| General Partner | Lone Star Capital Management LLC |
| Total Commitments | $75,000,000 |
| Capital Called to Date | $42,500,000 (56.7%) |
| Uncalled Commitments | $32,500,000 (43.3%) |
| Final Close Date | September 15, 2022 |
| Investment Period Expires | September 15, 2027 |
| Fund Termination | September 15, 2032 |
| Management Fee | 2.0% p.a. on committed capital |
| Carried Interest | 20% (8% hurdle, whole-fund waterfall) |
| GP Commitment | $7,500,000 (10.0% co-invest) |
| Number of LPs | 8 Limited Partners |
| Strategy | Lower Middle Market Buyouts |
| Geography Focus | Texas & Southeast United States |
| Target EBITDA Range | $2M – $15M at entry |
| Entry Multiple Target | 4.0x – 7.0x EV/EBITDA |
| Target Hold Period | 4 – 6 years |
| Target Net IRR | 18% – 22% |
| Active Portfolio Companies | 5 Companies |
| Fully Realized | 0 (fund in deployment phase) |
| Sectors | Industrial, Healthcare IT, Logistics, Telecom, Energy |
| Gross IRR (since inception) | 18.4% |
| DPI / RVPI | 0.19x / 1.15x |
Lone Star Growth Partners II, L.P. — Q4 2025 Limited Partner Quarterly Report
NAV increased to $48.75M (+$1.45M, +3.1% QoQ). Cumulative net IRR 14.2% against 8% preferred return hurdle — 6.2 points above hurdle. TVPI of 1.34x reflects 3+ years of value creation. Alamo Industrial drove $1.2M of Q4 unrealized appreciation following City of San Antonio contract renewal.
No new platform acquisitions in Q4 2025. Lone Star Healthcare IT confirmed Series C term sheet ($75M at $310M post-money) — potential LP secondary opportunity H1 2026. Gulf Coast Logistics new warehouse management system live, targeting 180bps margin improvement in 2026. Texas Tower — new GM (Roberto Vasquez) onboarded; customer churn stabilizing.
No capital calls in Q4 2025. Unfunded commitments of $32.5M remain available. Two add-on acquisition LOIs under review: (1) Alamo Industrial bolt-on in San Antonio (~$4.2M equity) and (2) Gulf Coast Logistics fleet expansion. Next capital call anticipated Q2 2026 subject to LOI conversion.
Texas Tower Communications: Watch list — integration delay, 2 enterprise non-renewals. FMV marked $350K below cost. Board working session Jan 14 2026.
Permian Energy Services: Restructuring — cost reduction program achieving results (+$180K EBITDA QoQ) but FMV remains $850K below cost. Lender covenant waiver valid through Q2 2026.
All Limited Partners — As of December 31, 2025
| Limited Partner | Commitment | % Fund | Called to Date | Distributions Received | Net Capital Invested | NAV Share (FMV) | Unrealized Gain/(Loss) | TVPI |
|---|---|---|---|---|---|---|---|---|
| INSTITUTIONAL INVESTORS | ||||||||
| Texas Teachers Retirement System | $15,000,000 | 20.00% | $8,500,000 | $1,640,000 | $6,860,000 | $9,750,000 | +$2,890,000 | 1.34x |
| Houston Municipal Pension Trust | $10,000,000 | 13.33% | $5,667,000 | $1,093,000 | $4,574,000 | $6,500,000 | +$1,926,000 | 1.34x |
| FAMILY OFFICES & PRIVATE INVESTORS | ||||||||
| Longhorn Family Office LLC | $12,000,000 | 16.00% | $6,800,000 | $1,312,000 | $5,488,000 | $7,800,000 | +$2,312,000 | 1.34x |
