Stratus Properties Inc. (NASDAQ: STRS) (“Stratus” or the
“Company”) today announced an agreement to sell The Santal for $152
million, or approximately $339 thousand per unit, in cash. The
Santal is Stratus’ wholly owned 448-unit garden-style, multi-family
luxury apartment complex located in Section N of Austin’s upscale
Barton Creek community.
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The Santal (Photo: Business Wire)
The sales price represents a premium of approximately 96% to
Stratus’ estimated net asset value of The Santal (after tax and net
of loan prepayment fee and other costs) as of December 31, 2020 as
reflected in Stratus’ Investor Presentation dated March 15, 2021,
available on Stratus’ website. The agreement to sell The Santal
contains a 30-day diligence period during which the buyer may
terminate the transaction for any reason. The transaction is
expected to close in the fourth quarter of 2021, subject to the
satisfaction of customary closing conditions.
William H. Armstrong III, Chairman of the Board and Chief
Executive Officer of Stratus, stated, “This is another clear
example of our strategy to optimize value for our shareholders by
developing high-quality properties and holding or monetizing them
depending on market conditions. We had opportunities to sell The
Santal in 2019 but elected to hold and refinance it at the time.
The refinancing enabled us to reduce both our investment in The
Santal and our recourse debt exposure while increasing the rate of
return on invested equity. Since then, we have engaged in a process
that generated multiple high-quality, competitive offers. We are
confident that this sale represents a tremendous opportunity for
our shareholders.”
Mr. Armstrong continued, “The Stratus team designed and
developed this project to meet the continuing strong demand for
high-quality residential property located close to downtown Austin.
We believe our success with The Santal further supports our plan
for the adjacent environmentally sustainable Holden Hills
residential development and Section N mixed-use development
projects planned for Barton Creek.”
Mr. Armstrong concluded, “We estimate that the sale of The
Santal will produce pre-tax cash proceeds of approximately $72
million after payment of project debt. In connection with the
anticipated closing of the sale, our Board is evaluating options
including returning cash to shareholders, paying down additional
debt and reinvesting in our pipeline of opportunities. Our robust
pipeline of projects includes other multi-family projects such as
the recently announced luxury high-rise tower The Annie B as part
of Block 150 in downtown Austin, and The Saint June in the Amarra
section of Barton Creek, which is currently under construction. We
also have plans for multi-family components at several of our
mixed-use projects, including at Lantana Place which is expected to
begin construction next year.”
Construction on the first phase of The Santal commenced in
January 2015 and was completed in August 2016. Stratus completed
construction of the second phase of The Santal during first-quarter
2019. The Santal is fully leased and stabilized.
Following the company’s refinancing of the original construction
loans for The Santal in the third-quarter 2019, in second-quarter
2021, Stratus entered into an amendment to the Santal loan that
reduced the Company’s annual interest costs.
In connection with entering into the agreement to sell The
Santal, Stratus amended the loan agreement with the project lender
to enable prepayment of the loan, subject to a prepayment fee.
About Stratus Properties Inc.
Stratus is a diversified real estate company engaged primarily
in the acquisition, entitlement, development, management, and sale
of commercial, and multi-family and single-family residential real
estate properties, real estate leasing, and the operation of hotel
and entertainment businesses located in the Austin, Texas area and
other select, fast-growing markets in Texas.
Forward-Looking Statements
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, including Stratus’ estimated
pre-tax net cash proceeds from the sale of The Santal and
statements regarding whether and when the sale of The Santal will
be completed. The words “anticipates,” “may,” “can,” “could,”
“plans,” “believes,” “potential,” “possible,” “estimates,”
“expects,” “projects,” “targets,” “intends,” “likely,” “will,”
“should,” “to be” and any similar expressions 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, 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,
Stratus’ ability to continue to effectively develop and execute its
strategies, including its ability to develop, finance, construct
and sell properties on its anticipated schedule and at prices its
Board considers acceptable, changes in the demand for real estate
in select markets in Texas where Stratus operates, changes in
economic, market and business conditions, the results of Stratus’
Board’s evaluation of a potential conversion of Stratus to a REIT,
the uncertain and ongoing impact of the COVID-19 pandemic, 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, 2020, filed with the U.S. Securities and Exchange
Commission.
Investors are cautioned that many of the assumptions upon which
Stratus' forward-looking statements are based are likely to change
after the date 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 undertakes no
obligation to update any forward-looking statements, which speak
only as of the date made, notwithstanding any changes in its
assumptions, business plans, actual experience, or other
changes.
A copy of this release is available on Stratus’
website, stratusproperties.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210921006070/en/
Financial and Media Contact: William H. Armstrong III
(512) 478-5788
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