Stratus Properties Inc. (NASDAQ: STRS):
HIGHLIGHTS
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Consistent with Stratus' board approved five-year business strategy,
on July 2, 2015, Stratus completed the sales of its Austin-area
Parkside Village and 5700 Slaughter retail properties, both located in
the Circle C community, for $32.5 million and $12.5 million,
respectively. Stratus used the proceeds from these transactions to
fully repay the related outstanding debt totaling $26 million, and
expects to record a pre-tax gain of approximately $21 million in
third-quarter 2015, of which the non-controlling interest is
approximately $4 million.
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In July 2015, Stratus notified Canyon-Johnson Urban Fund II, L.P.
(Canyon-Johnson) of its election to purchase Canyon-Johnson’s interest
in the joint venture that owns the W Austin Hotel & Residences project
for $60.9 million, to be financed in connection with refinancing
currently in progress.
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Operating results at the W Austin Hotel & Residences project continued
to reflect positive trends.
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Revenue per Available Room (REVPAR) at the W Austin Hotel was $287
during second-quarter 2015 and $303 for the first six months of
2015, compared with $284 during second-quarter 2014 and $296 for
the first six months of 2014.
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Austin City Limits Live at the Moody Theater (ACL Live) hosted 55
events during second-quarter 2015 and 103 for the first six months
of 2015, compared with 51 events during second-quarter 2014 and 96
for the first six months of 2014.
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Sales of four lots for $2.0 million were closed in second-quarter 2015
and 12 lots for $4.3 million for the first six months of 2015,
compared with 10 lots for $4.1 million in second-quarter 2014 and 18
lots for $7.7 million for the first six months of 2014. In July 2015,
Stratus sold two lots for $1.4 million and as of July 31, 2015, had 12
lots under contract.
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Expenditures for purchases and development of real estate properties
included in Stratus' five-year business strategy totaled $15.7 million
for the first six months of 2015, primarily reflecting development
costs for Barton Creek properties. Stratus also had commercial leasing
capital expenditures of $16.2 million for the first six months of 2015
primarily associated with the advancement of The Oaks at Lakeway
project.
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Net loss attributable to common stock for second-quarter 2015 totaled
$1.1 million, $0.14 per share, compared with net income attributable
to common stock of $0.2 million, $0.03 per share, for second-quarter
2014. Net income attributable to common stock for the first six months
of 2015 totaled $1.6 million, $0.20 per share, compared with $1.3
million, $0.16 per share, for the first six months of 2014.
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Stratus' consolidated debt was $210.8 million and consolidated cash
was $25.5 million at June 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 a net loss attributable
to common stock of $1.1 million, $0.14 per share for second-quarter
2015, compared with net income attributable to common stock of $0.2
million, $0.03 per share, for second-quarter 2014. Stratus' net income
attributable to common stock for second-quarter 2014 included income of
$0.4 million associated with the recovery of building repair costs
associated with damage caused by the June 2011 balcony glass breakage
incidents at the W Austin Hotel & Residences project. Net income
attributable to common stock for the first six months of 2015 totaled
$1.6 million, $0.20 per share, compared with $1.3 million, $0.16 per
share, for the first six months of 2014. Results for the first six
months of 2015 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 six months
of 2014 included income of $0.6 million associated with insurance
settlements and $0.5 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 advance its
five-year development plan during second-quarter 2015. Construction of
the first phase of the Barton Creek 236-unit Tecoma Multi-Family project
is progressing well and pre-leasing is expected to begin in September
2015. Construction and leasing of The Oaks at Lakeway project, one of
several development projects with HEB Grocery Company, is well underway
and our first tenants are expected to open this fall. The sales of the
Parkside Village and 5700 Slaughter retail projects for $45 million,
with cash proceeds of approximately $17 million (after debt repayments
and closing costs), together with our previously announced pending
acquisition of Canyon-Johnson's interest in the joint venture that owns
the W Austin Hotel & Residences for $60.9 million, adds value for our
shareholders and focuses and simplifies our operations. Our financial
results reflect continued positive operating performance at the W Austin
Hotel, ACL Live and commercial leasing businesses, and we are working
constructively with lenders towards appropriate long-term financing for
our W Austin Hotel project transaction.”
