Empirical Hotel Investments - Investment Strategy

Empirical is an opportunistic hotel real estate investor with a disciplined focus on intrinsic value. We set out to achieve superior risk adjusted returns, regardless of market conditions. We are permanent investors in the hotel real estate space.

Risk and Reward

We take a thorough assessment of the inherent risks, and the predictability of the expected upside of each potential investment opportunity. After running each potential transaction through our rigorous valuation models, we stress test each Proforma against a comprehensive set of risk factors. The results of our analysis and modeling are entered into an “expected value table” similar to the one below:

At Risk Capital	$1,000,000
Life of Investment	5 years

	Amount	Probability	Value
Potential Upside:	$1,250,000	85%	$1,062,500
Downside Risk:	$250,000	15%	$37,500
Expected Value:			$1,025,000
Annualized Return:			20.50%

Value Creation

Empirical is a very specialized real estate investor. Our area of expertise is narrow, but deep. It is this specialization in hotel real estate that allows us to find assets that give us clear “value creation” opportunities.

Intrinsic Value

The intrinsic value of a hotel asset is simply the discounted value of cash that is generated from the property throughout its economic life. By focusing on the intrinsic value of each investment opportunity, we seek to limit our downside risk.