Stratus Properties Inc. (NASDAQ: STRS), a diversified real
estate company with multi-family and single-family residential real
estate development, real estate leasing, hotel and entertainment
businesses in the Austin, Texas area and other select Texas
markets, today reported second-quarter 2018 results and a new
development project in Kingwood, Texas.
Highlights:
- In August, completed a series of
financing transactions used to purchase a 54-acre tract of land in
Kingwood, Texas, for Kingwood Place, a new H-E-B, L.P.
(HEB)-anchored, mixed-use project.
- Obtained project financing and
commenced construction of The Saint Mary, a 240-unit luxury
garden-style apartment project in the Circle C Community in Austin,
Texas.
- Increased the revolving credit facility
with Comerica Bank by 33 percent to $60.0 million and extended the
maturity date to June 29, 2020.
- Sold six developed properties for a
total of $6.9 million, including two Amarra Villas
townhomes, one condominium at the W Austin Hotel &
Residences and three Amarra Drive Phase III lots. Since
the end of second-quarter 2018, Stratus closed on the sale of one
Amarra Drive Phase III lot for $0.7 million. Two Amarra Villa
townhomes and three Amarra Drive Phase III lots are currently under
contract.
- Anchor tenant Moviehouse & Eatery
opened in May 2018 at Lantana Place, a mixed-use development
in southwest Austin consisting of approximately 320,000 square feet
of retail, hotel and office space. Construction of phase one is
nearing completion and Stratus has signed leases for a Marriott A/C
hotel and approximately 25 percent of the in-line retail
space.
- Leasing reached 80 percent for the
retail component of Jones Crossing, an HEB-anchored,
mixed-use development in College Station, Texas, and construction
of the retail component is nearing completion. The HEB grocery
store is currently scheduled to open in September 2018.
- Robust leasing activity continues at
West Killeen Market, a retail development project anchored
by a 90,000-square-foot HEB grocery store. As of June 30,
2018, Stratus has executed leases for approximately 70 percent of
the 44,000 square feet of tenant leasing space. Stratus intends to
explore opportunities to sell West Killeen Market later this year
depending on leasing progress and market conditions.
- Construction of Santal Phase II,
a 212-unit garden style, multi-family project located directly
adjacent to Santal Phase I in the upscale, highly populated Barton
Creek community is advancing on schedule and on
budget. Stratus expects the first Phase II units to be
available for occupancy in August 2018 and to substantially
complete construction by year-end 2018.
William H. Armstrong III, Chairman, President and Chief
Executive Officer, stated, “Stratus has reached a new peak of
development activity. Today we announced our new Kingwood Place
project, our sixth mixed-use development project anchored by HEB.
This 54-acre project located in Kingwood, Texas, a thriving
master-planned community 20 miles northeast of Houston, will
include, in addition to an HEB grocery, upscale shopping, dining,
entertainment, and multi-family residences. Kingwood is the second
largest master-planned community within the 10-county greater
Houston metropolitan area. Adding Kingwood Place to our portfolio
of multi-use development projects further expands our geographic
footprint in vibrant and growing Texas communities. We look forward
to completing these projects and creating value for
shareholders.”
New Development Project in Kingwood,
Texas
Stratus announced today that it completed a series of financing
transactions used to purchase a 54-acre tract of land in Kingwood,
Texas, for Kingwood Place, an HEB-anchored mixed-use project. The
financing transactions included (1) a private placement of limited
partnership interests in Stratus Kingwood Place, L.P., a Texas
limited partnership and a subsidiary of Stratus, to a limited
number of investors for $10.7 million, representing approximately
70 percent of the projected total required equity, on August 3,
2018 and (2) a $6.8 million land loan with Comerica Bank with a
12-month term and interest of LIBOR plus 4 percent closed on August
6, 2018, in connection with the land purchase. Kingwood Place will
include a 103,000-square-foot HEB grocery store, 41,000 square feet
of retail space, six retail pads, and an 11-acre parcel planned for
approximately 300 multi-family units. Construction financing and
building permits are being arranged, and Stratus currently plans to
break ground in November 2018 to meet HEB's current projected store
opening.
Second-Quarter 2018 Financial
Results
Stratus reported a net loss attributable to common stockholders
of $0.9 million, $0.11 per share, in both the second quarters of
2018 and 2017.
Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization) totaled $2.8 million in second-quarter 2018,
compared with $2.1 million in second-quarter 2017. For a
reconciliation of net loss attributable to common stockholders to
Adjusted EBITDA, see the supplemental schedule on page V, "Adjusted
EBITDA," which is available on Stratus' website.
