What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-13 · 209 added, 253 removed, 256 unchanged (64% of the section changed)

3 unchanged sentences

(In Thousands)

September 30,

2025 December 31,

31 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Real estate operations $ 25 $ 22,123

6 unchanged sentences

Total cost of sales 4,787 18,357

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

General and administrative expenses 4,051 4,465

Gain on sale of asset ( 200 ) —

Total 8,638 22,822

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

Operating (loss) income ( 3,595 ) 3,685

Loss on interest rate cap agreements ( 13 ) —

Loss on extinguishment of debt ( 183 ) ( 59 )

Other income, net 64 173

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

(Loss) income before income taxes ( 3,727 ) 3,799

Provision for income taxes ( 30 ) ( 102 )

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

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

Net (loss) income and total comprehensive (loss) income ( 3,757 ) 3,697

Total comprehensive loss attributable to noncontrolling interests 882 855

2 unchanged sentences

Diluted net (loss) income per share attributable to common stockholders $ ( 0.36 ) $ 0.56

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

Weighted-average shares of common stock outstanding:

8,080 8,003 8,059 7,993

Diluted 8,037 8,151

3 unchanged sentences

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flow from operating activities:

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

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

Net (loss) income $ ( 3,757 ) $ 3,697

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

Depreciation and amortization 1,394 1,401

Cost of real estate sold — 13,191

Loss on interest rate cap agreements 13 —

Loss on extinguishment of debt 183 59

2 unchanged sentences

Gain on sale of assets ( 200 ) —

Equity in unconsolidated affiliate’s loss — 10

Purchases and development of real estate properties ( 7,212 ) ( 8,957 )

Write-off of capitalized project costs 721 —

Decrease in other assets 792 948

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

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

Decrease in accounts payable, accrued liabilities and other ( 5,422 ) ( 4,472 )

Net cash (used in) provided by operating activities ( 13,495 ) 6,547

Cash flow from investing activities:

Capital expenditures ( 4,527 ) ( 8,141 )

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

Payments on master lease obligations ( 166 ) ( 251 )

1 unchanged sentence

Cash flow from financing activities:

Borrowings from credit facility 4,000 —

Borrowings from project loans 57,969 9,330

3 unchanged sentences

Stock-based awards net payments ( 336 ) ( 376 )

Noncontrolling interest contributions

Noncontrolling interest distributions ( 856 ) —

Purchases of treasury stock ( 410 ) —

Financing costs ( 1,220 ) ( 67 )

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

Net cash provided by (used in) financing activities 9,991 ( 9,059 )

Net decrease in cash, cash equivalents and restricted cash ( 8,197 ) ( 10,904 )

6 unchanged sentences

Stockholders’ Equity

Retained Earnings (Accumulated Deficit) Common Stock

Held in Treasury Total Noncontrolling Interests in Subsidiaries

Common Stock Capital in Excess of Par Value

Held in Treasury Total

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

of Shares At Par

3 unchanged sentences

Stock-based compensation — — 369 — — — 369 — 369

Grant of restricted stock units (RSUs) under the Profit Participation Incentive Plan (PPIP) — — 1,492 — — — 1,492 — 1,492

Tender of shares for stock-based awards

— — — — 17 ( 336 ) ( 336 ) — ( 336 )

Excise tax on 2023 common stock repurchases — — — — — ( 22 ) ( 22 ) — ( 22 )

Total comprehensive income (loss) — — — 4,552 — — 4,552 ( 855 ) 3,697

Balance at March 31, 2024 9,664 97 199,674 31,197 1,599 ( 33,395 ) 197,573 102,271 299,844

Vested stock-based awards 12 — — — — — — — —

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

Stock-based compensation — — 434 — — — 434 — 434

Total comprehensive loss — — — ( 1,725 ) — — ( 1,725 ) ( 1,053 ) ( 2,778 )

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

Common stock repurchases — — — — 21 ( 410 ) ( 410 ) — ( 410 )

Noncontrolling interest distributions — — — — — — — ( 856 ) ( 856 )

Total comprehensive loss — — — ( 2,875 ) — — ( 2,875 ) ( 882 ) ( 3,757 )

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.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Continued)

(In Thousands)

Balance at March 31, 2025 9,773 $ 98 $ 201,346 $ 25,726 1,700 $ ( 35,711 ) $ 191,459 $ 101,124 $ 292,583

