Stratus Properties Inc. (NASDAQ: STRS):
HIGHLIGHTS
- Net income attributable to common stock
for third-quarter 2015 totaled $10.2 million, $1.27 per share,
compared with $0.6 million, $0.07 per share, for third-quarter
2014. Net income attributable to common stock for the first nine
months of 2015 totaled $11.9 million, $1.47 per share, compared
with $1.9 million, $0.24 per share, for the first nine months of
2014.
- On September 28, 2015, Stratus
completed the purchase of Canyon-Johnson Urban Fund II, L.P.'s
(Canyon-Johnson) approximate 58 percent interest in the CJUF II
Stratus Block 21, LLC joint venture (the Block 21 Joint Venture),
which owns the W Austin Hotel & Residences, for approximately
$62 million.
- In connection with its acquisition of
Canyon-Johnson’s interest in the Block 21 Joint Venture, on
September 28, 2015, Stratus amended its term loan with Bank of
America, N.A (the BoA Loan), increasing the loan to $130.0 million
and extending the maturity date to September 28, 2020.
- On August 21, 2015, Stratus amended its
$48.0 million credit facility with Comerica (the Comerica credit
facility), increasing the credit facility to $72.5 million and
extending the maturity to August 31, 2017.
- On July 2, 2015, Stratus completed the
sales of its Austin-area Parkside Village and 5700 Slaughter
commercial properties, both located in the Circle C community, for
$45.0 million.
- Operating results at the W Austin Hotel
& Residences included:
- Revenue per Available Room (RevPAR) at
the W Austin Hotel was $241 during third-quarter 2015 and $282 for
the first nine months of 2015, compared with $264 during
third-quarter 2014 and $286 for the first nine months of 2014.
- Austin City Limits Live at the Moody
Theater (ACL Live) hosted 49 events during third-quarter 2015 and
152 for the first nine months of 2015, compared with 46 events
during third-quarter 2014 and 142 for the first nine months of
2014.
- Sales of 13 lots in Meridian and Barton
Creek for $5.9 million closed in third-quarter 2015 and 25 lots for
$10.2 million for the first nine months of 2015, compared with 7
lots for $2.9 million in third-quarter 2014 and 25 lots for $10.6
million for the first nine months of 2014. As of October 31, 2015,
Stratus had 6 lots under contract.
- Expenditures for purchases and
development of real estate properties included in Stratus'
five-year plan totaled $20.6 million for the first nine months of
2015, primarily reflecting development costs for Barton Creek
properties and for the West Killeen Market project. Stratus also
had commercial leasing capital expenditures of $36.6 million for
the first nine months of 2015 primarily associated with the
advancement of The Oaks at Lakeway and Santal (formerly Tecoma)
multi-family projects.
- Stratus' consolidated debt was $255.6
million and consolidated cash was $33.2 million at
September 30, 2015, compared with consolidated debt of $196.5
million and consolidated cash of $29.6 million at December 31,
2014.
Stratus Properties Inc. (NASDAQ: STRS) reported net income
attributable to common stock of $10.2 million, $1.27 per share for
third-quarter 2015, compared with $0.6 million, $0.07 per share,
for third-quarter 2014. Net income attributable to common stock for
the first nine months of 2015 totaled $11.9 million, $1.47 per
share, compared with $1.9 million, $0.24 per share, for the first
nine months of 2014. The results for the third quarter and the
first nine months of 2015 included a total gain of $21 million ($11
million to net income attributable to common stock) on the sales of
Parkside Village and 5700 Slaughter. Results for third-quarter 2014
included net income of $1.5 million related to a litigation
settlement. Results for the first nine months of 2015 also included
recognition of a deferred gain associated with the 2012 sale of
7500 Rialto totaling $5.0 million ($3.2 million to net income
attributable to common stock). Results for the first nine months of
2014 included net income of $2.1 million associated with litigation
and insurance settlements and $0.4 million associated with the
recovery of building repair costs.