| Dallas Endowment Fund | $8,000,000 | 10.67% | $4,533,000 | $875,000 | $3,658,000 | $5,200,000 | +$1,542,000 | 1.34x |
| Austin Family Office Partners LP | $7,500,000 | 10.00% | $4,250,000 | $820,000 | $3,430,000 | $4,875,000 | +$1,445,000 | 1.34x |
| Permian Basin Foundation | $6,000,000 | 8.00% | $3,400,000 | $656,000 | $2,744,000 | $3,900,000 | +$1,156,000 | 1.34x |
| Hill Country Capital Management LLC | $9,000,000 | 12.00% | $5,100,000 | $984,000 | $4,116,000 | $5,850,000 | +$1,734,000 | 1.34x |
| GENERAL PARTNER CO-INVESTMENT | ||||||||
| Lone Star Capital Management LLC (GP Co-Invest) | $7,500,000 | 10.00% | $4,250,000 | $820,000 | $3,430,000 | $4,875,000 | +$1,445,000 | 1.34x |
| TOTAL / FUND | $75,000,000 | 100.00% | $42,500,000 | $8,200,000 | $34,300,000 | $48,750,000 | +$14,450,000 | 1.34x |
Capital Account Notes: All LP capital accounts are maintained on a pari passu basis. Each LP's capital account reflects: (i) capital contributions, (ii) distributions received (return of capital), (iii) allocated share of net income/loss including unrealized appreciation/(depreciation), (iv) management fees and expenses allocated pro-rata. Accounts prepared in accordance with GAAP and the LPA dated August 1, 2022.
Key Metrics: TVPI (Total Value to Paid-In) = (NAV + Distributions) ÷ Capital Called = ($48,750,000 + $8,200,000) ÷ $42,500,000 = 1.34x. DPI (Distributions to Paid-In) = $8,200,000 ÷ $42,500,000 = 0.19x. RVPI (Residual Value to Paid-In) = $48,750,000 ÷ $42,500,000 = 1.15x. Carried interest: $0 payable (fund not yet past return-of-capital phase on whole-fund waterfall basis). K-1 allocation schedules distributed separately by March 31, 2026.
All capital calls from fund inception through December 31, 2025
| Call | Notice Date | Due Date | Purpose | Portfolio Co. | Total Called | % Committed | Cum. Called | Cum. % |
|---|---|---|---|---|---|---|---|---|
| Call 1 | May 28, 2022 | Jun 15, 2022 | Initial platform investment + setup costs | Alamo Industrial Services | $14,875,000 | 19.83% | $14,875,000 | 19.83% |
| Call 2 | Feb 14, 2023 | Mar 1, 2023 | New platform investment + Alamo follow-on | Lone Star Healthcare IT | $10,625,000 | 14.17% | $25,500,000 | 34.00% |
| Call 3 | Sep 1, 2023 | Sep 15, 2023 | New platform investment | Gulf Coast Logistics | $9,200,000 | 12.27% | $34,700,000 | 46.27% |
| Call 4 | Apr 24, 2024 | May 10, 2024 | Two new platform investments | TX Tower + Permian Energy | $7,800,000 | 10.40% | $42,500,000 | 56.67% |
| TOTAL CALLED TO DATE | $42,500,000 | 56.67% | $42,500,000 | 56.67% | ||||
| Limited Partner | Commitment | Call 1 Jun 2022 | Call 2 Mar 2023 | Call 3 Sep 2023 | Call 4 May 2024 | Total Called | Unfunded |
|---|---|---|---|---|---|---|---|
| Texas Teachers Retirement System | $15,000,000 | $2,975,000 | $2,125,000 | $1,840,000 | $1,560,000 | $8,500,000 | $6,500,000 |
| Longhorn Family Office LLC | $12,000,000 | $2,380,000 | $1,700,000 | $1,472,000 | $1,248,000 | $6,800,000 | $5,200,000 |
| Houston Municipal Pension Trust | $10,000,000 | $1,983,333 | $1,416,667 | $1,226,667 | $1,040,000 | $5,666,667 | $4,333,333 |
