Core Return Modeling
Net Present Value
Present value of projected cash flows minus initial investment.
NPV calculates the value today of future hotel cash flows discounted at a required rate of return. In Bay Street's pipeline it is the first-pass viability screen. Positive NPV means value creation; negative NPV means rejection.
IRR, Bay Score
Investopedia NPV guide; Bay Street Quantamental Investment Process
Core Return Modeling
Internal Rate of Return
The discount rate at which NPV = 0.
IRR standardizes returns across deals with different time horizons. In Bay Street's process it follows NPV and provides a comparable baseline before hospitality adjustments.
NPV, AHA, Bay Score
CFA Institute IRR definition; Bay Street Quantamental Investment Process
Hospitality-Specific Return Adjustment
Adjusted Hospitality Alpha
IRR minus benchmark minus illiquidity premium.
AHA strips out inflated IRR by accounting for illiquidity and benchmarking against the Bay Street Hospitality Index (BSHI). It measures true excess performance above sector norms.
IRR, BAS, Bay Score, IP
Bay Street Lifecycle Methodology
Hospitality-Specific Return Adjustment
Bay Adjusted Sharpe
AHA divided by volatility.
BAS measures return efficiency per unit of risk. High AHA only matters if delivered efficiently, making BAS critical for risk-adjusted comparability across operators and markets.
AHA, LSD, Bay Score
Bay Street Risk-Adjusted Return Engineering
Downside & Liquidity Filters
Liquidity Stress Delta
Quantifies liquidity drag from FX, capex, and lockup frictions.
LSD models exit risk by stress-testing timing, foreign exchange, and capital expenditures. High LSD penalizes Bay Score and may trigger exit clauses in term sheets.
BAS, BMRI, Bay Score
Bay Street Dynamic Negotiation Playbook
Downside & Liquidity Filters
Bay Macro Risk Index
Composite index of country-level macro risk.
BMRI integrates sovereign spread, FX volatility, tourism growth deltas, political risk, and repatriation restrictions into a 0–100 score. Used to discount IRR projections and adjust Bay Score for macro fragility.
LSD, Bay Score
Bay Street Macro Risk Overlays
Downside & Liquidity Filters
Illiquidity Premium
Adjustment for private vs public market liquidity gaps.
IP is engineered, not assumed: it compares private deal IRRs with public REIT yields, adjusting for volatility and dispersion. Integrated into AHA and Bay Score to prevent overvaluation.
AHA, Bay Score
Bay Street Illiquidity Premium Whitepaper
Unified Scoring & Decision Gate
Bay Score
Composite 0–100 score integrating all metrics.
Bay Score is Bay Street's unifying decision metric. It combines AHA, BAS, LSD, BMRI, IP, ESG, and sponsor quality into one comparable output. Deals scoring ≥70 typically proceed to Investment Committee.
NPV, IRR, AHA, BAS, LSD, BMRI, IP, IC Decision
Bay Street Quantamental Investment Process
Governance
Investment Committee Decision
Final governance gate for deal approval.
IC Decision is triggered by Bay Score thresholds and macro-risk overlays. It represents the final investment governance step, where institutional review aligns with quantamental scoring outputs.
Bay Score, LSD, BMRI
Bay Street Quantamental Execution Blueprint
