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 6,
2009
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 8.01
Other
Events.
Stratus
Properties Inc. issued a press release dated November 6, 2009, announcing its
third-quarter and nine-month 2009 results and updating its W Austin Hotel &
Residences development activities (see Exhibit 99.1).
Item 9.01
Financial Statements
and Exhibits.
(d)
Exhibit.
The
Exhibit included as part of this Current Report is 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/
Erin D. Pickens
----------------------------------------
Erin D.
Pickens
Senior
Vice President and
Chief
Financial Officer
(authorized
signatory and
Principal
Financial Officer)
Date: November
6, 2009
Stratus
Properties Inc.
Exhibit
Index
Exhibit
Number
|
Press
release dated November 6, 2009, titled “Stratus Properties Inc. Reports
Third-Quarter and Nine-Month 2009 Results and Updates W Austin Hotel &
Residences 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 2009 RESULTS
AND
UPDATES W AUSTIN HOTEL & RESIDENCES DEVELOPMENT ACTIVITIES
HIGHLIGHTS
|
·
|
On
October 21, 2009, Stratus’ joint venture with Canyon-Johnson Urban Fund
II, L.P. closed on a $120 million construction loan with Beal Bank Nevada
for the W Austin Hotel & Residences
project.
|
|
·
|
W
Austin Hotel & Residences project in downtown Austin, Texas, continues
to be on schedule and within budgeted cost of $300
million.
|
|
·
|
At
September 30, 2009, Stratus had $24.9 million of cash and cash
equivalents and
$31.8 million in available borrowing
capacity under its revolving credit
facility.
|
|
·
|
As
of September 30, 2009, there are 30 Meridian lots in the Circle C
community remaining under homebuilder contracts. Future sales
of these lots are expected to approximate 24 lots for $1.6 million in the
fourth quarter of 2009 and six lots for $0.4 million in the first quarter
of 2010.
|
SUMMARY
FINANCIAL RESULTS
|
Third
Quarter
|
Nine
Months
|
|||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||
|
(In
Thousands, Except Per Share Amounts)
|
||||||||||||||
|
Revenues
|
$
|
3,344
|
$
|
6,909
|
$
|
8,366
|
$
|
16,064
|
||||||
|
Operating
loss
|
(2,375
|
)
|
(1,147
|
)
|
(7,904
|
)
|
(4,270
|
)
|
||||||
|
Net
loss
|
(1,597
|
)
|
(571
|
)
|
(4,988
|
)
|
(2,039
|
)
|
||||||
|
Net
loss attributable to Stratus common stock
|
(1,553
|
)
|
(447
|
)
|
(4,734
|
)
|
(1,851
|
)
|
||||||
|
Diluted
net loss per share attributable to Stratus common stock:
|
||||||||||||||
|
Continuing
operations
|
$
|
(0.21
|
)
|
$
|
(0.06
|
)
|
$
|
(0.64
|
)
|
$
|
(0.23
|
)
|
||
|
Discontinued
operations
|
-
|
-
|
-
|
(0.01
|
)
|
|||||||||
|
Diluted
net loss per share attributable to Stratus common stock
|
$
|
(0.21
|
)
|
$
|
(0.06
|
)
|
$
|
(0.64
|
)
|
$
|
(0.24
|
)
|
||
|
Diluted
weighted average shares of common stock
|
||||||||||||||
|
outstanding
|
7,435
|
7,641
|
7,439
|
7,613
|
||||||||||
AUSTIN,
TX, November 6, 2009 – Stratus Properties Inc. (NASDAQ: STRS) reported a net
loss attributable to common stock of $1.6 million, $0.21 per share, for the
third quarter of 2009, compared to $0.4 million, $0.06 per share, for the third
quarter of 2008. For the nine months ended September 30, 2009,
Stratus reported a
net loss
attributable to common stock of $4.7 million, $0.64 per share, compared to $1.9
million, $0.24 per share, for the nine months ended September 30,
2008.
Stratus
sold one courtyard home at Calera Court, one lot at Verano Drive and 16 lots at
its Meridian development in the third quarter of 2009, compared with one
courtyard home at Calera Court, three lots at Verano Drive and 48 lots at
Meridian in the third quarter of 2008. For the first nine months of
2009, Stratus sold two courtyard homes at Calera Court, one lot at Verano Drive
and 39 lots at Meridian, compared with two courtyard homes at Calera Court,
three lots at Verano Drive and 125 total lots at Meridian, Deerfield and
Wimberly Lane during the first nine months of 2008. Rental income
from commercial leasing properties totaled $1.2 million in the third quarters of
2009 and 2008, and $3.3 million for the first nine months of 2009 and
2008. While rental income for the 2009 periods approximated the 2008
periods, rental income from 7500 Rialto was $0.1 million lower in each of the
2009 periods because of higher vacancies, compared to the 2008 periods; however,
these 2009 decreases were offset by additional rental income from the new leases
in 2009 at Barton Creek Village and 5700 Slaughter. Stratus is actively pursuing tenants
to fill the available office space at 7500 Rialto
Boulevard. At September 30, 2009, occupancy was 71 percent for
the original office building at 7500 Rialto Boulevard and 94 percent for the
second building.