Stockholders’ Equity

Retained Earnings (Accumulated Deficit) Common Stock

Held in Treasury Total Noncontrolling Interests in Subsidiaries

Common Stock Capital in Excess of Par Value

Held in Treasury Total

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

of Shares At Par

3 unchanged sentences

Stock-based compensation — — 442 — — — 442 — 442

Grant of restricted stock units (RSUs) under the Profit Participation Incentive Plan (PPIP) — — 1,492 — — — 1,492 — 1,492

Tender of shares for stock-based awards

— — — — 16 ( 376 ) ( 376 ) — ( 376 )

Common stock repurchases — — — — 44 ( 894 ) ( 894 ) — ( 894 )

Contributions from noncontrolling interests — — — — — — — 40,000 40,000

Total comprehensive loss — — — ( 5,801 ) — — ( 5,801 ) ( 472 ) ( 6,273 )

Excise tax on 2023 common stock repurchases — — — — — ( 22 ) ( 22 ) — ( 22 )

Total comprehensive income (loss) — — — 4,552 — — 4,552 ( 855 ) 3,697

Balance at March 31, 2024 9,664 $ 97 $ 199,674 $ 31,197 1,599 $ ( 33,395 ) $ 197,573 $ 102,271 $ 299,844

Vested stock-based awards 93 2 — — — — 2 — 2

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

Stock-based compensation — — 505 — — — 505 — 505

Tender of shares for stock-based awards — — — — 28 ( 573 ) ( 573 ) — ( 573 )

Common stock repurchases — — — — 31 ( 695 ) ( 695 ) — ( 695 )

Total comprehensive loss — — — ( 5,301 ) — — ( 5,301 ) ( 8 ) ( 5,309 )

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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023, included in Stratus Properties Inc.’s (Stratus) Annual Report on Form 10-K for the year ended December 31, 2023 (Stratus 2023 Form 10-K) filed with the U.S.

Securities and Exchange Commission on March 28, 2024.

The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States (U.S.

GAAP) and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2024, included in Stratus Properties Inc.’s (Stratus) Annual Report on Form 10-K for the year ended December 31, 2024 (Stratus 2024 Form 10-K) filed with the United States (U.S.) Securities and Exchange Commission (SEC) on March 28, 2025.

The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported and consist of normal recurring adjustments.

1 unchanged sentence

Related Party Transactions.

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

In April 2022, Stratus hired the son of Stratus’ President and Chief Executive Officer as an employee.

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.

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

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

3 unchanged sentences

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

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

Net (loss) income and total comprehensive (loss) income ( 3,757 ) 3,697

Total comprehensive loss attributable to noncontrolling interests 882 855

1 unchanged sentence

Basic weighted-average shares of common stock outstanding

8,080 8,003 8,059 7,993

Add shares issuable upon vesting of dilutive restricted stock units (RSUs) a

Diluted weighted-average shares of common stock outstanding

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

Basic net (loss) income per share attributable to common stockholders $ ( 0.36 ) $ 0.57

Diluted net (loss) income per share attributable to common stockholders $ ( 0.36 ) $ 0.56

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.

For the first three months of March 31, 2025, excludes 161 thousand shares of common stock associated with RSUs that were anti-dilutive as a result of a net loss.

For the first three months of March 31, 2024, excludes 21 thousand shares of common stock associated with RSUs that were anti-dilutive.

LIMITED PARTNERSHIPS

1 unchanged sentence

Stratus, through its subsidiaries, is a partner in the following limited partnerships:

The Saint George Apartments, L.P.

Holden Hills, L.P.

( 50.0 percent indirect equity interest), The Saint George Apartments, L.P.

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

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

( 34.13 percent indirect equity interest), Holden Hills, L.P.

( 34.13 percent indirect equity interest) and Stratus Kingwood Place, L.P.

1 unchanged sentence

For additional information regarding Stratus' partnerships, refer to Note 2 in the Stratus 2024 Form 10-K.

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 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.

Until February 2024, the interest rate on the loans was the one-month Bloomberg Short Term Bank Yield Index (BSBY) Rate plus 5.00 percent.

In February 2024, the interest rate on the loans was changed to the one-month Term Secured Overnight Financing Rate (SOFR) plus 5.00 percent.