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Summary Financial Results.
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2015
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2014
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2015
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2014
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(In Thousands, Except Per Share Amounts)
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Revenues
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$
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19,986
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$
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22,521
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$
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40,211
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$
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45,820
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Operating income
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542
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2,842
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a
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2,151
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6,190
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a
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(Loss) income from continuing operations
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(240)
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1,264
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a
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326
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4,156
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a
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Income from discontinued operations
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—
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—
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3,218
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b
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—
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Net (loss) income
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(240)
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1,264
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a
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3,544
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4,156
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a,c
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Net (loss) income attributable to common stock
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(1,119)
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219
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a
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1,623
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b
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1,316
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a,c
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Diluted net (loss) income per share attributable to common stock:
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Continuing operations
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$
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(0.14)
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$
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0.03
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$
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(0.20)
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$
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0.16
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Discontinued operations
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$
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—
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$
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—
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$
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0.40
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b
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$
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—
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Diluted net (loss) income per share attributable to common stock
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$
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(0.14)
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$
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0.03
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a
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$
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0.20
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$
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0.16
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a,c
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Diluted weighted-average shares of common stock outstanding
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8,061
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8,068
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8,081
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8,085
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a. Includes income of $0.4 million, $0.05 per share, in
second-quarter 2014 and $0.5 million, $0.06 per share, for the
first six months of 2014 related to the recovery of building
repair costs associated with damage caused by the June 2011
balcony glass breakage incidents at the W Austin Hotel &
Residences project.
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b. Includes 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.
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c. Includes income of $0.6 million, $0.07 per share, for the
first six months of 2014, related to insurance settlements.
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Five-Year Business Strategy.
Stratus' board of directors has 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
strategy communicated in the five-year plan, on July 2, 2015, Stratus
completed the sales of its Austin-area Parkside Village and 5700
Slaughter retail properties, both located in the Circle C community, for
$32.5 million and $12.5 million, respectively.
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 strategy
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.
As part of its five-year plan, Stratus is currently developing The Oaks
at Lakeway and Tecoma 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 65 percent of the
space, including the HEB lease, have been executed and leasing for the
remaining space is underway. The Tecoma Multi-Family project is a
garden-style apartment complex consisting of 236 units, with pre-leasing
expected to begin in September 2015.
Currently, Stratus is the manager of, and has an approximate 42 percent
interest in, the W Austin Hotel & Residences project, and
Canyon-Johnson, our joint venture partner, has an approximate 58 percent
interest in the W Austin Hotel & Residences project. Stratus and
Canyon-Johnson explored a possible sale of the W Austin Hotel &
Residences project in early 2015. This process did not result in a
transaction acceptable to both parties, and on May 12, 2015,
Canyon-Johnson triggered the process of requiring Stratus to elect to
either sell its interest in the joint venture to Canyon-Johnson for
$44.5 million or purchase Canyon-Johnson’s interest in the joint venture
for $60.9 million. On July 6, 2015, Stratus notified Canyon-Johnson of
its election to purchase Canyon-Johnson’s interest in the joint venture.
In accordance with the terms of the joint venture’s operating agreement,
closing, which is subject to customary conditions, will occur no later
than November 10, 2015. The purchase will be made in connection with the
refinancing of the W Austin Hotel & Residences project, which is
currently being negotiated. Stratus is also in the process of engaging
or considering the engagement of advisers to market other developed and
undeveloped properties.
Circle C Property Sales. On July 2,
2015, Stratus completed the sales of its Austin-area Parkside Village
and 5700 Slaughter retail properties, both located in the Circle C
community, to Whitestone REIT. Stratus successfully entitled, developed
and fully leased both projects. The Parkside Village retail project,
which was owned in a joint venture with LCHM Holdings, LLC, consists of
90,184 leasable square feet and was sold for $32.5 million. The 5700
Slaughter retail 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 fully repay the amounts
outstanding under both the Parkside Village construction loan with
Comerica Bank and the term loan with United Heritage Credit Union, which
totaled approximately $26 million at June 30, 2015. After debt
repayments and closing costs, cash proceeds from these transactions
approximated $17 million, and Stratus expects to record a pre-tax gain
of approximately $21 million, of which the noncontrolling interest is
approximately $4 million, in third-quarter 2015.
