The short answer
What belongs in a real estate investment committee presentation?
Present the decision, the property economics, the capital required, the financing, the downside and the conditions for approval. State a maximum price supported by your underwriting, explain why the deal beats credible alternatives, and identify what still needs to be verified. A projected IRR by itself is not an investment case.
The questions your presentation should answer
Build the deck around a decision, with the detailed model available as an appendix. A shorter presentation can combine several rows.
| Part | What the committee needs |
|---|---|
| Recommendation | Acquire, renegotiate, investigate further or pass; state price limit, equity needed, timing and conditions. |
| Asset and market | Who uses the space, why tenants choose it, lease rollover, comparable evidence and local supply risks. |
| Business plan | What changes, who executes it, when costs occur and why the improvements are achievable. |
| Operating forecast | Reconcile historical results to a forward view of rent, vacancy, collections and property expenses. |
| Sources and uses | Purchase price plus fees, improvements and reserves; committed or proposed debt and equity that fund them. |
| Debt and equity | Terms, coverage, maturity, guarantees where relevant, and how sponsor and investor economics differ. |
| Valuation and exit | Comparable evidence, holding period, forward NOI, exit cap rate, sale costs and debt repayment. |
| Alternatives and downside | Compare another viable use of capital and show a coherent adverse scenario. |
| Diligence and approval | Unverified items, deal-breaking findings, responsible owners and the next decision date. |
Start with all-in cost, not just the purchase price
Fictional teaching case: a stabilized property costs $10 million. The planned loan is $6 million. Financing terms are illustrative, not a current quote. A purchase-price-only view would understate the required equity by $1 million.
- Identify taxes, insurance, management, maintenance and other property expenses in the operating forecast.
- Show tenant improvements, leasing commissions and capital expenditure cash needs separately when excluded from NOI. Label the exact NOI convention used.
- Distinguish spending from funding a reserve. Do not deduct the same reserve-funded outlay twice. A cash reserve is not automatically an accounting expense.
| Uses of funds | Amount |
|---|---|
| Purchase price | $10,000,000 |
| Closing and financing costs | $200,000 |
| Initial improvements | $500,000 |
| Initial cash reserve | $300,000 |
| Total uses | $11,000,000 |
| Loan proceeds | $6,000,000 |
| Required equity: uses less loan | $5,000,000 |
Bridge NOI to cash available after financing
Assume annual NOI of $600,000 before debt service and the separately funded initial improvements. A $6 million interest-only loan at 6.5% requires $390,000 of annual interest. This simplified example assumes no amortization during the illustrated year.
NOI divided by annual debt service gives DSCR of 1.54×. NOI divided by loan balance gives a 10% debt yield. The $210,000 remaining after debt service is before any additional capital spending, reserve contributions, investor-level fees or taxes. It is not automatically a distribution.
The going-in cap rate is 6%: $600,000 divided by the $10 million purchase price. Dividing the same NOI by the $11 million total project cost instead gives 5.45%, a yield on total cost with a different denominator. Neither figure is the investor’s IRR.
References: OCC: Commercial Real Estate Lending handbook
Make the downside visible
Hold debt service constant at $390,000 to isolate operating and valuation stress. These are illustrative annual snapshots, not a multi-year return forecast. The valuation column uses direct capitalization of each assumed stabilized NOI; it is not net sale proceeds or an appraisal.
- Explain the story behind the stress: vacancy, concessions, expense growth, delayed work or another plausible driver. Assumptions should fit together.
- Test a floating rate or refinancing separately. An interest-only balance still has to be repaid; do not assume another lender will refinance it on favorable terms.
- Show liquidity needs during the difficult period, not just the eventual sale. Insurance coverage and payment timing need verification.
| Annual scenario | NOI | DSCR | Cap rate | Indicated value |
|---|---|---|---|---|
| Base | $600,000 | 1.54× | 6.0% | $10.00M |
| NOI down 10% | $540,000 | 1.38× | 6.5% | $8.31M |
| NOI down 20% | $480,000 | 1.23× | 7.5% | $6.40M |
Explain the exit and the maximum price
For a sale at the end of year 5, a common approach capitalizes year 6 NOI using a supported exit cap rate. Deduct selling costs to estimate net property proceeds, then repay outstanding debt to estimate proceeds to equity before investor-specific fees and taxes. Discount each cash flow to the valuation date using a rate consistent with its risk and whether it is levered or unlevered.
Work backward from required returns, cash needs and financing limits to the price you can justify. Market comparables are a cross-check. A Treasury yield can inform the opportunity-cost discussion, but it is not automatically an appropriate required return for risky, illiquid property equity.
Separate property-level returns from the sponsor and limited partner returns after fees, preferred returns and promote. Show the distribution rules rather than treating the property IRR as everyone’s return.
Close with conditions, not false certainty
Name the work that could change the decision: lease and rent-roll verification, property condition, environmental review, title, zoning, legal matters, insurance, taxes or lender approval. Use qualified specialists where needed; a slide summary is not a substitute for diligence.
A useful recommendation is conditional: ‘Proceed only if the verified operating results support the case, financing is available on the modeled terms, and diligence does not reveal costs beyond the approved contingency.’ Assign an owner and date to every open item.
One-minute check
Can you explain the difference?
Put it into practice
Your next steps
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Common questions
A few useful clarifications
Is NOI the same as cash flow to investors?
No. NOI describes property operations under a stated convention. Debt service, capital expenditure, reserve funding and fees can reduce cash available to investors. State what your NOI includes and reconcile it to equity cash flow.
What is a good DSCR for a real estate investment?
There is no universal threshold. Property risk, income stability, amortization, lender policy and loan terms affect the required cushion. A ratio above 1.0 only says the income measure exceeds the debt-service measure; it does not prove the investment is safe or that all cash needs are covered.
Which NOI should I use for an exit cap rate?
Many models use the next year’s projected NOI: year 6 NOI for an end-of-year-5 sale. State your convention and use comparable cap rates consistently. Deduct sale costs and repay debt when moving from gross value to equity proceeds.
Should my investment memo include more than one option?
Yes. Compare credible alternatives such as another investment, a smaller commitment, renegotiating the price or waiting. Recommend one and show the tradeoff that makes it preferable under your assumptions.
Sources & scope
Adapted from Devon Coombs’s teaching feedback across entrepreneurial finance and real estate at Santa Clara University. The advice is generalized; all companies, transactions and numerical examples here are fictional. No student work, identities, grades or private classroom records are published.
Reviewed October 9, 2026. Numerical cases are fictional teaching examples, not current market quotes or individual advice. Assumptions appear beside each calculation. Rules, program requirements and source material can change.
- OCC: Commercial Real Estate Lending handbookBank underwriting reference for property income, valuation, debt coverage and sensitivity analysis; not a universal investment hurdle.
- OCC: refinance riskWhy a balloon balance cannot simply be assumed to refinance under future market conditions.
Keep going
Use what you learned.
Apply the full case in Real Estate Finance
Use the fictional capstone’s rent roll, operating history and comparables to build your own underwriting case.
Understand the equity waterfall
Follow how the investor and sponsor split available cash.
Build your presentation decision brief
Turn your analysis into an opening recommendation and a concrete approval request.