What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-13 · 122 added, 71 removed, 387 unchanged (33% of the section changed)

3 unchanged sentences

(In Thousands)

September 30,

2024 December 31,

31 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

7 unchanged sentences

Total cost of sales 8,673 3,815 34,598 15,302

Gain on sale of assets ( 1,626 ) — ( 1,626 ) —

General and administrative expenses 3,363 3,183 11,670 11,973

Total 10,410 6,998 44,642 27,275

Operating (loss) income ( 2,920 ) ( 5,352 ) 765 ( 10,945 )

Operating loss ( 1,519 ) ( 3,329 ) ( 754 ) ( 14,274 )

Loss on extinguishment of debt — — ( 59 ) —

Other income, net 163 472 522 1,501

(Loss) income before income taxes and equity in unconsolidated affiliate's loss ( 2,734 ) ( 4,808 ) 1,065 ( 9,916 )

Loss before income taxes and equity in unconsolidated affiliate's loss ( 1,356 ) ( 2,857 ) ( 291 ) ( 12,773 )

Provision for income taxes ( 58 ) ( 356 ) ( 204 ) ( 2,016 )

Equity in unconsolidated affiliate's loss — ( 4 ) — ( 10 )

Net (loss) income and total comprehensive (loss) income ( 2,778 ) ( 5,309 ) 919 ( 11,582 )

Net loss and total comprehensive loss ( 1,414 ) ( 3,217 ) ( 495 ) ( 14,799 )

Total comprehensive loss attributable to noncontrolling interests 1,050 373 2,958 853

Net (loss) income and total comprehensive (loss) income attributable to common stockholders $ ( 364 ) $ ( 2,844 ) $ 2,463 $ ( 13,946 )

Net (loss) income per share attributable to common stockholders (basic and diluted) $ ( 0.21 ) $ ( 0.66 ) $ 0.35 $ ( 1.39 )

Basic net (loss) income per share attributable to common stockholders $ ( 0.05 ) $ ( 0.36 ) $ 0.31 $ ( 1.74 )

Diluted net (loss) income per share attributable to common stockholders:

$ ( 0.05 ) $ ( 0.36 ) $ 0.30 $ ( 1.74 )

Weighted-average shares of common stock outstanding:

5 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flow from operating activities:

Net income (loss) $ 919 $ ( 11,582 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Net loss $ ( 495 ) $ ( 14,799 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 4,168 2,865

3 unchanged sentences

Debt issuance cost amortization 1,028 631

Gain on sale of assets ( 1,626 ) —

Equity in unconsolidated affiliate’s loss — 10

Purchases and development of real estate properties ( 22,925 ) ( 34,697 )

Write-off of capitalized project costs 721 —

Decrease in other assets 233 2,223

Decrease in accounts payable, accrued liabilities and other ( 7,644 ) ( 123 )

(Decrease) increase in accounts payable, accrued liabilities and other ( 3,994 ) 908

Net cash used in operating activities ( 2,402 ) ( 39,300 )

1 unchanged sentence

Capital expenditures ( 22,962 ) ( 36,178 )

Proceeds from sale of assets, net of fees 8,586 —

Payments on master lease obligations ( 649 ) ( 730 )

9 unchanged sentences

Financing costs ( 139 ) ( 2,758 )

Net cash (used in) provided by financing activities ( 213 ) 50,137

Net cash provided by financing activities 5,331 66,884

Net decrease in cash, cash equivalents and restricted cash ( 12,096 ) ( 9,319 )

6 unchanged sentences

Stockholders’ Equity

Held in Treasury Total

Common Stock Capital in Excess of Par Value Retained Earnings Noncontrolling Interests in Subsidiaries

Retained Earnings (Accumulated Deficit) Common Stock

Held in Treasury Total Noncontrolling Interests in Subsidiaries

Common Stock Capital in Excess of Par Value

of Shares At Par

14 unchanged sentences

Balance at June 30, 2024 9,676 97 200,114 29,472 1,599 ( 33,395 ) 196,288 101,218 297,506

Vested stock-based awards 9 — — — — — — — —

Director fees paid in shares of common stock — — 6 — — — 6 — 6

Stock-based compensation — — 437 — — — 437 — 437

Contributions from noncontrolling interests — — — — — — — 3,600 3,600

Total comprehensive loss — — — ( 364 ) — — ( 364 ) ( 1,050 ) ( 1,414 )

Balance at September 30, 2024 9,685 $ 97 $ 200,557 $ 29,108 1,599 $ ( 33,395 ) $ 196,367 $ 103,768 $ 300,135

STRATUS PROPERTIES INC.

