What Is a Due Diligence Report?
In short, a due diligence report (DD report) is the written deliverable that summarizes what a buyer or lender found when reviewing a property before closing. A CRE DD report covers financials, leases, tenant credit, legal, environmental, physical condition, and operations, and ends with a risk assessment and a recommendation.
A due diligence report is the formal document that summarizes the findings of a due diligence investigation. In commercial real estate, it is the deliverable that tells an acquisitions team, and ultimately the investment committee, whether a property is worth acquiring, what the risks are, and what they should expect after closing.
The due diligence report compiles analysis across multiple areas, including financial performance, lease terms, tenant quality, legal standing, environmental condition, physical state, and operational efficiency, into a single, structured document that drives the investment decision.
A well-prepared due diligence report does three things:
- Confirms the investment thesis: Validates (or contradicts) the assumptions behind the deal
- Identifies risks: Surfaces issues that could affect value, cash flow, or operational performance
- Provides a basis for negotiation: Documents findings that may justify price adjustments, repair credits, or deal term modifications
Who Prepares a Due Diligence Report?
Due diligence reports are prepared by different parties depending on the organization’s structure and resources.
| Who | When | Typical Cost |
|---|---|---|
| Internal acquisitions team | Mid-market and institutional buyers with in-house DD capability | Staff time only |
| Due diligence consulting firm | When internal expertise is limited or the deal requires independent review | Quoted per engagement |
| Legal counsel | For legal-specific DD components (title, litigation, regulatory) | Hourly billing |
| AI due diligence platform | When speed and consistency are priorities | Moraine: $3,000 per property or $300/month |
| Hybrid approach | Most common: AI or internal team handles document analysis; consultants cover specialized areas | Varies |
Increasingly, CRE acquisitions teams use AI due diligence platforms to generate the initial report, then layer in human judgment for strategic interpretation. This approach delivers the best combination of speed, coverage, and insight.
What a Due Diligence Report Contains
A comprehensive CRE due diligence report covers the following sections. The depth of each section varies based on property type, deal size, and the acquirer’s requirements.
1. Executive Summary
The executive summary is the most-read section. It should answer the core question: Should we acquire this property?
Include:
- Property overview (name, location, type, size, occupancy)
- Acquisition price and key financial metrics (cap rate, price per unit/SF)
- Investment thesis summary
- Top 3–5 key findings (positive and negative)
- Key risks identified
- Recommendation (proceed, proceed with conditions, or pass)
Length: 1–2 pages. Senior decision-makers often read only this section, so it must stand alone.
2. Property Overview
Include:
- Legal description and address
- Property type and building class
- Year built, renovations, total square footage
- Unit count and mix (if multifamily)
- Site description, parking, access
- Zoning and entitlements
- Current ownership and management
3. Financial Analysis
The financial section verifies the seller’s reported numbers and identifies trends.
Include:
- Multi-year operating statement analysis (3–5 years of historical T-12s)
- Revenue analysis: rent collections, vacancy/credit loss, other income
- Expense analysis: controllable vs. uncontrollable, year-over-year trends
- NOI calculation and trend
- Comparison to underwriting assumptions
- Variance analysis: where actuals differ from the seller’s pro forma
- Below-the-line items: debt service, capital reserves, TI/LC
Red flags to highlight:
- Revenue growth that exceeds market fundamentals
- Expense categories with unusual spikes or drops
- Management fees that seem artificially low
- Deferred maintenance masked by low repair costs
- Missing or incomplete financial data periods
4. Rent Roll and Lease Analysis
This section verifies the income stream by analyzing every lease.
Include:
- Current rent roll with all tenants, suite numbers, square footage, rent per SF
- Lease expiration schedule and rollover risk analysis
- Weighted average lease term (WALT)
- Rent escalation schedule for every lease
- Lease structure breakdown (NNN, modified gross, full service)
- Expense reimbursement structures and CAM provisions
- Options inventory: renewal, termination, expansion, contraction, purchase
- Percentage rent and breakpoint analysis (retail)
- Tenant improvement allowances outstanding
- Free rent or abatement periods remaining
For detailed guidance on extracting this data, see how lease abstraction works.
