Pro Forma — Thaxton Corner

🟢 SB 2038 UPDATE (Apr 14): De-annexation probability updated from 40% to ~95%. Thaxton Corner is in Austin's ETJ — release is MANDATORY under SB 2038. 45-day timeline, $10-15K cost. Expected value: +$3.03M. De-annexation is now near-base-case, not just upside.

🚨 April 29, 2026 — Extension notice deadline in 15 days. This pro forma is the basis for the extend-or-walk decision. Base case supports extension. De-annexation (now near-certain) makes it a no-brainer.

💡 Key Takeaways

Base case net profit: $2.6M on $6.5M acquisition — 35% margin, 24.6% LP IRR. The deal works without de-annexation.
De-annexation case (near-certain under SB 2038): $5.1M net profit — at ~95% probability, 2 additional QSR pads unlock ~$2.0M incremental profit, pushing total return toward 40%+ margin. $10-15K cost, 45-day timeline.
Extension cost is minimal: $10,000 for an additional feasibility period through May 4. The optionality value far exceeds the cost.
Total equity required: $2.6M (95/5 LP/GP split on 40% equity after 60% LTV senior debt). GP commitment is only ~$130K.
18-24 month hold: Subdivide → entitle → horizontal infrastructure → sell lots. No vertical construction by BBM.

Purchase Price

$6.5M

$660K / acre

Base Gross Revenue

$11.0M

Mid-case lot sales

Base Net Profit

$2.6M

35% margin

LP IRR (Base)

24.6%

18-month hold

Upside Gross

$14.7M

With de-annexation

Upside Net Profit

$5.1M

~47% margin

Total Equity

$2.6M

60% LTV / 95-5 LP-GP

Extension Cost

$10K

Due May 1 for Extension #1

Base Case (No De-Annexation)

Gross Revenue$11,000,000

Total Costs$8,400,000

Net Profit$2,600,000

Margin35%

LP IRR24.6%

Equity Multiple1.8x

Upside Case (With De-Annexation)

Gross Revenue$14,700,000

Total Costs$9,600,000

Net Profit$5,100,000

Margin47%

LP IRR38%+ (est.)

Equity Multiple2.5x+

Strengths

Base case works without de-annexation — 24.6% LP IRR on a land merchant-build deal
South Austin growth corridor — Slaughter/Thaxton is an established retail/residential node
Low execution risk — subdivide and sell, no vertical construction
Modest equity ($2.6M) with conservative 60% LTV
18-month hold — fast capital recycling
De-annexation creates asymmetric upside (base works, upside is gravy)

Watch Items

De-annexation attorney needed ASAP — retain SB 2038 specialist to prepare ETJ release petition ($5-15K, 45 days)
QSR demand must be verified — are operators actively looking at Thaxton frontage?
CLD listing status — termination pending John's decision
Charter Stone Capital conversation is early-stage
MF land values depend on entitlement certainty (city vs. ETJ zoning)

Development Budget — Base Case

Note: This is a land merchant-build model. BBM acquires, entitles, subdivides, and installs horizontal infrastructure — then sells lots. No vertical construction costs.

Apr 14 update: De-annexation costs revised. Under SB 2038, cost is $5-15K (attorney fees only) vs. previously estimated $50-150K under SB 840. No hearings, no engineering studies, no litigation.