| Dallas Endowment Fund | $8,000,000 | $1,586,667 | $1,133,333 | $981,333 | $832,000 | $4,533,333 | $3,466,667 |
| Austin Family Office Partners LP | $7,500,000 | $1,487,500 | $1,062,500 | $920,000 | $780,000 | $4,250,000 | $3,250,000 |
| Permian Basin Foundation | $6,000,000 | $1,190,000 | $850,000 | $736,000 | $624,000 | $3,400,000 | $2,600,000 |
| Hill Country Capital Management LLC | $9,000,000 | $1,785,000 | $1,275,000 | $1,104,000 | $936,000 | $5,100,000 | $3,900,000 |
| Lone Star Capital Mgmt LLC (GP Co-Invest) | $7,500,000 | $1,487,500 | $1,062,500 | $920,000 | $780,000 | $4,250,000 | $3,250,000 |
| TOTAL | $75,000,000 | $14,875,000 | $10,625,000 | $9,200,000 | $7,800,000 | $42,500,000 | $32,500,000 |
All distributions to LPs from fund inception through December 31, 2025
| Distribution | Record Date | Payment Date | Source / Event | Distribution Type | Gross Amount | Tax Withholding | Net Amount Distributed |
|---|---|---|---|---|---|---|---|
| Distribution 1 | Nov 15, 2023 | Nov 30, 2023 | Alamo Industrial Services — Dividend Recapitalization (refinance of existing senior secured debt with new $18M term loan; excess cash distributed) | Return of Capital | $3,200,000 | $0 | $3,200,000 |
| Distribution 2 | Aug 1, 2024 | Aug 15, 2024 | Gulf Coast Logistics Partners — Partial Secondary Exit (20% stake sold to co-investor at $52M enterprise value; pro-rata distribution of proceeds) | Mixed (ROC + Realized Gain) | $5,000,000 | $0 | $5,000,000 |
| TOTAL DISTRIBUTIONS TO DATE | $8,200,000 | $0 | $8,200,000 | ||||
| Limited Partner | Dist 1 (Nov 2023) Return of Capital | Dist 2 (Aug 2024) ROC Portion | Dist 2 (Aug 2024) Realized Gain | Total ROC Received | Total Realized Gain | Total Distributions |
|---|---|---|---|---|---|---|
| Texas Teachers Retirement System | $640,000 | $680,000 | $320,000 | $1,320,000 | $320,000 | $1,640,000 |
| Longhorn Family Office LLC | $512,000 | $544,000 | $256,000 | $1,056,000 | $256,000 | $1,312,000 |
| Houston Municipal Pension Trust | $426,667 | $453,333 | $213,333 | $880,000 | $213,333 | $1,093,333 |
| Dallas Endowment Fund | $341,333 | $362,667 | $170,667 | $704,000 | $170,667 | $874,667 |
| Austin Family Office Partners LP | $320,000 | $340,000 | $160,000 | $660,000 | $160,000 | $820,000 |
| Permian Basin Foundation | $256,000 | $272,000 | $128,000 | $528,000 | $128,000 | $656,000 |
| Hill Country Capital Management LLC | $384,000 | $408,000 | $192,000 | $792,000 | $192,000 | $984,000 |
| Lone Star Capital Mgmt LLC (GP Co-Invest) | $320,000 | $340,000 | $160,000 | $660,000 | $160,000 | $820,000 |
| TOTAL | $3,200,000 | $3,400,000 | $1,600,000 | $6,600,000 | $1,600,000 | $8,200,000 |
Distribution 1 — Alamo Industrial (Nov 2023): $3.2M distributed from Alamo dividend recapitalization. Alamo refinanced existing $8M senior debt with new $18M term loan from Southwest Bank at L+375bps. Net refi proceeds of $3.2M distributed pro-rata to all LPs. Treated as return of capital per LPA Sec. 5.3(a). No realized gain; cost basis reduced proportionally.