5. Tenant Credit Analysis
Understanding whether tenants can pay rent is as important as understanding what they owe.
Include:
- Tenant credit scores or ratings
- Default probability for each major tenant
- Concentration risk: percentage of revenue from top tenants
- Industry diversification analysis
- Tenant financial health indicators
- Public vs. private tenant considerations
- Guarantor analysis where applicable
6. Legal Review
Include:
- Title review and exceptions
- Survey issues
- Pending or threatened litigation
- Liens, judgments, and encumbrances
- Regulatory compliance status
- Violation history
- HOA/REA/CC&R review (if applicable)
- SNDA status
- Estoppel certificate review and discrepancies
- Ground lease terms (if applicable)
7. Environmental Assessment
Include:
- Phase I Environmental Site Assessment summary
- Phase II findings (if applicable)
- Recognized Environmental Conditions (RECs)
- Historical use and potential contamination risk
- Regulatory database findings
- Remediation status and cost estimates
- Environmental insurance recommendations
8. Physical Condition and CapEx
Include:
- Property condition report summary
- Major building systems assessment (roof, HVAC, electrical, plumbing, elevators)
- Deferred maintenance inventory
- CapEx requirements and timeline
- Remaining useful life estimates for major components
- ADA compliance status
- Seismic assessment (where applicable)
- Estimated capital budget for years 1–5 and 6–10
9. Operations Review
Include:
- Current management company and contract terms
- Staffing levels and costs
- Vendor contracts and terms
- Utility costs and efficiency opportunities
- Insurance coverage adequacy
- Security, janitorial, landscaping contracts
- Operational efficiency benchmarking against comparable properties
10. Risk Assessment
Include:
- Summary of all identified risks categorized by severity (critical, moderate, minor)
- Financial impact estimates for each significant risk
- Mitigation strategies
- Items requiring further investigation
- Deal structure adjustments recommended (price reductions, escrows, representations)
11. Appendices
Include:
- Detailed lease abstracts
- Operating statement spreadsheets
- Tenant credit reports
- Environmental report excerpts
- Legal summaries
- Property condition report excerpts
- Supporting documentation for key findings
Free Due Diligence Report Template
Use this template structure for your next CRE acquisition. Each section includes the key data points to capture.
Template Section 1: Executive Summary
- Property name, address, type
- Acquisition price, cap rate, price per SF/unit
- Investment thesis (2–3 sentences)
- Occupancy rate and WALT
- Top 5 findings (mix of positive and negative)
- Key risks with severity rating
- Recommendation: Proceed / Proceed with conditions / Pass
Template Section 2: Property Overview
- Legal description
- Building specifications (year built, SF, units, stories, parking ratio)
- Zoning designation and permitted uses
- Recent capital improvements
- Site plan and floor plan references
Template Section 3: Financial Analysis
- 3–5 year operating statement comparison table
- Revenue breakdown by category
- Expense breakdown by category
- NOI trend analysis
- Variance vs. pro forma
- Below-the-line items summary
Template Section 4: Rent Roll and Lease Summary
- Complete rent roll table (tenant, suite, SF, rent/SF, lease dates, options)
- Lease expiration schedule chart
- WALT calculation
- Escalation schedule summary
- Options inventory table
- Expense reimbursement structure summary
Template Section 5: Tenant Credit
- Tenant credit score/rating table
- Default probability for each tenant
- Revenue concentration analysis
- Industry diversification breakdown
Template Section 6: Legal Summary
- Title exceptions list
- Litigation summary
- Lien/judgment search results
- Regulatory compliance status
Template Section 7: Environmental
- Phase I summary and findings
- REC inventory (if any)
- Remediation requirements and cost estimates
Template Section 8: Physical Condition and CapEx
- Building systems condition table
- CapEx budget (Year 1–5 and Year 6–10)
- Deferred maintenance items
- Remaining useful life estimates
Template Section 9: Operations
- Management contract summary
- Vendor contract inventory
- Staffing and payroll summary
- Utility cost benchmarking
Template Section 10: Risk Matrix
- Risk item / Severity / Financial Impact / Mitigation
Want this template pre-populated with your deal data? Moraine builds source-linked findings that follow this structure from your actual deal documents, and exports them to Excel.
