How Do CRE Acquisitions Teams Actually Do Deal Screening?

I'm curious what the real-world deal-screening process looks like at different CRE acquisitions shops, and where you draw the line between an initial deal screen and full underwriting/due diligence

  • How do you find the initial deals? Like setting up a mailbox notification on LoopNet?
  • What are the typical steps you go through when a new acquisition opportunity comes in? is the process sth like, deal screen → preliminary underwriting → LOI → due diligence → full underwriting / investment committee? Or does it work differently?
  • How long do you normally spend on the initial deal screen before deciding whether to pass or proceed?
  • How detailed should a deal screen be? At the screening stage, what info do you consider must-have, and what info is usually unnecessary at that point? Like purchase price, property type, size, units, year built, current occupancy, current rents, asking rents, rent roll, T12 operating statement, property taxes and insurance, cap rate, NOI, recent capex, renovation history, comparable rents, sales, market, and submarket. fundamanetals, zoniing, developmemng potential, construction assumptions, financing assumptions, partnership, jv assumption, etc ?? what kind of them should include in the deal screen, what are unnecessary?
  • How much should you assume at the deal screening stage? How much of the future business plan do you actually underwrite during the initial screen? Like, if you are looking at a multifamily property, would you already make assumptions about renovating units, increasing rents, repositioning the property, redevelopment, adding units, rezoning, changing the property’s use? Holding vs. selling after stabilization.
  • Or is the initial screen mainly based on the existing asset and current operations, with the business plan becoming more detailed only if the deal survives the first screen?
  • Do you build a pro forma during the deal screen, with revenue growth, expense growth, renovation assumptions, financing, exit assumptions, IRR, equity multiple? Or do you use a much simpler screening model, like purchase price → current NOI → stabilized NOI → cap rate → rough returns?
  • At what point do you move from a quick screening model to a full underwriting model?
  • Is there a standard deal-screen template? Do most acquisitions teams have a fixed deal-screen template/model, or is it highly case-by-case?
  • My big question prob What is the practical difference between a deal screen and full underwriting? Where do you personally draw the line?

I'm asking because in my current work, I've noticed that I sometimes make the deal-screening process too detailed.

I start with what I think should be a quick screen, but by the time I'm finished, I've analyzed so much that it feels like I'm already doing full due diligence and full underwriting on the asset.

At the same time, if I make the screen too high-level, I don't feel like I have enough information to confidently decide whether to pass or proceed.

I think the process might be different across property types, markets, and big shops vs. small shops, so it would be better if you can make a note to write this along with your comments

Much appreciated!!!

9 Comments
 

Based on the highest ranked content on WSO, here's how CRE acquisitions teams actually handle deal screening:

Deal Sourcing & Initial Pipeline

Most teams use a combination of approaches: - Broker relationships - The primary source. Teams maintain relationships with brokers who send deal flow - Off-market prospecting - Analysts research properties that fit investment criteria, look up ownership info, and reach out directly to owners through brokers - Weekly deal reviews - Teams compile deals from various sources, present to leadership who selects which ones to pursue

Typical Deal Screening Process

The process generally follows this flow: Deal Screen → Basic Underwriting → LOI → Due Diligence → Full Underwriting → Investment Committee

Here's what happens at each stage:

Initial Deal Screen (1-2 days max)

Must-have info: - Purchase price and basic property metrics (size, units, year built) - Current NOI and rent roll - Property type and location/submarket - Current occupancy rates - Basic market comparables

Usually unnecessary at screening: - Detailed renovation history - Complex development assumptions - Detailed financing structures - Partnership/JV specifics - Extensive capex analysis

Basic Underwriting (If deal passes screen)

This is where you dig deeper: - Research top tenants and their financials - Run sensitivity analyses on key assumptions - Analyze market fundamentals and comparable sales - Create initial business plan assumptions - Build preliminary cash flow model

Screening vs. Full Underwriting - The Key Difference

Deal Screen: Focus on the existing asset and current operations. Use simple metrics like current NOI, market cap rates, and basic comparable analysis. The goal is to quickly determine if the deal fits your investment criteria and has potential.

Full Underwriting: This happens after LOI acceptance during due diligence. You build detailed pro formas with specific renovation assumptions, financing structures, exit strategies, and comprehensive market analysis.

Practical Screening Approach by Shop Size

Larger Firms: - More standardized screening templates - Dedicated due diligence teams handle detailed analysis - Acquisitions teams focus on deal sourcing and initial screening - Multiple investment committee layers

Smaller Shops: - Deal teams handle everything from screening through closing - More flexible, case-by-case approach - Analysts wear multiple hats throughout the process

Time Investment Guidelines
  • Initial Screen: 1-2 days maximum
  • Basic Underwriting: 3-5 days if deal advances
  • Full Due Diligence: 30-60 days post-LOI

The key insight from top WSO content: Only 1 out of 5+ deals typically advances past the initial screening stage. This means your screening process should be efficient enough to quickly eliminate deals that don't fit, while thorough enough to identify genuine opportunities.

Pro tip: If you're spending more than 2 days on initial screening, you're probably going too deep too early. Save the detailed business plan analysis for deals that survive the first cut and show real promise.

Sources: Life in Acquisitions (Analyst/Associate), Life in Acquisitions (Analyst/Associate), Got this task during an Private Equity internship interview, how to handle it?

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

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