Stratus Properties Inc. Reports First-Quarter 2013 Results

AUSTIN, Texas--(BUSINESS WIRE)-- Stratus Properties Inc. (NAS: STRS) :

HIGHLIGHTS

  • As of March 31, 2013, sales of 128 of the 159 condominium units at the W Austin Hotel & Residences project had closed for $140.7 million (an average of $1.1 million per unit), including 10 units for $14.0 million (an average of $1.4 million per unit) in first-quarter 2013, compared with 12 units for $12.7 million (an average of $1.1 million per unit) in first-quarter 2012. In April 2013, Stratus sold five units for $6 million and as of April 30, 2013, had eight units under contract.
  • Lot sales totaled nine lots for $2.7 million in first-quarter 2013, compared with five lots for $1.5 million in first-quarter 2012. In April 2013, Stratus sold eight lots for $2.5 million and as of April 30, 2013, had four lots under contract. In addition, Stratus sold a 16 acre tract at Lantana for $2.1 million in March 2013.
  • Revenue per available room at the W Austin Hotel was $278 during first-quarter 2013, compared with $238 during first-quarter 2012.
  • ACL Live hosted 47 events during first-quarter 2013, compared with 49 events during first-quarter 2012.
  • Construction of the final two buildings at Parkside Village is expected to be completed in late 2013 and as of March 31, 2013, occupancy of the completed 77,641 square feet was 89 percent. Of the remaining buildings under development, the 7,500-square-foot building is fully pre-leased, and leasing activities are ongoing for the 4,500-square-foot building.
  • Total Stratus debt was $130.4 million at March 31, 2013, compared with $137.0 million at December 31, 2012.
  • During first-quarter 2013, Stratus purchased 36,884 shares of its common stock for $0.4 million or $10.06 per share under its open market share purchase program. As of March 31, 2013, a total of 76,761 shares remained available under this 0.7 million-share program.

SUMMARY FINANCIAL RESULTS

    First-Quarter
2013     2012
(In Thousands, Except Per Share Amounts)
Revenues $ 33,459 $ 27,500
Operating income 3,121 845
Income (loss) from continuing operations 1,831 (2,997 )
Income from discontinued operations 4,805 a
Net income 1,831 1,808
Net income attributable to Stratus common stock 1,153 1,703
 
Diluted net income (loss) per share attributable to Stratus common stock:
Continuing operations $ 0.14 $ (0.41 )
Discontinued operations   0.63   a
Diluted net income per share attributable to Stratus common stock $ 0.14   $ 0.22  
Diluted weighted average shares of common stock outstanding 8,105 7,577
 

a.

Includes the results of Stratus' two office buildings at 7500 Rialto Boulevard (including a gain on sale of $5.1 million, $0.67 per share), which Stratus sold in February 2012.

 

Stratus Properties Inc. (NAS: STRS) reported net income attributable to common stock of $1.2 million, $0.14 per share, for first-quarter 2013, compared with $1.7 million, $0.22 per share, for first-quarter 2012. The results for first-quarter 2013 included a gain of $1.5 million associated with the sale of a 16-acre tract of land at Lantana, $0.7 million of interest collected in connection with a MUD reimbursement and a gain of $0.5 million from the recovery of land previously sold. The results for first-quarter 2012 included a gain of $5.1 million associated with the sale of two office buildings at 7500 Rialto Boulevard (7500 Rialto) in February 2012.

William H. Armstrong III, Chairman of the Board, Chief Executive Officer and President of Stratus, stated, "We see continuing improvement in the Austin real estate market and are optimistic about the future of our real estate assets. Sales of our Barton Creek lots have been strong in 2013. The W Austin Hotel & Residences project also continues to perform very well, with approximately 84 percent of our condominium units sold to date and hotel operations reflecting increasing occupancy and room rates. Austin City Limits Live is building on its reputation as a premier choice for music industry events. The project's retail space will be fully leased in second-quarter 2013 and the office space is expected to be fully leased this year. Our Parkside Village project has been well received by the community, with construction expected to be completed in late 2013."

W Austin Hotel & Residences Project. Stratus completed development of the W Austin Hotel & Residences in downtown Austin,Texas through a joint venture with Canyon-Johnson Urban Fund II, L.P., at a cost of approximately $300 million. Delivery of condominium units commenced in January 2011 and continues. As of April 30, 2013, sales of 133 of the 159 condominium units had closed for $146.4 million and eight of the remaining 26 units were under contract.

Revenue per available room at the W Austin Hotel was $278 during first-quarter 2013, compared with $238 during first-quarter 2012. The 251-room hotel, which Stratus believes sets the standard for contemporary luxury in downtown Austin, is managed by Starwood Hotels & Resorts Worldwide, Inc.