How to Write an Effective Due Diligence Report
Lead with Findings, Not Process
Investment committee members and senior decision-makers do not want to read about your methodology. They want to know what you found. Lead every section with the key findings, then provide supporting data.
Instead of: “We reviewed 47 leases across the property and analyzed each for key terms…” Write: “Three leases representing 22% of revenue have below-market escalations that will result in $180,000 less income than the pro forma assumes over the hold period.”
Quantify Every Risk
A due diligence report that says “the roof needs attention” is not actionable. One that says “the roof has an estimated remaining useful life of 3 years with a replacement cost of $450,000” gives decision-makers what they need.
For every risk identified, include:
- What the issue is (specific and factual)
- How much it could cost (estimated financial impact)
- When it will likely materialize (timeline)
- What to do about it (mitigation or deal structure adjustment)
Cite Your Sources
Every finding should trace back to a source document. This makes the report defensible and allows reviewers to verify your analysis. Good source citation looks like:
“Tenant XYZ’s lease (Suite 200, dated 03/15/2022, Section 4.2) provides for annual CPI escalations capped at 2%, compared to the pro forma assumption of 3% fixed increases.”
Moraine’s automated red flag detection includes page-level citations for every finding, creating a verifiable trail back to the source.
Use Tables and Visual Summaries
Dense narrative paragraphs are hard to scan. Use tables for comparison data, charts for trends, and summary boxes for key takeaways. Your readers are reviewing multiple deals. Make it easy for them to find what matters.
Include a Clear Recommendation
The report should conclude with a clear recommendation, not just a data dump. State whether you recommend proceeding, proceeding with specific conditions (price adjustment, escrow, repair credits), or passing on the deal. Support the recommendation with the top 3–5 findings that drive it.
Can You Order Multiple Due Diligence Reports at Once?
A DD report is usually assembled from several third-party reports, each ordered from a different vendor: a Phase I environmental site assessment, a property condition assessment, a title commitment and survey, a zoning report, and often an appraisal. Lenders typically order their own set; buyers order theirs. Orders go through the vendors or a consultant who coordinates them, and the lead time of the slowest report sets the schedule, so order the long-lead items first.
Moraine does not order third-party reports. It analyzes the deal documents you upload and adds its own research modules, then combines the findings in one source-linked workbook. For the software-versus-consultant question, see due diligence software vs. a consulting firm, and for tools that cover this step see CRE due diligence platforms compared.
How Moraine Builds Due Diligence Findings
Moraine turns the weeks-long manual effort into a much faster, source-linked first draft, with review time remaining. Here is how Moraine’s modules map to the template structure above.
| Template Section | Moraine Module | Automated? |
|---|---|---|
| Executive Summary | IC Reporting | Yes: AI-generated summary with key metrics (Excel output) |
| Financial Analysis | Financial Analysis | Yes: multi-year consolidation with trends |
| Rent Roll & Lease Summary | Lease Abstraction | Yes: every lease abstracted with key terms |
| Tenant Credit | Tenant Credit Scoring | Yes: tenant credit scoring; see also the tenant default probability guide |
| Legal Summary | Legal Screening | Yes: litigation, liens, regulatory |
| Environmental | Environmental | Yes: web-based environmental research with a 1-10 risk score |
| Physical Condition / CapEx | CapEx Summary | Yes: from property condition reports |
| Operations | Operations | Yes: management and operational analysis |
| Risk Assessment | Red Flag Detection | Yes: with citations to source documents |
Moraine builds a first draft in minutes that follows this structure; review time remains.
The difference is not just speed — it is source traceability. Every finding carries a page-level citation. Manual DD reports often rely on sample-based review due to time pressure, which means risks buried in the 47th lease may never make it into the report.
For a deeper comparison, see Moraine vs. hiring a due diligence consultant.
