Unlike other real estate sectors, hospitality investments require decisions that span multiple dimensions: real estate fundamentals, brand operations, regional macro trends, and public-private capital structure considerations. Bay Street Hospitality integrates proprietary scoring and benchmarking into each step of the deal lifecycle, ensuring that every variable is priced, scored, and stress-tested. This whitepaper walks through the seven stages of that lifecycle and the specific scoring logic used at each point.

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The Seven Stages of Quantamental Deal Evaluation

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Brand & Operator Selection

• Criteria: OpCo vs. PropCo, brand RevPAR performance, flag alignment

• Bay Score Link: Operator score, AHA premium from brand uplift

• BSHI Inputs: STR brand volatility, management fee compression

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Feasibility Study & Market Positioning

• Metrics: Stabilized RevPAR vs. comp set, penetration ratios

• AHA Use: Compare to regional BSHI for alpha visibility

• Macro Overlay: FX, tourism elasticity, seasonality adjustment

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Financial Modeling & Underwriting

• Tools: Bay Score triage, BAS range analysis

• Stress Testing: Exit delay impact via LSD

• Benchmark: Match IRR curve to BSHI trailing deciles

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Debt & JV Structuring

• Inputs: DSCR, LTC, FX hedging, capital stack flags

• Scorecard Use: Sponsor co-invest, promote structure, risk share

• IC Memo Logic: Quant-justified preferred equity and intercreditor terms

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Technical Diligence

• Focus: CapEx sufficiency, deferred maintenance, ADA/sharia overlays

• Score Interaction: Adjust LSD and Bay Score based on technical shortfall

• Stress Add-ons: Value leakage modeling via environmental/legal risk

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Asset Management & Monitoring

• Dashboards: Forecast vs. actual NOI/RevPAR vs. BSHI

• Drift Alerts: AHA re-casting, BAS re-weighting, sponsor slippage alerts

• LSD Flagging: Exit planning triggers based on liquidity stress

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Exit Strategy & Waterfall Design

• Variables: Buyer type sensitivity (strategic vs. financial), hold premium decay

• Quant Mapping: Exit IRR optimization vs. Bay Score under delayed exit

• Waterfall Sync: Promote clauses linked to scenario-tested score outputs

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Use Cases & Applications

• Screen operator-brand pairings for uplift vs. volatility using BSHI metrics

• Present AHA and BAS-adjusted IRRs in IC memos alongside exit stress cases

• Use FX overlay tools to justify repatriation protections in cross-border JVs

• Build exit waterfalls that reflect scenario-modeled IRR dispersion and LSD drift

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Quantamental Advantage

• Every lifecycle stage is tied to a transparent scoring engine

• Risks are benchmarked, not estimated

• Public-private bridge via REIT-adjusted volatility for underwriting clarity

• Operator and asset quality embedded in Bay Score framework

• LPs can view scorecards in real time, reducing blind spots and IC friction

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LP Takeaways

• Every stage—LOI, feasibility, underwriting, structuring, exit—is scored and tracked

• AHA and BAS evolve with the deal, not just appear in a pitch

• Exit timing risk is modeled and tied to promote structure

• BSHI ties private underwriting to public comparables for auditability

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Appendix: Bay Street Metrics

AHA = Return − Benchmark − Illiquidity Premium (1–7.5%)

BAS = AHA / volatility (public REIT proxy x leverage x dispersion)

LSD = (IRR_base − IRR_delayed) / IRR_base

Bay Score = Composite of AHA, BAS, LSD, Sponsor, Region, Structure

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Benchmark Methodology Integration

• STR (TRI RevPAR Index)

• NCREIF Hotel Index (Time-Weighted Returns)

• Cambridge PE Hospitality Index

• FTSE Nareit Lodging (REITs)

• MSCI GPFI

• S&P Global Hotels (GICS Sector)

• Dynamic Illiquidity Premium (Hold Period, FX, Repatriation)

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CoStar Methodology Integration & Forecast Notes

CoStar Modeled Flags, STR Sufficiency Checks, Oxford Economics Forecasts

Forecast Confidence = Low / Moderate / High → Impacts visual weight in Bay Score projections

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Copyright Notice and Legal Disclaimer

The materials provided by Bay Street Hospitality Fund I GP LLC are for informational purposes only. They do not constitute investment advice. Reproduction without permission is prohibited.
© 2025 Bay Street Hospitality. All rights reserved.

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