William H. Armstrong III, Chairman of the Board, President
and Chief Executive Officer of Stratus, stated, “Stratus continued
to execute its five-year plan during the third quarter, highlighted
by the acquisition of our former partner’s interest in the joint
venture that owns the W Austin Hotel and Residences. Completion of
this transaction, which was achieved in connection with the
long-term refinancing of the project on favorable terms together
with an expansion of our existing credit facility, is expected to
simplify operations and generate consistent cash flows going
forward. Additionally, completion of our sales of the Parkside
Village and 5700 Slaughter commercial projects during the quarter
generated significant cash and benefited our financial results.
Construction and pre-leasing activity at the HEB-anchored The Oaks
at Lakeway retail project and Santal (formerly Tecoma) multi-family
project are proceeding as planned, and lot sales activity at our
Meridian and Barton Creek developments reflect what we believe
continues to be an exciting Austin-area market.”
Summary Financial
Results.
Three Months Ended Nine Months
Ended September 30, September 30, 2015 2014 2015
2014 (In Thousands, Except Per Share Amounts)
Revenues $ 19,677 $ 21,630 $ 59,888 $ 67,450 Operating income
20,976 a 2,086 b 23,127 a 8,276 b,c Income from continuing
operations 13,741 a 778 b 14,067 a 4,934 b Income from discontinued
operations — — 3,218 d — Net income 13,741 a 778 b 17,285 4,934 b,c
Net income attributable to common stock 10,248 a 597 b 11,871 a,d
1,913 b,c Diluted net income per share attributable to
common stock: Continuing operations $ 1.27 $ 0.07 $ 1.07 $ 0.24
Discontinued operations $ — $ — $ 0.40 d $ —
Diluted net income per share attributable to common stock $
1.27 a $ 0.07 b $ 1.47 a $ 0.24 b,c
Diluted weighted-average shares of common stock outstanding
8,094 8,067 8,085 8,078
a. Includes a total gain of $20.7 million
($10.8 million to net income attributable to common stock or $1.34
per share) associated with the sales of Parkside Village and 5700
Slaughter.
b. Includes a gain of $1.5 million, $0.19
per share, associated with a litigation settlement. Also includes
lease termination charges of $0.3 million, $0.04 per share,
recorded by the commercial leasing segment.
c. Includes income of $0.6 million, $0.07
per share, related to insurance settlements and $0.4 million, $0.05
per share, for the recovery of building repair costs.
d. Represents recognition of a deferred
gain totaling $5.0 million ($3.2 million to net income attributable
to common stock or $0.40 per share) associated with the 2012 sale
of 7500 Rialto.
Five-Year Plan. Stratus' board of
directors approved a five-year plan to create value for
stockholders by methodically developing certain existing assets and
actively marketing other assets for possible sale at appropriate
values. Under the plan, any future new projects will be
complementary to existing operations and will be projected to be
developed and sold within a five-year time frame.
Consistent with the five-year plan, on July 2, 2015, Stratus
completed the sales of its Austin-area Parkside Village and 5700
Slaughter commercial properties, both located in the Circle C
community, for $32.5 million and $12.5 million, respectively.
Stratus is also in the process of engaging or considering the
engagement of advisers to market other developed and undeveloped
properties.
Additionally, on September 28, 2015, Stratus completed the
purchase of Canyon-Johnson's approximate 58 percent joint venture
interest in the Block 21 Joint Venture for approximately $62
million. Stratus funded the acquisition with (1) $32.3 million from
its BoA Loan, (2) a $20.0 million term loan under its credit
facility with Comerica Bank and (3) approximately $9.7 million in
cash.
Stratus is currently developing The Oaks at Lakeway and Santal
multi-family projects. The Oaks at Lakeway is a HEB Grocery
Company, L.P. (HEB) anchored retail project planned for 245,022
square feet of commercial space. Leases for 68 percent of the
space, including the HEB lease, have been executed and leasing for
the remaining space is underway. The project is currently under
construction, and the HEB store opened in October 2015. The Santal
multi-family project is a garden-style apartment complex consisting
of 236 units. Construction commenced in January 2015 and
pre-leasing is expected to begin in November 2015. The project is
expected to be completed in April 2016.