2 unchanged sentences

Stockholders’ Equity

Held in Treasury Total

Common Stock Capital in Excess of Par Value Retained Earnings (Accumulated Deficit) Noncontrolling Interests in Subsidiaries

Retained Earnings (Accumulated Deficit) Common Stock

Held in Treasury Total Noncontrolling Interests in Subsidiaries

Common Stock Capital in Excess of Par Value

of Shares At Par

16 unchanged sentences

Balance at June 30, 2023 9,572 96 196,819 30,350 1,562 ( 32,449 ) 194,816 104,345 299,161

Vested stock-based awards 14 — — — — — — — —

Director fees paid in shares of common stock — — 6 — — — 6 — 6

Stock-based compensation — — 468 — — — 468 — 468

Common stock repurchases — — — — 18 ( 475 ) ( 475 ) — ( 475 )

Total comprehensive loss — — — ( 2,844 ) — — ( 2,844 ) ( 373 ) ( 3,217 )

Balance at September 30, 2023 9,586 $ 96 $ 197,293 $ 27,506 1,580 $ ( 32,924 ) $ 191,971 $ 103,972 $ 295,943

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these consolidated financial statements.

7 unchanged sentences

In April 2022, Stratus hired the son of Stratus’ President and Chief Executive Officer as an employee at an annual salary of $ 100 thousand.

He is eligible for the same health and retirement benefits provided to all Stratus employees and is also eligible for annual incentive awards and for awards under the Profit Participation Incentive Plan (PPIP) and the Long-Term Incentive Plan (LTIP).

As an employee, he received the same health and retirement benefits provided to all Stratus employees, annual incentive awards and two awards under the Profit Participation Incentive Plan (PPIP).

In first-quarter 2023, he received $ 22 thousand as an annual incentive award for 2022, and his annual salary was increased to $ 120 thousand.

In first-quarter 2024, he received $ 22 thousand as an annual incentive award for 2023, and his annual salary was increased to $ 124 thousand.

As of June 30, 2024, the employee had two outstanding awards under the PPIP.

The liability associated with these awards at June 30, 2024 was nominal in amount relative to the consolidated financial statements.

Refer to Note 7 for discussion of the PPIP and LTIP.

In September 2024, the employee resigned from employment with Stratus, resulting in the forfeiture of his two outstanding awards under the PPIP.

Refer to Note 7 for discussion of the PPIP.

For additional information regarding Stratus’ related parties, including LCHM Holdings, LLC and JBM Trust, refer to Notes 1 and 2 in the Stratus 2023 Form 10-K.

1 unchanged sentence

Stratus’ basic net (loss) income per share of common stock was calculated by dividing the net (loss) income attributable to common stockholders by the weighted-average shares of common stock outstanding during the period.

A reconciliation of net (loss) income and weighted-average shares of common stock outstanding for purposes of calculating diluted net (loss) income per share follows (in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, June 30,

A reconciliation of net loss and weighted-average shares of common stock outstanding for purposes of calculating diluted net (loss) income per share follows (in thousands, except per share amounts):

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Net (loss) income and total comprehensive (loss) income $ ( 2,778 ) $ ( 5,309 ) $ 919 $ ( 11,582 )

Net loss and total comprehensive loss $ ( 1,414 ) $ ( 3,217 ) $ ( 495 ) $ ( 14,799 )

Total comprehensive loss attributable to noncontrolling interests 1,050 373 2,958 853

5 unchanged sentences

8,080 8,003 8,186 7,993

Net (loss) income per share attributable to common stockholders (basic and diluted) $ ( 0.21 ) $ ( 0.66 ) $ 0.35 $ ( 1.39 )

Excludes 187 thousand shares for second-quarter 2024, 222 thousand shares for second-quarter 2023 and 259 thousand shares for the first six months of 2023 of common stock associated with RSUs that were anti-dilutive as a result of net losses.

Excludes 23 thousand shares for the first six months of 2024 of common stock associated with RSUs that were anti-dilutive.