Cost Category	Amount	Per Acre	Notes
Acquisition
Land Purchase Price	$6,500,000	$659,800	Per contract — 9.8512 acres
Acquisition Fee (2%)	$130,000	$13,196	BBM GP acquisition fee per operating agreement
Title & Closing Costs	$85,000	$8,628	Heritage Title (John Bruce); title insurance, recording, escrow
Phase I Environmental	$8,500	$863	Standard Phase I ESA
ALTA Survey	$25,000	$2,538	Boundary, topographic, ALTA/NSPS
Appraisal	$12,000	$1,218	Lender-required MAI appraisal
Subtotal — Acquisition	$6,760,500	$686,238
Entitlement & Engineering
Civil Engineering (subdivision plat)	$175,000	$17,764	Preliminary + final plat, drainage, utilities plan
Environmental / Wetlands Study	$35,000	$3,553	Heritage tree survey, drainage analysis
Traffic Impact Analysis	$45,000	$4,568	TxDOT + City of Austin (or Travis County if ETJ) TIA
Legal — Entitlement & Zoning	$85,000	$8,628	Kutak Rock — zoning, variance, subdivision approval
Permitting Fees	$120,000	$12,182	City of Austin or Travis County subdivision/dev permits
Impact Fees	$95,000	$9,644	Water, wastewater, drainage, transportation (varies city vs. ETJ)
Subtotal — Entitlement	$555,000	$56,339
Horizontal Infrastructure
Grading & Earthwork	$185,000	$18,780	Site grading, cut/fill, drainage grading
Roadway / Drive Cuts	$220,000	$22,333	Internal subdivision roads, curb cuts to Thaxton
Water & Sewer Lines	$310,000	$31,469	Extend water/sewer to lot lines; tap fees
Storm Drainage	$165,000	$16,749	Detention/retention, storm pipe, outfall
Electric / Dry Utilities	$95,000	$9,644	Austin Energy / Pedernales; telecom, gas stubs
Landscaping & Erosion Control	$55,000	$5,583	TCEQ SWPPP compliance, temp erosion control, final landscape
Subtotal — Horizontal	$1,030,000	$104,558
Carry & Financing Costs
Loan Interest (18 mo. @ 7.5% on $3.9M)	$438,750	$44,538	60% LTV senior debt; 18-month avg draw
Loan Origination (1.0%)	$39,000	$3,959	Lender origination fee
Property Taxes (18 mo.)	$165,000	$16,749	Travis County; estimated at ~$11K/mo during hold
Insurance (18 mo.)	$22,000	$2,233	Vacant land + GL during development
Asset Management Fee (1%/yr × 18 mo.)	$97,500	$9,898	1% of purchase price per year
Subtotal — Carry	$762,250	$77,377
Marketing & Disposition
Broker Commissions (lot sales)	$165,000	$16,749	1.5% of gross revenue (seller-side)
Marketing & Offering Materials	$25,000	$2,538	Brochure, aerials, site plan renderings
Disposition Fee (1%)	$110,000	$11,167	BBM GP disposition fee per OA
Subtotal — Marketing & Disposition	$300,000	$30,454
Contingency
Hard Cost Contingency (10%)	$158,500	$16,090	10% of horizontal infrastructure
Soft Cost Contingency (5%)	$27,750	$2,817	5% of entitlement costs
Total Development Cost (Base Case)	$9,594,000	$974,000

Incremental Costs — De-Annexation Upside Case

Additional Item	Amount	Notes
De-annexation legal (SB 2038 petition)	$10,000	SB 2038 attorney — mandatory 45-day release, no hearings needed
Additional civil engineering (2 QSR pads)	$55,000	Replat, utility design for 2 additional lots
Additional horizontal infrastructure	$185,000	Extended water/sewer, drive cuts, grading for 2 pads
Additional permitting & impact fees	$35,000	Travis County (lower than city) for ETJ pads
Additional contingency (10%)	$25,000	10% on incremental hard costs
Total Incremental Cost	$310,000

Total de-annexation case cost: $9,904,000. The additional $310K in costs generates $2.4M in additional revenue — a 7.7:1 return on incremental investment. At ~95% probability under SB 2038, this is near-certain value creation.

Land Use Plan — Base Case

Total tract: 9.8512 acres. After road dedications, utility easements, and drainage (~1.35 acres), approximately 8.5 net developable acres.

Parcel / Lot	Acres	Use	Est. Sale Price	Basis
Lot 1 — Multifamily	4.00	Multifamily (200+ units)	$5,000,000	$25,000/unit × 200 units = $5M; comparable to entitled MF land in South Austin ETJ ($20K–30K/unit range)
Lot 2 — Retail Pad A	1.00	QSR / Drive-Through	$1,300,000	Thaxton frontage; ~$30/SF for pad-ready retail land
Lot 3 — Retail Pad B	0.85	QSR / Drive-Through	$1,200,000	Secondary Thaxton frontage; slightly smaller lot
Lot 4 — Retail Pad C	0.75	QSR / Retail / Bank	$1,000,000	Interior pad; less frontage premium
Lot 5 — C-Store / Fuel	1.50	Convenience store + fuel	$2,500,000	Corner location; $1.67M/ac — premium for c-store/fuel use
Road / Utility / Drainage	1.35	Dedications	—	Internal road, easements, detention
Total — Base Case	9.45		$11,000,000

Land Use Plan — Upside Case (With De-Annexation)

🟢 SB 2038 update (Apr 14): De-annexation is now ~95% probable under SB 2038. This land use plan should be treated as near-base-case, not speculative upside. 45-day mandatory release, $10-15K cost.

After ETJ release (SB 2038 — ~95% probability): The Thaxton frontage adjacent to the c-store can support 2 additional QSR/drive-through pads. City setback/buffer requirements currently prevent this configuration. After ETJ release, Travis County permitting allows tighter lot spacing and more flexible use categories.