Stratus believes that the Austin and surrounding sub-markets
continue to be desirable. Many of Stratus' developments are in
locations where development approvals have historically been
subject to regulatory constraints, which has made it difficult to
obtain entitlements. Stratus' Austin assets, which are located in
desirable areas with significant regulatory constraints, are highly
entitled and, as a result, Stratus believes that through strategic
planning and development, it can maximize and fully realize their
value. These development plans require significant additional
capital, and may be pursued through joint ventures or other means.
In addition, the five-year plan is subject to continued review by
Stratus' board of directors and may change as a result of market
conditions or other factors deemed relevant by the board.
Debt Refinancings. In connection
with its acquisition of Canyon-Johnson’s interest in the Block 21
Joint Venture, on September 28, 2015, Stratus amended its BoA Loan.
Pursuant to the BoA Loan amendment, among other revisions, (1) the
$100.0 million non-recourse term loan previously made available to
the Block 21 Joint Venture was increased to $130.0 million, (2) the
interest rate was reduced to the London Interbank Offered Rate
(LIBOR) daily floating rate plus 2.35 percent and (3) the maturity
date was extended from September 29, 2016, to September 28, 2020.
In addition, Canyon-Johnson was released as a guarantor.
Accordingly, certain obligations of the Block 21 Joint Venture,
including environmental indemnification and other customary
carve-out obligations, are guaranteed by Stratus. All other terms
and conditions remain unchanged.
On August 21, 2015, Stratus amended its $48.0 million credit
facility with Comerica (the Comerica credit facility), that was
scheduled to mature on August 31, 2015. The amendment increases the
borrowing capacity under the Comerica credit facility to $72.5
million, comprised of a $45.0 million revolving line of credit, a
$7.5 million tranche for letters of credit and a $20.0 million term
loan. The interest rate applicable to amounts borrowed under the
Comerica credit facility is LIBOR plus 4.0 percent, with a minimum
interest rate of 6.0 percent. The Comerica credit facility matures
on August 31, 2017, however, to the extent amounts are outstanding
under the $20.0 million term loan, a principal payment of $8.0
million is required on or before December 31, 2015, with quarterly
principal payments of $1.75 million due thereafter. The Comerica
credit facility is secured by substantially all of Stratus' assets
except for properties that are encumbered by separate loan
financing.The Comerica credit facility contains customary financial
covenants including a requirement that Stratus maintain a minimum
total stockholders' equity balance of $110.0 million. As of
September 30, 2015, Stratus had $58.1 million outstanding under the
Comerica credit facility, which was comprised of $38.1 million
under the revolving line of credit and $20.0 million under the term
loan.
Circle C Property Sales. On July 2,
2015, Stratus completed the sales of its Austin-area Parkside
Village and 5700 Slaughter commercial properties, both located in
the Circle C community, to Whitestone REIT. Stratus successfully
entitled, developed and fully leased both projects. The Parkside
Village commercial project, which was owned in a joint venture with
LCHM Holdings, LLC, consisted of 90,184 leasable square feet and
was sold for $32.5 million. The 5700 Slaughter commercial project,
which was wholly owned by Stratus, consists of 25,698 leasable
square feet and was sold for $12.5 million. Stratus used the
proceeds from these transactions to repay the $26 million
outstanding under both the Parkside Village construction loan with
Comerica Bank and the term loan with United Heritage Credit Union,
with the remainder being held in escrow while Stratus assessed
potential tax free like-kind exchange transactions. In September
2015, Stratus used $2.6 million of the escrow funds to purchase an
undeveloped tract of land for the West Killeen Market project and
withdrew $12.1 million to fund distributions to Stratus and LCHM
Holdings, of $9.4 million and $3.2 million respectively. The
remaining proceeds are expected to be distributed to Stratus in
fourth-quarter 2015. After debt repayments and closing costs, cash
proceeds from these transactions approximated $17 million, and
Stratus recorded a pre-tax gain in third-quarter 2015 of $21
million, of which the noncontrolling interest share was $4
million.