Discontinued Operations. In
2012, Stratus sold 7500 Rialto, an office building in Lantana. In
connection with the sale, Stratus recognized a gain of $5.1 million and
deferred a gain of $5.0 million related to a guaranty provided to the
lender in connection with the buyer's assumption of the loan related to
7500 Rialto. The guaranty was released in January 2015, and Stratus
recognized the deferred gain totaling $5.0 million ($3.2 million to net
income attributable to common stock) in first-quarter 2015.
W Austin Hotel & Residences Project.
REVPAR at the W Austin Hotel, which is calculated by dividing total room
revenue by total rooms available, averaged $287 during second-quarter
2015 and $303 for the first six months of 2015, compared with $284
during second-quarter 2014 and $296 for the first six months of 2014.
The 251-room hotel, which Stratus believes sets the standard for
contemporary luxury in downtown Austin, is managed by Starwood Hotels &
Resorts Worldwide, Inc.
Austin City Limits Live at the Moody Theater (ACL Live) hosted 55 events
during second-quarter 2015, compared with 51 events during
second-quarter 2014. ACL Live hosted 103 events during the first six
months of 2015, compared with 96 events during the first six months of
2014. ACL Live currently has events booked through April 2016.
The project also has 39,328 square feet of leasable office space,
including 9,000 square feet occupied by Stratus' corporate office, and
18,362 square feet of retail space. As of June 30, 2015, occupancy for
the office space was 100 percent and occupancy for the retail space was
74 percent. Leasing is ongoing for the remaining retail space.
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Operating Results. Stratus'
developed property sales included the following (dollars in
thousands):
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Three Months Ended June 30,
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2015
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2014
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Lots/Units
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Revenues
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Average
Cost per
Lot/Unit
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Lots/Units
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Revenues
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Average
Cost per
Lot/Unit
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Barton Creek
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Calera:
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Verano Drive
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—
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$
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—
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$
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—
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6
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$
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2,370
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$
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179
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Amarra Drive:
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Phase II Lots
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—
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—
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—
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4
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1,707
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163
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Phase III Lots
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3
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1,770
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284
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—
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—
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—
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Circle C Meridian
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1
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275
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156
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—
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—
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—
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W Austin Hotel & Residences Project Condominium Units
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—
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—
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—
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1
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2,700
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2,295
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Total Residential
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4
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$
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2,045
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11
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$
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6,777
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Six Months Ended June 30,
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2015
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2014
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Lots/Units
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Revenues
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Average
Cost per
Lot/Unit
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Lots/Units
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Revenues
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Average
Cost per
Lot/Unit
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Barton Creek
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Calera:
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Verano Drive
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—
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$
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—
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$
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—
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9
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$
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3,524
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$
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181
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Amarra Drive:
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Phase II Lots
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—
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—
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—
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9
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4,182
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185
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Phase III Lots
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3
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|
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1,770
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284
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—
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—
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—
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Circle C Meridian
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9
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2,480
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156
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—
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—
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—
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W Austin Hotel & Residences Project Condominium Units
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—
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—
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—
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3
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4,420
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1,230
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Total Residential
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12
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$
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4,250
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21
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$
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12,126
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The decrease in developed property sales and revenues in the 2015
periods primarily resulted from fewer condominium unit sales at the W
Austin Residences and fewer lot sales at Verano Drive and Amarra Drive
Phase II as inventories have declined as a result of previous sales
activity. These decreases were partly offset by increased lot sales at
Meridian and Amarra Drive Phase III, which was completed in
first-quarter 2015.
As of July 31, 2015, 41 Meridian lots, 14 Amarra Drive Phase II lots and
59 Amarra Drive Phase III lots remain available for sale.
Revenue from the Hotel segment totaled $11.1 million for second-quarter
2015 and $22.8 million for the first six months of 2015, compared with
$10.7 million for second-quarter 2014 and $21.6 million for the first
six 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. Increased Hotel revenues for
the 2015 periods primarily reflect increased food and beverage sales.
