EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

 
NEWS RELEASE
 
NASDAQ Symbol: “STRS”
Stratus Properties Inc.
Financial and Media Contact:
98 San Jacinto Blvd. Suite 220
William H. Armstrong III
Austin, Texas  78701
(512) 478-5788

STRATUS PROPERTIES INC. REPORTS
FIRST-QUARTER 2010 RESULTS AND UPDATES
W AUSTIN HOTEL & RESIDENCES DEVELOPMENT ACTIVITIES

HIGHLIGHTS
·  
On April 6, 2010, Stratus completed several financing transactions, including $30 million in project financing for the W Austin Hotel & Residences project, an extension and modification of its revolving credit facility, and an extension and modification of its seven unsecured term loans.
·  
W Austin Hotel & Residences project in downtown Austin, Texas, continues to be on schedule and within budgeted cost of $300 million.
·  
At March 31, 2010, Stratus had $5.9 million of cash and cash equivalents and $25.7 million in available borrowing capacity under its revolving credit facility.

SUMMARY FINANCIAL RESULTS

 
First Quarter
  
 
2010
  
2009
  
 
(In Thousands, Except
  
 
Per Share Amounts)
  
Revenues
$
2,300
  
$
1,532
  
Operating loss
  
(2,803
)
  
(2,879
)
Net loss
  
(1,780
)
  
(1,843
)
Net loss attributable to Stratus common stock
  
(1,709
)
  
(1,737
)
             
Diluted net loss per share attributable to Stratus common stock
$
(0.23
)
$
(0.23
)
             
Diluted weighted average shares of common stock outstanding
  
7,456
    
7,446
  
             

AUSTIN, TX, May 17, 2010 – Stratus Properties Inc. (NASDAQ: STRS) reported a net loss attributable to common stock of $1.7 million, $0.23 per share, for the first quarter of 2010, compared with a similar loss for the first quarter of 2009.

Stratus’ property sales totaled $0.9 million for the first quarter of 2010, which included 13 lots at its Meridian development in the Circle C community, compared with $0.2 million for the first quarter of 2009, which included three lots in the Meridian development.  The increase in developed property sales revenues resulted from a higher number of lots sold at Meridian primarily related to the completion of sales under homebuilder contracts in the first quarter of 2010.  Stratus currently has no outstanding homebuilder contracts.  Stratus is
 
 
 
proactively working to continue high-priority development activities and to maximize long-term property values, despite current real estate market conditions.

Rental income from commercial leasing properties increased to $1.3 million in the first quarter of 2010 from $1.2 million in the first quarter of 2009 primarily because of an increase in rental income at 5700 Slaughter in the Circle C community, which was in the initial leasing stage during 2009.

W Austin Hotel & Residences.  As previously announced, in May 2008, Stratus entered into a joint venture with Canyon-Johnson Urban Fund II, L.P. (Canyon-Johnson) for the development of the W Austin Hotel & Residences in downtown Austin.  Construction of the $300 million project commenced in the second quarter of 2008 and is proceeding as scheduled.  The hotel is expected to open in the fourth quarter of 2010.  Condominium residences will be completed on a floor-by-floor basis with expected completion beginning in the fourth quarter of 2010 and continuing through mid-2011.  As of May 4, 2010, 79 of the 159 condominium residences were under contract.  The sales contracts are generally secured with buyer deposits of 10 percent of the purchase price.

Stratus, the manager of the project, has an approximate 40 percent interest in the joint venture and Canyon-Johnson has an approximate 60 percent interest in the joint venture.  As of March 31, 2010, capital contributions totaled $63.4 million for Stratus and $85.5 million for Canyon-Johnson.

