Company · Real Assets · Equity · 2019–2020

The Zero-Based Re-Underwrite: A $145M Build in the Most-Visited City on Earth, and Why We Walked

We had the market, the partner, and the product. We had a signed conviction and real money already spent. Then the demand curve that underwrote the whole thing fell by more than half in a single quarter — and the discipline that matters wasn't the discipline to build. It was the discipline to stop.

The most expensive sentence in investing is "we've already come this far."

It is the sentence that keeps capital in a position long after the thesis that justified it has broken, because the mind treats money and months already spent as a reason to spend more. Economists call it the sunk-cost fallacy. Every investor knows the term. Almost none are immune to it, because the pull is strongest precisely when you have the most invested — the most capital, the most work, and the most of your own conviction on the line. This is the story of a deal where all three were on the line, and we walked anyway.

In 2019, we were developing Orlando Motorsports Park — a roughly $145 million experiential entertainment build, alongside one of the most respected master-planned-community developers in the country. The logic was clean. Orlando was, at that moment, the single most-visited destination on earth: a record 75.8 million visitors in 2019, the most-visited destination in the United States for the eighth straight year, growing 4.2% over the prior year. We had the best demand market in the world, a real-estate partner with an institutional balance sheet and a track record of building places people travel to, and a differentiated product in a market saturated with the same two theme-park brands. I believed in it enough to invest, and then to step in and run it.

Then the demand curve that underwrote the entire model fell off a cliff.

The Deal Was Good. That Was the Problem.

It is worth being precise about why the opportunity cleared our bar, because the discipline only counts if the deal was genuinely worth doing.

Orlando was not a speculative tourism bet. It was the most durable leisure-demand market in the world, and the partner was not a promoter — it was a developer whose name is on some of the most valuable master-planned real estate in Florida, the kind of counterparty whose involvement is itself a diligence signal. The product thesis held too: a market drawing 75 million visitors a year was served, at the paid-attraction tier, by a narrow set of incumbents charging escalating prices for an increasingly similar experience. A well-built, differentiated experiential venue had a real wedge into an enormous, proven, repeat-visitation market.

Four things we look for, in one asset: a proven demand market, an institutional partner, a differentiated product, and a physical build with hard-asset value underneath the enterprise. On paper, it was one of the more complete opportunities I've underwritten. We committed real capital and real time to developing it.

Which is exactly what makes it the right first entry in this collection. Walking away from a bad deal is not discipline; it's competence. Walking away from a good deal, after you've paid to develop it and after you've told people you believe in it, is the harder thing — and it is the only thing that actually protects capital when the world changes faster than your conviction.

When the Curve Fell 53% in a Quarter

In 2020, Orlando's visitation collapsed from 75.8 million to 35.28 million — a 53% decline in a single year. Not a soft patch. Not a cyclical dip we could underwrite through with a discount rate. The specific input the entire model rested on — millions of discretionary visitors, arriving, spending on paid experiences — was cut in half with no known duration and no reliable curve back.

For a $145 million experiential development, that is not a headwind. It is a solvency question. A nine-figure leisure build is financed against forward attendance and forward per-cap spend. When both of those go dark, the project doesn't get cheaper to finance — it becomes, for a window of unknown length, effectively un-financeable. No senior lender underwrites new construction into a demand shock they can't size; no equity partner accepts development risk on top of a pandemic of unknown length on top of a leisure-demand curve nobody could forecast. The financing market didn't say no. It said not now, and we can't tell you when — which, for a build with a construction clock and carrying costs, is the same as no.

This is the point where the sunk-cost fallacy does its real damage. We had money in. We had months in. Every instinct built by "we've already come this far" argued for pushing through — restructuring the timeline, waiting it out, protecting the work already done.

The Zero-Based Re-Underwrite

So we did the one thing the fallacy makes hardest. We threw out the question of what we'd already spent, and asked a different one.

Not "should we keep going, given how far we've come?" — the sunk-cost question, the one that quietly assumes the answer.