Distribution 2 — Gulf Coast Logistics (Aug 2024): $5.0M from partial secondary sale — 20% co-investor stake at $52M enterprise value ($9.0M equity value for our 80% stake; secondary buyer acquired 15% stake at $7.8M). Gross proceeds $6.2M less $1.2M transaction costs = $5.0M net. Of total: $3.4M return of capital, $1.6M realized gain (15.4% gross IRR on exited portion). Tax treatment: long-term capital gain (held 14 months).
Five active portfolio companies — As of December 31, 2025
| Portfolio Company | Location | Sector | Inv. Date | Stake | Type | Cost Basis | FMV Dec 2025 | Unreal. G/(L) | Gross MOC | Status |
|---|---|---|---|---|---|---|---|---|---|---|
| 1. Alamo Industrial Services LLC | San Antonio TX | Industrial Svcs | Jun 2022 | 67% | Buyout | $12,200,000 | $19,400,000 | +$7,200,000 | 1.59x | Hold |
| 2. Lone Star Healthcare IT Inc. | Austin TX | Healthcare SaaS | Jan 2023 | 35% | Growth Equity | $8,200,000 | $12,100,000 | +$3,900,000 | 1.48x | Series C |
| 3. Gulf Coast Logistics Partners LLC | Houston TX | 3PL / Logistics | Sep 2023 | 80% | Buyout | $9,000,000 | $9,900,000 | +$900,000 | 1.10x | Hold |
| 4. Texas Tower Communications LLC | Dallas TX | Telecom Infra | May 2024 | 75% | Buyout | $4,600,000 | $4,250,000 | ($350,000) | 0.92x | Watch |
| 5. Permian Energy Services LLC | Midland TX | Oilfield Services | May 2024 | 85% | Buyout | $3,000,000 | $2,150,000 | ($850,000) | 0.72x | Restruct. |
| TOTAL PORTFOLIO (at FMV) | $37,000,000 | $46,825,000* | +$9,825,000 | 1.27x | ||||||
* Portfolio FMV differs from fund NAV ($48,750,000) by $1,925,000 representing fund cash ($2,235,000) less net liabilities ($310,000). All FMV determinations made by GP Investment Committee using income and market approaches per ASC 820 / IPEV Guidelines.
📈 Fair Value Methodology (ASC 820 / IPEV)
Alamo & Gulf Coast: EV/EBITDA (industry comparable transactions) • Healthcare IT: Revenue multiple (SaaS comparable rounds) • Texas Tower: DCF + EV/EBITDA • Permian: Asset-based valuation + distressed comparables. All valuations reviewed by LP Advisory Board. Annual third-party valuation review by Duff & Phelps (Q4 2025 in progress — expected Jan 31, 2026).
LTM financial metrics, operational KPIs, and investment outlook per company
| LTM Revenue | $48,400,000 | LTM EBITDA | $8,640,000 |
| EBITDA Margin | 17.9% | EV (implied 8.5x) | $73,440,000 |
| Revenue at Entry | $28,200,000 | EBITDA at Entry | $4,800,000 |
| Revenue Growth | +71.6% (3yr) | Employees | 312 |
| ARR | $24,800,000 | ARR Growth YoY | +68% |
| Gross Margin | 78.4% | Net Rev. Retention | 118% |
| ARR at Entry | $7,200,000 | Customers | 284 hospital systems |
| FMV Multiple | 4.9x ARR | Entry Multiple | 3.5x ARR |
| LTM Revenue | $72,600,000 | LTM EBITDA | $5,480,000 |
| EBITDA Margin | 7.5% | EV (implied 5.5x) | $30,140,000 |
| Revenue at Entry | $58,400,000 | Employees | 184 |
| Revenue Growth | +24.3% (2yr) | New WMS | Live Dec 2025 |
| LTM Revenue | $9,200,000 | LTM EBITDA | $1,380,000 |
| EBITDA Margin | 15.0% | Customer Churn | 6.2% (vs 3% plan) |
| LTM Revenue | $11,400,000 | LTM EBITDA | $680,000 |
| EBITDA Margin | 6.0% | Q4 EBITDA chg | +$180K QoQ |