Operating
Results. Stratus' developed property sales included the
following (dollars in thousands):
Three Months Ended September 30, 2015
2014 Lots/Units Revenues
AverageCost perLot/Unit
Lots/Units Revenues
AverageCost perLot/Unit
Barton Creek Amarra Drive: Phase II Lots — $ — $ — 3 $ 1,743 $ 212
Phase III Lots 4 3,340 401 — — — Circle C Meridian 9 2,560
161 4 1,180 166 W Austin Hotel & Residences Project
Condominium Units — — — 2 3,455 1,567
Total Residential 13 $ 5,900 9 $ 6,378
Nine Months Ended September 30,
2015 2014 Lots/Units Revenues
AverageCost perLot/Unit
Lots/Units Revenues
AverageCost perLot/Unit
Barton Creek Calera: Verano Drive — $ — $ — 9 $ 3,524 $ 181 Amarra
Drive: Phase II Lots — — — 12 5,925 192 Phase III Lots 7 5,110 351
— — — Circle C Meridian 18 5,040 159 4 1,180 166 W
Austin Hotel & Residences Project Condominium Units — —
— 5 7,875 1,365 Total Residential 25 $
10,150 30 $ 18,504
The decrease in developed property sales revenues in the 2015
periods primarily resulted from fewer sales of higher priced
condominium units at the W Austin Residences and fewer lot sales at
Verano Drive and Amarra Drive Phase II as inventories have
declined, partly offset by increased lot sales at Meridian and
Amarra Drive Phase III, which was completed in first-quarter 2015.
As of October 30, 2015, 32 Meridian lots, 14 Amarra Drive
Phase II lots and 56 Amarra Drive Phase III lots remain available
for sale.
Revenue from the Hotel segment totaled $8.6 million for
third-quarter 2015 and $31.4 million for the first nine months of
2015, compared with $9.8 million for third-quarter 2014 and $31.4
million for the first nine months of 2014. Hotel revenue reflects
the results of operations for the W Austin Hotel, and primarily
includes revenue from room reservations and food and beverage
sales. Lower Hotel revenues for third-quarter 2015, compared with
third-quarter 2014, primarily reflect lower food and beverage sales
and room revenue. RevPAR at the W Austin Hotel, which is calculated
by dividing total room revenue by total rooms available, averaged
$241 during third-quarter 2015 and $282 for the first nine months
of 2015, compared with $264 during third-quarter 2014 and $286 for
the first nine months of 2014. The 251-room hotel, which Stratus
believes sets the standard for contemporary luxury in downtown
Austin, is managed by Starwood Hotels & Resorts Worldwide,
Inc.
Revenue from the Entertainment segment totaled $4.2 million for
third-quarter 2015 and $13.6 million for the first nine months of
2015, compared with $3.7 million for third-quarter 2014 and $12.7
million for the first nine months of 2014. Entertainment revenue
primarily reflects the results of operations for ACL Live,
including ticket sales, revenue from private events, sponsorships,
personal seat license sales and suite sales, and sales of
concessions and merchandise. Entertainment revenue also reflects
revenues associated with outside events hosted at venues other than
ACL Live and production of recorded content for artists performing
at ACL Live, as well as the results of the joint venture with
Pedernales Entertainment relating to Stageside Productions.
Revenues from the Entertainment segment will vary from period to
period as a result of factors such as the price of tickets and
number of tickets sold, as well as the number and type of events.
Austin City Limits Live at the Moody Theater (ACL Live) hosted 49
events during third-quarter 2015, compared with 46 events during
third-quarter 2014, and hosted 152 events during the first nine
months of 2015, compared with 142 events during the first nine
months of 2014. ACL Live currently has events booked through
October 2016. The increase in entertainment revenue for the 2015
periods primarily resulted from increases in the number of events
hosted and ticket sales.
Rental revenue from the Commercial Leasing segment totaled $0.9
million for third-quarter 2015 and $4.7 million for the first nine
months of 2015, compared with $1.8 million for third-quarter 2014
and $5.3 million for the first nine months of 2014. Rental revenue
primarily reflects revenue from the office and retail space at the
W Austin Hotel & Residences project, Barton Creek Village, and
Parkside Village and 5700 Slaughter, which are both in the Circle C
community. As discussed above, on July 2, 2015, we completed the
sales of Parkside Village and 5700 Slaughter for $45.0 million.
Lower rental revenues in the 2015 periods primarily reflects the
sales of the Parkside Village and 5700 Slaughter commercial
properties.