W Austin Hotel &
Residences. As previously announced, in May 2008, Stratus entered into a
joint venture with Canyon-Johnson Urban Fund II, L.P. (Canyon-Johnson) for the
development of the W Austin Hotel & Residences in downtown
Austin. Stratus, the manager of the project, has an approximate 40
percent interest in the joint venture and Canyon-Johnson has an approximate 60
percent interest in the joint venture. As of September 30, 2009,
capital contributions totaled $42.2 million for Stratus and $59.1 million for
Canyon-Johnson.
The joint
venture originally obtained a $165 million construction loan with Corus Bank
N.A. (Corus) to finance project costs after the required capital contributions
were made. On June 26, 2009, the loan agreement with Corus was
assigned to a subsidiary of Stratus, which is managed by Stratus and
Canyon-Johnson, in exchange for a pay down of $250,000 of the outstanding
principal balance of $2.1 million. As a result, Corus was no longer
the lender and in the second quarter of 2009 Stratus recognized a $0.2 million
loss on extinguishment of debt, which includes the write-off of unamortized
deferred loan costs in the amount of $2.1 million.
On
October 21, 2009, the subsidiary assigned and transferred the construction loan
agreement documents to Beal Bank Nevada (Beal Bank). In connection
with the assignment, the joint venture executed an amended and restated loan
agreement, an amended and restated promissory note and related loan documents
with Beal Bank (Beal Bank loan agreement). Pursuant to the Beal Bank
loan agreement, the joint venture may borrow up to an aggregate of $120 million
to fund the construction, development and marketing costs of the W Austin Hotel
& Residences project.
An
initial advance under the Beal Bank loan agreement of $3.4 million was made at
closing. The next advance is expected to occur in mid-2010 and
thereafter advances are expected to be made monthly until the loan is fully
funded. As a condition to further funding from the Beal Bank loan
agreement, the joint venture must invest at least $180
million. Previously, when Corus was the construction lender, the
joint venture was required to invest total equity of $128 million ($53 million
from Stratus and $75 million from Canyon-Johnson). As a result of
changing construction lenders, $52 million of additional equity is now
required. The joint venture
2
is
currently pursuing third parties to fund all or a portion of the $52
million. To the extent acceptable third-party or other financing is
not secured, the joint venture may be obligated to fund the additional capital
necessary to meet the $180 million pre-funding requirement under the Beal Bank
loan agreement.
Stratus
is a diversified real estate company engaged in the acquisition, development,
management, operations 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 in which we discuss factors
we believe may affect our performance in the future. Forward-looking
statements are all statements other than historical facts, such as statements
regarding proposed real estate sales, commercial leasing activities and
development and financing activities at the W Austin Hotel & Residences
project. Important factors that might cause future results to differ
from those projections include economic and business conditions, the
availability of financing, regulatory approvals, environmental regulations and
other factors which are described in more detail in Stratus’ 2008
Annual Report on Form 10-K
filed with the Securities and Exchange Commission.
A copy of
this release is available on Stratus’ web site,
www.stratusproperties.com.
