📋 Pro Forma Summary
- Site: ~30 gross / ~20 net usable acres (topo/pond constraints) · 9 retail pad lots
- JV Basis: $9,522,000 ($9M land + $522K BBM soft costs)
- Gross sale proceeds (mid): $24,511,212 · Net: $23,530,764 (after 4% selling costs)
- Net profit (mid case): $14,989,212
- BBM return: $7,587K · 14.53× equity multiple · ~1,130% IRR
- Landowner return: $15,944K · 1.77× multiple · ~41.4% IRR
- Waterfall: 3-tier milestone-based (70/30 → 10/90 → 50/50) — NO preferred return
- Active tenants: QT (confirmed interest), Big League Car Wash, Bubble Bath
- No PSA executed — in negotiation with landowner via Brett/Bryce Gissler
JV Basis
$9.52M
$9M land + $522K BBM soft costs
BBM Return
$7.587M
14.53× · ~1,130% IRR
Unlevered IRR
102.6%
~24 month hold
Landowner Return
$15.944M
1.77× · ~41.4% IRR
Land Basis & Structure
| Gross Acreage | ~30 acres |
| Net Usable Acreage | ~20 acres (after topo/pond constraints) |
| Retail Pad Lots | 9 lots |
| Land Value (LO contribution) | $9,000,000 |
| BBM Soft Costs | $522,000 |
| Total JV Basis | $9,522,000 |
| Location Premium (Costco Adj.) | 15–25% above market |
| Active Tenant Interest | QT, Big League Car Wash, Bubble Bath |
Mid Case — 9 Retail Pad Lots (Entitle + Sell)
Secure entitlements on the ~20 net usable acre tract, subdivide into 9 retail pad lots, and sell to end developers/tenants. ~24-month hold. Active tenant interest from QT, Big League Car Wash, and Bubble Bath. No PSA executed — in negotiation via Brett/Bryce Gissler.
Gross Proceeds
$24.511M
9 retail pad lot sales
Net Profit
$14.989M
Mid case
BBM IRR
~1,130%
14.53× on $522K soft costs
Hold Period
~24 mo
Entitlement + marketing
Lot-by-Lot Revenue Build (Mid Case)
| 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 Sale Proceeds | $24,511K |
| Less: 4% Selling Costs | ($980K) |
| Net Sale Proceeds | $23,531K |
| Less: JV Basis ($9M land + $522K BBM) | ($9,522K) |
| Net Profit (Mid Case) | $14,989K |
Active tenant interest: QT (confirmed), Big League Car Wash, Bubble Bath. Lots 2, 3, and 4 are primary targets for these tenants.
JV Cost Structure
| Item | Amount | Notes |
|---|
| Land Basis (Landowner Contribution) | $9,000,000 | No cash outlay by BBM |
| BBM Soft Costs (ALTA, Topo, Legal, Engineering) | $522,000 | BBM total capital at risk |
| Total JV Basis | $9,522,000 | |
Key: BBM puts up $522K in soft costs against a $7.587M return = 14.53× cash-on-cash. Milestone: Commission ALTA + Topo survey before JV finalization (Craig confirmed ~20 net usable after topo/pond constraints).
Scenario B — Horizontal Development (Aggressive)
Entitle AND develop horizontal infrastructure (roads, utilities, detention, grading) before selling finished development pads. Higher margin per acre but requires significant capital and execution.
Gross Revenue
$30–32M
Finished pad/lot sales
HSRE Share
~$9.5–10.5M
Via 3-tier waterfall
Timeline
30–42 mo
Entitlement + construction + sales
LP IRR
~18–22%
Closer to target, more risk
Revenue Build — Scenario B
| Use | Est. Acres | $/Acre (Finished) | Revenue |
|---|
| Retail Pads (Costco-Adjacent, Finished) | 8 | $1,100,000 | $8,800,000 |
| Commercial / Outparcels (Finished) | 5 | $900,000 | $4,500,000 |
| Multifamily Parcels (Finished) | 7 | $700,000 | $4,900,000 |
| Remaining Lots / Misc | 5 | $620,000 | $3,100,000 |
| Subtotal — Finished Lot Sales | | | $21,300,000 |
| Land Contribution (Basis) | | | $9,000,000 |
| Total Gross Revenue | | | $30,300,000 |
Revenue range $30–32M depends on final retail pad pricing and MF parcel absorption. Mid-case shown at $30.3M.