Revenue from the Entertainment segment totaled $5.1 million for
second-quarter 2015 and $9.4 million for the first six months of 2015,
compared with $3.5 million for second-quarter 2014 and $9.0 million for
the first six 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. The increase in
Entertainment revenue for the 2015 periods primarily resulted from
increases in events hosted and ticket sales.
Rental revenue from the Commercial Leasing segment totaled $1.9 million
for second-quarter 2015 and $3.8 million for the first six months of
2015, compared with $1.8 million for second-quarter 2014 and $3.4
million for the first six months of 2014. The increase in rental revenue
in the 2015 periods primarily reflects increased leasing activity at
Parkside Village and Block 21 office. On July 2, 2015, Stratus completed
the sales of Parkside Village and 5700 Slaughter as discussed above.
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
anticipated financing and completion of Stratus' purchase of
Canyon-Johnson Urban Fund II, L.P.'s interest in CJUF II Stratus Block
21, LLC. 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
OPERATIONS (Unaudited) (In Thousands, Except Per Share
Amounts)
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
|
|
|
|
$
|
11,054
|
|
|
|
$
|
10,560
|
|
|
|
$
|
22,673
|
|
|
|
$
|
21,372
|
|
Entertainment
|
|
|
|
|
4,995
|
|
|
|
|
3,513
|
|
|
|
|
9,304
|
|
|
|
|
9,000
|
|
Real estate operations
|
|
|
|
|
2,234
|
|
|
|
|
6,824
|
|
|
|
|
4,710
|
|
|
|
|
12,255
|
|
Commercial leasing
|
|
|
|
|
1,703
|
|
|
|
|
1,624
|
|
|
|
|
3,524
|
|
|
|
|
3,193
|
|
Total revenues
|
|
|
|
|
19,986
|
|
|
|
|
22,521
|
|
|
|
|
40,211
|
|
|
|
|
45,820
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
|
|
|
|
|
8,295
|
|
|
|
|
7,641
|
|
|
|
|
16,377
|
|
|
|
|
15,273
|
|
Entertainment
|
|
|
|
|
3,688
|
|
|
|
|
2,515
|
|
|
|
|
7,091
|
|
|
|
|
6,536
|
|
Real estate operations
|
|
|
|
|
2,011
|
|
|
|
|
4,682
|
|
|
|
|
4,121
|
|
|
|
|
8,500
|
|
Commercial leasing
|
|
|
|
|
959
|
|
|
|
|
703
|
|
|
|
|
1,700
|
|
|
|
|
1,404
|
|
Depreciation
|
|
|
|
|
2,346
|
|
|
|
|
2,225
|
|
|
|
|
4,650
|
|
|
|
|
4,472
|
|
Total cost of sales
|
|
|
|
|
17,299
|
|
|
|
|
17,766
|
|
|
|
|
33,939
|
|
|
|
|
36,185
|
|
General and administrative expenses
|
|
|
|
|
2,145
|
|
|
|
|
1,959
|
|
|
|
|
4,121
|
|
|
|
|
4,021
|
|
Insurance settlement
|
|
|
|
|
—
|
|
|
|
|
(46
|
)
|
|
|
|
—
|
|
|
|
|
(576
|
)
|
Total costs and expenses
|
|
|
|
|
19,444
|
|
|
|
|
19,679
|
|
|
|
|
38,060
|
|
|
|
|
39,630
|
|
Operating income
|
|
|
|
|
542
|
|
|
|
|
2,842
|
|
|
|
|
2,151
|
|
|
|
|
6,190
|
|
Interest expense, net
|
|
|
|
|
(1,031
|
)
|
|
|
|
(974
|
)
|
|
|
|
(1,881
|
)
|
|
|
|
(1,823
|
)
|
Loss on interest rate cap agreement
|
|
|
|
|
(13
|
)
|
|
|
|
(170
|
)
|
|
|
|
(68
|
)
|
|
|
|
(251
|
)
|
Other income, net
|
|
|
|
|
285
|
|
|
|
|
3
|
|
|
|
|
289
|
|
|
|
|
22
|
|
(Loss) income before income taxes and equity in unconsolidated
affiliates' (loss) income
|
|
|
|
|
(217
|
)
|
|
|
|
1,701
|
|
|
|
|
491
|
|
|
|
|
4,138
|
|
Equity in unconsolidated affiliates' (loss) income
|
|
|
|
|
(239
|
)
|
|
|
|
(243
|
)
|
|
|
|
(118
|
)
|
|
|
|
438
|
|
Benefit from (provision for) income taxes
|
|
|
|
|
216
|
|
|
|
|
(194
|
)
|
|
|
|
(47
|