Basic net (loss) income per share attributable to common stockholders $ ( 0.05 ) $ ( 0.36 ) $ 0.31 $ ( 1.74 )

Diluted net (loss) income per share attributable to common stockholders $ ( 0.05 ) $ ( 0.36 ) $ 0.30 $ ( 1.74 )

Excludes 185 thousand shares for third-quarter 2024, 178 thousand shares for third-quarter 2023 and 232 thousand shares for the first nine months of 2023 of common stock associated with RSUs that were anti-dilutive as a result of net losses.

Excludes 17 thousand shares for the first nine months of 2024 of common stock associated with RSUs that were anti-dilutive.

LIMITED PARTNERSHIPS

2 unchanged sentences

The Saint George Apartments, L.P.

( 10.0 percent indirect equity

interest), Stratus Block 150, L.P.

( 10.0 percent indirect equity interest), Stratus Block 150, L.P.

( 31.0 percent indirect equity interest), The Saint June, L.P.

3 unchanged sentences

For additional information regarding Stratus' partnerships, refer to Note 2 in the Stratus 2023 Form 10-K.

Operating Loans to Partnerships.

In April 2023, Stratus made an operating loan of $ 1.5 million to Stratus Block 150, L.P.

Operating Loans/Additional Capital Contributions to Partnerships.

In 2023, Stratus made operating loans totaling $ 2.3 million to Stratus Block 150, L.P.

to facilitate the partnership’s ability to pay ongoing costs of The Annie B project during the pre-construction period.

In August 2023 and February 2024, Stratus made additional operating loans of $ 800 thousand and $ 2.4 million, respectively, to Stratus Block 150, L.P.

In February 2024 and August 2024, Stratus made additional operating loans of $ 2.4 million and $ 1.1 million, respectively, to Stratus Block 150, L.P.

The loans are subordinate to The Annie B land loan and must be repaid before distributions may be made to the partners.

2 unchanged sentences

In June 2023, Stratus made an operating loan of $ 750 thousand to The Saint June, L.P.

to support the partnership’s ability to pay its construction loan interest, which has risen above the amount originally budgeted due to rising interest rates.

to support the partnership’s ability to pay its construction loan interest, which had risen above the amount originally budgeted due to interest rate increases over the past two years.

In October 2023 and January 2024, Stratus made additional operating loans of $ 250 thousand and $ 339 thousand, respectively, to The Saint June, L.P., and the Class B Limited Partner made operating loans of $ 250 thousand and $ 339 thousand, respectively, to The Saint June, L.P.

1 unchanged sentence

The loans bear interest at the one-month Term SOFR plus 5.00 percent, are subordinate to The Saint June construction loan and must be repaid before distributions may be made to the partners.

In September 2024, Stratus contributed additional capital of $ 400 thousand in cash to The Saint George Apartments, L.P., representing its 10 percent equity share, and the Class B Limited Partner contributed additional capital of $ 3.6 million in cash to The Saint George Apartments, L.P.

to support the partnership’s ability to pay its construction loan interest, which has exceeded the amount budgeted due to interest rate increases over the past two years.

Potential Returns.

23 unchanged sentences

Stratus’ consolidated balance sheets include the following assets and liabilities of the partnerships, net of intercompany balances (including the operating loans made by Stratus), which are eliminated (in thousands):

September 30,

2024 December 31,

22 unchanged sentences

The Oaks at Lakeway.

Stratus has remaining lease obligations pursuant to a Pad Sites Master Lease entered into in connection with the sale of The Oaks at Lakeway, as described in Note 9 of the Stratus 2023 Form 10-K under the heading “Deferred Gain on Sale of The Oaks at Lakeway.” A related contract liability is presented as a deferred gain in the consolidated balance sheets in the amount of $ 2.4 million at June 30, 2024 and $ 2.7 million at December 31, 2023.

Stratus has remaining lease obligations pursuant to a Pad Sites Master Lease entered into in connection with the sale of The Oaks at Lakeway, as described in Note 9 of the Stratus 2023 Form 10-K under the heading “Deferred Gain on Sale of The Oaks at Lakeway.” A related contract liability is presented as a deferred gain in the consolidated balance sheets in the amount of $ 2.1 million at September 30, 2024 and $ 2.7 million at December 31, 2023.

