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 5, 2004
Stratus Properties Inc.
Delaware
0-19989
72-1211572
(State or other
(Commission
(IRS Employer
jurisdiction of
File Number)
Identification
incorporation)
Number)
98 San Jacinto Blvd., Suite 220
Austin, Texas 78701
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 5, 2004, announcing its third-quarter and nine months 2004 results and certain recent developments (see exhibit 99).
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 5, 2004
Stratus Properties Inc.
Exhibit Index
Exhibit
Number
99 | Press release dated November 5, 2004, titled “Stratus Properties Inc. Reports Third-Quarter and Nine Months 2004 Results.” | |
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 MONTHS 2004 RESULTS
HIGHLIGHTS
*
Sold 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.
*
Sold an 83-acre estate lot in the Barton Creek community for $1.8 million.
|
Third Quarter |
Nine Months | |||||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||||
|
(In Thousands, Except Per Share Amounts) | ||||||||||||||
|
Revenues |
$ |
4,859 |
$ |
7,622 |
$ |
11,033 |
$ |
11,817 | ||||||
|
Operating income (loss) |
778 |
1,855 |
(1,071 |
) |
662 | |||||||||
|
Net income (loss) |
557 |
2,220 |
(1,737 |
) |
719 | |||||||||
|
Net income (loss) per share of common stock |
$ |
0.07 |
$ |
0.30 |
$ |
(0.24 |
) |
$ |
0.10 | |||||
|
Average shares outstanding |
7,571 |
7,346 |
7,191 |
7,297 | ||||||||||
AUSTIN, TX, November 5, 2004 – Stratus Properties Inc. (NASDAQ:STRS) reported net income of $0.6 million, $0.07 per share, for the third quarter of 2004 compared to net income of $2.2 million, $0.30 per share, for the third quarter of 2003. Net income for the third quarter of 2004 included $0.7 million for reimbursement of certain building repairs received from a settlement with the general contractor responsible for construction of the 7000 West office buildings. Third-quarter 2003 net income included $1.7 million of Municipal Utility District reimbursements. For the nine months ended September 30, 2004, Stratus reported a net loss of $1.7 million, $0.24 per share, compared with net income of $0.7 million, $0.10 per share, for the nine months ended September 30, 2003.
Revenues. Stratus’ revenues for the third quarter of 2004 totaled $4.9 million, including sales of five residential estate lots within the Barton Creek community in Austin, three at the Mirador subdivision for $1.0 million and two at the Escala Drive subdivision for $0.7 million. Stratus also sold an 83-acre estate lot at the Barton Creek community for $1.8 million and recognized $0.3 million of previously deferred revenues related to a 2003 lot sale at the Mirador subdivision. Stratus’ revenues for the third quarter of 2003 totaled $7.6 million, which included $4.6 million for the sale of its entire 142 acres of residential real estate within the Lantana development in southwest Austin, $1.2 million for the sale of a 1.5-acre retail tract within the Circle C development and $0.5 million for the sale of two residential estate lots at the Mirador subdivision. For the third quarter of 2004, Stratus received rental income of $0.8 million from its two fully leased 7000 West office buildings in the Lantana project in southwest Austin, compared to $0.9 million for the third quarter of 2003. In addition, Stratus earned $0.3 million in rental income related to its 75,000-square-foot office building at 7500 Rialto Drive for the third quarter of 2004, compared to $0.1 million for the third quarter of 2003, as the occupancy rate increased from approximately 37 percent in the third quarter of 2003 to 94 percent in the third quarter of 2004. During the third quarter of 2004, Stratus executed leases that will bring its 7500 Rialto Drive office building to 97 percent occupancy by year end.
During the third quarter of 2003, Stratus had other revenue totaling $0.4 million, which included management fees and sales commissions totaling $0.2 million and the sale of $0.2 million of development fee credits to third parties. During the third quarter of 2003, Barton Creek Municipal Utility District No. 4 issued $5.0 million in bonds, of which Stratus received approximately $3.8 million representing a $2.1 million reimbursement recorded as a reduction of capital expenditures, a $1.2 million reimbursement recorded as a reduction to cost of sales and $0.5 million for interest on the reimbursements.