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 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.

In April 2024, Stratus made an additional operating loan of $ 85 thousand to The Saint June, L.P., and the Class B Limited Partner made an additional operating loan of $ 165 thousand to The Saint June, L.P.

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.

Operating Loans to Partnerships.

Stratus has made operating loans to Stratus Block 150, L.P.

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

The loans bear interest at one-month Term Secured Overnight Financing Rate (SOFR) plus 5.00 percent, are subordinate to The Annie B land loan and must be repaid before distributions may be made to the partners.

In first-quarter 2024, Stratus made an operating loan of $ 2.4 million.

In first-quarter 2025, Stratus made an operating loan of $ 1.5 million.

As of March 31, 2025, Stratus’ operating loans outstanding to Stratus Block 150, L.P.

totaled $ 7.2 million.

Stratus and the Class B limited partner have made operating loans to The Saint June, 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.

The loans bear interest at one-month Term SOFR plus 5.00 percent, are subordinate to The Saint June construction loan and, unless approved by all partners, no distributions may be made to the partners until the operating loans are repaid.

In first-quarter 2024, Stratus made an operating loan of $ 339 thousand, and the Class B limited partner made an operating loan of $ 339 thousand.

No loans were made in first-quarter 2025 .

As of March 31, 2025, Stratus’ and the Class B limited partner’s operating loans outstanding to The Saint June, L.P.

totaled $ 962 thousand and $ 493 thousand, respectively.

Potential Returns.

16 unchanged sentences

Accounting for Limited Partnerships.

Stratus has performed evaluations and concluded that The Saint George Apartments, L.P., Stratus Block 150, L.P., The Saint June, L.P., Stratus Kingwood Place, L.P.

and Holden Hills, L.P.

Stratus has performed evaluations and concluded that Holden Hills, L.P., The Saint George Apartments, L.P., Stratus Block 150, L.P., The Saint June, L.P.

and Stratus Kingwood Place, L.P.

are variable interest entities (VIEs) and that Stratus is the primary beneficiary of each VIE.

1 unchanged sentence

Stratus will continue to re-evaluate which entity is the primary beneficiary of these partnerships in accordance with applicable accounting guidance.

The cash and cash equivalents held at these limited partnerships are subject to restrictions on distribution to Stratus pursuant to the individual partnership loan agreements.

At March 31, 2025, cash and cash equivalents totaling $ 2.7 million held at certain of these limited partnerships are subject to restrictions on distribution to Stratus pursuant to the individual partnership loan agreements.

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,

2025 December 31,

15 unchanged sentences

Substantially all of the assets are available to settle obligations of the partnerships only.

The Kingwood Place construction loan has a 25.0 percent repayment guaranty and The Saint George construction loan has a completion guaranty and a 25.0 percent repayment guaranty.

The guaranty of The Saint June construction loan converted to a 50.0 percent repayment guaranty upon completion of the project in fourth-quarter 2023.

All of the rest of the debt is subject to a full repayment guaranty.

Certain of the guaranties terminate if the project meets specified financial and other conditions.

All of the debt is guaranteed by Stratus until certain conditions are met as provided in the applicable partnership loan agreements except for The Saint June construction loan, for which Stratus has a 50 percent repayment guaranty obligation, The Saint George construction loan, for which Stratus has a 25 percent repayment guaranty obligation, and the Kingwood Place loan, for which Stratus has customary non-recourse carve-out obligations and an environmental indemnification.

The creditors for the remaining liabilities do not have recourse to the general credit of Stratus.

1 unchanged sentence

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 $ 2.1 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.

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 2024 Form 10-K under the heading “Deferred Gain on Sale of The Oaks at Lakeway.” In first-quarter 2025, one of the pad sites subject to the master lease was sub-leased and resulted in recognition of a portion of the previously deferred gain of $ 200 thousand due to the expected savings in the master lease rent over the remaining term.

The remaining deferred gain representing the related contract liability is presented in the consolidated balance sheets in the amount of $ 1.5 million at March 31, 2025 and $ 1.8 million at December 31, 2024.

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

The remaining deferred gain balance is expected to be reduced primarily by future Pad Sites Master Lease payments.

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.

In first-quarter 2024, Stratus sold two of the Amarra Villas homes for a total of $ 7.6 million.