Additional Lots	Acres	Use	Est. Sale Price	Basis
Lot 6 — QSR Pad D	0.80	QSR / Drive-Through	$1,200,000	Adjacent to c-store; benefits from traffic synergy
Lot 7 — QSR Pad E	0.80	QSR / Drive-Through	$1,200,000	End-cap Thaxton position; drive-through oriented
Upside Total (All 7 Lots)	11.05		$14,700,000*

*Upside case assumes reconfiguration of base case lots to accommodate 2 additional pads — some acreage shifts between lots. Dedications also change slightly in ETJ (Travis County road standards differ from COA). Net effect: ~1.6 additional usable acres for QSR pads, partially carved from adjusted MF lot and reduced detention requirements in ETJ.

Highest & Best Use Analysis by Location

Position on Tract	Best Use	Why	Value Driver
Corner (Thaxton × Slaughter)	C-Store / Fuel	Highest traffic count, dual-frontage visibility, ingress/egress from both roads	$1.67M/ac
Thaxton Road Frontage	QSR / Drive-Through Retail	High visibility, drive-through access, QSR operators pay premium for frontage	$1.2–1.5M/pad
Interior / Back of Tract	Multifamily	Highest density use for non-frontage acres; MF doesn't need road visibility	$25K/unit
Slaughter Frontage (if any)	Retail / Bank / Medical	Slaughter is higher-traffic but TxDOT controlled; access may be limited	$30–40/SF

Revenue Model — Lot-by-Lot Sales Analysis

Base Case Revenue

Lot	Use	Acres	Sale Price	$/Acre	$/SF	Sale Timeline
Lot 1 — MF	Multifamily	4.00	$5,000,000	$1,250,000	$28.70	Month 12–15
Lot 2 — Retail A	QSR Pad	1.00	$1,300,000	$1,300,000	$29.86	Month 9–12
Lot 3 — Retail B	QSR Pad	0.85	$1,200,000	$1,411,765	$32.41	Month 9–12
Lot 4 — Retail C	Retail/Bank	0.75	$1,000,000	$1,333,333	$30.61	Month 12–15
Lot 5 — C-Store	C-Store/Fuel	1.50	$2,500,000	$1,666,667	$38.27	Month 6–9
Base Case Total			$11,000,000	$1,164,000	$26.72

Upside Case — Additional Revenue (De-Annexation)

Lot	Use	Acres	Sale Price	$/Acre	Sale Timeline
Lot 6 — QSR D	QSR Pad	0.80	$1,200,000	$1,500,000	Month 18–24
Lot 7 — QSR E	QSR Pad	0.80	$1,200,000	$1,500,000	Month 18–24
Upside Additional		1.60	$2,400,000	$1,500,000
Total Upside Gross		—	$14,700,000*	—

*Includes $1.3M adjustment: base case lots reconfigured slightly (MF lot reduces to ~3.6 ac, adjusting MF revenue down ~$200K, offset by lot reconfiguration value). Net additional revenue vs. base: $3,700,000.

Revenue Phasing — Projected Cash Inflows

Period	Base Case	Upside Case	Lots Sold
Month 1–6	$0	$0	Entitlement & horizontal construction
Month 6–9	$2,500,000	$2,500,000	C-store lot (first to sell — highest demand)
Month 9–12	$2,500,000	$2,500,000	Retail pads A + B
Month 12–15	$6,000,000	$5,800,000	MF lot + Retail C
Month 18–24	—	$2,400,000	QSR pads D + E (post de-annexation)
Total	$11,000,000	$13,200,000

C-store lot sells first. Fuel/c-store operators are the most aggressive buyers for pad-ready corner locations. Expect LOIs within 60 days of marketing a platted, pad-ready corner lot at this location. This early sale provides significant cash flow to cover carry costs.

LP/GP Waterfall — Base Case

Structure: 60% LTV senior debt, 95/5 LP/GP equity, 8% preferred return (non-compounding), 75/25 LP/GP promote after pref, 2% acquisition fee, 1% disposition fee, 1%/yr asset management fee.

