Stratus Properties Inc. (NASDAQ: STRS), a diversified real
estate company engaged primarily in the acquisition, entitlement,
development, management, operation and sale of commercial and
multi-family and single-family residential real estate properties
located in the Austin, Texas area and other select, fast-growing
markets in Texas, today reported year ended December 31, 2019
results.
Financial Highlights:
- Announced an agreement to sell Block 21, a mixed-use
development in downtown Austin, Texas, that contains the W Austin
Hotel and office, retail and entertainment space, to Ryman
Hospitality Properties, Inc. for $275 million. The transaction is
expected to close in the second quarter of 2020, and Stratus
expects to record an approximate $130 million pre-tax gain based on
December 31, 2019, balances.
- Refinanced The Santal, a 448-unit, garden-style,
multi-family project in Barton Creek by closing on a $75.0 million
loan and using $57.9 million of the proceeds to repay, in full, all
outstanding Santal construction loans.
- Completed the sales of Barton Creek Village, a
22,366-square-foot retail building for $7.7 million, and a
retail pad subject to a ground lease located in the Circle C
community for $3.2 million.
- Net loss attributable to common stockholders totaled
$2.5 million, $0.30 per share, for 2019, compared with a net loss
attributable to common stockholders of $4.0 million, $0.49 per
share, for 2018.
- Earnings before interest, taxes, depreciation and
amortization (EBITDA) totaled $6.8 million for 2019, compared
with a loss of $3.0 million for 2018. Both amounts are adjusted to
exclude the results from the Block 21 discontinued operations. For
a reconciliation of net loss from continuing operations to EBITDA,
see the supplemental schedule, “EBITDA,” on page V.
- Leasing operations revenue for 2019 increased by 98
percent to $16.2 million, compared with 2018, while real estate
operations revenues for 2019 decreased by 18 percent to $13.8
million, compared with 2018. Consolidated operating income
increased by $8.5 million, compared with 2018, to $1.2 million for
2019.
- As of December 31, 2019, consolidated debt totaled
$224.6 million, with $15.6 million available under Stratus’ credit
facility, and consolidated cash totaled $8.8 million, which
excludes debt and cash included in the Block 21 discontinued
operations.
Operational Highlights:
- Completed the construction of The Saint Mary, a 240-unit
luxury garden-style apartment project in the Circle C
community.
- Completed construction of two retail buildings at Kingwood
Place, an H-E-B, L.P. (HEB)-anchored, mixed-use project in
Kingwood, Texas. In addition, the HEB grocery store at Kingwood
Place was completed and opened in November 2019.
- Sold 18 developed properties for a total of $13.5 million,
including 2 Amarra Drive Phase II lots, 14 Amarra Drive
Phase III lots and 2 Amarra Villas townhomes.
William H. Armstrong III, Chairman, President and Chief
Executive Officer, stated, “In 2019, we announced two transactions
that evidence the success of our development cycle – we refinanced
The Santal and signed a definitive agreement to sell Block 21. I am
proud of what our team has accomplished and their dedication to
creating value for our shareholders. Block 21 was a valuable asset
for Stratus, and we believe the completion of the sale of this
project will place us in the strongest financial position we have
held in our 28-year history. We are working, along with the
Company’s external advisors, to determine how best to use our
proceeds from this sale. We are excited for the opportunities that
lie ahead for our Company, employees and shareholders.”
Summary Financial Results
Years Ended December 31,
2019
2018
(In Thousands, Except Per Share
Amounts)
Revenues
Real estate operations
$
13,803
$
16,809
Leasing operations
16,218
8,211
Corporate, eliminations and other
(18)
(31)
Total consolidated revenue
$
30,003
$
24,989
Operating income
(loss):
Real estate operations
$
4,112
$
1,144
a
Leasing operations
8,296
1,932
Corporate, eliminations and other
(11,192)
(10,313)
Total consolidated operating income
(loss)
$
1,216
$
(7,237)
Net loss from continuing operations
$
(2,787)
$
(5,347)
Net income from discontinued
operationsb
$
320
$
1,361
Net loss attributable to common
stockholders
$
(2,464)
$
(3,982)
c
Diluted net (loss) income per share:
Continuing operations
$
(0.34)
$
(0.66)
Discontinued operations
0.04
0.17
$
(0.30)
$
(0.49)
EBITDA
$
6,777
$
(3,020)
Capital expenditures and purchases and
development of real estate properties
$
73,827
$
105,592
Diluted weighted average shares of common
stock outstanding
8,182
8,153
a.