In first-quarter 2023, Stratus sold one of the Amarra Villas homes for $ 2.5 million.

In first-quarter 2024, Stratus sold two Amarra Villas homes for a total of $ 7.6 million.

Magnolia Place.

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.

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 first-quarter 2024, Stratus completed the sale of 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 this sale, the Magnolia Place construction loan, which had a balance of $ 8.8 million, was repaid.

3 unchanged sentences

The carrying value for certain Stratus financial instruments (i.e., cash and cash equivalents, restricted cash, accounts payable and accrued liabilities) approximates fair value because of their short-term nature and generally negligible credit losses.

A summary of the carrying amount and fair value of Stratus’ interest rate caps follows (in thousands):

2025 December 31,

Value Carrying

Interest rate caps $ 11 $ 11 $ 19 $ 19

Interest Rate Cap Agreements.

In November 2024, Stratus Kingwood Place, L.P.

paid $ 27,400 to enter into an interest rate cap agreement, with a Term SOFR strike rate equal to 6.00 percent, a notional amount of $ 33.0 million (the principal amount of the Kingwood Place loan) and an expiration date of December 1, 2026.

In March 2025, College Station 1892 Properties, L.L.C.

paid $ 4,800 to enter into an interest rate cap agreement, with a Term SOFR strike rate equal to 5.00 percent, a notional amount of $ 24.0 million (the principal amount of the Jones Crossing loan) and an expiration date of April 1, 2026.

The interest rate caps are derivative instruments that do not qualify for hedge accounting treatment.

Therefore, changes in the instruments’ fair values are recorded in the consolidated statements of comprehensive (loss) income.

Stratus uses an interest rate pricing model that relies on market observable inputs such as Term SOFR to measure the fair value of the agreements.

Stratus also evaluated the counterparty credit risk associated with the agreements, which is considered a Level 3 input, but did not consider such risk to be significant.

Therefore, the interest rate caps are classified within Level 2 of the fair value hierarchy.

The fair value of the interest rate caps is presented as part of other assets in the consolidated balance sheets.

The fair value of Stratus’ debt also approximates fair value, as the interest rates are variable and approximate prevailing market interest rates available for similar mortgage debt.

5 unchanged sentences

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

September 30,

2025 December 31,

Comerica Bank revolving credit facility $ — $ —

Jones Crossing loan 22,402 22,340

Comerica Bank revolving credit facility a

Kingwood Place loan 32,453 32,408

Lantana Place loan b

29,400 25,509

Jones Crossing loan c

23,554 22,428

The Annie B land loan 11,950 12,568

2 unchanged sentences

The Saint June 32,017 32,109

Kingwood Place 28,894 28,160

Lantana Place

22,744 22,961

Holden Hills 12,000 5,736

Holden Hills Phase 1 16,851 15,265

West Killeen Market

Amarra Villas credit facility 1,662 1,631

Magnolia Place — 8,731

$ 207,838 $ 194,853

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

In January and March 2025, the Comerica Bank revolving credit facility was amended.

In January 2025, the Lantana Place construction loan was refinanced with a four-year term loan.

In March 2025, the Jones Crossing loan was refinanced with a three-year term loan.

Includes net reductions for unamortized debt issuance costs of $ 2.2 million at March 31, 2025, and $ 1.8 million at December 31, 2024.

Comerica Bank revolving credit facility.

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.

As of March 31, 2025, the maximum amount that could be borrowed under the Comerica Bank revolving credit facility was $ 54.1 million, resulting in availability of $ 34.5 million, net of $ 15.6 million of letters of credit and borrowings of $ 4.0 million.

Letters of credit have been issued under the revolving credit facility, $ 13.3 million of which secure Stratus’ obligation to build certain roads and utilities facilities benefiting Holden Hills Phases 1 and 2 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.

In January 2025, the Comerica Bank revolving credit facility was modified to increase the aggregate amount of letters of credit that may be committed against the facility from $ 13.3 million to $ 15.6 million.

In February 2025, Stratus entered into an additional $ 2.3 million letter of credit to secure Stratus’ obligation to build certain roads and utilities facilities benefiting Holden Hills Phases 1 and 2.