Stratus is a diversified real estate company engaged primarily
in the acquisition, entitlement, development, management, operation
and sale of commercial, hotel, entertainment, and multi- and
single-family residential real estate properties, primarily located
in the Austin area, but including projects in certain other select
markets in Texas.
CAUTIONARY STATEMENT. 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
facts, such as statements regarding the implementation and
potential results of Stratus' five-year business strategy,
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, commercial leasing activities, timeframes for
development, construction and completion of Stratus' projects,
capital expenditures, liquidity and capital resources, and other
plans and objectives of management for future operations and
activities. 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 facts are
intended to identify those assertions as forward-looking
statements.
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 market, 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, business opportunities that may be presented to
and/or pursued by Stratus, the failure of third parties to satisfy
debt service obligations, the failure to complete agreements with
strategic partners and/or appropriately manage relationships with
strategic partners, 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, 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 its 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, 2014, filed with the U.S. Securities and Exchange
Commission (SEC) as updated by Stratus' subsequent filings with the
SEC.
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 notwithstanding any changes in its
assumptions, business plans, actual experience, or other changes,
and Stratus undertakes no obligation to update any forward-looking
statements, except as required by law.
A copy of this release is available on Stratus'
website, www.stratusproperties.com.
STRATUS PROPERTIES INC. CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
(In Thousands, Except Per Share
Amounts)
Three Months Ended Nine Months
Ended September 30, September 30, 2015 2014 2015
2014 Revenues: Hotel $ 8,521 $ 9,714 $ 31,194 $
31,086 Real estate operations 6,210 6,562 10,920 18,817
Entertainment 4,159 3,659 13,463 12,659 Commercial leasing 787
1,695 4,311 4,888 Total revenues 19,677
21,630 59,888 67,450 Cost of sales: Hotel 6,782 7,542 23,159 22,815
Real estate operations 4,459 5,478 8,580 13,978 Entertainment 3,423
3,003 10,514 9,539 Commercial leasing 516 1,045 2,216 2,449
Depreciation 2,063 2,241 6,713 6,713
Total cost of sales 17,243 19,309 51,182 55,494 General and
administrative expenses 2,187 1,741 6,308 5,762 Gain on sales of
assets (20,729 ) — (20,729 ) — Litigation and insurance settlements
— (1,506 ) — (2,082 ) Total costs and expenses (1,299
) 19,544 36,761 59,174 Operating income 20,976
2,086 23,127 8,276 Interest expense, net (855 ) (974 ) (2,736 )
(2,797 ) (Loss) gain on interest rate derivative instruments (918 )
15 (986 ) (236 ) Loss on early extinguishment of debt — (19 ) — (19
) Other income, net 15 3 304 25 Income
before income taxes and equity in unconsolidated affiliates' (loss)
income 19,218 1,111 19,709 5,249 Equity in unconsolidated
affiliates' (loss) income (280 ) (190 ) (398 ) 248 Provision for
income taxes (5,197 ) (143 ) (5,244 ) (563 ) Income from continuing
operations 13,741 778 14,067 4,934 Income from discontinued
operations, net of taxes — — 3,218 —
Net income 13,741 778 17,285 4,934 Net income attributable to
noncontrolling interests in subsidiaries (3,493 ) (181 ) (5,414 )
(3,021 ) Net income attributable to common stock $ 10,248 $
597 $ 11,871 $ 1,913 Basic and diluted
net income per share attributable to common stockholders:
Continuing operations $ 1.27 $ 0.07 $ 1.07 $ 0.24 Discontinued
operations — — 0.40 — Basic and diluted
net income per share attributable to common stockholders $ 1.27
$ 0.07 $ 1.47 $ 0.24
Weighted-average shares of common stock outstanding: Basic 8,063
8,032 8,055 8,037 Diluted 8,094
8,067 8,085 8,078
STRATUS PROPERTIES
INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
September 30,2015
December 31,2014
ASSETS Cash and cash equivalents $ 33,190 $ 29,645 Restricted cash
8,181 7,615 Real estate held for sale 27,013 12,245 Real estate
under development 153,241 123,921 Land available for development
24,223 21,368 Real estate held for investment, net 151,285 178,065
Deferred tax assets 15,977 11,759 Other assets 16,434 18,069
Total assets $ 429,544 $ 402,687
LIABILITIES AND EQUITY Liabilities: Accounts payable $ 16,546 $
8,076 Accrued liabilities 11,298 9,670 Debt 255,567 196,477 Other
liabilities and deferred gaina 9,788 13,378 Total
liabilities 293,199 227,601 Commitments and
contingencies Equity: Stratus stockholders' equity: Common
stock 91 91 Capital in excess of par value of common stock 192,103
204,269 Accumulated deficit (35,450 ) (47,321 ) Accumulated other
comprehensive loss — (279 ) Common stock held in treasury (20,470 )
(20,317 ) Total stockholders' equity 136,274 136,443 Noncontrolling
interests in subsidiaries 71 38,643 b Total equity
136,345 175,086 Total liabilities and equity $
429,544 $ 402,687
a. Deferred gain of $5.0 million
associated with the 2012 sale of 7500 Rialto was recognized in
first-quarter 2015.