Development Activities. In May 2004, Stratus entered into a contract with a national homebuilder to sell 41 lots within the Wimberly Lane Phase II subdivision. Stratus is retaining and marketing the remaining six estate lots in the subdivision, each averaging approximately five acres. In June 2004, the homebuilder paid Stratus a non-refundable $0.6 million deposit for the right to purchase the 41 lots, which has been used to pay ongoing development costs of the lots. The deposit will be recognized as income as lots are sold. The lots will be sold on an installment basis, with six lots to be sold upon substantial completion of subdivision utilities, and then three lots per quarter beginning 150 days after the sale of the initial lots. The average purchase price for each of the 41 lots is $150,400, subject to a six percent annual escalator commencing upon substantial comp letion of development. Subdivision streets and utilities were completed in October 2004 and the initial lot closings are scheduled to occur in November 2004.
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, Stratus was paid $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 would be applied against subsequent purchases of lots by the homebuilder after certain thresholds are achieved and will be recognized 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 $4.6 million of remaining availability under its Deerfield loan at September 30, 2004. The initial lot closing is scheduled to occur in November 2004.
Stratus also has commenced development activities at Circle C based on the entitlements set forth in its 2002 Circle C Settlement with the City of Austin. The preliminary plan has been approved for Meridian, an 800-lot residential development at Circle C. In October 2004, Stratus received final City of Austin plat and construction permit approvals for the first phase of Meridian. In addition, several retail sites at Circle C have received final City of Austin approvals and are being developed. Other retail sites, including a proposed 160,000-square-foot project anchored by a grocery store, are proceeding through the City of Austin approval process. Zoning for the 160,000-square-foot project was approved during the second quarter of 2004, and construction is expected to commence prior to year end 2004. The Circle C Settlement permits development of one million square feet of commercial space, 900 multi-family units and 830 single-family residential lots. &nbs p;
During the first quarter of 2004, Stratus completed construction of four courtyard homes at Calera Court within the Barton Creek community, one of which has been sold. Calera Court, the initial phase of the “Calera Drive” subdivision, will include 17 courtyard homes on 16 acres. The second phase of Calera Drive, consisting of 53 single-family lots, has received final plat and construction permit approval. The development of these lots, many of which adjoin the Fazio Canyons Golf Course, is expected to begin at the end of 2004. The last phase of Calera Drive, which will include approximately 70 single-family lots, also has been approved. Funding for the construction of courtyard homes at Calera Court is provided by a $3.0 million project loan, which Stratus established with Comerica Bank in September 2003. The project loan, which matures in November 2005, is secured by the courtyard homes at Calera Court.
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 sales and development. Important factors that might cause future results to differ from those projections include refinancing agreements, regulatory approvals and environmental regulations, which are described in more detail in Stratus’ 2003 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)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||
Revenues: | ||||||||||||
Real estate | $ | 3,756 | $ | 6,671 | $ | 8,128 | $ | 9,018 | ||||
Rental income | 1,103 | 951 | 2,905 | 2,799 | ||||||||
Total revenues | 4,859 | 7,622 | 11,033 | 11,817 | ||||||||
Cost of sales: | ||||||||||||
Real estate, net | 2,555 | 3,860 | a | 5,771 | 5,335 | a | ||||||
Rental | 47 | b | 626 | 1,547 | b | 1,775 | ||||||
Depreciation | 398 | 329 | 1,105 | 978 | ||||||||
Total cost of sales | 3,000 | 4,815 | 8,423 | 8,088 | ||||||||
General and administrative expenses | 1,081 | 952 | 3,681 | 3,067 | ||||||||
Total costs and expenses |
| 4,081 |
| 5,767 |
| 12,104 |
| 11,155 | ||||
Operating income (loss) | 778 | 1,855 | (1,071 | ) | 662 | |||||||
Interest expense, net | (233 | ) | (202 | ) | (701 | ) | (674 | ) | ||||
Interest income |
| 12 |
| 567 | c |
| 35 |
| 702 | c | ||
Equity in unconsolidated affiliates’ income | - | - | - | 29 | ||||||||
Net income (loss) | $ | 557 | $ | 2,220 | $ | (1,737 | ) | $ | 719 | |||
Net income (loss) per share of common stock: | ||||||||||||
Basic | $0.08 | $0.31 | $(0.24 | ) | $0.10 | |||||||
Diluted | $0.07 | $0.30 | $(0.24 | ) | $0.10 | |||||||
Average shares outstanding: | ||||||||||||
Basic | 7,213 | 7,123 | 7,191 | 7,123 | ||||||||
Diluted | 7,571 | 7,346 | 7,191 | 7,297 | ||||||||
a.
Includes a $1.2 million Municipal Utility District reimbursement recorded as a reduction to cost of sales.
b.
Amounts were reduced by $0.7 million for reimbursement of certain building repairs received from a settlement with the general contractor responsible for construction of the 7000 West office buildings.
c.