)
|
|
|
|
(420
|
)
|
(Loss) income from continuing operations
|
|
|
|
|
(240
|
)
|
|
|
|
1,264
|
|
|
|
|
326
|
|
|
|
|
4,156
|
|
Income from discontinued operations, net of taxes
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3,218
|
|
|
|
|
—
|
|
Net (loss) income
|
|
|
|
|
(240
|
)
|
|
|
|
1,264
|
|
|
|
|
3,544
|
|
|
|
|
4,156
|
|
Net income attributable to noncontrolling interests in subsidiaries
|
|
|
|
|
(879
|
)
|
|
|
|
(1,045
|
)
|
|
|
|
(1,921
|
)
|
|
|
|
(2,840
|
)
|
Net (loss) income attributable to common stock
|
|
|
|
$
|
(1,119
|
)
|
|
|
$
|
219
|
|
|
|
$
|
1,623
|
|
|
|
$
|
1,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net (loss) income per share attributable to common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
(0.14
|
)
|
|
|
$
|
0.03
|
|
|
|
$
|
(0.20
|
)
|
|
|
$
|
0.16
|
|
Discontinued operations
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
0.40
|
|
|
|
$
|
—
|
|
Basic and diluted net (loss) income per share attributable to common
stockholders
|
|
|
|
$
|
(0.14
|
)
|
|
|
$
|
0.03
|
|
|
|
$
|
0.20
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
8,061
|
|
|
|
|
8,030
|
|
|
|
|
8,051
|
|
|
|
|
8,040
|
|
Diluted
|
|
|
|
|
8,061
|
|
|
|
|
8,068
|
|
|
|
|
8,081
|
|
|
|
|
8,085
|
|
|
|
|
|
|
|
STRATUS PROPERTIES INC. CONSOLIDATED BALANCE SHEETS
(Unaudited) (In Thousands)
|
|
|
|
|
|
June 30, 2015
|
|
|
December 31, 2014
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
25,474
|
|
a
|
|
$
|
29,645
|
|
Restricted cash
|
|
|
|
|
6,485
|
|
|
|
|
7,615
|
|
Real estate held for sale
|
|
|
|
|
50,927
|
|
b
|
|
|
12,245
|
|
Real estate under development
|
|
|
|
|
127,808
|
|
|
|
|
123,921
|
|
Land available for development
|
|
|
|
|
24,151
|
|
|
|
|
21,368
|
|
Real estate held for investment, net
|
|
|
|
|
153,099
|
|
|
|
|
178,065
|
|
Investment in unconsolidated affiliates
|
|
|
|
|
615
|
|
|
|
|
795
|
|
Deferred tax assets
|
|
|
|
|
9,934
|
|
|
|
|
11,759
|
|
Other assets
|
|
|
|
|
18,211
|
|
|
|
|
17,274
|
|
Total assets
|
|
|
|
$
|
416,704
|
|
|
|
$
|
402,687
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
11,590
|
|
|
|
$
|
8,076
|
|
Accrued liabilities
|
|
|
|
|
7,894
|
|
|
|
|
9,670
|
|
Debt
|
|
|
|
|
210,758
|
|
|
|
|
196,477
|
|
Other liabilities and deferred gain
|
|
|
|
|
8,729
|
|
c
|
|
|
13,378
|
|
Total liabilities
|
|
|
|
|
238,971
|
|
|
|
|
227,601
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Stratus stockholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
91
|
|
|
|
|
91
|
|
Capital in excess of par value of common stock
|
|
|
|
|
204,546
|
|
|
|
|
204,269
|
|
Accumulated deficit
|
|
|
|
|
(45,698
|
)
|
|
|
|
(47,321
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
(265
|
)
|
|
|
|
(279
|
)
|
Common stock held in treasury
|
|
|
|
|
(20,470
|
)
|
|
|
|
(20,317
|
)
|
Total stockholders' equity
|
|
|
|
|
138,204
|
|
|
|
|
136,443
|
|
Noncontrolling interests in subsidiariesd
|
|
|
|
|
39,529
|
|
|
|
|
38,643
|
|
Total equity
|
|
|
|
|
177,733
|
|
|
|
|
175,086
|
|
Total liabilities and equity
|
|
|
|
$
|
416,704
|
|
|
|
$
|
402,687
|
|
|
a. Includes $3.4 million available to Stratus, $0.8 million
available to the Parkside Village project and $21.2 million
available to the W Austin Hotel & Residences project.
