Stratus Properties Inc. (NASDAQ: STRS) announced today that on September
28, 2015, Stratus completed its previously announced acquisition of
Canyon-Johnson Urban Fund II, L.P.’s (Canyon-Johnson’s) approximate 58
percent joint venture interest in CJUF II Stratus Block 21 LLC (Block
21), which owns a 36-story mixed-use development in downtown Austin,
Texas, anchored by the W Austin Hotel & Residences, for approximately
$62 million. Stratus funded its acquisition of Canyon-Johnson’s interest
in Block 21 with (1) approximately $32.3 million of proceeds from its
non-recourse term loan with Bank of America, N.A. (the BoA Loan), (2) a
$20.0 million term loan under Stratus’ credit facility with Comerica
Bank, and (3) approximately $9.7 million in cash. The Sale and Purchase
Agreement contains customary representations and warranties, and the
parties have agreed to indemnify each other in connection with the
breach of such representations and warranties. Block 21 is now a
wholly-owned subsidiary of Stratus. As of September 28, 2015, in
addition to its real estate assets, Block 21 had cash and cash
equivalents of approximately $22.8 million.
William H. Armstrong III, Chairman of the Board, President and Chief
Executive Officer of Stratus, stated, “We believe in the future of
Austin and surrounding markets and our acquisition of Canyon’s interest
in the joint venture that owns the W Austin Hotel and Residences affirms
that belief. Stratus’ ownership of the entire joint
venture provides dependable cash flow from diverse sources, simplifies
operations and is consistent with our previously announced five-year
development plan. We are pleased to have successfully completed this
acquisition in connection with the refinancing of the W Austin Hotel &
Residences project. We would like to congratulate Canyon-Johnson on the
sale and thank them for their participation in Block 21 and support over
the years.”
Also, in connection with its acquisition of Canyon-Johnson’s interest in
Block 21, Stratus, as guarantor, Block 21, as borrower; and Bank of
America, N.A., as administrative agent on behalf of the participating
lenders, amended the BoA Loan agreement to (1) increase the proceeds of
the existing non-recourse term loan from $100.0 million to $130.0
million, (2) reduce the interest rate to the LIBOR daily floating rate
plus 2.35 percent, (3) extend the maturity date to September 28, 2020,
(4) decrease the required debt service coverage ratio to be maintained
by Block 21 from 1.35 to 1.00 to 1.20 to 1.00 and (5) permit Block 21 to
obtain additional third-party financing, subject to certain conditions.
In addition, Canyon-Johnson was released as a guarantor. Accordingly,
certain obligations of Block 21 under the BoA Loan are guaranteed by
Stratus, including environmental indemnification and other customary
carve-out obligations. All other terms and conditions of the BoA Loan
agreement remain unchanged.
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.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS. This
press release contains forward-looking statements which 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, 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.
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