Pursuant to a construction loan agreement entered into on October 21, 2009, with Beal Bank Nevada (the Beal Bank loan agreement), the joint venture may borrow up to an aggregate of $120 million to fund the construction, development and marketing costs of the W Austin Hotel & Residences project.  An initial advance under the Beal Bank loan agreement of $3.4 million was made at closing.  The next advance is expected to occur in mid-2010 and thereafter advances are expected to be made monthly.  As a condition to further funding from the Beal Bank loan agreement, the joint venture must invest at least $180 million in the project.

On April 6, 2010, the joint venture entered into an agreement with Hunter’s Glen/Ford Investments I LLC (the Ford loan agreement) to finance $30 million of the remaining construction costs of the W Austin Hotel & Residences project.  An initial advance under the Ford loan agreement of $10 million was made at closing, and an additional advance of $11 million was made on April 19, 2010.  Stratus and Canyon-Johnson contributed an additional $0.8 million each in March 2010, to reach the $180 million pre-funding requirement under the Beal Bank loan agreement.  In conjunction with the Ford loan agreement, Stratus modified its revolving credit facility with Comerica Bank to extend the maturity, adjust the interest rate and replace the existing $45 million facility with a $35 million revolving loan and a $10 million term loan.  Stratus also modified its seven unsecured term loans with First American Asset Management (FAAM), by making a $2.0 million payment, extending the maturity dates for $27 million of the principal amount and modifying the applicable interest rates.

Stratus is a diversified real estate company engaged in the acquisition, development, management, operations and sale of commercial, multi-family and residential real estate properties located primarily in the Austin, Texas area.
____________________________

 
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CAUTIONARY STATEMENT.  This press release contains forward-looking statements in which we discuss factors we believe may affect our performance in the future.  Forward-looking statements are all statements other than historical facts, such as statements regarding proposed real estate sales, commercial leasing activities and development and financing activities at the W Austin Hotel & Residences project.  Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments.  Stratus cautions readers that it assumes no obligation to update the forward-looking statements in this press release and does not intend to update the forward-looking statements more frequently than quarterly.  Important factors that might cause future results to differ from results anticipated by forward-looking statements include economic and business conditions, the availability of financing, regulatory approvals, environmental regulations and other factors which are described in more detail in Stratus’ Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission.

A copy of this release is available on Stratus’ web site, www.stratusproperties.com.

#           #           #

 
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STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In Thousands, Except Per Share Amounts)

 
Three Months Ended
  
 
March 31,
  
 
2010
  
2009
  
Revenues:
            
Real estate
$
874
  
$
191
  
Rental income
  
1,297
    
1,173
  
Commissions, management fees and other
  
129
    
168
  
Total revenues
  
2,300
    
1,532
  
Cost of sales:
            
Real estate, net
  
2,106
    
1,061
  
Rental
  
745
    
831
  
Depreciation
  
420
    
440
  
Total cost of sales
  
3,271
    
2,332
  
General and administrative expenses
  
1,832
    
2,079
  
Total costs and expenses
  
5,103
    
4,411
  
Operating loss
  
(2,803
)
  
(2,879
)
Interest income
  
14
    
246
  
Other income
  
228
    
-
  
Loss on interest rate cap agreement
  
(24
)
  
(33
)
Loss before income taxes and equity in unconsolidated affiliate’s loss
  
(2,585
)
  
(2,666
)
Equity in unconsolidated affiliate’s loss
  
(76
)
  
(74
)
Benefit from income taxes
  
881
    
897
  
Net loss
  
(1,780
)
  
(1,843
)
Net loss attributable to noncontrolling interest in subsidiarya
  
71
    
106
  
Net loss attributable to Stratus common stock
$
(1,709
)
$
(1,737
)
             
Net loss per share attributable to Stratus common stock:
            
Basic and diluted
$
(0.23
)
$
(0.23
)
             
Weighted average shares of common stock outstanding:
            
Basic and diluted
  
7,456
    
7,446
  
             
a. 
Relates to the operations of W Austin Hotel & Residences, Stratus’ consolidated subsidiary.
 