The project also includes Austin City Limits Live at the Moody Theater (ACL Live), a live music and entertainment venue and production studio with a maximum capacity of approximately 3,000 people. In addition to hosting concerts and private events, the venue is the home of Austin City Limits, a television program showcasing popular music legends. ACL Live hosted 47 events during first-quarter 2013, compared to 49 events during first-quarter 2012, and currently has booked events through December 2013.

The project has 39,328 square feet of leasable office space, including 9,000 square feet for Stratus' corporate office. The project also includes approximately 18,362 square feet of leasable retail space. As of March 31, 2013, occupancy was 64 percent for the office space and 86 percent for the retail space, and a lease had been signed for an additional 20 percent of the office space, and a lease was in process for the remaining retail space. Leasing activities for the remaining office space are ongoing.

Parkside Village Project. In May 2011, Stratus, through its joint venture Tract 107, L.L.C., secured a $13.7 million construction loan to finance the development of Parkside Village, an 89,641-square-foot retail project under development in the Circle C community in southwest Austin. The project consists of a 33,650-square-foot full-service movie theater and restaurant, a 13,890-square-foot medical clinic and five other retail buildings, including a 14,926-square-foot building, a 10,175-square-foot building, a 7,500-square-foot building, a 4,500-square-foot building and a stand-alone 5,000-square-foot building. Construction of the final two buildings is expected to be completed in late 2013 and as of March 31, 2013, occupancy of the completed 77,641 square feet was 89 percent. Of the remaining buildings under development, the 7,500-square-foot building is fully pre-leased, and leasing activities are ongoing for the 4,500-square-foot building.

Lantana. Lantana is a partially developed, mixed-use real estate development project. In August 2012, Stratus completed the sale of eight of the remaining eleven undeveloped commercial tracts of land for $15.8 million. The tracts of land sold in August 2012, which totaled approximately 154 acres, have entitlements for approximately 1,131,200 square feet of office space. During March 2013, Stratus sold a 16-acre tract for $2.1 million, which had entitlements for approximately 70,000 square feet of office space. As of March 31, 2013, Stratus had remaining entitlements for approximately 485,000 square feet of office and retail use on 44 acres. Regional utility and road infrastructure is in place with capacity to serve Lantana at full build-out permitted under Stratus' existing entitlements.

Financial Results. Stratus is continuing its high-priority development activities and is focused on maximizing long-term property values. Stratus' developed property sales included the following (dollars in thousands):

    First-Quarter
2013     2012
Units/Lots     Revenues Units/Lots     Revenues
W Austin Hotel & Residences
Condominium Units 10 $ 13,986 12 $ 12,651
 
Barton Creek
Calera:
Verano Drive 7 2,049 3 835
Calera Drive 1 218 1 240
Mirador Estate 1   405   1   375
 
Total Residential 19   $ 16,658   17   $ 14,101
 

The increase in developed units/lots sales and revenues in first-quarter 2013 primarily resulted from an increase in lot sales at Barton Creek and the sale of higher priced condominium units.

As discussed above, during March 2013, Stratus sold a 16 acre tract at Lantana for $2.1 million, which had entitlements for approximately 70,000 square feet of office space.

Revenue from the hotel segment totaled $10.2 million for first-quarter 2013, compared with $9.1 million for first-quarter 2012. Hotel revenues reflect revenues for the W Austin Hotel and primarily include revenues from room reservations and food and beverage sales. The increase in hotel revenues in first-quarter 2013 primarily reflects higher average occupancy and room rates.

Revenue from the entertainment segment totaled $3.2 million for first-quarter 2013, compared with $3.3 million for first-quarter 2012. Entertainment revenues include revenues for ACL Live and primarily includes ticket sales; sponsorships, personal seat license sales and suite sales; and sales of concessions and merchandise. The entertainment segment also includes revenues and costs associated with events hosted at other venues, and the results of the Stageside Productions joint venture formed in October 2012.

Rental revenue from the commercial leasing segment totaled $1.4 million for first-quarter 2013, compared with $1.1 million for first-quarter 2012. The increase in rental revenue in first-quarter 2013 primarily reflects increased occupancy of the office and retail space at W Austin Hotel and Residences and Parkside Village.

Stratus is a diversified real estate company engaged in the acquisition, development, management, operation and sale of commercial, hotel, entertainment, multi- and single-family residential real estate properties, including the W Austin Hotel & Residences project, located primarily in the Austin, Texas area.

CAUTIONARY STATEMENT. This press release contains forward-looking statements in which Stratus discusses certain of its expectations regarding future operational and financial performance. Forward-looking statements are all statements other than statements of historical facts, such as those statements regarding future reimbursements for infrastructure costs, future events related to financing and regulatory matters, expectations regarding performance of financial obligations, anticipated development plans and sales of land, units and lots, projected timeframes for development, construction and completion of Stratus' projects, projected capital expenditures, liquidity and capital resources, anticipated results of Stratus' business strategy, and other plans and objectives of management for future operations and activities. The words "anticipates," "may," "can," "plans," "believes," "estimates," "expects," "projects," "intends," "likely," "will," "should," "to be" and any similar expressions and/or statements that are not historical facts are intended to identify those assertions as forward-looking statements.