In March 2025, Stratus entered into an amendment to its revolving credit facility, which (i) extended the maturity date to March 27, 2027, (ii) lowered the interest rate to one-month Term SOFR plus 0.10 percent (with a floor of 0.50 percent), plus 3.00 percent and (iii) lowered the maximum loan amount to the lesser of $ 55.0 million or the borrowing base limit.

Kingwood Place loan.

In first-quarter 2025, in connection with the refinancing of the Kingwood Place construction loan in November 2024, which generated additional cash proceeds, Stratus paid distributions of $ 856 thousand to noncontrolling interest holders.

Lantana Place loan.

In January 2025, Lantana Place, L.L.C.

entered into a loan with Broadway National Bank (the Lantana Place loan) to refinance the prior Lantana Place construction loan.

The Lantana Place loan has a principal amount of $ 29.8 million and matures February 1, 2029, with an option to extend the maturity for an additional 12 months, subject to satisfying certain conditions.

The Lantana Place loan bears interest at one-month Term SOFR plus 2.35 percent, with a floor of 0.00 percent .

Payments of interest only on the Lantana Place loan are due monthly through January 31, 2026.

Thereafter, principal and interest payments are due monthly based on a 30-year amortization with the remaining unpaid principal and interest due at maturity.

The Lantana Place loan is secured by the Lantana Place – Retail project.

Stratus has provided a guaranty limited to certain non-recourse carve-out obligations.

The Lantana Place loan agreement contains a financial covenant that the Lantana Place project maintain a debt service coverage ratio of at least 1.30 to 1.00 measured by reference to a trailing 12-month period for each fiscal year beginning with the year ending December 31, 2025.

After paying off the prior Lantana Place construction loan and paying property taxes and closing costs, Stratus received approximately $ 3.0 million in net cash proceeds.

Jones Crossing loan.

The Jones Crossing loan requires the Jones Crossing project to meet a debt service coverage ratio (DSCR) test of 1.15 to 1.00 measured quarterly, and starting June 30, 2023, on a rolling 12-month basis.

If the DSCR falls below 1.15 to 1.00, a “Cash Sweep Period” (as defined in the Jones Crossing loan) results, which limits Stratus’ ability to receive cash from its Jones Crossing subsidiary.

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.

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.

Accordingly, the DSCR met the threshold in second-quarter and third-quarter 2023.

In fourth-quarter 2023, the DSCR was slightly below the threshold, and a $ 13 thousand principal payment was made in first-quarter 2024 to bring the DSCR back above the threshold and a Cash Sweep Period did not occur.

The Annie B land loan.

In February 2024, The Annie B land loan was modified to extend the maturity to September 1, 2025, and change the interest rate to Term SOFR Rate plus 3.00 percent.

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.

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.

In June 2024, the Amarra Villas credit facility was modified to, among other things, extend the maturity to June 19, 2026, change the interest rate to Term SOFR Rate plus 3.00 percent (subject to a floor of 5.00 percent) and lower the commitment amount from $ 18.0 million to $ 10.5 million.

Under the Amarra Villas credit facility, Term SOFR Rate is defined as one-month Term SOFR plus 0.10 percent and is subject to a floor of 0.50 percent.

Principal paydowns occur as homes are sold, and amounts are borrowed as homes are constructed.

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.

In first-quarter 2024, Stratus made principal payments totaling $ 7.2 million on the credit facility upon the closing of the sales of two of the Amarra Villas homes.

In first-quarter 2023, Stratus made a $ 2.2 million principal payment on the credit facility upon the closing of a sale of one of the Amarra Villas homes.

Magnolia Place construction loan.

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.

In March 2025, College Station 1892 Properties, L.L.C.

entered into a loan with Brighthouse Life Insurance Company (the Jones Crossing loan) to refinance the prior Jones Crossing loan.

The Jones Crossing loan has a principal amount of $ 24.0 million and matures April 1, 2028.

The Jones Crossing loan bears interest at one-month Term SOFR plus 1.95 percent, with a floor of 3.00 percent.

Payments of interest only on the Jones Crossing loan are due monthly with the outstanding principal due at maturity.

College Station 1892 Properties, L.L.C.

may prepay all, but not a portion, of the Jones Crossing loan;

provided that a prepayment prior to April 1, 2026 is subject to a yield maintenance premium payment.

The Jones Crossing loan is secured by the Jones Crossing – Retail project.