Includes $0.4 million of reductions to
cost of sales associated with the collection of prior-years’
assessments of properties in Barton Creek.
b.
As a result of our December 2019
announcement of an agreement to sell Block 21 for $275 million, our
hotel and entertainment operations, as well as the leasing
operations associated with the Block 21 property, are reported as
discontinued operations for all periods presented. Block 21 assets
and liabilities are presented as held for sale in Stratus’ balance
sheets and the net income from Block 21 is shown on the income from
discontinued operations line in Stratus’ consolidated statements of
comprehensive loss.
c.
Includes $1.15 million ($0.14 per share)
from equity in unconsolidated affiliates’ income reflecting
Stratus’ interest in Crestview Station. During 2018, Crestview
Station sold its last tract of land and its multi-family
entitlements.
Continuing Operations
The decrease in revenue from the Real Estate Operations
segment in 2019, compared with 2018, primarily reflects lower
revenues from the sales of higher-priced residential units,
including Amarra Villas townhomes and a W Austin Hotel &
Residences condominium sold in 2018. The increase in operating
income in 2019, compared with 2018, primarily reflects $3.4 million
of income related to Travis County municipal utility district (MUD)
reimbursements of infrastructure costs incurred for development of
Barton Creek, which were recorded as a reduction of cost of
sales.
Stratus sold 2 Amarra Drive Phase II lots, 14 Amarra Drive Phase
III lots, and 2 Amarra Villas townhomes for a total of $13.5
million during 2019. Since December 31, 2019, Stratus sold one
Amarra Drive Phase II lot, six Amarra Drive Phase III lots and two
homes built on Amarra Drive Phase III lots for a total of $11.7
million. Four Amarra Drive Phase II lots and five Amarra Drive
Phase III lots are currently under contract.
The increase in revenue from the Leasing Operations
segment for 2019, compared with 2018, primarily reflects the
commencement of leases at Stratus’ recently completed properties.
The increase in operating income for 2019, compared with 2018,
primarily reflects the 2019 recognition of $5.7 million of pre-tax
gain on sales of assets related to Barton Creek Village and a
retail pad subject to a ground lease located in the Circle C
community.
Discontinued Operations
The decrease in income from discontinued operations in 2019,
compared with 2018, was primarily a result of lower hotel
revenue.
Hotel revenues were $35.2 million in 2019 and $37.9
million in 2018. The decrease in hotel revenue in 2019, compared
with 2018, was primarily a result of reduced group business and
transient weekend business and lower food and beverage sales.
Revenue per available room, which is calculated by dividing total
room revenue by the average total rooms available during the year,
was $235 in 2019, compared with $245 in 2018.
Entertainment revenues were $24.6 million in 2019 and
$22.5 million in 2018. Entertainment revenue increased in 2019,
compared with 2018, primarily as a result of an increase in the
number of events hosted and higher event attendance at ACL Live.
The ACL Live venue hosted 264 events and sold approximately 260,000
tickets in 2019, compared with 240 events and the sale of
approximately 214,000 tickets in 2018. The ACL Live entertainment
space is promoted through the broadcast of Austin City Limits by
KLRU, a local public television station.
Debt and Liquidity
At December 31, 2019, consolidated debt totaled $224.6 million
and consolidated cash totaled $8.8 million, compared with
consolidated debt of $152.3 million and consolidated cash of $7.9
million at December 31, 2018, which excludes debt and cash included
in the Block 21 discontinued operations.
Purchases and development of real estate properties (included in
operating cash flows) and capital expenditures (included in
investing cash flows) totaled $73.8 million for 2019, primarily
related to the development of The Saint Mary, Kingwood Place, The
Santal and other Barton Creek properties. This compares with $105.6
million for 2018, primarily related to the purchase of the Kingwood
Place land and development of The Santal, Lantana Place, Jones
Crossing and The Saint Mary.
