Fee Categories and Payment Timing

Broker fees are structured into four stages:

• Up Front (Engagement): Flat Fee triggered by data sufficiency and coverage.

• While in Diligence: Retainer Bonus triggered by minimum Bay Score and Forecast Confidence.

• At Close: % of Capital Placed tied to deal quality metrics.

• Post-Close (12-Month): Performance Bonus for realized IRR and Bay Score Drift success.

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Quant-Driven Fee Model: Core Components

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1. Flat Fee Engagement Bonus

Amount: $10,000–$25,000 (recoverable upon close)

• Data room passes checklist screening.

• STR/CoStar market coverage supports Forecast Confidence rating.

• Operator and brand are third-party verifiable.

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2. Percentage-Based Deal Close Fee

Fee % based on Bay Score, LSD metrics at IC memo approval.

Bay Score 90+ and LSD ≤ 5% = 1.5% fee.
Bay Score 80–89 = 1.25% fee.
Bay Score 70–79 = 1.0% fee.
Bay Score 60–69 = 0.75% fee.
<60 or LSD > 20% = 0.25% or rejected.

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3. 12-Month Performance Bonus

• Realized IRR ≥ Underwritten IRR.

• Bay Score Drift ≤ -5%.

• No material breach of NOI, RevPAR, Exit Cap projections.

• Bonus range: 0.25%–0.5% of originally raised capital.

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Add-On Incentive Layers

• Data Quality Score (DQS): Bonus for clean, index-ready data submissions.

• Sponsor Quality Index (SQI): Higher fees for institutional-quality sponsors.

• Forecast Accuracy Multiplier: Bonus for accurate underwriting predictions (RevPAR, Cap Rate, Exit Year).

• IC Approval Rate Weighting: Broker scoring for future allocations based on IC pass rates.

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Why This Matters

Bay Street’s broker system incentivizes quality over quantity. It aligns broker upside with investment performance, reducing LP risk and creating greater diligence discipline across sourcing channels.

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Appendix: Contract Language (Summary)

All broker arrangements are governed by the Bay Street Broker Compensation Agreement, which formally codifies:
• Fee triggers
• Metric thresholds
• Audit rights
• Bonus payout conditions
Available by request for approved partners.

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