Includes interest on Municipal Utility District reimbursements totaling $0.5 million in the third quarter of 2003 and $0.6 million during the first nine months of 2003.
STRATUS PROPERTIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
(In Thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents, including restricted cash of $1.8 million and $0.2 million, respectively |
| $ | 4,130 | $ | 3,413 | |||
Accounts receivable | 161 | 768 | ||||||
Prepaid expenses | 79 |
| 194 | |||||
Notes receivable from property sales | 43 | 60 | ||||||
Total current assets | 4,413 | 4,435 | ||||||
Real estate and facilities, net | 125,732 | a | 113,732 | |||||
Commercial leasing assets, net | 22,398 | 22,160 | ||||||
Other assets | 2,055 | 1,929 | ||||||
Notes receivable from property sales | 793 | b | 174 | |||||
Total assets | $ | 155,391 | $ | 142,430 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 1,912 | $ | 1,773 | ||||
Accrued interest, property taxes and other | 2,774 | 3,015 | ||||||
Current portion of borrowings outstanding | 434 | 434 | ||||||
Total current liabilities | 5,120 | 5,222 | ||||||
Long-term debt | 59,136 | c | 47,105 | |||||
Other liabilities | 5,388 | d | 3,282 | |||||
Stockholders' equity |
| 85,747 |
| 86,821 | ||||
Total liabilities and stockholders' equity | $ | 155,391 | $ | 142,430 | ||||
a.
Includes 68 acres of land in Plano, Texas (Deerfield), which was acquired in January 2004 for $7.0 million.
b.
Balance represents long-term notes receivable related to the third-quarter 2004 sales of three residential estate lots at the Mirador subdivision.
c.
Includes borrowings of $5.2 million from the Deerfield loan and $1.2 million from the Calera Court project loan during the first nine months of 2004.
d.
Includes $1.4 million and $0.6 million of non-refundable deposits related to the Deerfield property and Wimberly Lane Phase II subdivision, respectively, to be recognized as income as lots are sold.
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2004 | 2003 | |||||||
(In Thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net income (loss) | $ | (1,737 | ) | $ | 719 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation | 1,105 | 978 | ||||||
Cost of real estate sold | 4,192 | 4,494 | ||||||
Stock-based compensation | 127 | 88 | ||||||
Long-term notes receivable and other | (745 | ) | 1,280 | |||||
Equity in unconsolidated affiliates’ income | - | (29 | ) | |||||
Distribution of unconsolidated affiliates’ income | - | 29 | ||||||
Decrease in working capital: | ||||||||
Accounts receivable and prepaid expenses | 739 | 383 | ||||||
Accounts payable, accrued liabilities and other | 2,004 | a | 266 | |||||
Net cash provided by operating activities |
| 5,685 |
| 8,208 | ||||
Cash flow from investing activities: | ||||||||
Purchase and development of Deerfield property | (8,908 | ) | - | |||||
Development of other real estate and facilities, net of municipal utility district reimbursements | (8,626 | ) | (6,680 | ) | ||||
Distribution from Lakeway Project | - | 191 | ||||||
Net cash used in investing activities |
| (17,534 | ) |
| (6,489 | ) | ||
Cash flow from financing activities: | ||||||||
Borrowings from revolving credit facility, net | 3,939 | b | 368 | b | ||||
Borrowings from Calera Court project loan | 1,157 | - | ||||||
Borrowings from Deerfield loan | 5,167 | - | ||||||
Borrowings from (repayments of) 7500 Rialto project loan | 1,946 | (693 | ) | |||||
Payments on 7000 West project loan | (178 | ) | (719 | ) | ||||
Proceeds from exercise of stock options, net | 535 | 4 | ||||||
Net cash provided by (used in) financing activities |
| 12,566 |
| (1,040 | ) | |||
Net increase in cash and cash equivalents | 717 | 679 | ||||||
Cash and cash equivalents at beginning of year |
| 3,413 |
| 1,361 | ||||
Cash and cash equivalents at end of period | 4,130 | 2,040 | ||||||
Less cash restricted as to use | (1,775 | ) | (224 | ) | ||||
Unrestricted cash and cash equivalents at end of period | $ | 2,355 | $ | 1,816 | ||||
a.
Includes $1.4 million and $0.6 million of non-refundable deposits related to the Deerfield property and Wimberly Lane Phase II subdivision, respectively.
b.
Includes the $5.0 million term loan component which was converted to a revolver effective June 2004.