Statement of Operations — Q4 2025 and Full Year Ending December 31, 2025
| Line Item | Q4 2025 (3 Months) | FY 2025 (12 Months) | FY 2024 (12 Months) |
|---|---|---|---|
| INVESTMENT INCOME | |||
| Interest income from portfolio companies | $38,400 | $148,200 | $122,800 |
| Dividend income from portfolio companies | $29,600 | $136,400 | $84,500 |
| Money market / cash interest | $8,200 | $34,600 | $28,400 |
| Total Investment Income | $76,200 | $319,200 | $235,700 |
| REALIZED AND UNREALIZED GAINS / (LOSSES) | |||
| Net realized gain on investments | $0 | $0 | $1,600,000 |
| Net change in unrealized apprec. — Alamo Industrial | $1,200,000 | $2,100,000 | $1,800,000 |
| Net change in unrealized apprec. — Healthcare IT | $420,000 | $1,480,000 | $1,240,000 |
| Net change in unrealized apprec. — Gulf Coast Logistics | $180,000 | $540,000 | $360,000 |
| Net change in unrealized (depr.) — Texas Tower | ($120,000) | ($350,000) | $0 |
| Net change in unrealized (depr.) — Permian Energy | ($230,000) | ($850,000) | $0 |
| Total Net Gains / (Losses) | $1,450,000 | $2,920,000 | $5,000,000 |
| FUND EXPENSES | |||
| Management fee expense (2.0% × $75M) | ($375,000) | ($1,500,000) | ($1,500,000) |
| Audit and tax preparation fees | ($68,000) | ($148,000) | ($142,000) |
| Legal and compliance fees | ($24,000) | ($94,200) | ($88,400) |
| Administration and reporting | ($8,400) | ($32,800) | ($28,600) |
| D&O and fund insurance | ($12,600) | ($48,200) | ($46,800) |
| Other fund expenses | ($2,800) | ($11,400) | ($9,200) |
| Total Fund Expenses | ($490,800) | ($1,834,600) | ($1,815,000) |
| NET INCREASE IN NET ASSETS FROM OPERATIONS | $1,035,400 | $1,404,600 | $3,420,700 |
| Line Item | Cumulative SI |
|---|---|
| Total investment income (SI) | $818,400 |
| Net realized gains (SI) | $1,600,000 |
| Net unrealized appreciation (SI) | $9,825,000 |
| Total income (SI) | $12,243,400 |
| Total expenses (SI) | ($5,500,000) |
| Net increase in net assets (SI) | $6,743,400 |
ASC 946 Accounting Policy
The Fund qualifies as an investment company under ASC 946 and carries all investments at fair value through the income statement. Unrealized gains/(losses) are recorded each quarter. Management fee expense of 2.0% p.a. on committed capital is recognized monthly. Carried interest accrual: $0 (fund not yet past return-of-capital tranche on whole-fund waterfall basis — see Page 11).
FY 2025 Highlights
▪ Net income $1.4M despite two portfolio write-downs (TX Tower, Permian)
▪ Alamo Industrial +$2.1M unrealized appreciation (contract renewals, EBITDA growth)
▪ Healthcare IT +$1.48M (ARR +68%, Series C imminent)
▪ No realized gains in 2025 (no exits or partial sales)
▪ Expense ratio: 3.37% of average NAV (management fee dominates)
Tax Notes (Texas & Federal)
Fund structured as Delaware LP. Pass-through taxation — no entity-level federal tax. Texas Franchise Tax: Fund qualifies for passive entity exemption. Carried interest allocated per partnership agreement waterfall (not yet triggered). K-1 packages for tax year 2025 expected March 31, 2026. Unrelated business taxable income (UBTI): not expected for 2025.