Stratus has provided a guaranty limited to certain non-recourse carve-out obligations and an environmental indemnification.

After paying off the prior Jones Crossing loan and closing costs, Stratus received approximately $ 1.2 million in net cash proceeds.

For additional information regarding Stratus’ debt, refer to Note 6 in the Stratus 2024 Form 10-K.

Interest Expense and Capitalization.

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 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.

Interest costs (before capitalized interest) totaled $ 3.8 million in first-quarter 2025 and $ 4.0 million in first-quarter 2024.

All of these interest costs were capitalized for each of the periods presented.

Capitalized interest in first-quarter 2025 was primarily related to development activities at Barton Creek (primarily Holden Hills Phases 1 and 2) and The Saint George.

Capitalized interest in first-quarter 2024 was primarily related to development activities at Barton Creek (primarily Holden Hills Phases 1 and 2 and The Saint June), The Saint George and The Annie B.

The Comerica Bank revolving credit facility, Amarra Villas credit facility, The Annie B land loan, The Saint George construction loan and Holden Hills Phase 1 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 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.

Accrued liabilities included $ 28 thousand as of March 31, 2025, and $ 0.3 million as of December 31, 2024, 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.

Share Repurchase Programs.

In 2022, with written consent from Comerica Bank, Stratus’ Board approved a share repurchase program, which authorized repurchases of up to $ 10.0 million of Stratus’ common stock.

The repurchase program authorized Stratus, in management’s discretion, to repurchase shares from time to time, subject to market conditions and other factors.

In October 2023, Stratus completed the share repurchase program.

In total, Stratus acquired 389,378 shares of its common stock under the share repurchase program for a total cost of $ 10.0 million at an average price of $ 25.68 per share.

As required by the Inflation Reduction Act of 2022 (IR Act), Stratus recorded $ 22 thousand in excise tax in first-quarter 2024 for the 2023 share repurchases.

The excise tax liability is included in accrued liabilities in the consolidated balance sheet.

Share Repurchase Program.

In November 2023, with written consent from Comerica Bank, Stratus’ Board approved a new share repurchase program, which authorizes repurchases of up to $ 5.0 million of Stratus’ common stock.

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

In first-quarter 2025, Stratus acquired 20,694 shares of its common stock for a total cost of $ 0.4 million at an average price of $ 19.78 per share.

As of March 31, 2025, Stratus has acquired 83,380 shares of its common stock for a total cost of $ 2.0 million at an average price of $ 23.98 per share, and $ 3.0 million remains available for repurchases under the program.

PROFIT PARTICIPATION INCENTIVE PLAN AND LONG-TERM INCENTIVE PLAN

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

In July 2018, the Stratus Compensation Committee of the Board (the Committee) unanimously adopted the PPIP, which provides participants with economic incentives tied to the success of the development projects designated by the Committee as approved projects under the 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.

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In July 2023, Kingwood Place reached a valuation event under the PPIP and Stratus obtained an appraisal of the property to determine the payout under the PPIP.

The accrued liability under the PPIP related to Kingwood Place was reduced to $ 1.6 million at December 31, 2023, and was settled in RSUs with a three-year vesting period awarded to eligible participants in the first quarter of 2024.

Under the terms of the PPIP and LTIP, the number of RSUs granted in connection with settlement of approved projects is determined by reference to the 12-month trailing average stock price for the year the project reaches a payment event, whereas the grant date fair value of the RSUs for accounting purposes is based on the grant date closing price.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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

Three Months Ended

Charged to general and administrative expense

$ 9 $ ( 205 ) $ 168 $ 84

Capitalized (credited) to project development costs ( 71 ) 136 42 237

Total PPIP/LTIP costs

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

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).

Capitalized to project development costs 8 111

Total PPIP and LTIP costs

At March 31, 2025, 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 both March 31, 2025 and at December 31, 2024 (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 2024 Form 10-K.

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

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.

Federal net deferred tax assets as of both March 31, 2025 and December 31, 2024.

Stratus has recorded a deferred tax asset totaling $ 153 thousand at both March 31, 2025 and December 31, 2024 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.

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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 ( 70 ) percent for the first nine months of 2024 and the U.S.

The difference between Stratus’ consolidated effective income tax rate of ( 1 ) percent for the first three months of 2025 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, 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 net deferred tax assets as of March 31, 2025, and the executive compensation limitation.

