📝 Reference Notes

📊 Pro Forma Summary

Atlas independent model for 140 SFRs in New Braunfels TX. $37M TPC confirmed by Novak.

• NOI (stabilized): $2,450,258
• YOC: 6.62% (Novak says 6.5% — close match)
• Exit Value: $52M at 5.0% cap (confirmed)
• LP IRR: 19.1% | EM: 1.9x
• Adjusted IRR: 38.32% | EM: 2.38x (with promote)

🎯 Decision Memo

7-pass analysis of the Mayfair deal. Key question: at 19.1% LP IRR, Mayfair is the weakest return in JAK's portfolio. Is the capital efficiency ($800K equity) and dev spread (150 bps) worth it?

• Numbers: Work — 19.1% real but below JAK's 22-26% target
• Market: Strong — NB is fastest-growing TX city
• Permit: Risk — 1st round comments, not resolved
• Verdict: CONDITIONAL GO

🔍 Assumptions vs. Novak

Atlas vs. Novak confirmed numbers — high agreement. Novak provided confirmed figures for most deal parameters.

• TPC: $37M ↔ $37M Match
• Units: 140 ↔ 140 Match
• Exit Value: $49M (Yr 3) vs $52M (stabilized) $3M gap
• LP IRR: ~19% ↔ 19.1% Match
• Exit Cap: 5.0% ↔ 5.0% Match

📈 New Braunfels SFR Market

New Braunfels is one of the fastest-growing cities in Texas, positioned on the I-35 corridor between Austin and San Antonio.

• Growth driver: I-35 corridor — Austin/SA population overflow
• SFR rents (MPC): $1,600–$2,200/mo for 3BR/2BA
• MPC premium: 10–15% over standard NB rents
• Construction costs: $140K–$165K/unit (below Austin)
• Institutional SFR cap rates: 5.0–5.5%
• Key comps: Vintage Oaks, Veramendi, Gruene Oaks
• Demand drivers: Schlitterbahn tourism, Comal County schools, Hill Country lifestyle, affordability vs Austin

🤝 JV Structure

Four-party JV with JAK as developer/manager. Novak's $3M land contribution is the anchor asset.

• JAK Development: Developer/manager — $800K F&F equity
• Jeff Novak / Novak Bros / Rivery Capital: Landowner — $3M in-kind land
• Black Cat: Construction partner
• Institutional LP: Pari passu w/ F&F after CL close

Current loan status: $1.75M balance, extended through Aug 2026, no debt service until Sept 2026. This gives JAK breathing room but creates a hard deadline for permit resolution and capital formation.

F&F terms: 8% pref, 15% of GP promote. Total LP return: $1.9M on $800K invested.

⚠️ Permit Status Pending

Project is fully designed but not yet permitted. First-round permit comments have been received from the city — resolution is in progress.

• Design status: Complete — plans fully drawn
• Permit status: 1st round comments received
• Next step: Respond to comments, resubmit
• Timeline risk: Each 6-month delay adds ~$200K carry cost
• SDP target: 8 months → Q4 2026
• Budget for resolution: $800K earmarked (includes $300K design/eng/permit)

Key question: What are the specific permit comments? Are they routine (drainage, setbacks) or substantive (density, zoning)?

🏗️ Black Cat Construction

Black Cat is the construction partner for Mayfair's 140 SFRs. Construction cost budget: $21.7M (~$155K/unit).

• Cost per unit: ~$155K (within NB range of $140K–$165K)
• Total construction: $21.7M + $2.5M site work = $24.2M
• Contingency: $550K (~2% — tight for 140 homes)
• Construction timeline: 16 months to complete (after breaking ground Q4 2026)

Risk factors:

• 140 SFRs is a large-scale BTR build — execution risk is real
• 2% contingency is thin — industry standard is 5%+ for this scale
• Material cost inflation could compress already-tight margins
• NB labor market is competitive with other MPC developments

Key question: What is Black Cat's track record with BTR-scale SFR projects? Do they have NB-specific experience?

🚪 Exit Strategy

Stabilized SFR portfolio sale to institutional buyer. The BTR/SFR institutional market is deep and growing — major buyers actively acquiring in the I-35 corridor.

• Exit value: $52M at 5.0% cap (confirmed — Novak)
• Target exit: Post-stabilization, ~Q3 2028 or later
• Dev spread: 150 bps (6.5% YOC vs 5.0% exit cap)

Potential institutional buyers:

• Invitation Homes — largest US SFR REIT, active in TX
• FirstKey Homes (Cerberus) — major TX SFR buyer
• American Homes 4 Rent — BTR-focused, building in TX
• Tricon Residential — Sun Belt SFR focus
• Private equity: Blackstone, KKR, Starwood all active in SFR space

MPC premium: Institutional buyers pay premium for master-planned SFR communities vs scattered-site portfolios. The 800-acre Mayfair MPC adds significant exit value vs comparable unit count in non-MPC settings.