Waterfall Step	Amount	To LP	To GP
Sources
Gross Revenue (lot sales)	$11,000,000	—	—
Less: Total Development Costs	($9,594,000)	—	—
Net Distributable Cash	$1,406,000	—	—
Waterfall Distribution
1. Return of Capital (LP)	$2,470,000	$2,470,000	—
2. Return of Capital (GP)	$130,000	—	$130,000
3. LP Preferred Return (8% × 18 mo.)	$296,400	$296,400	—
4. Remaining Profit (75/25 split)	$979,600	$734,700	$244,900
Total Distributions	$3,876,000	$3,501,100	$374,900

GP Fee Income (in addition to waterfall)

Fee	Amount	Timing
Acquisition Fee (2%)	$130,000	At closing
Asset Management (1%/yr × 18 mo.)	$97,500	Quarterly
Disposition Fee (1%)	$110,000	At lot sales
Total GP Fee Income	$337,500
Total GP All-In (Promote + Fees)	$712,400	On $130K cash invested

Return Metrics — Base vs. Upside

LP IRR (Base)

24.6%

18-month hold

LP Equity Multiple (Base)

1.42x

$3.5M on $2.47M invested

GP Total Return (Base)

5.48x

$712K on $130K invested

LP IRR (Upside)

38%+

24-month hold (de-annex timeline)

LP Equity Multiple (Upside)

2.5x+

Estimated — depends on de-annex timing

Project Profit Margin

35% / 47%

Base / Upside

Cash Flow Timeline — Base Case

Month	Cash Out	Cash In	Net	Cumulative
0 (Closing)	($6,760,500)	$3,900,000	($2,860,500)	($2,860,500)
1–6 (Entitlement)	($890,000)	$0	($890,000)	($3,750,500)
6–9 (C-store sale)	($245,000)	$2,500,000	$2,255,000	($1,495,500)
9–12 (Retail A+B)	($120,000)	$2,500,000	$2,380,000	$884,500
12–15 (MF + Retail C)	($95,000)	$6,000,000	$5,905,000	$6,789,500
Total	($8,110,500)	$14,900,000	$6,789,500	—

The project goes cash-positive by month 12. The c-store lot sale at month 6–9 provides early liquidity, covering a significant portion of carry costs. The MF lot sale at month 12–15 is the largest single revenue event.

Price Sensitivity — Base Case Net Profit

How net profit changes if lot sale prices come in higher or lower than projected:

Scenario	Gross Revenue	Net Profit	Margin	LP IRR (est.)
Bear Case (−15%)	$9,350,000	$950,000	13%	~10%
Low Case (−10%)	$9,900,000	$1,500,000	20%	~16%
Conservative (−5%)	$10,450,000	$2,050,000	27%	~20%
Mid Case (Base)	$11,000,000	$2,600,000	35%	24.6%
High Case (+10%)	$12,100,000	$3,700,000	42%	~32%
Upside (De-Annexation)	$14,700,000	$5,100,000	47%	38%+

Break-even: ~$9,600,000 gross revenue — a 12.7% decline from mid-case. The deal has meaningful downside protection because the cost basis ($6.5M purchase + $3.1M development) is modest relative to the corridor's land values.

De-Annexation Scenario Analysis

🟢 UPDATED Apr 14: SB 2038 makes ETJ release mandatory within 45 days. Probability revised from 40% to ~95%. Cost revised from $100K to $10-15K. De-annexation is now near-base-case.

De-Annexation Outcome	Probability	Net Profit	LP IRR	Timeline Impact
ETJ release succeeds (SB 2038 — 45 days)	~95%	$5,100,000	38%+	18-month hold (petition runs parallel)
Petition has procedural defect (refile)	~4%	$4,900,000	35%	20-month hold (2-3 mo. delay to refile)
No de-annexation (base plan only)	~1%	$2,590,000	24.3%	18-month hold + $10K sunk legal cost

Probability-Weighted Return

Expected Net Profit

$5,032,000

Probability-weighted — dominated by 95% success case

Expected LP IRR

~37%

Weighted average

Downside (No De-Annex)

24.3% IRR

Still a solid deal — only $10K lost

De-annexation is no longer "upside optionality" — it's near-certain value creation. Under SB 2038, the city has zero discretion. $10-15K investment → $3.03M expected value = 151× return. The base case still works without it, but at 95% probability, the de-annexation scenario IS effectively the base case. File the petition simultaneously with the extension notice.

Hold Period Sensitivity

Hold Period	Additional Carry Cost	Net Profit Impact	LP IRR Impact
12 months (aggressive)	($175K saved)	+$175K	~30% IRR
18 months (base case)	$0	$2,600,000	24.6%
24 months (extended)	+$225K	$2,375,000	~19%
30 months (delayed)	+$450K	$2,150,000	~15%

Additional carry costs include: debt service ($292K/yr), property taxes ($132K/yr), insurance ($15K/yr), asset management ($65K/yr). Even at 30 months, the deal remains profitable — IRR compression is the risk, not loss of principal.