The reduction in the deferred gain balance primarily reflects Pad Sites Master Lease payments.

1 unchanged sentence

Amarra Villas.

In third-quarter 2024, Stratus sold one of the Amarra Villas homes for $ 4.0 million.

In second-quarter 2024, Stratus sold one of the Amarra Villas homes for $ 3.6 million.

2 unchanged sentences

Magnolia Place.

In first-quarter 2024, Stratus completed the sale of approximately 47 acres of undeveloped land in Magnolia, Texas planned for a second phase of retail development, all remaining pad sites and up to 600 multi-family units, for $ 14.5 million.

In connection with the sale, the Magnolia Place construction loan, which had a balance of $ 8.8 million, was repaid.

In third-quarter 2024, Stratus completed the sale of Magnolia Place – Retail for $ 8.9 million, generating a pre-tax net cash proceeds of approximately $ 8.6 million and a pre-tax gain of $ 1.6 million.

$ 14.5 million.

In connection with this sale, the Magnolia Place construction loan, which had a balance of $ 8.8 million, was repaid.

FAIR VALUE MEASUREMENTS

9 unchanged sentences

The components of Stratus’ debt follow (in thousands):

September 30,

2024 December 31,

9 unchanged sentences

Holden Hills 12,000 5,736

Amarra Villas credit facility

West Killeen Market

Amarra Villas credit facility

Magnolia Place — 8,731

$ 181,540 $ 175,168

Includes net reductions for unamortized debt issuance costs of $ 1.7 million at June 30, 2024, and $ 2.2 million at December 31, 2023.

Includes net reductions for unamortized debt issuance costs of $ 1.4 million at September 30, 2024, and $ 2.2 million at December 31, 2023.

Comerica Bank revolving credit facility.

As of June 30, 2024, the maximum amount that could be borrowed under the Comerica Bank revolving credit facility was $ 52.9 million, resulting in availability of $ 39.6 million, net of letters of credit.

Letters of credit, totaling $ 13.3 million, have been issued under the revolving credit facility, $ 11.0 million of which secure Stratus’ obligation to build certain roads and utilities facilities benefiting Holden Hills and Section N and $ 2.3 million of which secure Stratus’ obligation to construct and pay for certain utility infrastructure in Lakeway, Texas.

As of September 30, 2024, the maximum amount that could be borrowed under the Comerica Bank revolving credit facility was $ 52.9 million, resulting in availability of $ 39.6 million, net of letters of credit.

Letters of credit, totaling $ 13.3 million, have been issued under the revolving credit facility, $ 11.0 million of which secure Stratus’ obligation to build certain roads and utilities facilities benefiting Holden Hills and Section N and $ 2.3 million of which secure Stratus’ obligations, which are subject to certain conditions, to construct and pay for certain utility infrastructure in Lakeway, Texas, which is expected to be utilized by the planned multi-family project on Stratus’ remaining land in Lakeway.

Jones Crossing loan.

2 unchanged sentences

The DSCR fell below 1.15 to 1.00 in each of fourth-quarter 2022 and first-quarter 2023, and the Jones Crossing subsidiary made principal payments of $ 231 thousand and $ 1.7 million in February 2023 and May 2023, respectively, to bring the DSCR back above the threshold and a Cash Sweep Period did not occur.

As permitted under the Jones Crossing loan agreement, in August 2023 the Jones Crossing subsidiary separated the ground lease for the multi-family parcel (the Multi-Family Phase) from the primary ground lease, and the Multi-Family Phase was released from the loan collateral.

As permitted under the Jones Crossing loan agreement, in

August 2023 the Jones Crossing subsidiary separated the ground lease for the multi-family parcel (the Multi-Family Phase) from the primary ground lease, and the Multi-Family Phase was released from the loan collateral.

In October 2023, the Jones Crossing loan was modified effective August 1, 2023 to remove the Multi-Family Phase from certain defined terms and to revise the DSCR calculation to exclude the Multi-Family Phase from expenses on a retroactive basis beginning in second-quarter 2023.

4 unchanged sentences

Under The Annie B land loan, Term SOFR Rate is defined as one-month Term SOFR plus 0.10 percent and is subject to a floor of 0.50 percent.

connection with the modification, Stratus made a $ 1.4 million principal payment on the loan and is required to make another principal payment of $ 630 thousand in February 2025.