Summary Financial
Results
Three Months Ended June 30, Six
Months Ended June 30, 2018 2017 2018
2017 (In Thousands, Except Per Share Amounts)
Revenues
Real Estate Operations $ 6,987 $ 4,029 $ 8,189 $ 6,206 Leasing
Operations 2,556 2,032 4,811 4,523 Hotel 9,643 9,847 19,037 20,252
Entertainment 4,451 5,917 9,710 11,862 Eliminations and other (327
) (396 ) (672 ) (750 ) Total Consolidated Revenue $ 23,310 $
21,429 $ 41,075 $ 42,093
Summary Financial
Results (continued)
Three Months Ended June 30,
Six Months Ended June 30, 2018 2017 2018
2017 (In Thousands, Except Per Share Amounts)
Operating income
(loss)
Real Estate Operations $ 1,363 a $ 104 $ 938 a $ 248 Leasing
Operations 487 484 919 (904 ) Hotel 1,565 1,602 3,026 3,839
Entertainment 499 1,091 1,234 2,152 Corporate and other (3,140 )
(2,986 ) (6,246 ) (6,539 ) Total Consolidated Operating Income
(Loss) $ 774 $ 295 $ (129 ) $ (1,204 ) Net
loss attributable to common stockholders $ (857 ) $ (893 ) $ (2,727
) $ (3,563 ) Diluted net loss per share $ (0.11 ) $ (0.11 )
$ (0.33 ) $ (0.44 ) Adjusted EBITDA $ 2,835 $ 2,054 $ 3,882
$ 4,107 Capital expenditures and purchases and development
of real estate properties $ 22,693 $ 7,105 $ 50,681 $ 13,074
Diluted weighted-average shares of common stock outstanding 8,153
8,127 8,145 8,114
a. Includes $0.4 million of reductions to
cost of sales associated with collection of prior-years'
assessments of properties in Barton Creek.
The significant increases in revenue and operating income from
the Real Estate Operations segment in second-quarter 2018,
compared to second-quarter 2017, primarily reflect higher developed
property sales.
During second-quarter 2018, Stratus sold three Amarra Drive
Phase III lots, two Amarra Villas townhomes and one of the two
remaining condominium units at the W Austin Hotel & Residences
for a total of $6.9 million.
The increases in revenue from the Leasing Operations
segment in second-quarter 2018, compared to second-quarter 2017,
primarily reflect leasing activity at West Killeen Market and
Santal Phase I.
The slight decreases in revenue and operating income from the
Hotel segment in second-quarter 2018, compared to
second-quarter 2017, primarily reflect lower room revenues
resulting from competition from several newly completed hotels in
the downtown Austin area. Revenue per available room (RevPAR),
which is calculated by dividing total room revenue by the average
number of total rooms available, was $254 in second-quarter 2018,
compared with $263 for second-quarter 2017. An increase in
competition resulting from the anticipated opening of additional
hotel rooms in downtown Austin during the second-half of 2018 is
expected to continue to impact Stratus' hotel revenues. Stratus
remains positive on the long-term outlook of the W Austin Hotel
based on continued population growth and increased tourism in the
Austin market.
The decreases in revenue and operating income from the
Entertainment segment in second-quarter 2018, compared to
second-quarter 2017, primarily reflect a decrease in the number of
events hosted and the number of tickets sold at ACL Live. ACL Live
hosted 45 events and sold approximately 29 thousand tickets in
second-quarter 2018, compared with 60 events and the sale of
approximately 51 thousand tickets in second-quarter 2017.
Additionally, 3TEN ACL Live, hosted 57 events in second-quarter
2018, compared with 60 events in second-quarter 2017.
Debt and Liquidity
On June 29, 2018, Stratus increased its revolving credit
facility by 33 percent to $60.0 million, of which $12.0 million was
available as of June 30, 2018. The new maturity date is June 29,
2020.
At June 30, 2018, consolidated debt totaled $265.9 million
and consolidated cash totaled $12.7 million, compared with
consolidated debt of $221.5 million and consolidated cash of $14.6
million at December 31, 2017.
Purchases and development of real estate properties (included in
operating cash flows) and capital expenditures (included in
investing cash flows) totaled $50.7 million for the first six
months of 2018, primarily for the development of Barton Creek
properties, Santal Phase II, Lantana Place and Jones Crossing. This
compares with $13.1 million for the first six months of 2017,
primarily for the development of Barton Creek properties, Lantana
Place and West Killeen Market.