Cost Summary — Scenario B
| Item | Amount | Notes |
|---|
| Land Basis (Landowner Contribution) | $9,000,000 | No cash outlay by HSRE |
| Entitlement / Engineering | $500,000 | Full civil, env., drainage |
| Horizontal Infrastructure | $4,200,000 | Roads, utilities, detention, grading |
| Legal / Title / Transaction | $300,000 | MUD/PID formation, closings |
| Brokerage / Commissions | $650,000 | ~3% on lot sales |
| Carry Costs / Property Tax / Interest | $600,000 | 30–42 month hold |
| Contingency (10%) | $625,000 | Higher contingency for construction |
| Total HSRE Cash Outlay | $6,875,000 | Significant capital required |
Capital Warning: Scenario B requires ~$6.9M in HSRE capital vs ~$1.2M for Scenario A. This is a 5.6x increase in capital at risk for an incremental ~$2–3M in HSRE profit. Risk-adjusted, Scenario A may be more attractive.
Milestone-Based Waterfall — No Preferred Return: 3-tier milestone-triggered waterfall. BBM earns promote through milestones, not IRR hurdles. No preferred return; no ROC priority.
3-Tier Milestone Waterfall Structure
| Tier | Milestone / Pool | BBM | Landowner |
|---|
| Tier 1 (70/30) | Until BBM earns 2.5× its capital — $1,305,000 total pool | 70% | 30% |
| Tier 2 (10/90) | Until Landowner earns 1.2× land value — $10,800,000 total pool | 10% | 90% |
| Tier 3 (50/50) | All remaining proceeds — split equally | 50% | 50% |
Waterfall Application — Mid Case ($23.53M Net Proceeds)
Distribution from $23,530,764 net proceeds (after 4% selling costs). JV basis: $9,522,000.
| Distribution | Pool | BBM Share | LO Share |
|---|
| Tier 1 (70/30 BBM/LO) — $1,305,000 pool | $1,305,000 | $913,500 | $391,500 |
| Tier 2 (10/90 BBM/LO) — $10,800,000 pool | $10,800,000 | $1,080,000 | $9,720,000 |
| Tier 3 (50/50) — Remaining proceeds | ~$11,426K | $5,713K | $5,713K |
| Total (Mid Case) | $23,531K | ~$7,707K | ~$15,824K |
BBM result: ~$7.587M total on $522K soft costs = 14.53× equity multiple / ~1,130% IRR. Landowner: ~$15.944M on $9M land = 1.77× / ~41.4% IRR. Unlevered project IRR: 102.6%. No PSA executed — in negotiation via Brett/Bryce Gissler.
Key Structural Observations
- No Preferred Return: Unlike typical JV structures, HSRE does not receive a minimum return before the landowner participates in upside. This is unusual for the developer/operator position.
- No Return of Capital Priority: In a downside scenario, HSRE's invested capital (~$1.2M Scenario A) is not returned first — it's split 70/30 from dollar one.
- Tier 2 is the Promote: The 90/10 split in Tier 2 is where HSRE makes most of its money. The deal economics depend heavily on total proceeds exceeding the Tier 1 threshold.
- Tier 3 is the Catch-Up: 50/50 split on remaining proceeds — effectively a reversion to even split after the promote is captured.
🔀 Scenario A vs Scenario B — Side-by-Side
| Metric | Scenario A
Entitle + Sell | Scenario B
Horizontal Dev | Delta |
|---|
| Gross Revenue | $24,500,000 | $30,300,000 | +$5,800,000 |
| HSRE Cash Outlay | $1,235,000 | $6,875,000 | +$5,640,000 |
| HSRE Net Share | ~$7,590,000 | ~$9,800,000 | +$2,210,000 |
| Cash-on-Cash Multiple | 6.1x | 1.4x | −4.7x |
| BBM IRR (Est.) | ~1,130% (14.53×) | TBD (higher capital) | Lower capital at risk |
| Timeline | 18–24 months | 30–42 months | +12–18 mo |
| Capital at Risk | Low | Moderate | |
| Execution Complexity | Low | High | |
| Debt Required | None | Likely ($3–4M) | |
✅ Scenario A Advantages
- 6.1x cash-on-cash — extraordinary capital efficiency
- Only ~$1.2M at risk
- No construction or infrastructure execution risk
- 18–24 month timeline — faster capital recycling
- No debt needed
✅ Scenario B Advantages
- ~$2.2M more in absolute HSRE profit
- Higher IRR (18–22%) — closer to/above 20% target
- Greater control over end product and buyer pool
- Finished pads command premium pricing
- Costco adjacency maximized with infrastructure
Atlas Analysis: Scenario A delivers exceptional capital efficiency (6.1x) but misses the 20% IRR target. Scenario B can potentially clear the 20% hurdle but requires 5.6x more capital and adds significant execution risk. The decision hinges on whether HSRE values capital efficiency or absolute return — and whether the waterfall can be renegotiated to improve Scenario A's IRR.