In connection with the modification, Stratus made a $ 1.4 million principal payment on the loan and is required to make another principal payment of $ 630 thousand in February 2025.

The Saint June construction loan.

In October 2024, The Saint June construction loan was modified to (i) extend the maturity date of the loan to October 2, 2025;

(ii) increase the aggregate commitment under the loan by $ 2.0 million to $ 32.3 million;

(iii) decrease the interest rate applicable margin from 2.85 percent to 2.35 percent;

and (iv) require payment of an exit fee for prepayments and repayments of the loan of 1.00 percent of the principal amount of such amounts repaid, subject to certain exceptions.

Accordingly, the loan bears interest at the one-month Term SOFR plus 2.35 percent, subject to a 3.50 percent floor.

The loan is payable in monthly installments of principal and interest of approximately $ 40,000 , with the outstanding principal due at maturity.

The Saint June, L.P.

has an option to extend the maturity of the loan for an additional 12-month term if certain conditions are met.

Amarra Villas credit facility.

3 unchanged sentences

Paydowns made in connection with a sale of an Amarra Villas home reduce the commitment amount by the amount of the payment, and such amounts may not be re-borrowed.

In third-quarter 2024, Stratus made a $ 3.7 million principal payment on the credit facility upon the closing of a sale of one of the Amarra Villas homes.

In second-quarter 2024, Stratus made a $ 3.5 million principal payment on the credit facility upon the closing of a sale of one of the Amarra Villas homes.

3 unchanged sentences

In February 2024, this loan was repaid in full in connection with the sale of approximately 47 acres of undeveloped land.

Change in benchmark interest rate on the Comerica Bank revolving credit facility and The Saint George and Holden Hills construction loans.

In November 2024, in connection with the discontinuance of the BSBY benchmark rate, the benchmark interest rate on the Comerica Bank revolving credit facility and The Saint George and Holden Hills construction loans will be replaced.

As adjusted, advances under the Comerica Bank revolving credit facility will bear interest at one-month Term SOFR plus 0.50 percent (with a floor of 0.00 percent), plus 4.00 percent.

As adjusted, advances under The Saint George construction loan will bear interest at one-month Term SOFR plus 0.60 percent (with a floor of 0.00 percent) plus 2.35 percent.

As adjusted, advances under the Holden Hills construction loan will bear interest at one-month Term SOFR plus 0.60 percent (with a floor of 0.50 percent), plus 3.00 percent.

For additional information regarding Stratus’ debt, refer to Note 6 in the Stratus 2023 Form 10-K.

Interest Expense and Capitalization.

Interest costs (before capitalized interest) totaled $ 3.9 million in second-quarter 2024, $ 2.9 million in second-quarter 2023, $ 7.9 million for the first six months of 2024 and $ 5.3 million for the first six months of 2023.

Interest costs (before capitalized interest) totaled $ 4.0 million in third-quarter 2024, $ 3.4 million in third-quarter 2023, $ 11.9 million for the first nine months of 2024 and $ 8.7 million for the first nine months of 2023.

All of these interest costs were capitalized for all periods presented.

Capitalized interest is primarily related to development activities at our Barton Creek properties (primarily Holden Hills, Section N and The Saint June) and The Saint George for all periods presented.

Capitalized interest is primarily related to development activities at our Barton Creek properties (primarily Amarra Villas, Holden Hills and Section N) and The Saint George for the 2024 periods.

Capitalized interest was primarily related to development

activities at our Barton Creek properties (primarily Holden Hills, Section N and The Saint June), The Saint George and The Annie B for the 2023 periods.

The Comerica Bank revolving credit facility, Amarra Villas credit facility, The Annie B land loan, The Saint George construction loan, Kingwood Place construction loan and Holden Hills construction loan require Comerica Bank’s prior written consent for any common stock repurchases in excess of $ 1.0 million or any dividend payments.

On September 1, 2022, with written consent from Comerica Bank, Stratus’ Board of Directors (Board) declared a special cash dividend of $ 4.67 per share (totaling $ 40.0 million) on Stratus’ common stock, which was paid on September 29, 2022 to stockholders of record as of September 19, 2022.

Accrued liabilities included $ 0.3 million as of June 30, 2024, and $ 0.6 million as of December 31, 2023, representing dividends accrued for unvested RSUs in accordance with the terms of the awards.