Fund Balance Sheet — As of December 31, 2025 (GAAP / ASC 946)
| Line Item | Notes | Dec 31, 2025 |
|---|---|---|
| INVESTMENTS AT FAIR VALUE | ||
| Alamo Industrial Services LLC (67% equity stake) | Level 3 | $19,400,000 |
| Lone Star Healthcare IT Inc. (35% preferred equity) | Level 3 | $12,100,000 |
| Gulf Coast Logistics Partners LLC (80% equity) | Level 3 | $9,900,000 |
| Texas Tower Communications LLC (75% equity) | Level 3 | $4,250,000 |
| Permian Energy Services LLC (85% equity) | Level 3 | $2,150,000 |
| Total Investments at Fair Value | $47,800,000 | |
| OTHER ASSETS | ||
| Cash and cash equivalents (money market) | (a) | $2,235,000 |
| Accrued interest receivable | $112,400 | |
| Dividend receivable | $72,600 | |
| Prepaid expenses and other assets | $30,000 | |
| Total Other Assets | $2,450,000 | |
| TOTAL ASSETS | $50,250,000 | |
| LIABILITIES | ||
| Management fees payable (Q4 2025) | (b) | ($375,000) |
| Accrued audit and tax fees | ($145,000) | |
| Accrued legal and compliance fees | ($92,000) | |
| Accrued fund administration | ($68,000) | |
| Carried interest payable | (c) | $0 |
| Total Liabilities | ($680,000) | |
| NET ASSETS (Total LP Capital Accounts) | $48,750,000 | |
| Limited Partner | % Fund | Capital Account Dec 31, 2025 |
|---|---|---|
| Texas Teachers Retirement System | 20.00% | $9,750,000 |
| Longhorn Family Office LLC | 16.00% | $7,800,000 |
| Houston Municipal Pension Trust | 13.33% | $6,500,000 |
| Dallas Endowment Fund | 10.67% | $5,200,000 |
| Austin Family Office Partners LP | 10.00% | $4,875,000 |
| Permian Basin Foundation | 8.00% | $3,900,000 |
| Hill Country Capital Management LLC | 12.00% | $5,850,000 |
| Lone Star Capital Mgmt LLC (GP Co-Invest) | 10.00% | $4,875,000 |
| TOTAL NET ASSETS | 100.00% | $48,750,000 |
Balance Sheet Notes
(a) Cash: Held at First National Bank of Texas (FDIC insured). $2.0M in money market, $235K operating account. Available for expenses and LP commitments pending next capital call.
(b) Mgmt Fee: Q4 2025 fee ($375,000 = 2% × $75M / 4) accrued, due Jan 15, 2026 per LPA Sec. 4.2.
(c) Carry: $0 — Fund has returned $8.2M of $42.5M called (19.3%). Full return of capital ($42.5M) + 8% preferred return ($9.99M accrued) must be reached before carry triggers. Projected carry at current NAV: $3.2M (see Page 11).
Fair Value: All investments classified as Level 3 (unobservable inputs) per ASC 820 hierarchy. Duff & Phelps annual third-party review in progress — expected completion Jan 31, 2026.
