Stratus Properties Inc. closes the sale of The Santal for $ 152 million

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AUSTIN, Texas – (COMMERCIAL THREAD) – Stratus Properties Inc. (NASDAQ: STRS) (“Stratus” or the “Company”) announced today that it has completed the previously announced sale of The Santal for $ 152 million, or approximately $ 339,000 per unit, cash. The sale generated pre-tax net cash proceeds for Stratus of approximately $ 74 million, after transaction costs and the project loan payment. Stratus estimates the net after-tax cash proceeds to be approximately $ 51 million, after payment of the profit-sharing incentive plan amounts, and expects to record a pre-tax gain on the sale of approximately $ 80 million. dollars in the fourth quarter of 2021.

The sale generated an internal rate of return for Stratus of approximately 32% (pre-tax) calculated based on the company’s book value of the property contributed to the project, resulting in a multiple of 3.58x . The sale price of The Santal implies a net asset value (“NAV”) of $ 51 million, a premium of 103% over The Santal’s estimated after-tax net asset value of $ 25 million as of December 31, 2020, as reflected in Stratus’ investor presentation. dated March 15, 2021, available on the Stratus website.

The Santal was a luxury 448-unit garden-style multi-family apartment complex owned by Stratus, located in the N section of the upscale community of Barton Creek in Austin, located just minutes from downtown Austin and offering both Hill Country and downtown Austin views. Stratus began construction on the Sandalwood in the first quarter of 2015 and completed the construction of the first phase in the third quarter of 2016 and the second phase in the first quarter of 2019. Stratus has had the opportunity to sell the Sandalwood in 2019 at a price significantly lower than the current one. sale price, but chose to keep it and refinance it at that time. At the date of the sale, Le Santal was fully leased and stabilized.

William H. Armstrong III, Chairman and CEO of Stratus, said, “We are delighted with the continued validation of our strategy to find, plan, develop and sell properties at the right time. The selling prices for Sandalwood and Saint Mary, which we sold earlier this year, reflect significant premiums to NAV. The Board of Directors is currently reviewing the options for using the proceeds from the sale of The Santal and incorporating into its analysis the potential cash proceeds from the pending Block 21 sale. ”

Mr. Armstrong continued, “We look forward to advancing our current portfolio of development opportunities, which includes The Annie B, a luxury tower in downtown Austin; The Saint June, which is currently under construction in the Amarra section of Barton Creek; the N Section of Holden Hills residential and mixed-use development projects planned for Barton Creek; and several multi-family, HEB-anchored or phantom-anchored development projects in Austin and the greater Houston market. “

Stratus’ board of directors and management remain engaged in a strategic planning process, which includes reviewing the use of the proceeds from the sale of The Sandalwood and the ongoing sale of Block 21, as well as than Stratus’ long-term business strategy. Potential uses of the proceeds may include a combination of further deleveraging, returning liquidity to shareholders, and reinvesting in Stratus’ portfolio of projects. These factors may affect Stratus’ assessment of a potential conversion to a REIT. In the meantime, Stratus plans to use approximately $ 56 million of the pre-tax net cash proceeds from the sale of The Santal to pay off the full balance of its revolving credit facility with Comerica Bank.

About Stratus Properties Inc.

Stratus is a diversified real estate company engaged primarily in the acquisition, allocation, development, management and sale of commercial, 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 Texas markets.

Forward-looking statements

This press release contains forward-looking statements in which Stratus discusses factors that it believes could affect its future performance. Forward-looking statements are all statements other than statements of historical fact, such as plans, projections or expectations relating to the estimated earnings and net cash proceeds of Stratus from the sale of The Santal, and the potential uses of Stratus. proceeds from the sale of The Santal and the pending sale of block 21. The words “foresee”, “may”, “may”, “could”, “plans”, “believe”, “potential”, “possible”, “Estimates”, “expects”, “” projects “,” targets “,” intends “,” likely “,” will “,” should “,” be “and any similar expression is intended to identify these statements as forward-looking statements. Stratus cautions readers that forward-looking statements are not guarantees of future performance and that its actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. can ensure that the results The actual benefits of Stratus differ materially from those anticipated in the forward-looking statements include, but are not limited to, the possibility that the anticipated benefits from the sale of The Sandalwood may not be fully realized or may take longer to be realized. than expected, the occurrence of any event, change or other circumstance that could delay the closing of the Block 21 sale, or result in the termination of the Block 21 sale agreements, the results of the Board’s strategic planning process, uncertainty and the continued impact of the COVID-19 pandemic and other factors described in more detail under “Risk Factors” in Stratus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2020 , and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, each filed with the United States Securities and Exchange Commission.

Under Stratus Comerica Bank’s $ 60 Million Revolving Credit Facility, Stratus is not permitted to repurchase its common stock for more than $ 1 million or pay dividends on its common stock without written consent. prior to Comerica Bank. The declaration of dividends or the decision to repurchase the common shares of Stratus is at the discretion of the board of directors of Stratus, subject to restrictions under the Stratus Comerica Bank credit facility, and will depend on the financial results of Stratus, cash flow requirements, expected compliance with debt covenants, outlook and other factors considered relevant by the Board.

Investors are cautioned that many of the assumptions upon which Stratus’ forward-looking statements are based are subject to change after the date on which the forward-looking statements are made. In addition, Stratus may make changes to its business plans that could affect its results. Stratus cautions investors that it makes no commitment to update any forward-looking statements, which speak only as of the date they are posted, notwithstanding any change in its assumptions, business plans, actual experience or other changes.

A copy of this press release is available on the Stratus website, stratusproperties.com.


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