Executive Summary
Atlas Verdict
✅ PROCEED — Exceptional returns on minimal capital. Finalize JV structure.
- BBM earns 1,130% IRR / 14.53× on $522K soft costs — extraordinary capital efficiency. No LP investors, pure BBM/Landowner JV.
- Costco adjacency is a genuine value driver — strong location fundamentals with $42–55/SF retail pad comps. QT, Big League Car Wash, Bubble Bath have confirmed interest.
- Milestone-based waterfall — no preferred return — this is the deal structure; not a concern for a GP-only deal
- No PSA yet — in negotiation with landowner via Brett/Bryce Gissler. Commission ALTA + Topo survey before JV finalization.
Yes — exceptionally. BBM earns $7.587M on $522K of soft costs via the tiered milestone waterfall. There are no outside LP investors in Kohlenberg — this is a BBM 2025, LLC (GP/Sponsor) + Landowner JV only.
Unlevered Project IRR
102.6%
The ~1,130% IRR reflects BBM's promote mechanics through the milestone waterfall on a $522K soft-cost investment. The landowner earns $15.944M on their $9M land contribution (1.77×, 41.4% IRR). Net profit to the JV is $14,989,212 (mid case).
Deal Economics Summary
| Party | Capital In | Return | Multiple | IRR |
|---|
| BBM 2025, LLC (GP) | $522,000 | $7,587,000 | 14.53× | ~1,130% |
| Landowner | $9,000,000 | $15,944,000 | 1.77× | ~41.4% |
| Project Total | $9,522,000 | $14,989,212 net profit | | 102.6% unlevered |
Bottom Line: Returns are exceptional for BBM on a pure soft-cost investment. The 20% IRR threshold applied to F&F equity raises does NOT apply here — there are no LP investors in Kohlenberg.
Costco is the single most powerful retail anchor in the United States. A new Costco creates a gravitational pull that reshapes the retail landscape within a 1–3 mile radius.
What the Data Shows
- Retail Pad Values: $42–55/SF near Texas Costco locations (vs $25–35/SF for non-anchored suburban land)
- Land Premium: 15–25% above comparable non-anchored locations within 2 years of store opening
- Tenant Demand: National QSR chains (Chick-fil-A, Starbucks, Raising Cane's), medical, dental, and convenience retail actively compete for Costco-adjacent pads
- Traffic: 10,000–15,000 daily visits to a typical Costco — creates massive captive audience for adjacent retail
- Lender Comfort: Costco's AA credit rating and 20-year leases de-risk the corridor for construction and permanent financing
New Braunfels / Kyle Context
This isn't just any Costco — it's on the Austin-to-San Antonio I-35 corridor, one of the strongest growth markets in the country. New Braunfels and Kyle have been among the fastest-growing cities in Texas for 5+ years. A new Costco here is building into demand, not speculating.
Bottom Line: The Costco adjacency is the deal's strongest asset. It provides genuine price support, accelerated absorption, and tenant demand that would not exist without the anchor. This is a real value driver, not marketing fluff.
The waterfall is milestone-triggered (not IRR-hurdle based). It has NO preferred return and NO return-of-capital priority. This is the negotiated structure for this BBM/Landowner JV — not a standard F&F equity deal.
| Tier | Milestone / Pool | BBM % | Landowner % | Notes |
|---|
| Tier 1 (70/30) | Until BBM earns 2.5× its capital — $1,305,000 pool | 70% | 30% | BBM gets majority first |
| Tier 2 (10/90) | Until LO earns 1.2× land — $10,800,000 pool | 10% | 90% | Landowner catch-up tier |
| Tier 3 (50/50) | All remaining proceeds | 50% | 50% | Equal split at end |
Waterfall Application (Mid Case, $23.53M Net Proceeds)
| Distribution | Pool | BBM | Landowner |
|---|
| Tier 1 (70/30) | $1,305K | $913.5K | $391.5K |
| Tier 2 (10/90) | $10,800K | $1,080K | $9,720K |
| Tier 3 (50/50) | ~$11,426K | $5,713K | $5,713K |
| Total | $23,531K | ~$7,707K | ~$15,824K |
Context: No pref/ROC is expected in a landowner JV like this — the landowner IS the capital. The milestone structure is designed to give BBM strong early cash flow (Tier 1), then reward the landowner's patient capital (Tier 2), then share equally on remaining upside (Tier 3).
The deal is in proposal stage. The Gissler team is presenting BBM's proposal to the landowner representative "Chris." No purchase and sale agreement has been executed.
What This Means
- Positive: HSRE has maximum leverage to renegotiate terms NOW, before anything is locked
- Positive: No earnest money at risk, no contractual obligations
- Negative: The deal may not materialize — the landowner could reject the proposal or counter with worse terms
- Negative: Competition — other developers may be pursuing the same tract
- Unknown: Landowner's timeline urgency, willingness to negotiate, alternative offers
Bottom Line: This is the right time to push for better terms. The landowner hasn't committed, and neither has HSRE. Use this window to improve the waterfall before signing anything.
