In commercial real estate transactions, information is often as valuable as the property itself.
Financial records, expansion plans, operational details, and internal decision-making documents may change hands long before a lease is signed or a purchase is completed.
This is where Non-Disclosure Agreements (NDAs) play an important role. NDAs establish expectations around how confidential information can be shared, used, and protected during negotiations, underwriting, and due diligence.
For business leaders, understanding how NDAs function can help protect sensitive information while allowing a real estate transaction to move forward.
A Non-Disclosure Agreement (NDA) is a legal document that outlines how confidential information may be shared, used, and protected between parties. In a CRE context, NDAs are typically executed before sensitive information is disclosed during:
Lease negotiations
Property sales or acquisitions
Portfolio reviews
Financial underwriting and due diligence
The agreement defines what information is considered confidential and establishes limitations on disclosure to third parties.
NDAs help create a structured framework for information sharing while protecting confidential business information.
Commercial real estate transactions often require early disclosure of sensitive data to evaluate feasibility, pricing, and long-term strategy. Without confidentiality protections in place, this information could be misused or shared outside of the intended transaction.
NDAs are commonly used to help:
For business leaders, NDAs can provide a level of comfort when sharing information that is not otherwise publicly available.
While the scope of an NDA can vary, commercial real estate NDAs often reference confidentiality related to:
Financial statements or rent rolls
Lease terms and operating expenses
Expansion, relocation, or consolidation plans
Space utilization data
Internal forecasts or capital planning assumptions
Non-public property or portfolio information
The specific definition of confidential information depends on the agreement and transaction. NDAs may also identify exclusions, such as information already publicly available or independently obtained through permitted means.
NDAs in CRE are commonly structured in one of two ways:
A one-way NDA is used when only one party is disclosing confidential information. This is common when a tenant, buyer, or seller is sharing internal data for evaluation purposes.
A mutual NDA applies when both parties expect to exchange confidential information. These are often used in more complex negotiations or strategic discussions where disclosure flows both ways.
The structure selected usually reflects the nature of the transaction and the direction of information sharing.
NDAs are typically executed early in the transaction process, often before:
Detailed financials are released
Lease documents are shared
Formal proposals are exchanged
Due diligence begins
They are not a substitute for transaction documents, but rather a foundational step that enables open communication during evaluation and negotiation.
Depending on its terms, confidentiality obligations may continue even if the underlying transaction does not move forward.
Despite their widespread use, NDAs are sometimes misunderstood. Common misconceptions include:
An NDA guarantees a deal will happen
An NDA only governs confidentiality, not transaction outcomes.
NDAs are only for large companies
Businesses of all sizes may use NDAs when sharing sensitive information.
NDAs eliminate all risk
NDAs help define expectations but do not remove all potential exposure.
Understanding the purpose and limitations of NDAs helps set realistic expectations throughout the process.
Because an NDA is a legal agreement, its specific language matters. Depending on the transaction, business leaders and their legal counsel may want to understand:
An NDA should be reviewed in the context of the specific transaction and with appropriate legal counsel before sensitive information is exchanged.
In commercial real estate transactions, advisors often help coordinate the flow of information between parties once an NDA is in place. This can include managing document access, organizing data rooms, and maintaining structured communication during negotiations.
By establishing clear confidentiality parameters upfront, NDAs can support a more efficient and professional transaction process.
Real estate decisions can reveal more about a company's strategy than many leaders realize. A potential relocation may signal growth, consolidation, a market entry, an acquisition, or an operational change long before the company is ready to make that information public.
NDAs provide one mechanism for establishing how sensitive information will be handled as companies evaluate real estate alternatives.
For business leaders, confidentiality isn't simply a legal consideration. It can be an important part of protecting the company's broader business strategy while a real estate decision is still taking shape.
Non-Disclosure Agreements are an important part of many commercial real estate transactions. They establish expectations for how sensitive information can be shared and used while a lease, acquisition, disposition, or other real estate decision is being evaluated.
Understanding the role and limitations of an NDA can help business leaders ask better questions, involve legal counsel at the appropriate time, and protect sensitive information as their real estate strategy moves forward.
Disclaimer
This article is for informational purposes only. It does not provide legal, financial, or investment advice.
Written by the Keyser Editorial Team
A CRE NDA may cover financial information, lease terms, business plans, expansion or relocation strategies, forecasts, property information, and other non-public information identified by the agreement. The exact scope depends on the terms of the NDA.