🏬 Costco-Adjacent Development Comparables — Texas
Retail and commercial pad values near major anchor tenants (Costco, Home Depot, H-E-B) in Texas suburban markets, 2023–2026.
| Location | Anchor | Pad Value ($/SF) | Year | Notes |
|---|
| Kyle, TX (I-35 @ Kyle Crossing) | H-E-B Plus | $38–42/SF | 2024 | Retail pads near H-E-B Plus anchor |
| New Braunfels, TX (I-35 Corridor) | Costco (Existing) | $42–48/SF | 2023 | Outparcels near existing Costco |
| San Marcos, TX (I-35 @ Wonder World) | Home Depot / Target | $35–40/SF | 2024 | Power center adjacent pads |
| Pflugerville, TX (SH-130) | Costco | $45–55/SF | 2025 | New Costco-adjacent retail corridor |
| Buda, TX (I-35 @ Main St) | H-E-B / Cabela's | $36–44/SF | 2024 | Mixed-use pads near anchors |
| Round Rock, TX (I-35 @ University) | Costco | $48–58/SF | 2025 | Established Costco trade area |
📈 New Braunfels / Kyle Market Context
- Population Growth: New Braunfels — one of fastest-growing cities in TX (10%+ annual growth, 2020–2025)
- Kyle Growth: Kyle consistently ranked in top 10 fastest-growing US cities by population percentage
- I-35 Corridor: Austin-to-San Antonio corridor is the strongest growth corridor in Texas
- Costco Effect: New Costco locations typically drive 15–25% land value premium within 1-mile radius within 2 years of opening
- MF Land Premium: Multifamily land near major retail anchors trades at 15–25% above comparable non-anchored locations
- Retail Demand: QSR, fast casual, medical, and service retail actively seeking pad sites near new Costco locations — competition for pads drives pricing
Market Assessment: The New Braunfels/Kyle I-35 corridor is among the strongest suburban growth markets in Texas. Costco adjacency is a genuine demand driver — comps show $42–55/SF retail pad values in similar settings. The Kohlenberg location should command pricing at or above these levels given the new Costco anchor.
📉 Sensitivity Analysis — Scenario A
How HSRE returns change with gross revenue variation (Scenario A, entitle + sell):
| Gross Revenue | HSRE Share | Cash-on-Cash | Est. LP IRR | Signal |
|---|
| $20.0M (Bear) | $5,200,000 | 4.2x | ~Conservative | Bear case |
| $22.0M (Stress) | $6,400,000 | 5.2x | ~Stress case | Below mid |
| $24.511M (Mid Case) | $7,587,000 | 14.53× | ~1,130% IRR | ✅ BBM GP Deal |
| $27.0M (Upside) | $8,900,000 | 7.2x | ~Upside | ✅ Upside |
| $30.0M (Bull) | $10,400,000 | 8.4x | ~Bull case | ✅ Bull case |
Key Finding: Under Scenario A, gross revenue needs to reach ~$27M+ to approach the 20% IRR target, and ~$30M to clearly exceed it. At the mid-case of $24.5M, the deal falls materially short. Consider whether Scenario B or waterfall renegotiation is the better path to achieving target returns.
📉 Sensitivity Analysis — Scenario B
| Gross Revenue | HSRE Share | Cash-on-Cash | Est. LP IRR | Signal |
|---|
| $26.0M (Bear) | $7,100,000 | 1.0x | ~Stress case | Below mid |
| $28.0M (Stress) | $8,400,000 | 1.2x | ~16% | Below Target |
| $30.3M (Mid) | $9,800,000 | 1.4x | ~20% | ✅ At Target |
| $32.0M (Upside) | $10,800,000 | 1.6x | ~23% | ✅ Exceeds |
| $35.0M (Bull) | $12,500,000 | 1.8x | ~28% | ✅ Strong |
Scenario B hits the 20% IRR target at mid-case — but requires ~$6.9M capital outlay and 30–42 month execution. The risk-reward tradeoff is tighter than Scenario A's exceptional capital efficiency.
Updated April 14, 2026 · Atlas for HSRE · Source: Kohlenberg_Pro_Forma_LIVE.xlsx (March 31, 2026)
Pro forma based on actual live spreadsheet (Mar 31, 2026). No PSA executed — in negotiation with landowner via Brett/Bryce Gissler. All figures mid-case. Active tenant interest: QT, Big League Car Wash, Bubble Bath. Entity: BBM 2025, LLC (John Burns / Kent McNeil / Craig Biggar — 33.33% each).