📈 Net Asset Value Rollforward (Q4 2025)
| Opening NAV (Sep 30, 2025) | $47,304,600 |
| + Net investment income Q4 | +$76,200 |
| + Net change in unrealized appreciation Q4 | +$1,450,000 |
| - Total fund expenses Q4 | ($490,800) |
| +/- Capital calls / distributions | $410,000 |
| Closing NAV (Dec 31, 2025) | $48,750,000 |
IRR, multiples, benchmark comparison — Since Inception (Sep 2022 – Dec 2025)
| Metric | Fund | Cambridge 2022 Vintage | vs. Benchmark |
|---|---|---|---|
| Net IRR (Since Inception) | 14.2% | 12.8% | +140 bps |
| Gross IRR (Since Inception) | 18.4% | 17.1% | +130 bps |
| TVPI (Total Value / Paid-In) | 1.34x | 1.28x | +0.06x |
| DPI (Distributions / Paid-In) | 0.19x | 0.22x | -0.03x |
| RVPI (Residual Value / Paid-In) | 1.15x | 1.06x | +0.09x |
| RETURN ATTRIBUTION | |||
| Unrealized portfolio appreciation | $9,825,000 | Net IRR calculated using XIRR method on actual cash flows. All capital calls as negative; all distributions as positive; current NAV as terminal positive cash flow at Dec 31, 2025. | |
| Realized gains (Gulf Coast partial exit) | $1,600,000 | ||
| Investment income received (dividends/interest) | $818,400 | ||
| Gross total value created | $12,243,400 | ||
| Less: Cumulative management fees paid | ($4,962,500) | ||
| Less: Cumulative other expenses | ($537,500) | ||
| NET VALUE CREATED (LP net basis) | $6,743,400 | ||
Benchmark: Cambridge Associates US Private Equity Q2 2022 Vintage Year benchmark (as published Q3 2025). DPI slightly below benchmark reflects GP strategy of holding longer for higher exits (Alamo, Healthcare IT pipeline). RVPI above benchmark reflects strong unrealized portfolio quality.
Reading the J-Curve
The J-Curve shows the classic private equity cash flow pattern: early negative cash flows (capital calls for investments + fees) before distributions and appreciation reverse the curve. Blue bars: cumulative net cash flows (calls minus distributions) — fund currently -$34.3M net deployed. Gold line: NAV + cumulative distributions = total value. The fund has crossed the J-curve bottom and is in value creation phase. Projected exit period: 2027–2029.
Whole-Fund Waterfall — LPA Section 5.3 • 8% Preferred Return • 20% Carried Interest
Key Waterfall Thresholds: Total distributions required to trigger carry = Return of Capital ($42,500,000) + Accrued Preferred Return ($9,989,000) = $52,489,000. Current total value (NAV + prior distributions) = $48,750,000 + $8,200,000 = $56,950,000. The fund is above the carry threshold on a total-value basis but has only distributed $8.2M in cash — the carry will only be paid when sufficient cash is realized and returned to LPs.
| Scenario | Exit EV | Total LP Proceeds | GP Carry Payable | GP Total Return |
|---|---|---|---|---|
| Downside (0.9x TVPI) | ~$38.25M | $38,250,000 | $0 | $0 (below hurdle) |
| Base (current NAV, 1.34x) | $56,950,000 | $53,746,000 | $3,204,000 | $7,454,000 incl co-invest |
| Upside (1.8x TVPI) | $76,500,000 | $67,080,000 | $9,420,000 | $17,070,000 incl co-invest |
| Target (2.2x TVPI) | $93,500,000 | $78,600,000 | $14,900,000 | $25,150,000 incl co-invest |
Base Case Carry Calculation (at current NAV)
Total value: $56,950,000
Step 1 — Return of capital: ($42,500,000) → LPs receive $42.5M
Step 2 — Preferred return (8% hurdle): ($9,989,000) → LPs receive $9.99M
Step 3 — GP catch-up (100% to GP): remaining $4,461,000 — GP needs 20% of all profits = 20% × $14,450,000 = $2,890,000. Since $4,461,000 > $2,890,000, GP takes $2,890,000 in catch-up, LP gets remaining $1,571,000.
Step 4 — 80/20 split on $1,571,000 → LP $1,257,000 + GP $314,000
Total GP carry: $2,890,000 + $314,000 = $3,204,000
Total LP distributions: $42,500K + $9,989K + $1,257K + prior $8,200K = $61,946K
Carry Accrual Policy: Per ASC 946 and the LPA, no carried interest is accrued or booked until the waterfall conditions are met on a cumulative realized basis. The GP has not received any carried interest distributions. Projected carry of $3.2M is disclosed for informational purposes only and is not a liability of the Fund at this time.
