Traditional real estate allocations often treat hospitality as a niche "alternatives" category, reliant on vintage diversification or relationship-based sourcing. Public hospitality assets, such as REITs and operators, are benchmarked on broad market indices with limited asset-specific risk adjustment.
Bay Street Hospitality re-engineers this paradigm. We blend:
The goal: Create a truly unified, risk-calibrated investment architecture for hospitality across all asset types and regions.
Bay Score: Weighted composite measure of deal attractiveness, integrating financial, operational, strategic, and risk-adjusted inputs into a single 0–100 score.
Adjusted Hospitality Alpha (AHA): Excess return above benchmark, net of illiquidity premium, region risk, and FX volatility.
Bay Adjusted Sharpe (BAS): Risk-adjusted alpha, using synthetic volatility models for private assets and realized vol for public comparables.
Liquidity Stress Delta (LSD): Projected IRR degradation under delayed exit or impaired liquidity scenarios.
Each input is calibrated quarterly using Time-Weighted Return (TWR) logic, ensuring dynamic drift modeling and macro-adjusted return expectations.
Bay Street uses a Platform Synergy Score and Operational Leverage Flag to quantify brand/operator quality beyond traditional franchise terms. STR RevPAR, EBITDA margins, and brand equity sentiment analytics are integrated into Bay Score calculations.
LP Insight: Operator agreements that incentivize upside while limiting fixed downside exposure enhance AHA and raise Bay Score rankings.
All market feasibility assumptions are benchmarked against public REIT proxies (P/FFO, FFO Yield) and regional submarket data (STR/CoStar). IRR Sensitivity Bands and LSD modeling overlay downside case stress.
LP Insight: Feasibility reports that lack modeled exit stress are flagged for rejection or adjustment.
Every underwriting model integrates Bay Score, BAS, and LSD metrics dynamically. Volatility assumptions are adjusted based on public market analogs and private leverage dispersion scores.
Capital stack modeling includes:
Preferred equity, intercreditor protections, and exit covenants are scored within the deal's Bay Score rating.
Brand compliance, CapEx planning, timeline buffers, and ADA/Sharia compliance factors are incorporated into IRR Drift Index projections.
AHA and BAS are recalculated quarterly post-close, with Live Bay Score Deltas tracked to identify drift from underwriting assumptions.
Exit readiness modeling includes:
LP Insight: Exit optionality is modeled at underwriting, not post-hoc.
Bay Street's custom Streamlit platform solves for optimal portfolio composition by maximizing Bay Score or AHA under defined risk constraints:
Historical simulations (5-, 10-, 15-, 20-year periods) benchmark against the Bay Street Hospitality Index (BSHI), a proprietary composite integrating STR, NCREIF, CoStar, Cambridge, FTSE Nareit, MSCI, and S&P Global indices.
To enable apples-to-apples comparisons between private deals and public assets, Bay Street developed a Public-Private Mapping Framework:
Public MetricPrivate EquivalentRisk-Adjusted PurposeP/FFOEntry Cap Rate vs Stabilized NOIEarnings PowerEV/EBITDATEV/NOIOperating YieldPrice/BookEntry vs Replacement CostAsset MispricingDividend YieldCoC YieldRealized YieldROIC/ROEReturn on CostCapital Efficiency
LP Insight: Every private deal is normalized to a public equivalent risk-return profile, reducing anchoring bias.
Bay Street Hospitality transforms hospitality investing from a fragmented, intuition-based practice into a systematic, data-anchored discipline.
Through rigorous quantamental integration—anchored by the Bay Street Hospitality Index (BSHI), Bay Score, AHA, BAS, and LSD metrics—the firm offers LPs a risk-calibrated pathway to alpha generation, downside protection, and long-term performance predictability.
Hospitality is no longer a niche alternative. Under Bay Street's framework, it becomes an institutional core.
The materials provided herein are for informational purposes only and do not constitute investment advice, an offer, or solicitation. No representation is made that any strategy described will achieve specific results. Past performance is not indicative of future returns. All information is subject to change without notice.
© 2025 Bay Street Hospitality Fund I GP LLC. All rights reserved.
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Bay Street Hospitality is a diversified hotel fund series for allocators seeking quant-driven exposure across top countries, operators, and hotel tiers. The fund targets a diversified portfolio in both high-growth emerging markets and stable developed markets, optimizing risk-adjusted returns. The leadership provides structured equity and pivotal strategic guidance to hotel-related investments. The fund establishes joint ventures with best-in-class partners, focusing on deal flexibility, currency considerations, tax efficiency, and clear exit strategies.