Stratus cautions readers that forward-looking statements are not guarantees of future performance, and its actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause Stratus' actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, changes in economic and business conditions, business opportunities that may be presented to and/or pursued by Stratus, the availability of financing, increases in foreclosures and interest rates, the termination of sales contracts or letters of intent due to, among other factors, the failure of one or more closing conditions or market changes, the failure to attract homebuilding customers for Stratus' developments or their failure to satisfy their purchase commitments, the failure of third parties to satisfy debt service obligations, the failure to complete agreements with strategic partners and/or appropriately manage relationships with strategic partners, a decrease in the demand for real estate in the Austin, Texas market, competition from other real estate developers, increases in operating costs, including real estate taxes and the cost of construction materials, changes in laws, regulations or the regulatory environment affecting the development of real estate and other factors described in more detail under "Risk Factors" in Item 1A. of Stratus' Annual Report on Form 10-K for the year ended December 31, 2012.

Investors are cautioned that many of the assumptions on which Stratus' forward-looking statements are based are likely to change after its forward-looking statements are made. Further, Stratus may make changes to its business plans that could or will affect its results. Stratus cautions investors that it does not intend to update its forward-looking statements more frequently than quarterly, notwithstanding any changes in its assumptions, changes in business plans, actual experience, or other changes, and Stratus undertakes no obligation to update any forward-looking statements.

A copy of this release is available on Stratus' website, www.stratusproperties.com.

   

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In Thousands, Except Per Share Amounts)

 
Three Months Ended
March 31,
2013     2012
Revenues:
Real estate $ 18,862 $ 14,286
Hotel 10,079 9,017
Entertainment venue 3,208 3,271
Rental 1,310   926  
Total revenues 33,459 27,500
Cost of sales:
Real estate 15,952 13,453
Hotel 7,274 6,651
Entertainment venue 2,456 2,477
Rental 662 486
Depreciation 2,230   2,117  
Total cost of sales 28,574 25,184
General and administrative expenses 1,764   1,471  
Total costs and expenses 30,338   26,655  
Operating income 3,121 845
Interest expense, net (2,299 ) (3,641 )
Other income, net 1,250   a 29  
Income (loss) from continuing operations before income taxes and equity in unconsolidated affiliate's loss 2,072 (2,767 )
Equity in unconsolidated affiliate's loss (38 ) (72 )
Provision for income taxes (203 ) (158 )
Income (loss) from continuing operations 1,831 (2,997 )
Income from discontinued operations   4,805   b
Net income and total comprehensive income 1,831 1,808
Net income and total comprehensive income attributable to noncontrolling interest in subsidiaries (678 ) (105 )
Net income and total comprehensive income attributable to Stratus common stock $ 1,153   $ 1,703  
 
Basic and diluted net income (loss) per share attributable to Stratus common stock:
Continuing operations $ 0.14 $ (0.41 )
Discontinued operations   0.63   b
Basic and diluted net income per share attributable to Stratus common stock $ 0.14   $ 0.22  
 
Weighted-average shares of common stock outstanding:
Basic 8,105   7,577   c
Diluted 8,134   7,577  
 

a.

Includes $0.7 million of interest collected in connection with a MUD reimbursement and $0.5 million for a gain on recovery of land previously sold.

b.

Includes the results of 7500 Rialto (including a first-quarter 2012 gain on sale of $5.1 million, $0.67 per share), which Stratus sold in February 2012.

c.

On March 15, 2012, Stratus sold 625,000 shares of common stock in a private placement.

       

STRATUS PROPERTIES INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In Thousands)

 
March 31,
2013

December 31,
2012

ASSETS
Cash and cash equivalents $ 15,189 a $ 12,784
Restricted cash 20,073 17,657
Real estate held for sale 48,328 60,244
Real estate under development 36,101 31,596
Land available for development 46,344 49,569
Real estate held for investment 187,189 189,331
Investment in unconsolidated affiliate 3,364 3,402
Other assets 14,577   14,545  
Total assets $ 371,165   $ 379,128  
 
LIABILITIES AND EQUITY
Accounts payable $ 18,824 $ 13,845
Accrued liabilities 5,460 8,605
Deposits 1,848 2,073
Debt 130,369 137,035
Other liabilities and deferred gain 8,514   8,675  
Total liabilities 165,015   170,233  
 
Commitments and contingencies
 
Equity:
Stratus stockholders' equity:
Common stock 91 90
Capital in excess of par value of common stock 203,394 203,298
Accumulated deficit (62,156 ) (63,309 )
Common stock held in treasury (18,862 ) (18,392 )
Total Stratus stockholder

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