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Item 1. Financial Statements

2025-08-12 compared with 2025-05-15 · 253 added, 90 removed, 375 unchanged (48% of the section changed)

34 unchanged sentences

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(In Thousands, Except Per Share Amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Real estate operations $ 6,798 $ 3,629 $ 6,823 $ 25,752

7 unchanged sentences

General and administrative expenses 3,557 3,842 7,608 8,307

Gain on sale of asset ( 200 ) —

Gain on sale of assets ( 5,000 ) — ( 5,200 ) —

Total 12,364 11,410 21,002 34,232

Operating (loss) income ( 759 ) ( 2,920 ) ( 4,354 ) 765

Interest expense, net ( 277 ) — ( 277 ) —

Loss on interest rate cap agreements ( 9 ) — ( 22 ) —

Loss on extinguishment of debt — — ( 183 ) ( 59 )

Other income, net 64 173

Other (loss) income, net ( 793 ) 186 ( 729 ) 359

(Loss) income before income taxes ( 1,838 ) ( 2,734 ) ( 5,565 ) 1,065

2 unchanged sentences

Total comprehensive loss attributable to noncontrolling interests 2,555 1,053 3,437 1,908

Net (loss) income and total comprehensive (loss) income attributable to common stockholders $ ( 2,875 ) $ 4,552

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

Net income (loss) and total comprehensive income (loss) attributable to common stockholders $ 260 $ ( 1,725 ) $ ( 2,615 ) $ 2,827

Net income (loss) per share attributable to common stockholders (basic and diluted) $ 0.03 $ ( 0.21 ) $ ( 0.32 ) $ 0.35

Weighted-average shares of common stock outstanding:

8,082 8,072 8,060 8,049

Diluted 8,176 8,072 8,060 8,172

3 unchanged sentences

(In Thousands)

Three Months Ended

Six Months Ended

Cash flow from operating activities:

Net (loss) income $ ( 6,052 ) $ 919

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

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

Depreciation and amortization 2,770 2,803

8 unchanged sentences

Decrease in accounts payable, accrued liabilities and other ( 2,260 ) ( 7,644 )

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

Net cash used in operating activities ( 15,179 ) ( 1,716 )

Cash flow from investing activities:

Capital expenditures ( 7,161 ) ( 16,142 )

Proceeds from sale of assets, net of fees 12,979 —

Municipal utility district (MUD) reimbursements

Payments on master lease obligations ( 416 ) ( 400 )

Net cash used in investing activities ( 4,693 ) ( 8,392 )

Net cash provided by (used in) investing activities 5,811 ( 16,542 )

Cash flow from financing activities:

Borrowings from credit facility 4,000 —

Payments on credit facility ( 4,000 ) —

Borrowings from project loans 59,886 21,754

4 unchanged sentences

Noncontrolling interest distributions ( 856 ) —

Noncontrolling interest contributions 47,847 —

Purchases of treasury stock ( 526 ) —

1 unchanged sentence

Net cash provided by (used in) financing activities 48,597 ( 213 )

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

Net increase (decrease) in cash, cash equivalents and restricted cash 39,229 ( 18,471 )

Cash, cash equivalents and restricted cash at beginning of year 21,154 32,432

18 unchanged sentences

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

Vested stock-based awards 16 — — — — — — — —

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

Stock-based compensation — — 299 — — — 299 — 299

Common stock repurchases — — — — 6 ( 116 ) ( 116 ) — ( 116 )

Noncontrolling interest contributions — — — — — — — 47,847 47,847

Total comprehensive income (loss) — — — 260 — — 260 ( 2,555 ) ( 2,295 )

Balance at June 30, 2025 9,789 $ 98 $ 201,651 $ 25,986 1,706 $ ( 35,827 ) $ 191,908 $ 146,416 $ 338,324

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Continued)

(In Thousands)

Stockholders’ Equity

Held in Treasury Total

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

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

of Shares At Par

6 unchanged sentences

— — — — 16 ( 376 ) ( 376 ) — ( 376 )

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

Excises 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

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

13 unchanged sentences

EARNINGS PER SHARE

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

Stratus’ basic net income (loss) per share of common stock was calculated by dividing the net income (loss) 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 income (loss) per share follows (in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Net (loss) income and total comprehensive (loss) income $ ( 2,295 ) $ ( 2,778 ) $ ( 6,052 ) $ 919

Total comprehensive loss attributable to noncontrolling interests 2,555 1,053 3,437 1,908

Net (loss) income and total comprehensive (loss) income attributable to common stockholders $ ( 2,875 ) $ 4,552

Net income (loss) and total comprehensive income (loss) attributable to common stockholders $ 260 $ ( 1,725 ) $ ( 2,615 ) $ 2,827

Basic weighted-average shares of common stock outstanding

8,082 8,072 8,060 8,049

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

Diluted weighted-average shares of common stock outstanding

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

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.

