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): November 10,
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 November 10, 2005, announcing
its
third-quarter and nine-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:
November 10, 2005
Stratus
Properties Inc.
Exhibit
Index
Exhibit
Number
|
Press
release dated November 10, 2005, titled “Stratus Properties Inc. Reports
Third-Quarter and Nine-Month 2005 Results and Updates Development
Activities.”
|
||
|
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
THIRD-QUARTER
AND NINE-MONTH 2005 RESULTS
AND
UPDATES DEVELOPMENT ACTIVITIES
HIGHLIGHTS
| · |
Third-quarter
2005 net income totaled $3.3 million, $0.44 per share, compared with
$0.6
million, $0.07 per share, in the year-ago
quarter.
|
| · |
Third-quarter
2005 property sales totaled $11.6 million, including a 38-acre tract
in
Barton Creek for $5.0 million, compared with $3.7 million in the
third
quarter of 2004. 40 lots sold in the third quarter of 2005, compared
with
5 lots in the third quarter of
2004.
|
| · |
For
the fourth quarter of 2005, Stratus’ scheduled real estate sales under
existing homebuilder lot sale contracts include at
least:
|
| o |
12
lots at its Deerfield project for $0.8
million
|
| o |
14
lots in its Circle C community for $0.9
million
|
| o |
2
lots at its Wimberly Lane Phase II subdivision in the Barton Creek
community for $0.3 million
|
|
Third
Quarter
|
Nine
Months
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
|
(In
Thousands, Except Per Share Amounts)
|
||||||||||||
|
Revenues
|
$
|
13,005
|
$
|
4,859
|
$
|
24,677
|
$
|
11,033
|
||||
|
Operating
income (loss)
|
3,596
|
778
|
4,545
|
(1,071
|
)
|
|||||||
|
Net
income (loss) applicable to common stock
|
3,319
|
557
|
3,727
|
(1,737
|
)
|
|||||||
|
Diluted
net income (loss) per share of common stock
|
$
|
0.44
|
$
|
0.07
|
$
|
0.49
|
$
|
(0.24
|
)
|
|||
|
Diluted
average shares of common stock outstanding
|
7,605
|
7,571
|
7,649
|
7,191
|
||||||||
AUSTIN,
TX, November 10, 2005 - Stratus Properties Inc. (NASDAQ: STRS) reported net
income of $3.3 million, $0.44 per share, for the third quarter of 2005 compared
to $0.6 million, $0.07 per share, for the third quarter of 2004. For the nine
months ended September 30, 2005, Stratus reported net income of $3.7 million,
$0.49 per share, compared with a net loss of $1.7 million, $0.24 per share,
for
the nine months ended September 30, 2004.
Real
Estate Revenues.
Stratus’
real estate revenues for the third quarter of 2005 totaled $11.6 million,
including sales of 27 lots at its Deerfield project in Plano, Texas for $1.7
million and four standard homebuilder lots at its Barton Creek Wimberly Lane
Phase II subdivision in Austin, Texas for $0.6 million. Third-quarter 2005
real
estate sales also included nine other residential lots within the Barton Creek
community, five at Calera Drive for $2.1 million and four estate lots at the
Escala Drive subdivision for $2.2 million. During the third quarter of 2005,
Stratus also sold a 38-acre tract within Barton Creek for $5.0 million. Stratus’
real estate revenues for the third quarter of 2004 totaled $3.7 million and
included five residential estate lots within the
Barton
Creek community, three at the Mirador subdivision for $1.0 million and two
at
the Escala Drive subdivision for $0.7 million. In addition, Stratus recognized
$0.3 million of previously deferred revenues related to a 2003 lot sale at
the
Mirador subdivision. During the third quarter of 2004, Stratus also sold an
83-acre undeveloped estate lot within the Barton Creek community for $1.8
million.
Rental
Income and Other Revenues.