The difference between Stratus’ consolidated effective income tax rate of 3 percent for the first three 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 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.

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

Refer to Note 6 for discussion of Stratus’ share repurchase programs.

Federal net deferred tax assets as of March 31, 2024, and the executive compensation limitation.

BUSINESS SEGMENTS

Stratus has two operating segments:

Stratus is engaged primarily in the entitlement, development, management, leasing and sale of multi-family and single-family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas.

Stratus generates revenues primarily from the sale of developed lots or homes and undeveloped land and the lease of developed retail, mixed-use and multi-family properties.

Stratus has two operating segments, which are also its two reportable segments:

Real Estate Operations and Leasing Operations.

The Real Estate Operations segment is comprised of Stratus’ real estate assets (developed for sale, under development and available for development), which consists of its properties in Austin, Texas (including the Barton Creek Community, which includes Section N, Holden Hills, Amarra multi-family and commercial land, Amarra Villas, Amarra Drive lots and other vacant land;

The Real Estate Operations segment includes properties under various stages of development:

developed for sale, under development and available for development.

In this segment, Stratus entitles, develops and sells properties.

Properties that Stratus develops and then holds for investment become part of the Leasing Operations segment.

Decisions about whether to continue to hold a property for investment or to sell it depend on various factors, including conditions in the real estate markets in which Stratus operates and the estimated fair value of the property, and are primarily driven by the objective of maximizing overall asset value.

The Real Estate Operations segment is comprised of Stratus’ real estate assets, which consists of its properties in Austin, Texas (including the Barton Creek Community, which includes Holden Hills Phases 1 and 2, Amarra multi-family and commercial land, Amarra Villas, Amarra Drive lots and other vacant land;

the Circle C community;

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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.

Stratus’ chief operating decision maker (CODM) is the chief executive officer.

The CODM primarily uses segment profit (loss), which is operating income (loss) excluding general and administrative expenses, determined consistent with the measurement principles of U.S.

GAAP, to measure the performance of Stratus’ reportable segments.

The segment measure of profit (loss) provides a comprehensive view of the segments’ financial performance.

The CODM makes decisions about the allocation of operating and capital resources to each segment based on assessment of the performance of the two segments and considering the capital needs for new and existing

projects and the objectives of Stratus’ overall business strategy.

General and administrative expenses, which primarily consist of employee salaries, wages and other costs, are managed on a consolidated basis and are not allocated to Stratus’ operating segments.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Real Estate Operations:

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Commissions and other 25 —

3,971 — 29,723 2,551

Leasing Operations:

Rental revenue 5,018 4,384

4,920 3,669 14,165 10,450

Total revenues from contracts with customers $ 5,043 $ 26,507

Financial Information by Business Segment.

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

Unaffiliated customers $ 3,971 $ 4,920 $ — $ 8,891

Cost of sales, excluding depreciation and amortization

( 5,344 ) ( 1,964 ) — ( 7,308 )

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 )

Operating (loss) income $ ( 1,421 ) $ 3,249 $ ( 3,347 ) $ ( 1,519 )

Capital expenditures and purchases and development of real estate properties

$ 6,608 $ 6,820 $ — $ 13,428

Total assets at September 30, 2024 d

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

Includes sales commissions and other revenues together with related expenses.

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.

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

Unaffiliated customers $ — $ 3,669 $ — $ 3,669

Cost of sales, excluding depreciation and amortization

Financial Information by Reportable Segment.

Summarized financial information by reportable segment for the three months ended March 31, 2025, follows (in thousands):

Leasing Operations Total

Revenue from unaffiliated customers $ 25 $ 5,018 $ 5,043

Segment expenses:

Property taxes and insurance ( 357 ) ( 807 ) ( 1,164 )

Lease expense ( 285 ) ( 285 )

Professional fees ( 363 ) ( 363 )

Maintenance and repairs ( 509 ) ( 509 )

Allocated overhead costs ( 285 ) ( 285 )

Property management fees and payroll ( 285 ) ( 285 )

Utilities ( 40 ) ( 40 )

Other segment items b

( 190 ) ( 272 ) ( 462 )

Depreciation and amortization ( 47 ) ( 1,347 ) ( 1,394 )

Gain on sale of assets — 200 200

Segment (loss) profit ( 1,502 ) 1,958 456

General and administrative expenses ( 4,051 )

Operating (loss) income $ ( 1,505 ) $ 1,354 $ ( 3,178 ) $ ( 3,329 )

Operating loss ( 3,595 )

Loss on interest rate cap agreements ( 13 )

Loss on extinguishment of debt ( 183 )

Other income 64

Net loss before income taxes $ ( 3,727 )

Capital expenditures and purchases and development of real estate properties

$ 7,212 $ 4,527 $ 11,739

Total assets at September 30, 2023 c

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

Includes sales commissions and other revenues together with related expenses.