8,176 8,072 8,060 8,172

Net income (loss) per share attributable to common stockholders (basic and diluted) $ 0.03 $ ( 0.21 ) $ ( 0.32 ) $ 0.35

Excludes 31 thousand shares for second-quarter 2025 of common stock associated with RSUs that were anti-dilutive.

Excludes 187 thousand shares for second-quarter 2024 of common stock associated with RSUs that were anti-dilutive as a result of a net loss.

Excludes 156 thousand shares for the first six months of 2025 of common stock associated with RSUs that were anti-dilutive as a result of a net loss.

Excludes 23 thousand shares for the first six months of 2024 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:

Partnership a

Indirect Equity Interest

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) and Stratus Kingwood Place, L.P.

( 60.0 percent indirect equity interest).

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

Holden Hills Phase 2, L.P.

Stratus Block 150, L.P.

Stratus Kingwood Place, L.P.

The Saint George Apartments, L.P.

The Saint June, L.P.

Holden Hills Phase 2, L.P.

was formed in second-quarter 2025 – see discussion below.

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

Holden Hills Phase 2, L.P.

In second-quarter 2025, Holden Hills Phase 2, L.P.

(the Holden Hills Phase 2 partnership), a Texas limited partnership and subsidiary of Stratus, was formed for the development of Holden Hills Phase 2 (Holden Hills Phase 2 Project).

The Holden Hills Phase 2 Project is Stratus’ approximately 570-acre mixed-use development located along Southwest Parkway in the southern portion of the Barton Creek community in Austin, Texas adjacent to Holden Hills Phase 1, Stratus’ 495-acre residential development.

The Holden Hills Phase 2 partnership is governed by a limited partnership agreement between a wholly owned subsidiary of Stratus as Class A limited partner and an unaffiliated equity investor as Class B limited partner, and another wholly owned subsidiary of Stratus which serves as general partner (the Phase 2 general partner).

In second-quarter 2025, the partners made the following initial capital contributions to the Holden Hills Phase 2 partnership:

(i) Stratus contributed the Holden Hills Phase 2 land and related personal property at an agreed value of $ 95.7 million, which reflects an agreed land value of $ 86.9 million and Stratus’ Tecoma Circle infrastructure investment of approximately $ 8.8 million, and (ii) The Class B limited partner contributed $ 47.8 million in cash.

Following the Class B limited partner’s initial capital contribution, $ 47.8 million of cash was distributed by the Holden Hills Phase 2 partnership to Stratus.

Further, the Holden Hills Phase 2 partnership will reimburse Stratus for certain initial project costs of approximately $ 0.8 million.

As a result of these transactions, Stratus holds, indirectly through its wholly owned subsidiaries, a 50.0 percent equity interest in the Holden Hills Phase 2 partnership, and the Class B limited partner holds the remaining 50.0 percent equity interest in the Holden Hills Phase 2 partnership.

Generally, after the initial distribution described above, distributions will be made to the partners in accordance with their relative equity capital interests.

Stratus consolidates the Holden Hills Phase 2 partnership;

therefore, its contribution of the Holden Hills Phase 2 land and related personal property was recorded at historical cost and the contribution from the Class B limited partner was accounted for as a noncontrolling interest contribution.

The initial purposes of the Holden Hills Phase 2 partnership do not include the development or construction of horizontal or vertical improvements (each, a future project) and the commencement of any future project will require the approval of all partners.

In addition to each partner’s initial capital contribution, upon the call of the Phase 2 general partner from time to time, the partners are obligated to make additional capital contributions for certain Holden Hills Phase 2 partnership costs and expenses defined as “mandatory,” such as property taxes and debt service payments, within available unused reserves in the then-current approved budget or as otherwise approved by the partners.