Accrued liabilities included $ 0.3 million as of September 30, 2024, and $ 0.6 million as of December 31, 2023, representing dividends accrued for unvested RSUs in accordance with the terms of the awards.

The accrued dividends are paid to the holders of the RSUs as the RSUs vest.

8 unchanged sentences

The repurchase program authorizes Stratus, in management’s and the Capital Committee of the Board’s discretion, to repurchase shares from time to time, subject to market conditions and other factors.

As of June 30, 2024, Stratus had not purchased any shares under the new program.

As of September 30, 2024, Stratus had not purchased any shares under the new program.

PROFIT PARTICIPATION INCENTIVE PLAN AND LONG-TERM INCENTIVE PLAN

In July 2018, the Compensation Committee (the Committee) adopted the PPIP.

In February 2023, the Committee approved the LTIP, which amends and restates the PPIP, and is effective for participation interests awarded under development projects on or after its effective date.

Outstanding participation interests granted under the PPIP will

continue to be governed by the terms of the prior PPIP.

In February 2023, the Committee approved the Long-term Incentive Plan (LTIP), which amends and restates the PPIP, and is effective for participation interests awarded under development projects on or after its effective date.

Outstanding participation interests granted under the PPIP will continue to be governed by the terms of the prior PPIP.

The PPIP and LTIP provide participants with economic incentives tied to the success of the development projects designated by the Committee as approved projects under the PPIP and LTIP.

5 unchanged sentences

A summary of PPIP/LTIP costs follows (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

4 unchanged sentences

$ ( 62 ) $ ( 69 ) $ 210 $ 321

At June 30, 2024, outstanding awards under the PPIP included Amarra Villas, Jones Crossing – Retail, Magnolia Place and The Saint June, and outstanding awards under the LTIP included The Saint George.

The accrued liability for the PPIP and LTIP totaled $ 1.9 million at June 30, 2024, and $ 3.1 million at December 31, 2023 (included in other liabilities).

At September 30, 2024, outstanding awards under the PPIP included Amarra Villas, Jones Crossing – Retail, Magnolia Place and The Saint June, and outstanding awards under the LTIP included The Saint George.

The accrued liability for the PPIP and LTIP totaled $ 1.8 million at September 30, 2024, and $ 3.1 million at December 31, 2023 (included in other liabilities).

Stratus’ accounting policy for and other information regarding its income taxes are further described in Notes 1 and 7 in the Stratus 2023 Form 10-K.

Stratus has a full valuation allowance against its U.S.

Federal net deferred tax assets as of both June 30, 2024 and December 31, 2023.

Stratus has recorded a deferred tax asset totaling $ 173 thousand at both June 30, 2024 and December 31, 2023 related to state income taxes.

Federal net deferred tax assets as of both September 30, 2024 and December 31, 2023.

Stratus has recorded a deferred tax asset totaling $ 173 thousand at both September 30, 2024 and December 31, 2023 related to state income taxes.

In evaluating the recoverability of the remaining deferred tax assets, management considered available positive and negative evidence, giving greater weight to the uncertainty regarding projected future financial results.

1 unchanged sentence

Stratus’ future results of operations may be negatively impacted by an inability to realize a tax benefit for future tax losses or for items that will generate additional deferred tax assets that are not more likely than not to be realized.

The difference between Stratus’ consolidated effective income tax rate of 14 percent for the first six months of 2024 and the U.S.

The difference between Stratus’ consolidated effective income tax rate of ( 70 ) percent for the first nine months of 2024 and the U.S.

Federal statutory income tax rate of 21 percent was primarily attributable to state income taxes, noncontrolling interests in subsidiaries, the presence of a valuation allowance against its U.S.

Federal net deferred tax assets as of June 30, 2024, and the executive compensation limitation.

The difference between Stratus’ consolidated effective income tax rate of ( 17 ) percent for the first six months of 2023 and the U.S.

Federal statutory income tax rate of 21 percent was primarily attributable to state income taxes, noncontrolling interests in subsidiaries, the presence of a valuation allowance against certain U.S.

Federal deferred tax assets as of June 30, 2023, and the executive compensation limitation.

Federal net deferred tax assets as of September 30, 2024, and the executive compensation limitation.