----------------------------------------------
Conference Call
Information
Stratus will conduct an investor conference call to discuss its
unaudited second-quarter 2018 financial results today,
August 9, 2018, at 11:00 a.m. ET. The public is invited to
listen to the conference call by dialing (877) 418-4843 for
domestic access and (412) 902-6766 for international access. A
replay of the conference call will be available at the conclusion
of the call for five days by dialing (877) 344-7529 domestically
and (412) 317-0088 internationally. Please use replay ID:
10121895. The replay will be available on Stratus' website at
stratusproperties.com until August 14, 2018.
____________________________
CAUTIONARY STATEMENT AND REGULATION G DISCLOSURE. This
press release contains forward-looking statements in which Stratus
discusses factors it believes may affect its future performance.
Forward-looking statements are all statements other than statements
of historical fact, such as statements regarding the implementation
and potential results of Stratus' active development plan,
projections or expectations related to operational and financial
performance or liquidity, reimbursements for infrastructure costs,
financing and regulatory matters, development plans and sales of
properties, including, but not limited to, Amarra Drive lots and
townhomes and exploring opportunities to sell West Killeen Market,
leasing activities, timeframes for development, construction and
completion of Stratus' projects, capital expenditures, possible
joint venture or other arrangements, Stratus’ projections with
respect to its obligations under the master lease agreements
entered into in connection with the sale of The Oaks at Lakeway,
and other plans and objectives of management for future operations
and activities and future dividend payments. The words
“anticipates,” “may,” “can,” “plans,” “believes,” “potential,”
“estimates,” “expects,” “projects,” “intends,” “likely,” “will,”
“should,” “to be” and any similar expressions and/or statements
that are not historical fact are intended to identify those
assertions as forward-looking statements. Under Stratus’ loan
agreement with Comerica Bank, Stratus is not permitted to pay
dividends on common stock without Comerica’s prior written consent,
which was obtained in connection with the special dividend paid in
April 2017. The declaration of dividends is at the discretion of
Stratus’ Board of Directors (Board), subject to restrictions under
Stratus’ loan agreement with Comerica Bank, and will depend on
Stratus’ financial results, cash requirements, projected compliance
with covenants in its debt agreements, outlook and other factors
deemed relevant by the Board.
Stratus cautions readers that forward-looking statements are not
guarantees of future performance, and its actual results may differ
materially from those anticipated, projected or assumed in the
forward-looking statements. Important factors that can cause
Stratus' actual results to differ materially from those anticipated
in the forward-looking statements include, but are not limited to,
Stratus’ ability to refinance and service its debt and the
availability of financing for development projects and other
corporate purposes, Stratus' ability to sell properties at prices
its Board considers acceptable, a decrease in the demand for real
estate in the Austin, Texas area and other select Texas markets
where Stratus operates, changes in economic and business
conditions, reductions in discretionary spending by consumers and
corporations, competition from other real estate developers, hotel
operators and/or entertainment venue operators and promoters, the
termination of sales contracts or letters of intent due to, among
other factors, the failure of one or more closing conditions or
market changes, Stratus’ ability to secure qualifying tenants for
the space subject to the master lease agreements entered into in
connection with the sale of The Oaks at Lakeway and to assign such
leases to the purchaser and remove the corresponding property from
the master leases, the failure to attract customers for its
developments or such customers’ failure to satisfy their purchase
commitments, increases in interest rates, declines in the market
value of Stratus' assets, increases in operating costs, including
real estate taxes and the cost of construction materials, changes
in external perception of the W Austin Hotel, changes in consumer
preferences, changes in laws, regulations or the regulatory
environment affecting the development of real estate, opposition
from special interest groups with respect to development projects,
weather-related risks and other factors described in more detail
under the heading “Risk Factors” in Stratus’ Annual Report on Form
10-K for the year ended December 31, 2017, filed with the
SEC.
This press release also includes Adjusted EBITDA, which is not
recognized under U.S. generally accepted accounting principles
(GAAP). Stratus believes this measure can be helpful to investors
in evaluating its business. Adjusted EBITDA is a financial measure
frequently used by securities analysts, lenders and others to
evaluate Stratus' recurring operating performance. Adjusted EBITDA
is intended to be a performance measure that should not be regarded
as more meaningful than a GAAP measure. Other companies may
calculate Adjusted EBITDA differently. As required by SEC
Regulation G, a reconciliation of Stratus' net loss attributable to
common stockholders to Adjusted EBITDA is included in the
supplemental schedules of this press release.
