. The goal is to stop deals where the team cannot explain why that risk is being paid for.

Decision Hygiene

Decision hygiene is what keeps the IC process honest. A clean process:

  • makes the disconfirming evidence visible
  • distinguishes reversible from irreversible decisions
  • names the assumptions carrying the underwriting
  • records why the deal should be rejected, not just why it might work

Weak decision hygiene usually looks impressive on the surface. The memo is long, the exhibits are dense, and nobody can identify the real hinge assumptions by the end of the meeting. That is not rigor. It is decision fog.

The best IC memos reduce the deal to a small number of arguments that can be challenged directly.

CBRE's Adam Grant metadata adds a general decision-process overlay that fits this page: pre-mortems, challenge networks, and truth-to-power norms are useful IC hygiene because they surface failure modes before the committee has already invested reputation in the deal.

Post-Close Control Use

The IC memo should become a control document after close. Its job is not finished when the deal is approved. The thesis, business plan milestones, return drivers, downside case, leverage constraints, CapEx plan, and unresolved risks should convert into an AM dashboard and risk register.

This is especially important for assumptions that carry most of the projected return: rent growth, lease-up pace, expense resets, tax and insurance treatment, renovation scope, debt terms, refinance proceeds, and exit cap rate. Asset management should be able to point to each assumption and show the current actual, variance explanation, reforecast treatment, owner, and corrective action.

Related Pages

Sources

  • Investment Fundamentals Sprint Research 2026
  • Investment Committee Verification 2026-04-21