The $275 million purchase price for Block 21 will be paid by the
purchaser’s assumption of existing mortgage debt of approximately
$142 million with the balance paid in cash. Stratus expects the
sale of Block 21 to generate net proceeds before taxes of
approximately $120 million and after-tax proceeds of approximately
$100 million. After using some of the net proceeds to fully pay the
balance of its $60 million Comerica Bank credit facility, Stratus
expects to have approximately $60 million of cash and the full $60
million of availability under the credit facility. Stratus believes
this transaction will put the Company in the strongest financial
position it has held during its 28-year history and opens the door
to a number of attractive options for the Company to consider.
Stratus is evaluating its options for the use of net proceeds from
the sale of Block 21.
Stockholder Return
The cumulative total stockholder return of 133 percent on
Stratus’ common stock over the five years ending December 31, 2019,
exceeded the returns of the S&P 500 Index (74 percent) and the
Dow Jones U.S. Real Estate Index (49 percent) and significantly
exceeded the returns of a group of peer real estate-related
companies, which had a 2 percent loss. The peer group is comprised
of Alexander & Baldwin, Inc., Consolidated-Tomoka Land Co.,
Forestar Group Inc., The Howard Hughes Corporation, Maui Land &
Pineapple Company, Inc., The St. Joe Company and Tejon Ranch Co.
This comparison assumes $100.00 invested at December 31, 2014, with
all dividends reinvested. The stock price performance is not
necessarily indicative of future performance.
----------------------------------------------
Conference Call
Information
Stratus will conduct an investor conference call to discuss its
year ended December 31, 2019, financial and operating results
today, March 16, 2020, 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 for domestic
access and by dialing (412) 317-0088 for international access.
Please use replay ID: 10138992. The replay will be available on
Stratus’ website at stratusproperties.com until March 21, 2020.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 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 facts, such as plans, projections or
expectations related to whether and when the sale of Block 21 will
be completed, the planning, financing, development, construction,
completion and stabilization of Stratus’ development projects,
plans to sell, recapitalize or refinance properties, operational
and financial performance, expectations regarding future cash
flows, MUD reimbursements for infrastructure costs, regulatory
matters, leasing activities, estimated costs and timeframes for
development and stabilization of properties, liquidity, tax rates,
the impact of interest rate changes, capital expenditures,
financing plans, possible joint venture, partnership, strategic
relationships or other arrangements, Stratus’ projections with
respect to its obligations under the master lease agreements
entered into in connection with the 2017 sale of The Oaks at
Lakeway, other plans and objectives of management for future
operations and development projects, and future dividend payments
and share repurchases. The words “anticipates,” “may,” “can,”
“plans,” “believes,” “potential,” “estimates,” “expects,”
“projects,” “targets,” “intends,” “likely,” “will,” “should,” “to
be” and any similar expressions are intended to identify those
assertions as forward-looking statements.
Under Stratus’ loan agreements with Comerica Bank, Stratus is
not permitted to pay dividends on common stock without Comerica
Bank’s prior written consent. The declaration of dividends is at
the discretion of Stratus’ Board of Directors (Board), subject to
restrictions under Stratus’ loan agreements 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, expected, 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,
evolving risks relative to the spread of the coronavirus or fear of
the further spread of the coronavirus, the occurrence of any other
event, change or other circumstance that could delay the closing of
the sale of Block 21 or result in the termination of the agreements
to sell Block 21, Stratus’ ability to refinance and service its
debt, the availability and terms of financing for development
projects and other corporate purposes, Stratus’ ability to enter
into and maintain joint venture, partnership, strategic
relationships or other arrangements, Stratus’ ability to effect its
business strategy successfully, including its ability to sell
properties at prices its Board considers acceptable, market
conditions or corporate developments that could preclude, impair or
delay any opportunities with respect to plans to sell, recapitalize
or refinance properties, Stratus’ ability to obtain various
entitlements and permits, a decrease in the demand for real estate
in select markets in Texas where Stratus operates, changes in
economic, market and business conditions, reductions in
discretionary spending by consumers and businesses, competition
from other real estate developers, the termination of sales
contracts or letters of intent because of, 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
2017 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 or tenants for its
developments or such customers’ or tenants’ failure to satisfy
their purchase commitments or leasing obligations, increases in
interest rates and the phase out of the London Interbank Offered
Rate, declines in the market value of Stratus’ assets, increases in
operating costs, including real estate taxes and the cost of
building materials and labor, changes in consumer preferences,
industry risks, changes in laws, regulations or the regulatory
environment affecting the development of real estate, opposition
from special interest groups or local governments with respect to
development projects, weather-related risks, loss of key personnel,
cybersecurity incidents 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, 2019, filed with the U.S.