Due Diligence Report Examples by Property Type
Office Property DD Report Focus Areas
- Lease rollover concentration and WALT
- Tenant credit quality (especially with remote work trends)
- Operating expense ratio benchmarking
- TI/LC obligations for upcoming renewals
- Below-grade parking and building systems condition
Retail Property DD Report Focus Areas
- Co-tenancy and kick-out clauses
- Percentage rent and sales breakpoint analysis
- Anchor tenant credit and default risk
- Exclusive use provisions and conflicts
- Pad site lease terms and ground lease structures
Industrial Property DD Report Focus Areas
- Clear height, column spacing, loading dock specifications
- Environmental history (especially manufacturing tenants)
- Tenant improvement and modification reversibility
- Property tax reassessment exposure
- Utility infrastructure capacity
Multifamily DD Report Focus Areas
Moraine supports office, retail, and industrial properties, not multifamily. This list is for the report structure only.
- Unit mix and renovation status
- Rent comparables and mark-to-market analysis
- Tenant turnover rates and concession history
- Utility reimbursement structures (RUBS, sub-metering)
- Capital improvement program and remaining budget
Frequently Asked Questions
What is the difference between a due diligence report and a property condition report?
A property condition report (PCR) assesses the physical state of a building: roof condition, HVAC systems, structural integrity, ADA compliance, and estimated remaining useful life of major components. It is one input into the broader due diligence report. A due diligence report covers everything: financial performance, lease terms, tenant credit, legal standing, environmental condition, physical state, and operational efficiency. The PCR feeds into the CapEx and physical condition sections of the DD report.
How long should a due diligence report be?
A typical CRE due diligence report ranges from 30 to 100+ pages, depending on property complexity. The executive summary should be 1–2 pages. Each subsequent section adds detail proportional to its complexity: a 50-tenant office property will have a much longer lease analysis section than a single-tenant NNN industrial building. Focus on completeness and clarity rather than page count.
Who reads the due diligence report?
The primary audience is the investment committee or decision-makers who approve the acquisition. Secondary readers include legal counsel, lenders (for loan underwriting), asset management (for post-closing planning), and in some cases insurance underwriters. Write the executive summary for senior decision-makers who have limited time. Write the detailed sections for analysts and specialists who need to verify specific findings.
When in the acquisition process is the DD report prepared?
The due diligence report is typically prepared during the due diligence period specified in the purchase and sale agreement (usually 30–60 days after the contract is executed). Some acquirers prepare preliminary DD reports during the letter of intent (LOI) stage to inform bidding strategy. With AI tools like Moraine building a first-draft model and source-linked findings in minutes (review time remains), teams can now run preliminary DD at the LOI stage and comprehensive DD once under contract, without the cost of multiple consulting engagements.
Can I use Moraine’s report for my investment committee presentation?
Yes. Moraine’s IC Reporting module produces IC-ready outputs with key metrics, risk assessments, and structured findings, delivered as Excel (XLSX) workbooks with page-level citations. Use them as the foundation for your IC memo, adding your own strategic commentary, market context, and investment thesis. Exports drop into your organization’s IC template; there is no PDF export.
What is the most common mistake in due diligence reports?
The most common mistake is presenting data without interpretation. A DD report that lists every lease term but does not highlight which ones create risk is not useful. Every section should answer “so what”: what does this data mean for the investment decision? The second most common mistake is incomplete coverage: missing documents, skipped leases, or unreviewed financial periods that leave gaps in the analysis. Moraine addresses both issues by providing AI-interpreted findings with risk flags and page-level citations back to the source documents.
How much does it cost to prepare a due diligence report?
Costs range widely depending on the approach. Internal preparation costs staff time but no direct fees. Consulting firms quote per engagement. For Moraine, the due diligence suite is $3,000 per property and Individual underwriting is $300/month. For a detailed cost comparison, see our guide on due diligence consulting vs. software.
Build Your Due Diligence Findings in Minutes
Stop spending weeks compiling DD reports manually. Moraine analyzes your deal documents and delivers source-linked due diligence findings, with every number linked to its source, ready for your investment committee to review.