For the
third 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 third quarter of 2004. In addition, Stratus earned
$0.4
million in rental income related to its nearly 100 percent leased
75,000-square-foot office building at 7500 Rialto Boulevard for the third
quarter of 2005, compared to $0.3 million for the 2004 period.
Stratus’
other revenues, including management fees, sales commissions and the sale of
development fee credits to third parties, increased to $0.2 million for the
third quarter of 2005 from less than $0.1 million for the 2004 period,
reflecting higher sales of Stratus’ development fee credits to third parties in
the 2005 period.
Development
Activities. Lantana
- As
previously announced, Stratus is working with Advanced Micro Devices, Inc.
(NYSE: AMD) on site planning and related matters necessary for AMD to develop
a
proposed project at Stratus’ Lantana property. The proposed 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 negotiating definitive agreements.
At
September 30, 2005, Stratus’ two 70,000-square-foot office buildings at 7000
West were fully leased and its 75,000-square-foot office building at 7500 Rialto
Boulevard had an occupancy rate of approximately 96 percent. 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 includes an entire city block and is suitable for a mixture of retail,
office, hotel, residential and civic uses. Stratus and the City of Austin have
entered into an exclusive negotiation period to reach agreement on the project’s
design and transaction terms and structure.
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 an average of 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 fourth quarter of 2005 to total two lots for $0.3
million. Wimberly Lane Phase II also includes six estate lots, each averaging
approximately five acres, which Stratus retained and marketed. Estate lot sales
in 2005 through September 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 $6.8 million of remaining availability under its Deerfield
loan
at September 30, 2005. The initial lot sale occurred in November 2004 and
subsequent lot sales are on schedule with 56 lot sales closing in the first
nine
months of 2005. In October 2005, Stratus and the homebuilder executed a revised
agreement which increases lot sizes and average purchase prices, based on a
new
total of 224 lots. Under the revised agreement terms, Stratus expects to
complete 12 lot sales for $0.8 million during the fourth quarter 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 1.0 million square feet of commercial
space, 900 multi-family units and 830 single-family residential lots. In the
second quarter of 2004, Stratus and the City of Austin amended the 2002 Circle
C
settlement to increase the amount of permitted commercial space from 1.0 million
square feet to 1.16 million square feet in exchange for a decrease in allowable
multi-family units from 900 units to 504 units. 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 2005. 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 2005. Development of the second phase of approximately 134 lots
commenced in the third quarter of 2005, with completion projected by early
2006.
Stratus estimates its sales from the first phase of Meridian will total at
least
14 lots for $0.9 million during the fourth quarter 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
168,000-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, two of which were sold in October 2005 and
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.
The second phase of Calera, Calera Drive, consisting of 53 single-family lots
many of which adjoin
the
Fazio
Canyons Golf Course, received final plat and construction permit approval.
Development of these lots was completed and the initial five lots were sold
for
$2.1 million in the third quarter of 2005. During the fourth quarter of 2005
through November 7, 2005, Stratus sold an additional 10 lots for $3.5 million.
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.
Comerica
Revolving Credit Facility.
On
September 30, 2005, Stratus entered into a loan agreement with Comerica to
replace its existing $30.0 million revolving credit facility with Comerica.
The
loan agreement provides for a $45.0 million revolving credit facility, of which
$3.0 million is provided for Stratus’ Calera Court project. The facility matures
on May 30, 2007.
The
facility sets limitations on liens and limitations on transactions with
affiliates, and requires that certain financial ratios be maintained. The
facility allows Stratus to purchase up to $6.5 million of its outstanding common
stock after September 30, 2005. Amounts borrowed under the facility bear
interest at a minimum annual rate of 5.0 percent or, at Stratus’ option,
Comerica’s prime rate plus 0.5 percent or LIBOR plus 2.5 percent. Security for
obligations outstanding under the facility includes substantially all of
Stratus’ assets, except for Escarpment Village, 7000 West, Deerfield and the
Meridian project.
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
|
Nine
Months Ended
|
|||||||||||
|
September
30,
|
September
30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
|
Revenues:
|
||||||||||||
|
Real
estate
|
$
|
11,603
|
$
|
3,728
|
$
|
20,480
|
$
|
7,902
|
||||
|
Rental
income
|
1,223
|
1,103
|
3,608
|
2,905
|
||||||||
|
Commissions,
management fees and other
|
179
|
28
|
589
|
226
|
||||||||
|
Total
revenues
|
13,005
|
4,859
|
24,677
|
11,033
|
||||||||
|
Cost
of sales:
|
||||||||||||
|
Real
estate, net
|
7,074
|
2,555
|
13,063
|
5,771
|
||||||||
|
Rental
|
727
|
47
|
a
|
2,047
|
1,547
|
a
|
||||||
|
Depreciation
|
422
|
398
|
1,259
|
1,105
|
||||||||
|
Total
cost of sales
|
8,223
|
3,000
|
16,369
|
8,423
|
||||||||
|
General
and administrative expenses
|
1,186
|
1,081
|
3,763
|
3,681
|
||||||||
|
Total
costs and expenses
|
9,409
|
4,081
|
20,132
|
12,104
|
||||||||
|
Operating
income (loss)
|
3,596
|
778
|
4,545
|
(1,071
|
)
|
|||||||
|
Interest
expense, net
|
(311
|
)
|
(233
|
)
|
(909
|
)
|
(701
|
)
|
||||
|
Interest
income
|
34
|
12
|
91
|
35
|
||||||||
|
Net
income (loss) applicable to common stock
|
$
|
3,319
|
$
|
557
|
$
|
3,727
|
$
|
(1,737
|
)
|
|||
|
Net
income (loss) per share of common stock:
|
||||||||||||
|
Basic
|
$
|
0.46
|
$
|
0.08
|
$
|
0.52
|
$
|
(0.24
|
)
|
|||
|
Diluted
|
$
|
0.44
|
$
|
0.07
|
$
|
0.49
|
$
|
(0.24
|
)
|
|||
|
Average
shares of common stock outstanding:
|
||||||||||||
|
Basic
|
7,203
|
7,213
|
7,211
|
7,191
|
||||||||
|
Diluted
|
7,605
|
7,571
|
7,649
|
7,191
|
||||||||
| a. |
Includes
a $0.7 million reimbursement of certain building repairs received
from a
settlement with the general contractor responsible for construction
of the
7000 West office buildings.
|
I
STRATUS
PROPERTIES INC.
CONSOLIDATED
BALANCE SHEETS (Unaudited)
(In
Thousands)
|
September
30,
|
December
31,
|
|||||
|
2005
|
2004
|
|||||
|
ASSETS
|
||||||
|
Current
assets:
|
||||||
|
Cash
and cash equivalents, including restricted cash of
|
||||||
|
$119
and $124, respectively
|
$
|
908
|
$
|
379
|
||
|
Accounts
receivable
|
453
|
345
|
||||
|
Prepaid
expenses
|
72
|
40
|
||||
|
Notes
receivable from property sales
|
22
|
47
|
||||
|
Total
current assets
|
1,455
|
811
|
||||
|
Real
estate, commercial leasing assets and facilities, net:
|
||||||
|
Property
held for sale - developed or under development
|
126,207
|
104,526
|
||||
|
Property
held for sale - undeveloped
|
17,181
|
20,919
|
||||
|
Property
held for use, net
|
20,682
|
21,676
|
||||
|
Other
assets
|
3,875
|
4,140
|
||||
|
Notes
receivable from property sales
|
-
|
789
|
||||
|
Total
assets
|
$
|
169,400
|
$
|
152,861
|
||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||
|
Current
liabilities:
|
||||||
|
Accounts
payable and accrued liabilities
|
$
|
4,794
|
$
|
1,343
|
||
|
Accrued
interest, property taxes and other
|
5,318
|
2,390
|
||||
|
Current
portion of long-term debt
|
6,735
|
1,531
|
||||
|
Total
current liabilities
|
16,847
|
5,264
|
||||
|
Long-term
debt
|
57,623
|
54,116
|
||||
|
Other
liabilities
|
5,355
|
5,285
|
||||
|
Total
liabilities
|
79,825
|
64,665
|
||||
|
Stockholders’
equity:
|
||||||
|
Preferred
stock
|
-
|
-
|
||||
|
Common
stock
|
74
|
72
|
||||
|
Capital
in excess of par value of common stock
|
182,086
|
181,145
|
||||
|
Accumulated
deficit
|
(87,690
|
)
|
(91,417
|
)
|
||
|
Unamortized
value of restricted stock units
|
(636
|
)
|
(841
|
)
|
||
|
Common
stock held in treasury
|
(4,259
|
)
|
(763
|
)
|
||
|
Total
stockholders’ equity
|
89,575
|
88,196
|
||||
|
Total
liabilities and stockholders' equity
|
$
|
169,400
|
$
|
152,861
|
||
II
STRATUS
PROPERTIES INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
(In
Thousands)
|
Nine
Months Ended
|
||||||
|
September
30,
|
||||||
|
2005
|
2004
|
|||||
|
Cash
flow from operating activities:
|
||||||
|
Net
income (loss)
|
$
|
3,727
|
$
|
(1,737
|
)
|
|
|
Adjustments
to reconcile net income (loss) to net cash
|
||||||
|
provided
by operating activities:
|
||||||
|
Depreciation
|
1,259
|
1,105
|
||||
|
Cost
of real estate sold
|
11,157
|
4,192
|
||||
|
Stock-based
compensation
|
212
|
127
|
||||
|
Long-term
notes receivable and other
|
1,337
|
(745
|
)
|
|||
|
(Increase)
decrease in working capital:
|
||||||
|
Accounts
receivable and prepaid expenses
|
(115
|
)
|
739
|
|||
|
Accounts
payable, accrued liabilities and other
|
6,449
|
2,004
|
||||
|
Net
cash provided by operating activities
|
24,026
|
5,685
|
||||
|
Cash
flow from investing activities:
|
||||||
|
Purchases
and development of real estate properties
|
(29,745
|
)
|
(16,823
|
)
|
||
|
Municipal
utility district reimbursements
|
645
|
699
|
||||
|
Development
of commercial leasing properties and other expenditures
|
(265
|
)
|
(1,410
|
)
|
||
|
Net
cash used in investing activities
|
(29,365
|
)
|
(17,534
|
)
|
||
|
Cash
flow from financing activities:
|
||||||
|
Borrowings
from revolving credit facility
|
47,005
|
11,200
|
||||
|
Payments
on revolving credit facility
|
(45,640
|
)
|
(7,261
|
)
|
||
|
Borrowings
from project loans
|
11,791
|
8,270
|
||||
|
Payments
on project loans
|
(4,445
|
)
|
(178
|
)
|
||
|
Purchases
of Stratus common shares
|
(3,307
|
)
|
(189
|
)
|
||
|
Net
proceeds from exercise of stock options
|
747
|
724
|
||||
|
Bank
credit facility fees
|
(283
|
)
|
-
|
|||
|
Net
cash provided by financing activities
|
5,868
|
12,566
|
||||
|
Net
increase in cash and cash equivalents
|
529
|
717
|
||||
|
Cash
and cash equivalents at beginning of year
|
379
|
3,413
|
||||
|
Cash
and cash equivalents at end of period
|
908
|
4,130
|
||||
|
Less
cash restricted as to use
|
(119
|
)
|
(1,775
|
)
|
||
|
Unrestricted
cash and cash equivalents at end of period
|
$
|
789
|
$
|
2,355
|
||
III