|
b. Includes $21.2 million associated with Parkside Village
and 5700 Slaughter, which were sold on July 2, 2015.
|
c. Deferred gain of $5.0 million associated with the 2012
sale of 7500 Rialto was recognized in first-quarter 2015.
|
d. Primarily relates to Canyon-Johnson's interest in the W
Austin Hotel & Residences project.
|
|
|
|
|
|
|
STRATUS PROPERTIES INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) (In Thousands)
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2015
|
|
|
2014
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
3,544
|
|
|
|
$
|
4,156
|
|
Adjustments to reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
4,650
|
|
|
|
|
4,472
|
|
Cost of real estate sold
|
|
|
|
|
2,098
|
|
|
|
|
6,081
|
|
Deferred gain on sale of 7500 Rialto
|
|
|
|
|
(5,000
|
)
|
|
|
|
—
|
|
Stock-based compensation
|
|
|
|
|
269
|
|
|
|
|
220
|
|
Equity in unconsolidated affiliates' income
|
|
|
|
|
118
|
|
|
|
|
(438
|
)
|
Deposits
|
|
|
|
|
82
|
|
|
|
|
(101
|
)
|
Deferred income taxes
|
|
|
|
|
1,829
|
|
|
|
|
—
|
|
Purchases and development of real estate properties
|
|
|
|
|
(15,703
|
)
|
|
|
|
(24,817
|
)
|
Municipal utility district reimbursement
|
|
|
|
|
5,307
|
|
|
|
|
—
|
|
Decrease in other assets
|
|
|
|
|
193
|
|
|
|
|
1,093
|
|
Increase (decrease) in accounts payable, accrued liabilities and
other
|
|
|
|
|
2,022
|
|
|
|
|
(1,233
|
)
|
Net cash used in operating activities
|
|
|
|
|
(591
|
)
|
|
|
|
(10,567
|
)
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(16,740
|
)
|
|
|
|
(953
|
)
|
Return of investment in unconsolidated affiliates
|
|
|
|
|
62
|
|
|
|
|
1,345
|
|
Net cash (used in) provided by investing activities
|
|
|
|
|
(16,678
|
)
|
|
|
|
392
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
Borrowings from credit facility
|
|
|
|
|
23,500
|
|
|
|
|
23,500
|
|
Payments on credit facility
|
|
|
|
|
(15,366
|
)
|
|
|
|
(6,828
|
)
|
Borrowings from project loans
|
|
|
|
|
15,810
|
|
|
|
|
6,000
|
|
Payments on project and term loans
|
|
|
|
|
(9,662
|
)
|
|
|
|
(5,067
|
)
|
Net payments for stock-based awards, including excess tax benefit
|
|
|
|
|
(144
|
)
|
|
|
|
(190
|
)
|
Noncontrolling interests distributions
|
|
|
|
|
(1,040
|
)
|
|
|
|
(3,581
|
)
|
Repurchase of treasury stock
|
|
|
|
|
—
|
|
|
|
|
(637
|
)
|
Financing costs
|
|
|
|
|
—
|
|
|
|
|
(69
|
)
|
Net cash provided by financing activities
|
|
|
|
|
13,098
|
|
|
|
|
13,128
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
|
(4,171
|
)
|
|
|
|
2,953
|
|
Cash and cash equivalents at beginning of year
|
|
|
|
|
29,645
|
|
|
|
|
21,307
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
25,474
|
|
|
|
$
|
24,260
|
|
|
|
|
|
|
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; and in Magnolia, Texas
located in the greater Houston area.
