11d • General discussion
Worked example: $1.3M Year-1 tax shield hiding inside a 313-key hotel deal
Pinning this as our first deal teardown.
A real DD package landed on my desk. 313-key upscale full-service hotel, Sun Belt airport submarket. Numbers are real. Property identity scrubbed.
The 5-year operating story:
2022: $9.3M revenue, ($462K) EBITDA, 63.9% occ, $63 RevPAR
2023: $10.8M revenue, ($394K) EBITDA, 68.3% occ, $72 RevPAR
2024: $13.4M revenue, $12K EBITDA, 71.3% occ, $86 RevPAR
2025: $12.6M revenue, $207K EBITDA, 69.4% occ, $86 RevPAR
T12 Apr 2026: $13.4M revenue, $501K EBITDA, 76.5% occ, $93 RevPAR
The STR insight: MPI 128.8 / ARI 87.8. Filling rooms 29% better than comp set, charging 12% less. Classic rate-management value-add lever.
The tax layer the broker's pro forma misses:
At a $105K/key basis ($32.87M):
- Acquisition cost seg → ~$1.3M Year 1 tax shield
- PIP cost seg (~$11M of capex, 70% short-life) → ~$1.1M Year 1 tax shield
- Form 3115 lookback if seller never did cost seg → potential 7-figure §481(a) catch-up
That's $2.4M+ of Year 1 tax shield before operating cash flow even shows up. On a 35% equity check, that's roughly 20%+ of equity returned in Year 1 from the tax layer alone.
Full breakdown with all the assumptions and math:
This is the kind of work the room is for. If you're underwriting a hotel deal and want a second set of eyes on the after-tax math, drop a comment or DM.
Educational. Not tax, legal, or investment advice.
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Worked example: $1.3M Year-1 tax shield hiding inside a 313-key hotel deal
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