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

Corporate, eliminations and other includes cash and cash equivalents and restricted cash of $ 34.3 million.

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

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

Unaffiliated customers $ 29,723 $ 14,165 $ — $ 43,888

Cost of sales, excluding depreciation and amortization

For Real Estate Operations, primarily includes advertising, property owner association fees, maintenance and utilities.

For Leasing Operations, primarily includes amortization of leasing costs, property owner association fees, professional fees and office and computer equipment.

Summarized financial information by reportable segment for the three months ended March 31, 2024, follows (in thousands):

Leasing Operations Total

Revenue from unaffiliated customers $ 22,123 $ 4,384 $ 26,507

Segment expenses

Cost of real estate sold ( 13,949 ) ( 13,949 )

Property taxes and insurance ( 315 ) ( 724 ) ( 1,039 )

Lease expense ( 285 ) ( 285 )

Professional fees ( 266 ) ( 266 )

Maintenance and repairs ( 362 ) ( 362 )

Allocated overhead costs ( 249 ) ( 249 )

Property management fees and payroll ( 203 ) ( 203 )

Utilities ( 159 ) ( 159 )

Other segment items b

( 214 ) ( 230 ) ( 444 )

Depreciation and amortization ( 44 ) ( 1,357 ) ( 1,401 )

Gain on sale of assets c

— 1,626 — 1,626

Segment profit 6,801 1,349 8,150

General and administrative expenses ( 4,465 )

Operating income (loss) $ 4,541 $ 6,327 $ ( 11,622 ) $ ( 754 )

Operating income 3,685

Loss on extinguishment of debt ( 59 )

Other income 173

Net income before income taxes $ 3,799

Capital expenditures and purchases and development of real estate properties $ 8,957 $ 8,141 $ 17,098

$ 22,925 $ 22,962 $ — $ 45,887

Includes sales commissions and other revenues together with related expenses.

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.

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

Unaffiliated customers $ 2,551 $ 10,450 $ — $ 13,001

Cost of sales, excluding depreciation and amortization

( 3,786 ) — ( 12,437 )

Depreciation and amortization ( 115 ) ( 2,764 ) 14 ( 2,865 )

General and administrative expenses — — ( 11,973 ) ( 11,973 )

Operating (loss) income $ ( 6,215 ) $ 3,900 $ ( 11,959 ) $ ( 14,274 )

Capital expenditures and purchases and development of real estate properties

For Real Estate Operations, primarily includes advertising, property owner association fees, maintenance and utilities.

For Leasing Operations, primarily includes amortization of leasing costs, property owner association fees, professional fees and office and computer equipment.

Total assets by segment were as follows (in thousands):

Real Estate Operations $ 371,355 $ 329,062

Leasing Operations 151,950 160,759

Corporate and other a

11,276 19,696

Includes sales commissions and other revenues together with related expenses.

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

Total assets $ 534,581 $ 509,517

Corporate and other includes cash and cash equivalents and restricted cash of $ 11.1 million and $ 19.4 million at March 31, 2025 and 2024, respectively.

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

SUBSEQUENT EVENTS

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.

In April 2025, a water leak occurred at The Saint George multi-family project when construction was nearing completion and initial resident move-ins were occurring.

The water line break resulted in damage that is currently estimated to cost $ 1.9 million to remediate and repair.

Remediation and repairs are underway, and the event has been filed as a builder’s risk insurance claim.

Repairs are anticipated to be completed in second-quarter 2025.

Stratus is currently evaluating how these costs will be paid.

Costs of the remediation and repairs to The Saint George Apartments, L.P., to the extent not covered by the insurance company and the general contractor, are currently estimated to be less than $ 1 million.

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