# # #
3
STRATUS
PROPERTIES INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
(In
Thousands, Except Per Share Amounts)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||
|
September
30,
|
September
30,
|
|||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||
|
Revenues:
|
||||||||||||
|
Real
estate
|
$
|
2,116
|
$
|
5,691
|
$
|
4,201
|
$
|
11,994
|
||||
|
Rental
income
|
1,163
|
1,158
|
3,296
|
3,278
|
||||||||
|
Commissions,
management fees and other
|
65
|
60
|
869
|
792
|
||||||||
|
Total
revenues
|
3,344
|
6,909
|
8,366
|
16,064
|
||||||||
|
Cost
of sales:
|
||||||||||||
|
Real
estate, net
|
2,710
|
4,954
|
6,806
|
11,163
|
||||||||
|
Rental
|
788
|
944
|
2,405
|
2,683
|
||||||||
|
Depreciation
|
403
|
435
|
1,227
|
1,211
|
||||||||
|
Total
cost of sales
|
3,901
|
6,333
|
10,438
|
15,057
|
||||||||
|
General
and administrative expenses
|
1,818
|
1,723
|
5,832
|
5,277
|
||||||||
|
Total
costs and expenses
|
5,719
|
8,056
|
16,270
|
20,334
|
||||||||
|
Operating
loss
|
(2,375
|
)
|
(1,147
|
)
|
(7,904
|
)
|
(4,270
|
)
|
||||
|
Interest
income and other
|
66
|
330
|
894
|
a
|
1,432
|
|||||||
|
Loss
on extinguishment of debt
|
-
|
-
|
(182
|
)b
|
-
|
|||||||
|
Gain
(loss) on interest rate cap agreement
|
(37
|
)
|
(121
|
)
|
33
|
(121
|
)
|
|||||
|
Loss
from continuing operations before income taxes and
|
||||||||||||
|
equity
in unconsolidated affiliate’s (loss) income
|
(2,346
|
)
|
(938
|
)
|
(7,159
|
)
|
(2,959
|
)
|
||||
|
Equity
in unconsolidated affiliate’s (loss) income
|
(95
|
)
|
99
|
(277
|
)
|
365
|
||||||
|
Benefit
from income taxes
|
844
|
268
|
2,448
|
660
|
||||||||
|
Loss
from continuing operations
|
(1,597
|
)
|
(571
|
)
|
(4,988
|
)
|
(1,934
|
)
|
||||
|
Loss
from discontinued operations
|
-
|
-
|
-
|
(105
|
)c
|
|||||||
|
Net
loss
|
(1,597
|
)
|
(571
|
)
|
(4,988
|
)
|
(2,039
|
)
|
||||
|
Net
loss attributable to noncontrolling interest in subsidiaryd
|
44
|
124
|
254
|
188
|
||||||||
|
Net
loss attributable to Stratus common stock
|
$
|
(1,553
|
)
|
$
|
(447
|
)
|
$
|
(4,734
|
)
|
$
|
(1,851
|
)
|
|
Net
loss per share attributable to Stratus common stock:
|
||||||||||||
|
Continuing
operations
|
$
|
(0.21
|
)
|
$
|
(0.06
|
)
|
$
|
(0.64
|
)
|
$
|
(0.23
|
)
|
|
Discontinued
operations
|
-
|
-
|
-
|
(0.01
|
)
|
|||||||
|
Basic
and diluted net loss per share attributable to Stratus
|
||||||||||||
|
common
stock
|
$
|
(0.21
|
)
|
$
|
(0.06
|
)
|
$
|
(0.64
|
)
|
$
|
(0.24
|
)
|
|
Weighted
average shares of common stock outstanding:
|
||||||||||||
|
Basic
and diluted
|
7,435
|
7,641
|
7,439
|
7,613
|
||||||||
a. Includes
$0.6 million related to a forfeited homebuilder deposit for contract
termination.
b. Relates
to assignment of W Austin Hotel & Residences project construction loan to a
Stratus subsidiary.
c. Relates
to the revised amount of Texas Margin Tax accrued on Escarpment Village income
earned during 2007.
d. Relates
to the operations of W Austin Hotel & Residences, Stratus’ consolidated
subsidiary.
I
STRATUS
PROPERTIES INC.
CONSOLIDATED
BALANCE SHEETS (Unaudited)
(In
Thousands)
|
September
30,
|
December
31,
|
|||||
|
2009
|
2008
|
|||||
|
ASSETS
|
||||||
|
Cash
and cash equivalents
|
$
|
24,926
|
$
|
17,097
|
||
|
Investment
in U.S. treasury securities
|
-
|
15,388
|
||||
|
Real
estate, commercial leasing assets and facilities, net:
|
||||||
|
Property
held for sale – developed or under development
|
136,473
|
115,966
|
||||
|
Property
held for sale – undeveloped
|
31,928
|
27,514
|
||||
|
Property
held for use, net
|
84,709
|
56,919
|
||||
|
Deferred
tax asset
|
8,633
|
7,330
|
||||
|
Investment
in unconsolidated affiliate
|
3,468
|
2,283
|
||||
|
Other
assets
|
13,552
|
10,049
|
||||
|
Total
assets
|
$
|
303,689
|
$
|
252,546
|
||
|
LIABILITIES
AND EQUITY
|
||||||
|
Accounts
payable and accrued liabilities
|
$
|
12,278
|
$
|
6,585
|
||
|
Deposits
|
7,396
|
1,301
|
||||
|
Accrued
interest and property taxes
|
2,975
|
3,203
|
||||
|
Debt
|
75,951
|
63,352
|
||||
|
Other
liabilities
|
2,079
|
3,583
|
||||
|
Total
liabilities
|
100,679
|
78,024
|
||||
|
Commitments
and contingencies
|
||||||
|
Equity:
|
||||||
|
Stratus
stockholders’ equity:
|
||||||
|
Preferred
stock
|
-
|
-
|
||||
|
Common
stock
|
83
|
83
|
||||
|
Capital
in excess of par value of common stock
|
197,285
|
196,692
|
||||
|
Accumulated
deficit
|
(34,829
|
)
|
(30,095
|
)
|
||
|
Accumulated
other comprehensive loss
|
-
|
(3
|
)
|
|||
|
Common
stock held in treasury
|
(17,941
|
)
|
(17,441
|
)
|
||
|
Total
Stratus stockholders’ equity
|
144,598
|
149,236
|
||||
|
Noncontrolling
interest in subsidiary
|
58,412
|
a
|
25,286
|
a
|
||
|
Total
equity
|
203,010
|
174,522
|
||||
|
Total
liabilities and equity
|
$
|
303,689
|
$
|
252,546
|
||
a. Relates
to Canyon-Johnson’s interest in the W Austin Hotel & Residences
project.