b. Primarily relates to Canyon-Johnson's
interest in the Block 21 Joint Venture through September 28,
2015.
STRATUS PROPERTIES INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)
Nine Months Ended September 30, 2015
2014 Cash flow from operating activities: Net income $
17,285 $ 4,934
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 6,713 6,713 Cost of real estate sold 4,935 9,772
Deferred gain on sale of 7500 Rialto (5,000 ) — Gain on sales of
assets (20,729 ) — Loss on early extinguishment of debt — 19
Stock-based compensation 421 348 Equity in unconsolidated
affiliates' loss (income) 398 (248 ) Deposits 1,267 597 Deferred
income taxes 3,252 — Purchases and development of real estate
properties (20,591 ) (47,611 ) Municipal utility district
reimbursement 5,307 — Increase in other assets (1,777 ) (2,939 )
Increase in accounts payable, accrued liabilities and other 11,863
3,334 Net cash provided by (used in) operating
activities 3,344 (25,081 ) Cash flow from investing
activities: Capital expenditures (37,383 ) (2,263 ) Net proceeds
from sales of assets 43,266 — Return of investment in
unconsolidated affiliates 6 1,368 Net cash provided
by (used in) investing activities 5,889 (895 ) Cash
flow from financing activities: Borrowings from credit facility
55,826 28,500 Payments on credit facility (20,857 ) (9,782 )
Borrowings from project loans 60,202 29,812 Payments on project and
term loans (36,081 ) (12,079 ) Purchase of noncontrolling interest
(61,991 ) — Stock-based awards net proceeds (payments), including
excess tax benefit 1,722 (125 ) Noncontrolling interests
distributions (4,244 ) (4,275 ) Repurchase of treasury stock — (637
) Financing costs (265 ) (69 ) Net cash (used in) provided by
financing activities (5,688 ) 31,345 Net increase in cash
and cash equivalents 3,545 5,369 Cash and cash equivalents at
beginning of year 29,645 21,307 Cash and cash
equivalents at end of period $ 33,190 $ 26,676
BUSINESS SEGMENTS
Stratus currently has four operating segments: Real Estate
Operations, Hotel, Entertainment and Commercial Leasing.
The Real Estate Operations segment is comprised of Stratus’ real
estate assets (developed, under development and available for
development), which consist of its properties in Austin, Texas (the
Barton Creek community, the Circle C Community, Lantana and the
condominium units at the W Austin Hotel & Residences project);
in Lakeway, Texas (The Oaks at Lakeway) located in the greater
Austin area; in Magnolia, Texas located in the greater Houston
area; and in Killeen, Texas (The West Killeen Market).
The Hotel segment includes the W Austin Hotel located at the W
Austin Hotel & Residences project.
The Entertainment segment includes ACL Live, a live music and
entertainment venue and production studio at the W Austin Hotel
& Residences project. 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, and the results of the
Stageside Productions joint venture formed with Pedernales
Entertainment LLC.
The Commercial Leasing segment includes the office and retail
space at the W Austin Hotel & Residences project and a retail
building and a bank building in Barton Creek Village. On
July 2, 2015, Stratus completed the sales of the Parkside
Village and 5700 Slaughter properties, which were included in the
Commercial Leasing segments.