The difference between Stratus’ consolidated effective income tax rate of ( 16 ) percent for the first nine months of 2023 and the U.S.

Federal statutory income tax rate of 21 percent was primarily attributable to state income taxes, noncontrolling interests in subsidiaries, the presence of a valuation allowance against its U.S.

Federal net deferred tax assets as of September 30, 2023, and the executive compensation limitation.

On August 16, 2022, the IR Act was enacted in the United States.

Among other provisions, the IR Act imposes a new one percent excise tax on the fair market value of net corporate stock repurchases made by covered

corporations, effective for tax years beginning after December 31, 2022.

Among other provisions, the IR Act imposes a new one percent excise tax on the fair market value of net corporate stock repurchases made by covered corporations, effective for tax years beginning after December 31, 2022.

Stratus recorded $ 22 thousand in such excise taxes in first-quarter 2024 for share repurchases in 2023.

11 unchanged sentences

and in Magnolia, Texas (potential development of approximately 11 acres planned for future multi-family use), Kingwood, Texas (a retail pad site) and New Caney, Texas (New Caney), each located in the greater Houston area.

The Leasing Operations segment is comprised of Stratus’ real estate assets held for investment that are leased or available for lease and includes The Saint June, West Killeen Market, Kingwood Place, the retail portions of Lantana Place and Magnolia Place, the completed retail portion of Jones Crossing and retail pad sites subject to ground leases at Lantana Place, Kingwood Place and Jones Crossing.

The Leasing Operations segment is comprised of Stratus’ real estate assets held for investment that are leased or available for lease and includes The Saint June, West Killeen Market, Kingwood Place, the retail portion of Lantana Place, the completed retail portion of Jones Crossing, retail pad sites subject to ground leases at Lantana Place, Kingwood Place and Jones Crossing, and, prior to its sale in third-quarter 2024, the retail portion of Magnolia Place.

Stratus uses operating income or loss to measure the performance of each segment.

3 unchanged sentences

Stratus’ revenues from contracts with customers follow (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

9 unchanged sentences

Financial Information by Business Segment.

Summarized financial information by segment for the three months ended June 30, 2024, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Summarized financial information by segment for the three months ended September 30, 2024, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Leasing Operations Corporate, Eliminations and Other b

3 unchanged sentences

Depreciation and amortization ( 48 ) ( 1,333 ) 16 ( 1,365 )

Gain on sale of assets c

— 1,626 — 1,626

General and administrative expenses — — ( 3,363 ) ( 3,363 )

2 unchanged sentences

$ 6,608 $ 6,820 $ — $ 13,428

Total assets at June 30, 2024 c

Total assets at September 30, 2024 d

349,701 154,257 19,222 523,180

1 unchanged sentence

Includes consolidated general and administrative expenses and eliminations of intersegment amounts.

Represents a pre-tax gain on the sale of Magnolia Place – Retail in third-quarter 2024 of $ 1.6 million.

Corporate, eliminations and other includes cash and cash equivalents and restricted cash of $ 18.7 million.

Summarized financial information by segment for the three months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the three months ended September 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Leasing Operations Corporate, Eliminations and Other b

7 unchanged sentences

$ 13,613 $ 12,701 $ — $ 26,314

Total assets at June 30, 2023 c

Total assets at September 30, 2023 c

302,927 164,565 34,529 502,021

3 unchanged sentences

The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the six months ended June 30, 2024, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Summarized financial information by segment for the first nine months ended September 30, 2024, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Leasing Operations Corporate, Eliminations and Other b

3 unchanged sentences

Depreciation and amortization ( 136 ) ( 4,080 ) 48 ( 4,168 )

Gain on sale of assets c

— 1,626 — 1,626

General and administrative expenses — — ( 11,670 ) ( 11,670 )

4 unchanged sentences

Includes consolidated general and administrative expenses and eliminations of intersegment amounts.

Summarized financial information by segment for the six months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Represents a pre-tax gain on the sale of Magnolia Place – Retail in third-quarter 2024 of $ 1.6 million.

Summarized financial information by segment for the first nine months ended September 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

Leasing Operations Corporate, Eliminations and Other b

10 unchanged sentences

SUBSEQUENT EVENTS

Stratus evaluated events after June 30, 2024, and through the date the financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements.

Stratus evaluated events after September 30, 2024, and through the date the financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements