UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): August 12,
2005
Stratus
Properties Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-19989
|
72-1211572
|
||
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification Number)
|
|
98
San Jacinto Blvd., Suite 220
|
|
|
Austin,
Texas
|
78701
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (512) 478-5788
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
2.02. Results
of Operations and Financial Condition.
Stratus
Properties Inc. issued a press release dated August 12, 2005, announcing
its
second-quarter and six-month 2005 results and updating its development
activities (see exhibit 99.1).
Item
9.01. Financial
Statements and Exhibits.
(c)
Exhibits.
The
Exhibits included as part of this Current Report are listed in the attached
Exhibit Index.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Stratus
Properties Inc.
By:
/s/
John E. Baker
----------------------------------------
John
E.
Baker
Senior
Vice President and
Chief
Financial Officer
(authorized
signatory and
Principal
Financial Officer)
Date:
August 12, 2005
Stratus
Properties Inc.
Exhibit
Index
Exhibit
Number
|
|
NEWS
RELEASE
|
|
NASDAQ
Symbol: “STRS”
|
|
|
Stratus
Properties Inc.
|
Financial
and Media Contact:
|
|
98
San Jacinto Blvd. Suite 220
|
William
H. Armstrong III
|
|
Austin,
Texas 78701
|
(512)
478-5788
|
STRATUS
PROPERTIES INC. REPORTS
SECOND-QUARTER
AND SIX-MONTH 2005 RESULTS
AND
UPDATES DEVELOPMENT ACTIVITIES
HIGHLIGHTS
| · |
Second-quarter
2005 property sales totaled $6.6 million compared with $3.2 million
in the
second quarter of 2004.
|
| · |
For
the remainder of 2005, Stratus’ scheduled real estate sales under existing
homebuilder lot sale contracts include at
least:
|
| o |
47
lots at its Deerfield project for $2.9
million
|
| o |
14
lots in its Circle C community for $0.9
million
|
| o |
6
lots at its Wimberly Lane Phase II subdivision in the Barton Creek
community for $0.9 million
|
|
Second
Quarter
|
Six
Months
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
|
(In
Thousands, Except Per Share Amounts)
|
||||||||||||
|
Revenues
|
$
|
8,042
|
$
|
4,227
|
$
|
11,672
|
$
|
6,174
|
||||
|
Operating
income (loss)
|
1,594
|
(269
|
)
|
949
|
(1,849
|
)
|
||||||
|
Net
income (loss) applicable to common stock
|
1,320
|
(489
|
)
|
408
|
(2,294
|
)
|
||||||
|
Diluted
net income (loss) per share of common stock
|
$
|
0.17
|
$
|
(0.07
|
)
|
$
|
0.05
|
$
|
(0.32
|
)
|
||
|
Diluted
average shares of common stock outstanding
|
7,680
|
7,212
|
7,671
|
7,180
|
||||||||
AUSTIN,
TX, August 12, 2005 - Stratus Properties Inc. (NASDAQ: STRS) reported net income
of $1.3 million, $0.17 per share, for the second quarter of 2005 compared to
a
net loss of $0.5 million, $0.07 per share, for the second quarter of 2004.
For
the six months ended June 30, 2005, Stratus reported net income of $0.4 million,
$0.05 per share, compared with a net loss of $2.3 million, $0.32 per share,
for
the six months ended June 30, 2004.
Development
Activities. Lantana
- As
previously announced, Stratus is working with Advanced Micro Devices, Inc.
(NYSE: AMD) on site planning and related matters necessary to develop a proposed
project at Stratus’ Lantana property. The AMD project consists of approximately
825,000 square feet of office and related uses located on a 59-acre site at
the
southeast corner of West William Cannon Drive and Southwest Parkway. Lantana
is
a partially developed, mixed-use project with remaining entitlements for
approximately three million square feet of office and retail use on 282 acres.
Regional utility and road infrastructure is in place with capacity to serve
Lantana. Development of the AMD project is subject to several conditions,
including finalizing definitive agreements and securing
financing.
At
June
30, 2005, Stratus’ 75,000-square-foot office building at 7500 Rialto Boulevard
was fully leased. As demand for office space within Lantana has increased,
Stratus plans to commence construction of a second 75,000-square-foot office
building at 7500 Rialto Boulevard during the coming year, subject to securing
suitable tenant leases.
Downtown
Austin Project
- In
April 2005, the City of Austin selected Stratus’ proposal to develop a mixed-use
project in downtown Austin immediately north of the new City Hall complex.
The
project is planned for retail, office and residential uses, and will be the
future site of the Austin Children’s Museum. Stratus and the City of Austin have
entered an exclusive negotiation period to reach agreement on the project’s
design and transaction terms and structure. Subject to successful negotiations
with the City of Austin, Stratus plans to pursue this project in partnership
with nationally recognized office, retail and apartment developers.
Wimberly
Lane Phase II
- In May
2004, Stratus entered into a contract with a national homebuilder to sell 41
lots within the Wimberly Lane Phase II subdivision in the Barton Creek
community. In June 2004, the homebuilder paid Stratus a non-refundable $0.6
million deposit for the right to purchase the 41 lots, which was used to pay
ongoing development costs of the lots. The deposit is being recognized as income
as lots are sold. The lots are being sold on a scheduled takedown basis, with
six lots sold in December 2004 following completion of subdivision utilities,
and then three lots per quarter beginning in June 2005. The average purchase
price for each of the 41 lots is $150,400, subject to a six percent annual
escalator commencing in December 2004. Stratus expects scheduled homebuilder
sales during the remainder of 2005 to total six lots for $0.9 million. Wimberly
Lane Phase II also includes six estate lots, each averaging approximately five
acres, which Stratus is retaining and marketing. Estate lot sales in 2005
through June 30 included five lots (one in the first quarter and four in the
second quarter) for $1.5 million.
Deerfield
- In
January 2004, Stratus acquired approximately 68 acres of land in Plano, Texas,
for $7.0 million. The property (Deerfield) is zoned and subject to a preliminary
subdivision plan for 234 residential lots. In February 2004, Stratus executed
an
Option Agreement and a Construction Agreement with a national homebuilder.
Pursuant to the Option Agreement, the homebuilder paid Stratus $1.4 million
for
an option to purchase all 234 lots over 36 monthly take-downs. The net purchase
price for each of the 234 lots is $61,500, subject to certain terms and
conditions. The $1.4 million option payment is non-refundable, but will be
applied against subsequent purchases of lots by the homebuilder after certain
thresholds are achieved and will be recognized by Stratus as income as lots
are
sold. The Construction Agreement requires the homebuilder to complete
development of the entire project by March 15, 2007. Stratus agreed to fund
up
to $5.2 million of the homebuilder’s development costs. The homebuilder must pay
all property taxes and maintenance costs. In February 2004, Stratus entered
into
a $9.8 million three-year loan agreement with Comerica Bank to finance the
acquisition and development of Deerfield. Development is proceeding on schedule
and Stratus had $5.6 million of remaining availability under its Deerfield
loan
at June 30, 2005. The initial lot sale occurred in November 2004 and subsequent
lot sales are on schedule with 29 lot sales closing in the first half of 2005.
Under the agreement terms, Stratus expects to complete 47 lot sales for $2.9
million during the remainder of 2005.
Circle
C Community
-
Stratus also has commenced development activities at the Circle C community
based on the entitlements secured in its 2002 Circle C settlement with the
City
of Austin, which permits development of one million square feet of commercial
space, 900 multi-family units and 830 single-family residential lots. The
preliminary plan has been approved for Meridian, an 800-lot residential
development at the Circle C community. In October 2004, Stratus received final
City of Austin plat and construction permit approvals for the first phase of
Meridian, and construction commenced in January. During the first quarter of
2005, Stratus contracted to sell a total of 494 lots in its Meridian project
to
three national homebuilders in four phases. Sales for each of the four phases
commence upon substantial completion of development for that phase, and continue
every quarter until all of the lots have been sold. The first phase, which
is
currently under development, includes 134 lots and substantial completion is
projected prior to year-end. Development of the second phase of approximately
134 lots will commence in the third quarter of 2005, with completion projected
by early 2006. Stratus estimates its sales from the first phase of Meridian
to
total at least 14 lots for $0.9 million during the remainder of
2005.
In
addition, several retail sites at the Circle C community received final City
of
Austin approvals and are being developed. Zoning for Escarpment Village, a
160,000-square-foot retail project anchored by a grocery store, was approved
during the second quarter of 2004, and construction has commenced with
completion expected by mid-2006. In December 2004, Stratus obtained an $18.5
million project loan from Comerica Bank to fund the construction of Escarpment
Village, as well as a $22.8 million commitment from the Teachers Insurance
and
Annuity Association of America for a long-term mortgage for the completed
project.
Calera
-
During
2004, Stratus completed construction of four courtyard homes at Calera Court
within the Barton Creek community, one of which was sold in the first quarter
of
2004. Calera Court, the initial phase of the “Calera” subdivision, will include
17 courtyard homes on 16 acres. Funding for the construction of courtyard homes
at Calera Court is provided by a $3.0 million project loan established with
Comerica Bank in September 2003. The second phase of Calera, Calera Drive,
consisting of 53 single-family lots many of which adjoin the Fazio Canyons
Golf
Course, has received final plat and construction permit approval. Development
of
these lots is expected to be completed during the third quarter of 2005.
Development of the third and last phase of Calera, which will include
approximately 70 single-family lots, is not expected to commence until after
2005.
Real
Estate Revenues.
Stratus’
real estate revenues for the second quarter of 2005 totaled $6.6 million,
including sales of 13 lots at its Deerfield project in Plano, Texas for $0.8
million and three standard homebuilder lots for $0.5 million and four estate
lots for $1.2 million at its Barton Creek Wimberly Lane Phase II subdivision
in
Austin, Texas. Second-quarter 2005 real estate sales also included eight other
residential estate lots within the Barton Creek community, six at the Mirador
subdivision for $3.3 million and two at the Escala Drive subdivision for $0.8
million. Stratus’ real estate revenues for the second quarter of 2004 totaled
$3.2 million, which included sales of five residential estate lots, three at
its
Escala Drive subdivision for $1.0 million and two at its Mirador subdivision
for
$0.8 million. During the second quarter of 2004, Stratus also sold two tracts
totaling three acres within its Circle C community for $1.4
million.
Rental
Income and Other Revenues.
For the
second quarter of 2005, Stratus earned rental income of $0.9 million from its
two fully leased 7000 West office buildings in Lantana in southwest Austin,
compared to $0.8 million for the second quarter of 2004. In addition, Stratus
earned $0.3 million in rental income related to its fully leased
75,000-square-foot office building at 7500 Rialto Boulevard for the second
quarter of 2005, compared to $0.2 million for the second quarter of 2004, as
the
occupancy rate increased to 100 percent in the second quarter of 2005 from
approximately 57 percent in the second quarter of 2004.
Stratus’
other revenues, including management fees, sales commissions and the sale of
development fee credits to third parties, increased to $0.3 million for the
second quarter of 2005 from less than $0.1 million for the 2004 period,
reflecting higher commissions from increased developed property sales in the
2005 period.
Stratus
is a diversified real estate company engaged in the acquisition, development,
management and sale of commercial, multi-family and residential real estate
properties located primarily in the Austin, Texas area.
____________________________
CAUTIONARY
STATEMENT. This press release contains certain forward-looking statements
regarding proposed real estate sales and development activities at the Deerfield
project, the Barton Creek community, the Circle C community and at Lantana
and
the proposed development of a mixed-use project in downtown Austin. Important
factors that might cause future results to differ from those projections include
economic and business conditions, the availability of financing, regulatory
approvals and environmental regulations, which are described in more detail
in
Stratus’ 2004 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
A
copy of
this release is available on our web site,
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,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
|
Revenues:
|
||||||||||||
|
Real
estate
|
$
|
6,625
|
$
|
3,202
|
$
|
8,877
|
$
|
4,174
|
||||
|
Rental
income
|
1,165
|
974
|
2,385
|
1,802
|
||||||||
|
Commissions,
management fees and other
|
252
|
51
|
410
|
198
|
||||||||
|
Total
revenues
|
8,042
|
4,227
|
11,672
|
6,174
|
||||||||
|
Cost
of sales:
|
||||||||||||
|
Real
estate, net
|
4,097
|
2,103
|
5,989
|
3,216
|
||||||||
|
Rental
|
712
|
811
|
1,320
|
1,500
|
||||||||
|
Depreciation
|
419
|
362
|
837
|
707
|
||||||||
|
Total
cost of sales
|
5,228
|
3,276
|
8,146
|
5,423
|
||||||||
|
General
and administrative expenses
|
1,220
|
1,220
|
2,577
|
2,600
|
||||||||
|
Total
costs and expenses
|
6,448
|
4,496
|
10,723
|
8,023
|
||||||||
|
Operating
income (loss)
|
1,594
|
(269
|
)
|
949
|
(1,849
|
)
|
||||||
|
Interest
expense, net
|
(304
|
)
|
(231
|
)
|
(598
|
)
|
(468
|
)
|
||||
|
Interest
income
|
30
|
11
|
57
|
23
|
||||||||
|
Net
income (loss) applicable to common stock
|
$
|
1,320
|
$
|
(489
|
)
|
$
|
408
|
$
|
(2,294
|
)
|
||
|
Net
income (loss) per share of common stock:
|
||||||||||||
|
Basic
|
$
|
0.18
|
$
|
(0.07
|
)
|
$
|
0.06
|
$
|
(0.32
|
)
|
||
|
Diluted
|
$
|
0.17
|
$
|
(0.07
|
)
|
$
|
0.05
|
$
|
(0.32
|
)
|
||
|
Average
shares of common stock outstanding:
|
||||||||||||
|
Basic
|
7,213
|
7,212
|
7,215
|
7,180
|
||||||||
|
Diluted
|
7,680
|
7,212
|
7,671
|
7,180
|
||||||||
I
STRATUS
PROPERTIES INC.
CONSOLIDATED
BALANCE SHEETS (Unaudited)
(In
Thousands)
|
June
30,
|
December
31,
|
|||||
|
2005
|
2004
|
|||||
|
ASSETS
|
||||||
|
Current
assets:
|
||||||
|
Cash
and cash equivalents, including restricted cash of
|
||||||
|
$121
and $124, respectively
|
$
|
1,308
|
$
|
379
|
||
|
Accounts
receivable
|
203
|
345
|
||||
| Prepaid expenses |
112
|
40
|
||||
|
Notes
receivable from property sales
|
47
|
47
|
||||
|
Total
current assets
|
1,670
|
811
|
||||
|
Real
estate, commercial leasing assets and facilities, net:
|
||||||
|
Property
held for sale - developed or under development
|
122,587
|
104,526
|
||||
|
Property
held for sale - undeveloped
|
17,125
|
20,919
|
||||
|
Property
held for use, net
|
21,060
|
21,676
|
||||
|
Other
assets
|
3,909
|
4,140
|
||||
|
Notes
receivable from property sales
|
780
|
789
|
||||
|
Total
assets
|
$
|
167,131
|
$
|
152,861
|
||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||
|
Current
liabilities:
|
||||||
|
Accounts
payable and accrued liabilities
|
$
|
5,186
|
$
|
1,343
|
||
|
Accrued
interest, property taxes and other
|
4,459
|
2,390
|
||||
|
Current
portion of long-term debt
|
7,895
|
1,531
|
||||
|
Total
current liabilities
|
17,540
|
5,264
|
||||
|
Long-term
debt
|
56,183
|
54,116
|
||||
|
Other
liabilities
|
5,349
|
5,285
|
||||
|
Total
liabilities
|
79,072
|
64,665
|
||||
|
Stockholders’
equity:
|
||||||
|
Preferred
stock
|
-
|
-
|
||||
|
Common
stock
|
73
|
72
|
||||
|
Capital
in excess of par value of common stock
|
181,483
|
181,145
|
||||
|
Accumulated
deficit
|
(91,008
|
)
|
(91,417
|
)
|
||
|
Unamortized
value of restricted stock units
|
(705
|
)
|
(841
|
)
|
||
|
Common
stock held in treasury
|
(1,784
|
)
|
(763
|
)
|
||
|
Total
stockholders’ equity
|
88,059
|
88,196
|
||||
|
Total
liabilities and stockholders' equity
|
$
|
167,131
|
$
|
152,861
|
||
II
STRATUS
PROPERTIES INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
(In
Thousands)
|
Six
Months Ended
|
||||||
|
June
30,
|
||||||
|
2005
|
2004
|
|||||
|
Cash
flow from operating activities:
|
||||||
|
Net
income (loss)
|
$
|
408
|
$
|
(2,294
|
)
|
|
|
Adjustments
to reconcile net income (loss) to net cash
|
||||||
|
provided
by operating activities:
|
||||||
|
Depreciation
|
837
|
707
|
||||
|
Cost
of real estate sold
|
4,632
|
2,231
|
||||
|
Stock-based
compensation
|
141
|
85
|
||||
|
Long-term
notes receivable and other
|
341
|
(35
|
)
|
|||
|
Decrease
in working capital:
|
||||||
|
Accounts
receivable and prepaid expenses
|
70
|
629
|
||||
|
Accounts
payable, accrued liabilities and other
|
5,976
|
1,075
|
||||
|
Net
cash provided by operating activities
|
12,405
|
2,398
|
||||
|
Cash
flow from investing activities:
|
||||||
|
Purchases
and development of real estate properties
|
(18,898
|
)
|
(12,569
|
)
|
||
|
Municipal
utility district reimbursements
|
-
|
136
|
||||
|
Development
of commercial leasing properties and other expenditures
|
(222
|
)
|
(1,017
|
)
|
||
|
Net
cash used in investing activities
|
(19,120
|
)
|
(13,450
|
)
|
||
|
Cash
flow from financing activities:
|
||||||
|
Borrowings
from revolving credit facility
|
16,490
|
6,228
|
||||
|
Payments
on revolving credit facility
|
(11,378
|
)
|
(3,953
|
)
|
||
|
Borrowings
from project loans
|
5,315
|
6,317
|
||||
|
Payments
on project loans
|
(1,996
|
)
|
(331
|
)
|
||
|
Net
proceeds from exercise of stock options
|
332
|
724
|
||||
|
Purchases
of Stratus common shares
|
(1,018
|
)
|
-
|
|||
|
Bank
credit facility fees
|
(101
|
)
|
-
|
|||
|
Net
cash provided by financing activities
|
7,644
|
8,985
|
||||
|
Net
increase (decrease) in cash and cash equivalents
|
929
|
(2,067
|
)
|
|||
|
Cash
and cash equivalents at beginning of year
|
379
|
3,413
|
||||
|
Cash
and cash equivalents at end of period
|
1,308
|
1,346
|
||||
|
Less
cash restricted as to use
|
(121
|
)
|
(782
|
)
|
||
|
Unrestricted
cash and cash equivalents at end of period
|
$
|
1,187
|
$
|
564
|
||
III