2026 LP Calendar, Tax Schedule, Pipeline & Fund Administration
| Date | Event |
|---|---|
| Jan 14, 2026 | TX Tower board working session |
| Jan 31, 2026 | Duff & Phelps valuation review complete |
| Feb 15, 2026 | Annual Fund audit begins (Hartman & Webb) |
| Mar 1, 2026 | Healthcare IT Series C close (expected) |
| Mar 15, 2026 | Annual LP Meeting — Austin TX |
| Mar 31, 2026 | K-1 Tax Packages distributed |
| Apr 15, 2026 | Q1 2026 quarterly report issued |
| Q2 2026 | Capital Call 5 expected (add-ons) |
| Q2–Q3 2026 | Alamo Industrial sale process launch |
| Dec 31, 2026 | Q4 2026 report + NAV update |
Annual LP Meeting Agenda
March 15, 2026 • Four Seasons Austin
9:00am — Fund Performance Review
10:30am — Portfolio Company Deep Dives
12:00pm — Working Lunch (Networking)
1:30pm — Exit Pipeline & 2026 Outlook
2:30pm — LPAC Meeting (closed session)
3:30pm — Q&A / Close
| Item | Status |
|---|---|
| Form 1065 (Fund Partnership Return) | In prep — due Sep 2026 |
| K-1 Packages (all 8 LPs) | Expected Mar 31, 2026 |
| UBTI Analysis (pension LP consideration) | Complete — no UBTI |
| Section 1256 / Section 1231 Classification | Complete |
| Texas Franchise Tax (passive entity) | Exempt — filed 2025 |
| FBAR (foreign bank accounts) | N/A — US only |
| Form PF (SEC reporting) | Q4 filing due Feb 2026 |
| Annual audit (FY2025) | In progress — Feb 2026 |
LP Tax Notes
2025 K-1 income items per LP: (1) ordinary income from portfolio company interest/dividends; (2) long-term capital gains: $0 (no 2025 exits); (3) net unrealized appreciation: not taxable until exit. Pension LPs (TX Teachers, Houston Pension): UBTI confirmed nil for 2025. Estimated taxable income: $818,400 total (interest + dividends), allocated pro-rata.
| Opportunity | Stage | Est. Equity |
|---|---|---|
| ADD-ON ACQUISITIONS (Existing Portfolio) | ||
| Alamo bolt-on (Bexar Cnty HVAC) | LOI signed | $4,200,000 |
| Gulf Coast fleet expansion | Board approved | $2,800,000 |
| NEW PLATFORM INVESTMENTS (Under Review) | ||
| Texas Commercial HVAC (San Antonio) | LOI in progress | $8,500,000 |
| SE Healthcare Staffing Co (Georgia) | Diligence | $6,200,000 |
| DFW Industrial Coatings | Screening | ~$4,800,000 |
| EXIT PIPELINE | ||
| Alamo Industrial (sale process) | H2 2026 launch | 9–10x EBITDA |
| Healthcare IT (secondary via Series C) | Q1 2026 | Partial TBD |
Next Capital Call (Est. Q2 2026)
Alamo bolt-on LOI ($4.2M) + Gulf Coast fleet ($2.8M) = $7.0M likely Call 5. New platform investment(s) may bring total to $10–15M. 10 business days advance notice per LPA. Unfunded commitments of $32.5M available across all LPs. GP to issue capital call notice April 2026 subject to LOI conversion.
Blackpeak CFO — Fund Accounting Services
This report prepared by Blackpeak CFO, fractional controller and fund administrator for Lone Star Growth Partners II, L.P. Services include: quarterly LP reporting, capital account maintenance, capital call & distribution notices, K-1 coordination, audit support, management fee calculations, waterfall modeling, and LPAC materials. Contact: info@blackpeakcfo.com • blackpeakcfo.com