Investors are cautioned that many of the assumptions upon which
Stratus' forward-looking statements are based are likely to change
after the forward-looking statements are made. Further, Stratus may
make changes to its business plans that could affect its results.
Stratus cautions investors that it does not intend to update its
forward-looking statements more frequently than quarterly
notwithstanding any changes in its assumptions, business plans,
actual experience, or other changes, and Stratus undertakes no
obligation to update any forward-looking statements.
A copy of this release is available on Stratus'
website, stratusproperties.com.
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS (Unaudited)
(In Thousands, Except Per Share
Amounts)
Three Months Ended Six Months Ended June 30, June 30, 2018 2017
2018 2017 Revenues: Real estate operations $ 6,979 $ 4,021 $ 8,173
$ 6,185 Leasing operations 2,331 1,811 4,335 4,092 Hotel 9,593
9,765 18,915 20,079 Entertainment 4,407 5,832 9,652
11,737 Total revenues 23,310 21,429 41,075 42,093
Cost of sales: Real estate operations 5,560 3,868 7,126 5,844
Leasing operations 1,323 973 2,505 2,658 Hotel 7,149 7,436 14,178
14,601 Entertainment 3,436 4,255 7,404 8,632 Depreciation 2,053
1,756 3,995 3,897 Total cost of sales
19,521 18,288 35,208 35,632 General and administrative expenses
3,015 2,846 5,996 6,242 Profit participation in sale of The Oaks at
Lakeway — — — 2,538 Gain on sales of assets — — —
(1,115 ) Total 22,536 21,134 41,204
43,297 Operating income (loss) 774 295 (129 ) (1,204 )
Interest expense, net (1,742 ) (1,508 ) (3,301 ) (3,483 ) Gain
(loss) on interest rate derivative instruments 80 (4 ) 258 82 Loss
on early extinguishment of debt — — — (532 ) Other income, net 11
13 22 18
Loss before income taxes and equity in
unconsolidated affiliates' loss
(877 ) (1,204 ) (3,150 ) (5,119 ) Equity in unconsolidated
affiliates' loss (3 ) (2 ) (6 ) (19 ) Benefit from income taxes 23
321 429 1,583 Net loss and total
comprehensive loss (857 ) (885 ) (2,727 ) (3,555 ) Total
comprehensive income attributable to noncontrolling interests in
subsidiaries — (8 ) — (8 ) Net loss and total
comprehensive loss attributable to common stockholders $ (857 ) $
(893 ) $ (2,727 ) $ (3,563 ) Basic and diluted net loss per
share attributable to common stockholders $ (0.11 ) $ (0.11 ) $
(0.33 ) $ (0.44 ) Basic and diluted weighted average common
shares outstanding 8,153 8,127 8,145 8,114
Dividends declared per share of common stock $ —
$ — $ — $ 1.00
STRATUS PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
June 30,2018
December 31,2017
ASSETS Cash and cash equivalents $ 12,660 $ 14,611 Restricted cash
24,637 24,779 Real estate held for sale 19,677 22,612 Real estate
under development 140,210 118,484 Land available for development
15,428 14,804 Real estate held for investment, net 210,425 188,390
Deferred tax assets 12,114 11,461 Other assets 13,537 10,852
Total assets $ 448,688 $ 405,993
LIABILITIES AND EQUITY Liabilities: Accounts payable $ 22,195 $
22,809 Accrued liabilities, including taxes 7,834 13,429 Debt
265,872 221,470 Deferred gain 10,480 11,320 Other liabilities
10,485 9,575 Total liabilities 316,866 278,603
Commitments and contingencies Equity:
Stockholders' equity: Common stock 93 93 Capital in excess of par
value of common stock 185,757 185,395 Accumulated deficit (39,848 )
(37,121 ) Common stock held in treasury (21,260 ) (21,057 ) Total
stockholders' equity 124,742 127,310 Noncontrolling interests in
subsidiaries 7,080 a 80 Total equity 131,822
127,390 Total liabilities and equity $ 448,688 $
405,993
a. Includes $7.0 million of contributions
from investors associated with financing The Saint Mary development
project.
