CRE underwriting checklist: review the model before committee

A CRE underwriting review should let another person follow a material number from its source to the model and then to the investment memo. A complete spreadsheet is only part of that handoff. The reviewer also needs to see what changed, which assumptions remain uncertain and what decision the team is requesting.

This checklist focuses on the review before an acquisition or credit committee meeting. Use it to organize the working files and resolve discrepancies. Adapt the checks to the property, transaction and your firm's approval requirements.

Define the decision and freeze the review version

State whether the team is asking to continue diligence, submit an offer, approve financing or make a final investment decision. The evidence needed for an initial screen differs from the evidence needed to commit capital. Label the stage on the cover of the review pack.

Give the model and memo a version number and an as-of date. Record the source-data cutoff, preparer and reviewer. Keep the version circulated to committee so that later updates do not silently change what members reviewed.

If new information arrives after circulation, issue a change note. Identify the affected assumption, model output and memo section. A replacement spreadsheet without that explanation makes it harder to understand whether the recommendation has changed.

Build a review pack with visible checks

The following is a suggested working structure. Add a status, responsible person and resolution date to each check. A blank cell should mean an open item, not an implied approval.

Reconcile the income before debating the return

Start with the period and accounting basis of each source. A rent roll is a point-in-time record. An operating statement covers a period. Cash collections can also differ from amounts billed. Explain those differences before carrying a total into the model.

Keep the reported figures intact and put proposed adjustments in a separate bridge. For each adjustment, show the amount, sign, reason and supporting document. Do not remove an expense simply because it reduces the projected return. Explain whether it is recurring, property-related or treated elsewhere in the analysis.

For example, an analyst may classify a repair as capital spending while another schedule still includes it in operating expenses. The reviewer needs to check both schedules and the cash-flow treatment. Moving a cost between categories must not make it disappear or count it twice.

Flag conflicting lease terms or missing amendments for the responsible reviewer. An extracted field is a starting point for review. Leni's AI document processing guide explains how to structure extraction with source references and human checks.

Make assumptions and metric definitions explicit

Label inputs as source facts, analyst assumptions or pending confirmations. Put the supporting evidence beside each material assumption. Include the date of a rent comparable, the scope of a contractor estimate and the status of financing terms. A preliminary quote should not read like an executed agreement.

Record the definitions used for net operating income, net cash flow and debt service coverage. Show how reserves, capital costs and leasing costs enter the relevant calculations. If the investment team and lender use different definitions, provide a reconciliation instead of presenting the ratios as directly interchangeable.

CREFC's 2010 principles-based underwriting framework distinguishes historical income from underwritten income and separates payment risk during a loan from repayment risk at maturity. It addresses CMBS underwriting. Use it as background for those distinctions, not as a current loan quote or a universal approval standard.

Check the workbook and memo against the same case

Recalculate key outputs independently, check formula ranges and inspect links to older files. Confirm that monthly and annual amounts are not mixed. Make sure the memo's headline returns, loan amount and sensitivity results come from the version of the workbook being circulated.

Consider this illustrative consistency check. A model uses annual income of $1,200,000 for its coverage calculation and annual debt service of $900,000, producing 1.33 times coverage. A revised case reduces that income to $1,080,000 while debt service stays unchanged. Coverage becomes 1.20 times. If the memo still shows 1.33 times, it is describing the old case. These figures demonstrate the arithmetic only; neither ratio is a lending recommendation or approval threshold.

Run changes through the full model. A rent assumption can affect income, value and financing capacity. State which variables changed in each scenario and which stayed fixed. Give the reviewer a way to compare cases without manually tracing every input.

Review repayment at maturity separately from periodic debt payments. Identify the assumptions behind a refinance or sale and the remaining loan balance. A case that covers scheduled payments can still depend on uncertain future financing.

Keep unresolved diligence visible in the recommendation

Use an exception log for missing documents, conflicting inputs and pending specialist reviews. Record the possible effect on the decision, the person responsible and the evidence needed to close the item.

For example, an insurance renewal still awaiting a quote should appear as an assumption and an open item. The memo should explain how the team has treated it in the model. Committee members can then decide whether the uncertainty requires more work, a condition or a different recommendation.

A complete review pack can contain unresolved questions. It should make their status explicit. Avoid presenting legal, environmental, tax or property-condition work as complete before the responsible specialist has delivered and the team has reviewed it.

Give AI and service partners a reviewable brief

Define the deliverable before assigning preparation work. Specify the approved template, source files, model version, required checks and the person who signs off. Ask for the workbook, source register and exception log alongside the memo. Keep missing data visible and require support for material changes.

Leni's AI-native real estate services include deal flow and diligence support, with screening briefs, underwriting models, sensitivities, diligence trackers and investment memos. A named specialist uses AI to prepare and check the work. Your investment team retains the decision.

Teams that want to build their own workflow can explore Leni's own-your-AI offering. Scope the connected data, company context and review controls around the work the team needs to perform.

Before the meeting, confirm that the source register opens the right files, adjustments reconcile, scenario labels match and the memo cites the circulated model. After approval, retain the decision, conditions and approved assumptions. Those records become the starting point for tracking the business plan after acquisition.