Segment data presented below was prepared on the same basis as
Stratus' consolidated financial statements (in thousands).
Real EstateOperationsa
Hotel Entertainment
CommercialLeasingb
Eliminationsand Otherc
Total Three Months Ended September 30, 2015: Revenues: Unaffiliated
customers $ 6,210 $ 8,521 $ 4,159 $ 787 $ — $ 19,677 Intersegment 8
76 22 134 (240 ) — Cost of sales, excluding depreciation 4,458
6,792 3,493 524 (87 ) 15,180 Depreciation 58 1,494 323 222 (34 )
2,063 General and administrative expenses 1,672 120 43 497 (145 )
2,187 Gain on sales of assets — — — (20,729 )
— (20,729 ) Operating income $ 30 $ 191 $ 322
$ 20,407 $ 26 $ 20,976 Capital
expendituresd $ 4,888 $ 241 $ 52 $ 20,350 $ — $ 25,531 Total assets
at September 30, 2015 233,295 108,877 49,039 26,629 11,704 429,544
Three Months Ended September 30, 2014: Revenues:
Unaffiliated customers $ 6,562 $ 9,714 $ 3,659 $ 1,695 $ — $ 21,630
Intersegment 24 85 12 131 (252 ) — Cost of sales, excluding
depreciation 5,494 7,548 3,066 1,069 (109 ) 17,068 Depreciation 53
1,460 313 452 (37 ) 2,241 Insurance settlement (1,506 ) — — — —
(1,506 ) General and administrative expenses 1,344 83
31 412 (129 ) 1,741 Operating income (loss) $
1,201 $ 708 $ 261 $ (107 ) $ 23 $ 2,086
Capital expendituresd $ 22,794 $ 57 $ 23 $ 1,230 $ — $
24,104 Total assets at September 30, 2014 179,741 112,747 51,418
49,630 (5,598 ) 387,938
Real EstateOperationsa
Hotel Entertainment
CommercialLeasingb
Eliminationsand Otherc
Total Nine Months Ended September 30, 2015: Revenues: Unaffiliated
customers $ 10,920 $ 31,194 $ 13,463 $ 4,311 $ — $ 59,888
Intersegment 58 217 124 386 (785 ) — Cost of sales, excluding
depreciation 8,580 23,247 10,666 2,274 (298 ) 44,469 Depreciation
183 4,484 965 1,190 (109 ) 6,713 General and administrative
expenses 4,667 510 184 1,396 (449 ) 6,308 Net gain on sales of
assets — — — (20,729 ) — (20,729 )
Operating (loss) income $ (2,452 ) $ 3,170 $ 1,772 $
20,566 $ 71 $ 23,127 Income from discontinued
operationse $ — $ — $ — $ 3,218 $ — $ 3,218 Capital expendituresd
20,591 689 121 36,573 — 57,974 Nine Months Ended September
30, 2014: Revenues: Unaffiliated customers $ 18,817 $ 31,086 $
12,659 $ 4,888 $ — $ 67,450 Intersegment 71 314 30 386 (801 ) —
Cost of sales, excluding depreciation 14,060 22,822 9,733 2,521
(355 ) 48,781 Depreciation 166 4,390 943 1,325 (111 ) 6,713
Insurance settlement (2,082 ) — — — — (2,082 ) General and
administrative expenses 4,437 298 110 1,358
(441 ) 5,762 Operating income $ 2,307 $ 3,890
$ 1,903 $ 70 $ 106 $ 8,276
Capital expendituresd $ 47,611 $ 133 $ 55 $ 2,075 $ — $ 49,874
a. Includes sales commissions and other
revenues together with related expenses.
b. Includes the results of the Parkside
Village and 5700 Slaughter commercial properties through July 2,
2015.
c. Includes eliminations of intersegment
amounts.
d. Includes purchases and development of
residential real estate held for sale.
e. Represents a deferred gain, net of
taxes, associated with the 2012 sale of 7500 Rialto that was
recognized in first-quarter 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151109005882/en/
Stratus Properties Inc.Financial and Media
Contact:William H. Armstrong III, 512-478-5788
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