II
STRATUS PROPERTIES INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
(In
Thousands)
|
Nine
Months Ended September 30,
|
||||||
|
2009
|
2008
|
|||||
|
Cash
flow from operating activities:
|
||||||
|
Net
loss
|
$
|
(4,988
|
)
|
$
|
(2,039
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
||||||
|
used
in operating activities:
|
||||||
|
Loss
from discontinued operations
|
-
|
105
|
a
|
|||
|
Depreciation
|
1,227
|
1,211
|
||||
|
(Gain)
loss on interest rate cap agreement
|
(33
|
)
|
121
|
|||
|
Loss
on extinguishment of debt
|
182
|
-
|
||||
|
Cost
of real estate sold
|
2,912
|
8,126
|
||||
|
Deferred
income taxes
|
(1,303
|
)
|
(648
|
)
|
||
|
Stock-based
compensation
|
552
|
761
|
||||
|
Equity
in unconsolidated affiliate’s loss (income)
|
277
|
(365
|
)
|
|||
|
Distribution
of unconsolidated affiliate’s income
|
-
|
1,266
|
||||
|
Deposits
|
(802
|
)
|
(1,471
|
)
|
||
|
Purchases
and development of real estate properties
|
(32,653
|
)
|
(21,959
|
)
|
||
|
Municipal
utility district reimbursements
|
4,551
|
6,229
|
||||
|
Decrease
in other assets
|
615
|
495
|
||||
|
Increase
(decrease) in accounts payable, accrued liabilities and
other
|
3,249
|
(2,554
|
)
|
|||
|
Net
cash used in operating activities
|
(26,214
|
)
|
(10,722
|
)
|
||
|
Cash
flow from investing activities:
|
||||||
|
Development
of commercial leasing properties
|
(27,262
|
)
|
(10,337
|
)
|
||
|
(Investment
in) return of investment in unconsolidated affiliate
|
(1,462
|
)
|
2,374
|
|||
|
Proceeds
from matured U.S. treasury securities
|
15,391
|
-
|
||||
|
Investment
in interest rate cap agreement
|
-
|
(673
|
)
|
|||
|
Other
|
53
|
25
|
||||
|
Net
cash used in investing activities
|
(13,280
|
)
|
(8,611
|
)
|
||
|
Cash
flow from financing activities:
|
||||||
|
Borrowings
from revolving credit facility
|
15,000
|
-
|
||||
|
Payments
on revolving credit facility
|
(4,769
|
)
|
-
|
|||
|
Borrowings
from project and term loans
|
4,700
|
2,054
|
||||
|
Payments
on project and term loans
|
(488
|
)
|
(175
|
)
|
||
|
Noncontrolling
interest contributions
|
33,380
|
16,678
|
||||
|
Net
(payments for) proceeds from stock-based awards
|
(96
|
)
|
94
|
|||
|
Purchases
of Stratus common shares
|
(404
|
)
|
(517
|
)
|
||
|
Financing
costs
|
-
|
(2,845
|
)
|
|||
|
Net
cash provided by financing activities
|
47,323
|
15,289
|
||||
|
Net
increase (decrease) in cash and cash equivalents
|
7,829
|
(4,044
|
)
|
|||
|
Cash
and cash equivalents at beginning of year
|
17,097
|
40,873
|
||||
|
Cash
and cash equivalents at end of period
|
$
|
24,926
|
$
|
36,829
|
||
a. Relates
to the revised amount of Texas Margin Tax accrued on Escarpment Village income
earned during 2007.
III