 
I
 


STRATUS PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)

 
March 31,
  
December 31,
  
 
2010
  
2009
  
ASSETS
            
Cash and cash equivalents
$
5,908
  
$
15,398
  
Real estate held for sale – developed or under development
  
137,242
    
124,801
  
Real estate held for sale – undeveloped
  
57,485
    
57,201
  
Real estate held for use, net
  
115,543
    
101,863
  
Investment in unconsolidated affiliate
  
3,315
    
3,391
  
Deferred tax assets
  
9,038
    
8,296
  
Other assets
  
21,133
    
17,640
  
Total assets
$
349,664
  
$
328,590
  
             
LIABILITIES AND EQUITY
            
Accounts payable and accrued liabilities
$
24,712
  
$
16,247
  
Accrued interest and property taxes
  
1,318
    
3,401
  
Deposits
  
7,838
    
7,700
  
Debt
  
87,737
    
81,105
  
Other liabilities
  
1,705
    
2,224
  
Total liabilities
  
123,310
    
110,677
  
             
Commitments and contingencies
            
             
Equity:
            
Stratus stockholders’ equity:
            
Preferred stock
  
-
    
-
  
Common stock
  
83
    
83
  
Capital in excess of par value of common stock
  
197,277
    
197,333
  
Accumulated deficit
  
(37,708
)
  
(35,999
)
Common stock held in treasury
  
(17,972
)
  
(17,941
)
Total Stratus stockholders’ equity
  
141,680
    
143,476
  
Noncontrolling interest in subsidiarya
  
84,674
    
74,437
  
Total equity
  
226,354
    
217,913
  
Total liabilities and equity
$
349,664
  
$
328,590
  
             
a.  
Relates to Canyon-Johnson’s interest in the W Austin Hotel & Residences project.


 
II
 


STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)

 
Three Months Ended March 31,
  
 
2010
  
2009
  
Cash flow from operating activities:
          
Net loss
$
(1,780
)
$
(1,843
)
Adjustments to reconcile net loss to net cash
            
used in operating activities:
            
Depreciation
  
420
    
440
  
Loss on interest rate cap agreement
  
24
    
33
  
Cost of real estate sold
  
563
    
126
  
Deferred income taxes
  
(898
)
  
(913
)
Stock-based compensation
  
146
    
171
  
Equity in unconsolidated affiliate’s loss
  
76
    
74
  
Deposits
  
(2,133
)
  
(22
)
Purchases and development of real estate properties
  
(10,394
)
  
(8,454
)
Municipal utility district reimbursements
  
-
    
3,387
  
Decrease in other assets
  
878
    
274
  
Decrease in accounts payable, accrued liabilities and other
  
(2,788
)
  
(3,180
)
Net cash used in operating activities
  
(15,886
)
  
(9,907
)
             
Cash flow from investing activities:
            
Development of commercial leasing properties
  
(10,305
)
  
(6,153
)
Proceeds from matured U.S. treasury securities
  
-
    
497
  
Investment in unconsolidated affiliate
  
-
    
(260
)
Other
  
-
    
21
  
Net cash used in investing activities
  
(10,305
)
  
(5,895
)
             
Cash flow from financing activities:
            
Borrowings from revolving credit facility
  
5,012
    
-
  
Payments on revolving credit facility
  
(781
)
  
-
  
Borrowings from project and term loans
  
4,500
    
4,735
  
Payments on project and term loans
  
(2,099
)
  
(68
)
Noncontrolling interest contributions
  
10,308
    
11,000
  
Net payments for stock-based awards
  
(76
)
  
(101
)
Purchases of Stratus common shares
  
-
    
(404
)
Financing costs
  
(163
)
  
-
  
Net cash provided by financing activities
  
16,701
    
15,162
  
Net decrease in cash and cash equivalents
  
(9,490
)
  
(640
)
Cash and cash equivalents at beginning of year
  
15,398
    
17,097
  
Cash and cash equivalents at end of period
$
5,908
  
$
16,457
  
             


 
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