STRATUS PROPERTIES INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)
Six Months Ended June 30, 2018
2017 Cash flow from operating activities: Net loss $ (2,727 ) $
(3,555 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation 3,995 3,897 Cost of real estate
sold 5,053 3,897 Gain on sale of assets — (1,115 ) Gain on interest
rate derivative contracts (258 ) (82 ) Loss on early extinguishment
of debt — 532 Debt issuance cost amortization and stock-based
compensation 791 647 Equity in unconsolidated affiliates' loss 6 19
Increase (decrease) in deposits 588 (851 ) Deferred income taxes
(653 ) (12,607 ) Purchases and development of real estate
properties (7,699 ) (7,974 ) Municipal utility district
reimbursement — 2,172 (Increase) decrease in other assets (2,297 )
910 Decrease in accounts payable, accrued liabilities and other
(5,505 ) (895 ) Net cash used in operating activities (8,706 )
(15,005 ) Cash flow from investing activities: Capital
expenditures (42,982 ) (5,100 ) Proceeds from sale of assets —
117,261 Payments on master lease obligations (932 ) (927 ) Other,
net (87 ) (48 ) Net cash (used in) provided by investing activities
(44,001 ) 111,186 Cash flow from financing
activities: Borrowings from credit facility 22,336 20,200 Payments
on credit facility (4,225 ) (51,775 ) Borrowings from project loans
29,948 7,766 Payments on project and term loans (3,266 ) (63,723 )
Cash dividend paid — (8,127 ) Stock-based awards net payments (203
) (234 ) Noncontrolling interests contributions 7,000 a — Financing
costs (976 ) (375 ) Net cash provided by (used in) financing
activities 50,614 (96,268 ) Net decrease in cash, cash
equivalents and restricted cash (2,093 ) (87 ) Cash, cash
equivalents and restricted cash at beginning of year 39,390
25,489 Cash, cash equivalents and restricted cash at end of
period $ 37,297 $ 25,402
a. Represents contributions from investors
associated with financing The Saint Mary development project.
STRATUS PROPERTIES INC.BUSINESS
SEGMENTS
Stratus currently has four operating segments: Real Estate
Operations, Leasing Operations, Hotel and Entertainment.
The Real Estate Operations segment is comprised of Stratus’ real
estate assets (developed, under development and available for
development), which consists of its properties in Austin, Texas
(the Barton Creek community, including Santal Phase II; the Circle
C community, including The Saint Mary; the Lantana community,
including Lantana Place; and the condominium units at the W Austin
Hotel & Residences); in Lakeway, Texas located in the greater
Austin area (Lakeway); in College Station, Texas (Jones Crossing);
and in Magnolia, Texas, located in the greater Houston area
(Magnolia).
The Leasing Operations segment includes the office and retail
space at the W Austin Hotel & Residences, a retail building in
Barton Creek Village, Santal Phase I and the West Killeen Market in
Killeen, Texas, and portions of the Lantana Place and Jones
Crossing projects.
The Hotel segment includes the W Austin Hotel located at the W
Austin Hotel & Residences in downtown Austin, Texas.
The Entertainment segment includes ACL Live, a live music and
entertainment venue and production studio at the W Austin Hotel
& Residences. In addition to hosting concerts and private
events, this venue is the home of Austin City Limits, a television
program showcasing popular music legends. The Entertainment segment
also includes revenues and costs associated with events hosted at
other venues, including 3TEN ACL Live, which opened in March 2016
on the site of the W Austin Hotel & Residences.
Stratus uses operating income or loss to measure the performance
of each segment. General and administrative expenses, which
primarily consist of employee salaries, wages and other costs, are
managed on a consolidated basis and are not allocated to Stratus'
operating segments. The following segment information reflects
management determinations that may not be indicative of what the
actual financial performance of each segment would be if it were an
independent entity.
Segment information presented below was prepared on the same
basis as Stratus’ consolidated financial statements (in
thousands).