Securities and Exchange Commission.
This press release also includes 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. EBITDA is a financial measure frequently used by
securities analysts, lenders and others to evaluate Stratus’
recurring operating performance. EBITDA is intended to be a
performance measure that should not be regarded as more meaningful
than a GAAP measure. Other companies may calculate EBITDA
differently. As required by SEC Regulation G, a reconciliation of
Stratus’ net loss attributable to common stockholders to 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, some of which
Stratus may not be able to control. 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)
Years Ended December 31,
2019
2018
Revenues:
Real estate operations
$
13,785
$
16,778
Leasing operations
16,218
8,211
Total revenues
30,003
24,989
Cost of sales:
Real estate operations
9,466
a
15,444
Leasing operations
8,069
3,644
Depreciation
5,591
2,824
Total cost of sales
23,126
21,912
General and administrative expenses
11,344
10,314
Gain on sales of assets
(5,683)
—
Total
28,787
32,226
Operating income (loss)
1,216
(7,237)
Interest expense, net
(4,248)
(198)
(Loss) gain on interest rate derivative
instruments
(188)
187
Loss on early extinguishment of debt
(247)
—
Other income, net
424
a
56
Loss before income taxes and equity in
unconsolidated affiliates’ (loss) income
(3,043)
(7,192)
Equity in unconsolidated affiliates’
(loss) income
(19)
1,150
b
Benefit from income taxes
275
695
Loss from continuing operations
(2,787)
(5,347)
Income from discontinued operations
320
1,361
Net loss and total comprehensive loss
(2,467)
(3,986)
Total comprehensive loss attributable to
noncontrolling interests
3
4
Net loss and total comprehensive loss
attributable to common stockholders
$
(2,464)
$
(3,982)
Basic and diluted net (loss) income per
share attributable to common stockholders:
Continuing operations
$
(0.34)
$
(0.66)
Discontinued operations
0.04
0.17
$
(0.30)
$
(0.49)
Basic and diluted weighted-average common
shares outstanding
8,182
8,153
a.
Stratus received $4.8 million of proceeds
related to municipal utility district (MUD) reimbursements of
infrastructure costs incurred for development of Barton Creek. Of
the total amount, Stratus recorded $1.1 million as a reduction of
real estate under development on the consolidated balance sheets,
and $3.4 million as a reduction in real estate cost of sales and
$0.3 million in other income, net.
b.
Represents Stratus’ interest in its
unconsolidated affiliate, Crestview Station, and reflects the sale
of Crestview Station’s last tract of land and its multi-family
entitlements during 2018.
STRATUS PROPERTIES
INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
December 31,
2019
2018
ASSETS
Cash and cash equivalents
$
8,765
$
7,902
Restricted cash
5,844
6,311
Real estate held for sale
14,872
16,396
Real estate under development
95,026
136,678
Land available for development
45,539
24,054
Real estate held for investment, net
197,817
117,679
Lease right-of-use assets
11,378
—
Deferred tax assets
12,311
11,834
Other assets
11,068
11,669
Assets held for sale - discontinued
operations
158,748
163,970
Total assets
$
561,368
$
496,493
LIABILITIES AND EQUITY
Liabilities:
Accounts payable
$
14,459
$
18,421
Accrued liabilities, including taxes
6,169
6,346
Debt
224,565
152,281
Lease liabilities
12,636
—
Deferred gain
7,654
9,270
Other liabilities
6,578
5,543
Liabilities held for sale - discontinued
operations
155,225
157,981
Total liabilities
427,286
349,842
Commitments and contingencies
Equity:
Stratus stockholders’ equity:
Common stock, par value of $0.01 per
share, 150,000 shares authorized, 9,330 and 9,288 shares issued,
respectively and 8,197 and 8,164 shares outstanding,
respectively
93
93
Capital in excess of par value of common
stock
186,082
186,256
Accumulated deficit
(43,567)
(41,103)
Common stock held in treasury, 1,133
shares and 1,124 shares at cost, respectively
(21,509)
(21,260)
Total stockholders’ equity
121,099
123,986
Noncontrolling interests in
subsidiaries
12,983
a
22,665
Total equity
134,082
146,651
Total liabilities and equity
$
561,368
$
496,493
a.
Decrease primarily reflects Stratus’
acquisitions of (i) HEB’s noncontrolling interest in the New Caney
project for approximately $5 million and (ii) a limited partner's
33.33 percent interest in the Kingwood Place project for
approximately $6 million.
STRATUS PROPERTIES
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In Thousands)
Years Ended December 31,
2019
2018
Cash flow from operating activities:
Net loss
$
(2,467)
$
(3,986)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
11,006
8,571
Cost of real estate sold
7,210
10,283
Gain on sales of assets
(5,683)
—
Loss (gain) on interest rate derivative
contracts
188
(187)
Loss on early extinguishment of debt
247
—
Debt issuance cost amortization and
stock-based compensation
1,574
1,859
Equity in unconsolidated affiliates’ loss
(income)
19
(1,150)
Return on investment in unconsolidated
affiliate
—
1,251
Increase in deposits
75
507
Deferred income taxes, excluding U.S. tax
reform charge
(318)
(588)
U.S. tax reform charge
—
215
Purchases and development of real estate
properties
(11,277)
(43,660)
MUD reimbursements
1,143
—
Increase in other assets
(2,241)
(4,038)
Decrease in accounts payable, accrued
liabilities and other
(1,836)
(966)
Net cash used in operating
activities
(2,360)
(31,889)
Cash flow from investing activities:
Capital expenditures
(62,550)
(61,932)
Proceeds from sales of assets
10,820
—
Payments on master lease obligations
(1,798)
(2,112)
Purchase of noncontrolling interests in
consolidated subsidiaries
(10,345)
—
(Investment in) return of investment in
unconsolidated affiliates
(9)
26
Net cash used in investing activities
(63,882)
(64,018)
Cash flow from financing activities:
Borrowings from credit facility
27,186
34,436
Payments on credit facility
(34,925)
(9,981)
Borrowings from project loans
143,318
56,999
Payments on project and term loans
(67,943)
(6,693)
Cash dividend paid
(31)
(32)
Stock-based awards net payments
(234)
(131)
Noncontrolling interests’ (distributions)
contributions
(90)
22,589
Financing costs
(1,366)
(1,751)
Net cash provided by financing
activities
65,915
95,436
Net decrease in cash, cash equivalents and
restricted cash
(327)
(471)
Decrease (increase) in cash, cash
equivalents and restricted cash in assets held for sale
723
(3,154)
Cash, cash equivalents and restricted cash
at beginning of year
14,213
17,838
Cash, cash equivalents and restricted cash
at end of year
$
14,609
$
14,213
STRATUS PROPERTIES INC. BUSINESS
SEGMENTS
As a result of the pending sale of Block 21, Stratus has two
operating segments: Real Estate Operations and Leasing
Operations.
The Real Estate Operations segment is comprised of Stratus’ real
estate assets (developed for sale, under development and available
for development), which consists of its properties in Austin, Texas
(the Barton Creek community; the Circle C community; the Lantana
community, including a portion of Lantana Place still under
development and vacant pad sites; and one condominium unit at the W
Austin Hotel & Residences); in Lakeway, Texas, located in the
greater Austin area (Lakeway); in College Station, Texas (a portion
of Jones Crossing and vacant pad sites); in Killeen, Texas (vacant
pad sites at West Killeen Market); and in Magnolia, Texas (Magnolia
Place), Kingwood, Texas (a portion of Kingwood Place and vacant pad
sites) and New Caney, Texas (New Caney), located in the greater
Houston area.