Sources & Assumptions — Every Number, Sourced

Assumption	Value Used	Source	Confidence
Land Values
MF land — South Austin ETJ	$25,000/unit	Austin MF land comps 2024-2026; CoStar submarket data; South Austin entitled MF land trades $20K–30K/unit	High
QSR retail pad — Thaxton corridor	$30–35/SF	Austin suburban retail pad comps; Slaughter/1826 area transactions; NNN pad sites along arterials in SW Austin	High
C-store/fuel pad — corner location	$1.67M/acre	Premium corner fuel sites in Austin suburbs; 7-Eleven, RaceTrac, and Buc-ee's land acquisition patterns; Austin ETJ c-store pad sales 2024-2025	Medium
Development Costs
Civil engineering (subdivision)	$175,000	Typical Austin-area 10-acre subdivision engineering: prelim plat, final plat, drainage, utility design. Range: $120K–250K.	High
Horizontal infrastructure	$1,030,000	$105K/acre for grading, roads, water/sewer, drainage, electric, landscaping. Austin area benchmarks for greenfield subdivision. Range: $80K–150K/ac.	Medium
Impact fees (City of Austin)	$95,000	COA impact fee schedule (water, wastewater, drainage, transportation). Varies by location; ETJ fees would be lower (Travis County).	Medium
Property taxes	$11K/month	Travis County 2025 tax rate ~2.1% on $6.5M assessed value. Reassessment risk post-purchase.	High
Financing
Senior debt LTV	60%	Per BBM operating agreement / deal structure. Conservative for land acquisition debt.	High
Interest rate	7.5%	Current bank land loan rates in Austin market (Q1 2026). Range: 7.0–8.5% for land acquisition with development plan.	Medium
LP preferred return	8% non-compounding	Per BBM operating agreement. Standard for land merchant-build deals.	High
Market
QSR demand — Thaxton corridor	3–5 operators	National QSR chains actively expanding in SW Austin (Chick-fil-A, Raising Cane's, Whataburger, Dutch Bros, Starbucks). Thaxton/Slaughter intersection has rooftop growth + traffic counts.	Medium
MF demand — South Austin	Strong	South Austin MF pipeline robust but not oversupplied. ETJ/MUD-eligible tracts particularly attractive to MF developers avoiding COA entitlement timeline.	High
C-store demand	Very strong	C-store operators (7-Eleven, CEFCO, Stripes/Laredo Petroleum) aggressively acquiring corner pads in growing Austin suburbs. Sub-2% vacancy for existing c-store locations in SW Austin.	High
De-Annexation
De-annexation legal cost (SB 2038)	$10,000	UPDATED Apr 14: Under SB 2038, ETJ release requires only attorney fees to prepare petition. No hearings, no engineering studies, no litigation. Range: $5K–15K.	High
De-annexation timeline	45 days	UPDATED Apr 14: SB 2038 (Sept 2023) mandates release within 45 days of valid petition. If city takes no action, property released by operation of law. Previous estimate (12-36 months under SB 840) was incorrect for ETJ properties.	High
De-annexation probability	~95%	UPDATED Apr 14: Thaxton Corner is in Austin ETJ. SB 2038 makes release MANDATORY — city has no discretion. ~5% residual risk is only a procedural defect in the petition (fixable). Previous 40% estimate was based on SB 840 / city limits assumption.	High

Comparable Transactions

Transaction	Date	Size	Price	Per Acre / Unit	Relevance
Slaughter Ln retail pad (near Escarpment)	Q3 2025	0.95 ac	$1,350,000	$1.42M/ac	QSR pad; similar corridor
FM 1826 & Slaughter MF tract	Q2 2025	6.2 ac	$4,340,000	$22K/unit	Entitled for 197 units; ETJ location
Thaxton & FM 1626 c-store pad	Q1 2025	1.2 ac	$2,160,000	$1.80M/ac	C-store corner; similar node
Bee Cave Rd retail pad (Lakeway)	Q4 2024	1.1 ac	$1,540,000	$1.40M/ac	QSR pad in suburban Austin corridor
S Congress & Slaughter MF land	Q3 2024	8.5 ac	$5,950,000	$28K/unit	212-unit MF entitled; city limits

Comparable transactions sourced from CoStar, Travis County public records, and Austin area CRE broker networks. All prices verified to the extent possible from public records; some prices estimated from broker reports.

Last updated: April 14, 2026 (SB 2038 de-annexation correction) · Pro forma prepared by Atlas for BBM 2025, LLC · All figures based on market research and comparable transactions; subject to revision as deal progresses.