Real EstateOperationsa
LeasingOperations
Hotel Entertainment
Eliminationsand Otherb
Total Three Months Ended June 30, 2018: Revenues: Unaffiliated
customers $ 6,979 $ 2,331 $ 9,593 $ 4,407 $ — $ 23,310 Intersegment
8 225 50 44 (327 ) — Cost of sales, excluding depreciation 5,560 c
1,331 7,184 3,560 (167 ) 17,468 Depreciation 64 738 894 392 (35 )
2,053 General and administrative expenses — —
— — 3,015 3,015 Operating income (loss)
$ 1,363 $ 487 $ 1,565 $ 499 $ (3,140 ) $ 774
Capital expenditures and purchases and
development of real estate properties
$ 4,087 $ 18,486 $ 97 $ 23 $ — $ 22,693 Total assets at June 30,
2018 207,437 95,954 101,487 36,263 7,547 448,688 Three
Months Ended June 30, 2017: Revenues: Unaffiliated customers $
4,021 $ 1,811 $ 9,765 $ 5,832 $ — $ 21,429 Intersegment 8 221 82 85
(396 ) — Cost of sales, excluding depreciation 3,868 980 7,456
4,449 (221 ) 16,532 Depreciation 57 568 789 377 (35 ) 1,756 General
and administrative expenses — — — —
2,846 2,846 Operating income (loss) $ 104 $
484 $ 1,602 $ 1,091 $ (2,986 ) $ 295 Capital expenditures and
purchases and development of real estate properties $ 4,306 $ 2,748
$ 11 $ 40 $ — $ 7,105 Total assets at June 30, 2017 160,713 69,629
103,154 37,392 24,566 395,454
STRATUS PROPERTIES
INC. BUSINESS SEGMENTS (continued)
Real EstateOperationsa
LeasingOperations
Hotel Entertainment
Eliminationsand Otherb
Total Six Months Ended June 30, 2018: Revenues:
Unaffiliated customers $ 8,173 $ 4,335 $ 18,915 $ 9,652 $ — $
41,075 Intersegment 16 476 122 58 (672 ) — Cost of sales, excluding
depreciation 7,126 c 2,521 14,222 7,696 (352 ) 31,213 Depreciation
125 1,371 1,789 780 (70 ) 3,995 General and administrative expenses
— — — — 5,996 5,996 Operating income (loss) $
938 $ 919 $ 3,026 $ 1,234 $ (6,246 ) $ (129 ) Capital
expenditures and purchases and development of real estate
properties $ 7,699 $ 42,285 $ 336 $ 361 $ — $ 50,681 Six
Months Ended June 30, 2017: Revenues: Unaffiliated customers $
6,185 $ 4,092 $ 20,079 $ 11,737 $ — $ 42,093 Intersegment 21 431
173 125 (750 ) — Cost of sales, excluding depreciation 5,844 2,673
14,645 8,957 (384 ) 31,735 Depreciation 114 1,331 1,768 753 (69 )
3,897 General and administrative expenses — — — — 6,242 6,242
Profit participation — 2,538 — — — 2,538 Gain on sales of assets —
(1,115 ) — — — (1,115 ) Operating income (loss) $ 248 $ (904
) $ 3,839 $ 2,152 $ (6,539 ) $ (1,204 ) Capital expenditures and
purchases and development of real estate properties $ 7,974 $ 4,779
$ 258 $ 63 $ — $ 13,074
a. Includes sales commissions and other
revenues together with related expenses.
b. Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c. Includes $0.4 million of reductions to
cost of sales associated with collection of prior-years'
assessments of properties in Barton Creek.
RECONCILIATION OF NON-GAAP
MEASUREADJUSTED EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization) is a non-GAAP (U.S. generally accepted accounting
principles) financial measure that is frequently used by securities
analysts, investors, lenders and others to evaluate companies'
recurring operating performance, including, among other things,
profitability before the effect of financing and similar decisions.
Because securities analysts, investors, lenders and others use
Adjusted EBITDA, management believes that Stratus' presentation of
Adjusted EBITDA affords them greater transparency in assessing its
financial performance. This information differs from net income
(loss) attributable to common stockholders determined in accordance
with GAAP and should not be considered in isolation or as a
substitute for measures of performance determined in accordance
with GAAP. Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies, as different companies
may calculate such measures differently. Management strongly
encourages investors to review Stratus' consolidated financial
statements and publicly filed reports in their entirety. A
reconciliation of Stratus' net loss attributable to common
stockholders to Adjusted EBITDA follows (in thousands).
Three Months Ended June 30, Six
Months Ended June 30, 2018 2017 2018
2017
Net loss attributable to common stockholders $ (857 ) $
(893 ) $ (2,727 ) $ (3,563 ) Depreciation 2,053 1,756 3,995 3,897
Interest expense, net 1,742 1,508 3,301 3,483 Benefit from income
taxes (23 ) (321 ) (429 ) (1,583 ) Profit participation in sale of
The Oaks at Lakeway — — — 2,538 Gain on sales of assets — — —
(1,115 ) Gain on interest rate derivative instruments (80 ) 4 (258
) (82 ) Loss on early extinguishment of debt — — —
532
Adjusted EBITDA $ 2,835 $ 2,054
$ 3,882 $ 4,107
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Stratus Properties Inc.Financial and Media
Contact:William H. Armstrong III, 512-478-5788
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