Instead: "If we were seeing this today, from a blank sheet, with no capital and no months already in — would we start it?" We call this the zero-based re-underwrite: you re-price the opportunity as if you'd never seen it, deliberately blind to everything already committed, because the dollars already spent are gone whether you continue or not and can carry no weight in a forward decision. The only honest inputs are the ones in front of you: the market as it is now, the financing as it is now, the risk as it is now.

Underwritten that way, the answer was no. It took six months of work to be sure of it, and to be sure we weren't simply protecting our own prior conviction. But a $145 million experiential build, financed into a leisure-demand shock of unknown depth and unknown duration, was not a risk we could responsibly ask capital to take — not because the idea was wrong, but because the moment made it un-underwritable. We stopped.

What Protects the Downside Is Sometimes the Decision Not to Have One

The signature of how we underwrite is that we lead with the downside. On this deal, protecting the downside meant not creating one.

• Capital preserved is capital compounded. The money not deployed into a demand shock stayed available for opportunities we could actually underwrite. The highest return on a $145 million commitment, in the spring of 2020, was zero — and zero beat the alternative decisively.
• The option to not build has value. Development capital committed is illiquid, carrying, and exposed for years. Declining to commit it, in a period of maximum uncertainty, preserved the one thing a demand shock destroys fastest: optionality.
• We underwrote the exit before the entry. The question was never whether Orlando would recover someday. It was whether we could finance, build, and hold through an interval no one could size. When the exit path can't be underwritten, the entry can't be justified — regardless of how good the destination looks.
• Conviction is a position you have to be willing to sell. The hardest asset to mark down honestly is your own prior belief. A discipline that can't override its own conviction isn't discipline; it's momentum wearing a suit.

The honest counter-case belongs here too, because this collection is worthless if it only contains deals we were obviously right to kill. This one could have worked. Had the financing market stayed open, a patient owner might have built through the trough and caught the recovery. We don't claim we dodged a disaster. We claim something narrower and more useful: at the moment the decision had to be made, with the information that existed, a nine-figure build into an un-sizable demand shock was a risk the capital shouldn't take. Same facts, same day, we'd decide the same way.

How It Panned Out

Here is the part that makes the lesson real rather than self-congratulatory: Orlando came back.

By 2025, the city drew a record 76.7 million visitors — past its 2019 peak, still the most-visited destination in the United States. The top-line demand thesis we'd fallen for was, in the end, right. If the story were only "Orlando recovered," we'd have talked ourselves out of a winner.

But the number that would have actually underwritten our asset tells a different, sharper story. Aggregate visitation recovered; paid-attraction attendance did not keep pace. Disney's domestic parks have run flat-to-down, roughly -1% in fiscal 2025 and softening for two years. Universal's Orlando parks fell across multiple years — Universal Studios Florida down about 2.6% and Islands of Adventure down 5.5% in 2024, after both dropped near 9% the year before. Visitors came back to Orlando; they spread their spending across more options and pushed back on price at exactly the paid-experience tier a $145 million motorsports park would have competed in. The city's sparkle returned. The economics of the specific bet got harder, not easier.

That is the more useful validation than a simple "we dodged it." The headline demand came back and still, the sub-market we'd have been exposed to weakened — which means the un-financeable window in 2020 wasn't just bad luck we happened to survive. It was a correct read that the risk, at that price, in that segment, into that shock, wasn't worth taking. We were right about Orlando. We were also right to walk.

Why This Collection Exists

Most firms show you only what they did. The selection is curated, the outcomes are known, and the survivorship is invisible. We think the deals we didn't do tell you more about how we protect capital than the ones we did — because anyone can hold a winner, and the real test of an underwriter is what they're willing to abandon after they've already paid for it.

The Sunk-Cost Antidote is our record of those. Deals we believed in enough to develop at real cost, and disciplined enough to stop. Orlando Motorsports Park is the first, and the most personal — because I didn't just underwrite it, I ran it, and I still had to sell my own conviction back to the facts.

This is how we underwrite: leading with the downside, re-pricing from zero when the world changes, and willing to walk from our own best ideas when the moment turns them un-financeable. If disciplined capital deployment — including the discipline of the deals not done — is the standard you hold your partners to, we're glad to walk through the work.