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, a retail building and a bank
building in Barton Creek Village, and 5700 Slaughter and the Parkside
Village project in the Circle C community. On July 2, 2015, Stratus
completed the sales of the Parkside Village and 5700 Slaughter
properties.
Segment data presented below was prepared on the same basis as Stratus'
consolidated financial statements (in thousands).
|
|
|
|
Real Estate
Operationsa
|
|
|
Hotel
|
|
|
Entertainment
|
|
|
Commercial
Leasingb
|
|
|
Eliminations
and Otherc
|
|
|
Total
|
Three Months Ended June 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaffiliated customers
|
|
|
|
$
|
2,234
|
|
|
|
$
|
11,054
|
|
|
$
|
4,995
|
|
|
$
|
1,703
|
|
|
|
$
|
—
|
|
|
|
$
|
19,986
|
|
Intersegment
|
|
|
|
|
25
|
|
|
|
|
69
|
|
|
|
79
|
|
|
|
166
|
|
|
|
|
(339
|
)
|
|
|
|
—
|
|
Cost of sales, excluding depreciation
|
|
|
|
|
2,011
|
|
|
|
|
8,353
|
|
|
|
3,744
|
|
|
|
985
|
|
|
|
|
(140
|
)
|
|
|
|
14,953
|
|
Depreciation
|
|
|
|
|
68
|
|
|
|
|
1,496
|
|
|
|
318
|
|
|
|
501
|
|
|
|
|
(37
|
)
|
|
|
|
2,346
|
|
General and administrative expenses
|
|
|
|
|
1,620
|
|
|
|
|
169
|
|
|
|
61
|
|
|
|
484
|
|
|
|
|
(189
|
)
|
|
|
|
2,145
|
|
Operating (loss) income
|
|
|
|
$
|
(1,440
|
)
|
|
|
$
|
1,105
|
|
|
$
|
951
|
|
|
$
|
(101
|
)
|
|
|
$
|
27
|
|
|
|
$
|
542
|
|
Capital expendituresd
|
|
|
|
$
|
9,140
|
|
|
|
$
|
57
|
|
|
$
|
8
|
|
|
$
|
8,399
|
|
|
|
$
|
—
|
|
|
|
$
|
17,604
|
|
Total assets at June 30, 2015
|
|
|
|
|
205,426
|
|
|
|
|
109,069
|
|
|
|
49,116
|
|
|
|
48,445
|
|
|
|
|
4,648
|
|
|
|
|
416,704
|
|
|
|
|
Three Months Ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaffiliated customers
|
|
|
|
$
|
6,824
|
|
|
|
$
|
10,560
|
|
|
$
|
3,513
|
|
|
$
|
1,624
|
|
|
|
$
|
—
|
|
|
|
$
|
22,521
|
|
Intersegment
|
|
|
|
|
24
|
|
|
|
|
99
|
|
|
|
11
|
|
|
|
132
|
|
|
|
|
(266
|
)
|
|
|
|
—
|
|
Cost of sales, excluding depreciation
|
|
|
|
|
4,696
|
|
|
|
|
7,642
|
|
|
|
2,598
|
|
|
|
727
|
|
|
|
|
(122
|
)
|
|
|
|
15,541
|
|
Depreciation
|
|
|
|
|
57
|
|
|
|
|
1,457
|
|
|
|
311
|
|
|
|
438
|
|
|
|
|
(38
|
)
|
|
|
|
2,225
|
|
Insurance settlement
|
|
|
|
|
(46
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(46
|
)
|
General and administrative expenses
|
|
|
|
|
1,465
|
|
|
|
|
143
|
|
|
|
52
|
|
|
|
445
|
|
|
|
|
(146
|
)
|
|
|
|
1,959
|
|
Operating income
|
|
|
|
$
|
676
|
|
|
|
$
|
1,417
|
|
|
$
|
563
|
|
|
$
|
146
|
|
|
|
$
|
40
|
|
|
|
$
|
2,842
|
|
Capital expendituresd
|
|
|
|
$
|
16,826
|
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
438
|
|
|
|
$
|
—
|
|
|
|
$
|
17,291
|
|
Total assets at June 30, 2014
|