The Leasing Operations segment is comprised of Stratus’ real
estate assets, both residential and commercial, that are leased or
available for lease and includes The Santal, West Killeen Market,
The Saint Mary and completed portions of Lantana Place, Jones
Crossing and Kingwood Place.
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 Estate
Operationsa
Leasing Operations
Eliminations and Otherb
Total
Year Ended December 31, 2019:
Revenues:
Unaffiliated customers
$
13,785
$
16,218
$
—
$
30,003
Intersegment
18
—
(18)
—
Cost of sales, excluding depreciation
9,467
c
8,069
(1)
17,535
Depreciation
224
5,536
(169)
5,591
General and administrative expenses
—
—
11,344
11,344
Gain on sales of assets
—
(5,683)
d
—
(5,683)
Operating income (loss)
$
4,112
$
8,296
$
(11,192)
$
1,216
Capital expenditures and purchases and
development of real estate properties
$
11,277
$
61,245
$
1,305
$
73,827
MUD reimbursements applied to real estate
under developmentc
1,133
10
—
1,143
Total assets at December 31, 2019
180,099
211,922
169,347
e
561,368
STRATUS PROPERTIES
INC.
BUSINESS SEGMENTS
(continued)
Real Estate
Operationsa
Leasing Operations
Eliminations and Otherb
Total
Year Ended December 31, 2018:
Revenues:
Unaffiliated customers
$
16,778
$
8,211
$
—
$
24,989
Intersegment
31
—
(31)
—
Cost of sales, excluding depreciation
15,445
f
3,644
(1)
19,088
Depreciation
220
2,635
(31)
2,824
General and administrative expenses
—
—
10,314
10,314
Operating income (loss)
$
1,144
$
1,932
$
(10,313)
$
(7,237)
Capital expenditures and purchases and
development of real estate properties
$
43,660
$
60,759
$
1,173
$
105,592
Total assets at December 31, 2018
164,939
161,310
170,244
e
496,493
a.
Includes sales commissions and other
revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Stratus received $4.8 million of proceeds
related to MUD reimbursements of infrastructure costs incurred for
development of Barton Creek. Of the total amount, Stratus recorded
$1.1 million as a reduction of real estate under development on the
consolidated balance sheets, and $3.4 million as a reduction in
real estate cost of sales and $0.3 million in other income, net in
the consolidated statements of comprehensive loss.
d.
Includes (i) the fourth-quarter 2019 sale
of Barton Creek Village and (ii) the first-quarter 2019 sale of a
retail pad subject to a ground lease located in the Circle C
community, including adjustments recorded in the second and third
quarters of 2019.
e.
Includes assets held for sale associated
with discontinued operations, which totaled $158.7 million at
December 31, 2019, and $164.0 million at December 31, 2018.
f.
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 MEASURE
EBITDA
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
EBITDA, management believes that Stratus’ presentation of EBITDA
affords them greater transparency in assessing Stratus’ financial
performance. This information differs from net loss from continuing
operations 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. 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
from continuing operations to EBITDA follows (in thousands).
Years Ended December 31,
2019
2018
Net loss from continuing
operations
(2,787)
(5,347)
Depreciation
5,591
2,824
Interest expense, net
4,248
198
Benefit from income taxes
(275)
(695)
EBITDAa
$
6,777
b
$
(3,020)
c
a.
The impact of accounting for the pending
Block 21 sale as a discontinued operation reduced EBITDA by $14.4
million in 2019 and $15.2 million in 2018.
b.
Includes gain on sales of assets of $5.7
million and income from MUD reimbursements of $3.7 million.
c.
Includes equity in unconsolidated
affiliates’ income of $1.15 million.
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William H. Armstrong III (512) 478-5788
Stratus Properties (NASDAQ:STRS)
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