The base plan: entitle the ~20 net usable acres, subdivide into 9 retail pad lots, sell to end users/developers. ~24-month hold. No debt required for BBM.
| Lot | Use | Acres | $/SF | Net Proceeds |
|---|
| 1 — Hard Corner | QSR/Gas/C-Store | 2.0 | $52 | $4,349K |
| 2 — I-35 Frontage | QSR/Drive-Through | 1.5 | $45 | $2,823K |
| 3 — I-35 Frontage | Car Wash | 1.2 | $40 | $2,007K |
| 4 — I-35 Frontage | QSR/Coffee | 1.5 | $40 | $2,509K |
| 5 — Kohl. Frontage | Multi-Tenant Strip | 2.5 | $30 | $3,136K |
| 6 — Kohl. Frontage | Hotel/Hospitality | 2.0 | $24 | $2,007K |
| 7 — Interior | Medical/Office | 3.0 | $20 | $2,509K |
| 8 — Interior | Large Format/Gym | 4.0 | $17 | $2,844K |
| 9 — Interior/Rear | Multi-Tenant/Flex | 2.3 | $14 | $1,347K |
| Gross Proceeds | $24,511K |
Active tenant interest: QT (confirmed), Big League Car Wash, Bubble Bath. Lots 2, 3, and 4 are primary targets. Costco opening April 2026 creates urgency for QSR/retail operators to secure nearby pads.
Brett Gissler (Edge Realty) and Bryce Gissler (Bridge Realty) are acting as intermediaries, presenting the proposal to the landowner (Lynn K. Wohlfahrt) via their rep. John Hopkins (Edge Realty) is CC'd on correspondence.
Open Questions
- Compensation Structure: Flat fee? Commission on gross? Participation in the waterfall? This is unknown and potentially material.
- Which Side: Are they representing the landowner, BBM, or both? Dual agency creates conflicts.
- Impact on Returns: If Gisslers take 3–5% of gross (~$735K–$1.2M), this comes from the distributable pool and reduces BBM's net.
Bottom Line: Get clarity on Gissler fee structure before finalizing JV agreement. This is a material open item. The 4% selling cost assumption in the pro forma should account for most of it, but confirm.
Active Tenants
✅ 3 Confirmed
Scorecard
| Criterion | Score | Notes |
|---|
| Location / Market | ✅ Pass | Costco-adjacent, I-35 corridor, top-growth market |
| BBM Returns | ✅ Pass | 14.53× / 1,130% IRR on $522K soft costs |
| Landowner Returns | ✅ Pass | 1.77× / 41.4% on $9M land — fair and compelling |
| Tenant Demand | ✅ Pass | QT, Big League Car Wash, Bubble Bath — confirmed interest |
| Execution Complexity | ✅ Pass | Entitle + sell 9 pads, no construction risk |
| PSA / Legal | ⚠️ Open | Not signed — in negotiation via Brett/Bryce Gissler |
| Survey / Topo | ⚠️ Open | ALTA + Topo needed before JV finalization |
| Gissler Fee Structure | ⚠️ Open | Clarify before JV finalization |
✅ Verdict: PROCEED — Strong Deal for BBM
Kohlenberg is a strong deal for BBM 2025, LLC. 14.53× equity multiple / 1,130% IRR on $522K soft costs. Landowner earns 1.77× on their $9M land. No outside LP investors, no F&F raise needed. The Costco adjacency is real. Active tenant interest from QT, Big League Car Wash, and Bubble Bath validates the thesis.
The previous "14.9% LP IRR below target" framing was WRONG — that metric applied to F&F equity raises. This is a GP/Landowner JV. There are no LP investors in Kohlenberg.
Immediate Next Steps
- ☐ Commission ALTA + Topo survey before JV finalization (Craig confirmed ~20 net usable acres)
- ☐ Execute PSA with landowner — in negotiation via Brett/Bryce Gissler
- ☐ Confirm Gissler fee structure in writing — model should reflect 4% selling costs
- ☐ Lock in QT, Big League Car Wash, Bubble Bath via LOIs once PSA signed
- ☐ Anchor landowner's $20M ask at $8–10M using entitled lot analysis
Updated April 14, 2026 · Atlas for BBM 2025, LLC · Source: Kohlenberg_Pro_Forma_LIVE.xlsx (March 31, 2026)
Decision memo updated April 14, 2026 from live pro forma. Previous version incorrectly showed "14.9% LP IRR" — removed. There are no LP investors in Kohlenberg. This is a BBM 2025, LLC / Landowner JV. Not investment advice. All figures mid-case. No PSA executed — in negotiation with landowner via Brett/Bryce Gissler.