|
|
|
|
156,604
|
|
|
|
|
113,048
|
|
|
|
50,054
|
|
|
|
49,587
|
|
|
|
|
(5,761
|
)
|
|
|
|
363,532
|
|
|
|
|
|
|
|
|
Real Estate
Operationsa
|
|
|
Hotel
|
|
|
Entertainment
|
|
|
Commercial
Leasingb
|
|
|
Eliminations
and Otherc
|
|
|
Total
|
Six Months Ended June 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaffiliated customers
|
|
|
|
$
|
4,710
|
|
|
|
$
|
22,673
|
|
|
$
|
9,304
|
|
|
$
|
3,524
|
|
|
|
$
|
—
|
|
|
|
$
|
40,211
|
|
Intersegment
|
|
|
|
|
50
|
|
|
|
|
141
|
|
|
|
102
|
|
|
|
252
|
|
|
|
|
(545
|
)
|
|
|
|
—
|
|
Cost of sales, excluding depreciation
|
|
|
|
|
4,122
|
|
|
|
|
16,455
|
|
|
|
7,173
|
|
|
|
1,750
|
|
|
|
|
(211
|
)
|
|
|
|
29,289
|
|
Depreciation
|
|
|
|
|
125
|
|
|
|
|
2,990
|
|
|
|
642
|
|
|
|
968
|
|
|
|
|
(75
|
)
|
|
|
|
4,650
|
|
General and administrative expenses
|
|
|
|
|
2,995
|
|
|
|
|
390
|
|
|
|
141
|
|
|
|
899
|
|
|
|
|
(304
|
)
|
|
|
|
4,121
|
|
Operating (loss) income
|
|
|
|
$
|
(2,482
|
)
|
|
|
$
|
2,979
|
|
|
$
|
1,450
|
|
|
$
|
159
|
|
|
|
$
|
45
|
|
|
|
$
|
2,151
|
|
Income from discontinued operationse
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,218
|
|
|
|
$
|
—
|
|
|
|
$
|
3,218
|
|
Capital expendituresd
|
|
|
|
|
15,703
|
|
|
|
|
448
|
|
|
|
69
|
|
|
|
16,223
|
|
|
|
|
—
|
|
|
|
|
32,443
|
|
|
|
|
Six Months Ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaffiliated customers
|
|
|
|
$
|
12,255
|
|
|
|
$
|
21,372
|
|
|
$
|
9,000
|
|
|
$
|
3,193
|
|
|
|
$
|
—
|
|
|
|
$
|
45,820
|
|
Intersegment
|
|
|
|
|
47
|
|
|
|
|
229
|
|
|
|
18
|
|
|
|
255
|
|
|
|
|
(549
|
)
|
|
|
|
—
|
|
Cost of sales, excluding depreciation
|
|
|
|
|
8,566
|
|
|
|
|
15,274
|
|
|
|
6,667
|
|
|
|
1,452
|
|
|
|
|
(246
|
)
|
|
|
|
31,713
|
|
Depreciation
|
|
|
|
|
113
|
|
|
|
|
2,930
|
|
|
|
630
|
|
|
|
873
|
|
|
|
|
(74
|
)
|
|
|
|
4,472
|
|
Insurance settlement
|
|
|
|
|
(576
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(576
|
)
|
General and administrative expenses
|
|
|
|
|
3,093
|
|
|
|
|
215
|
|
|
|
79
|
|
|
|
946
|
|
|
|
|
(312
|
)
|
|
|
|
4,021
|
|
Operating income
|
|
|
|
$
|
1,106
|
|
|
|
$
|
3,182
|
|
|
$
|
1,642
|
|
|
$
|
177
|
|
|
|
$
|
83
|
|
|
|
$
|
6,190
|
|
Capital expendituresd
|
|
|
|
$
|
24,817
|
|
|
|
$
|
76
|
|
|
$
|
32
|
|
|
$
|
845
|
|
|
|
$
|
—
|
|
|
|
$
|
25,770
|
|
|
a. Includes sales commissions and other revenues together
with related expenses.
|
b. On July 2, 2015, Stratus completed the sales of Parkside
Village and 5700 Slaughter.
|
c. Includes eliminations of intersegment amounts.
|
d. Also 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.
|
|
|
|
|

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