Stratus guaranteed the additional capital contribution obligations of the Phase 2 general partner and the Class A limited partner.

The Phase 2 general partner has the authority to manage the day-to-day operations of the Holden Hills Phase 2 partnership, subject to approval rights given to the partners for specified “major decisions,” including but not limited to operating and future project budgets, the business plan and amendments thereto;

commencement of any future project;

sales, leases or transfers of any portion of the Holden Hills Phase 2 Project or any future project to any partner, affiliate of any partner, or to any unaffiliated third party other than as contemplated in the business plan;

payments, transactions or agreements between the Holden Hills Phase 2 partnership and any partner or its affiliates not already approved;

incurring any debt, mortgage or guaranty;

capital calls in excess of the initial capital commitment;

admitting a new partner;

and certain transfers of direct or indirect interests in the Holden Hills Phase 2 partnership.

Any partner can initiate a buy-sell at any time by written notice to the other partner, specifying the buyout price.

The Holden Hills Phase 2 partnership has agreed to pay Stratus an asset management fee of $ 39,875 per month for the first 12 months following the formation of the partnership and thereafter subject to an adjustment as agreed by the partners, plus 4.0 percent of the hard costs of landscaping and site clearing approved in the initial operating budget.

The Holden Hills Phase 2 partnership is working to establish a separate revolving credit facility for the Holden Hills Phase 2 Project, which is expected to be sized as needed for future operating costs.

The Holden Hills Phase 2 partnership intends to use the facility to reimburse the Class A limited partner for the approximately $ 0.8 million initial project costs, as described above, fund the approved operating budget for 2025 and fund future partnership activities approved by the partners.

Amendment to the Holden Hills, L.P.

Partnership Agreement .

In second-quarter 2025, the parties to the Holden Hills, L.P.

partnership agreement, relating to Holden Hills Phase 1, entered into an amendment thereto that changed certain provisions to more closely align with the Holden Hills Phase 2 partnership agreement, primarily that any partner can initiate a buy-sell at any time by written notice to the other partner.

Operating Loans to Partnerships.

4 unchanged sentences

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.

No loans were made in second-quarter 2025 or 2024.

As of June 30, 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.

Stratus and the Class B limited partner in The Saint June partnership 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 anticipated because of 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.

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 to The Saint June, L.P.

In second-quarter 2024, Stratus made an operating loan of $ 85 thousand, and the Class B limited partner made an operating loan of $ 165 thousand to The Saint June, L.P.

No loans were made in the first six months of 2025 .

As of June 30, 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.

2 unchanged sentences

Distribution Percentages

The Saint George Apartments, L.P.

The Saint June, L.P.

Holden Hills, L.P.

Stratus Kingwood Place, L.P.

Stratus Third-party Class B Limited Partner Stratus Third-party Class B Limited Partner Stratus Third-party Class B Limited Partner Stratus Third-party Class B Limited Partners

The Saint George Apartments, L.P.

The Saint June, L.P.

Stratus Third-party Class B Limited Partner Stratus Third-party Class B Limited Partners Stratus Third-party Class B Limited Partner Stratus Third-party Class B Limited Partner

Until all partners have received a return of their capital contributions and a 9.00 percent cumulative return;

8 unchanged sentences

Accounting for Limited Partnerships.

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.

Accordingly, the partnerships’ results are consolidated in Stratus’ financial statements.

Stratus has performed evaluations and concluded that all of these limited partnerships are variable interest entities (VIEs) and that Stratus is the primary beneficiary of each VIE.

Accordingly, the partnerships’ financial statements are consolidated in Stratus’ financial statements.

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

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.

At June 30, 2025, cash and cash equivalents totaling $ 2.4 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):

21 unchanged sentences

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 remaining deferred gain representing the related contract liability is presented in the consolidated balance sheets in the amount of $ 1.3 million at June 30, 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.

West Killeen Market.

In second-quarter 2025, Stratus completed the sale of the West Killeen Market retail project for $ 13.3 million, generating pre-tax net cash proceeds of approximately $ 7.8 million, after transaction expenses and payment of the remaining project loan, and a pre-tax gain of approximately $ 5.0 million.

In connection with this sale, the West Killeen Market construction loan, which had a balance of $ 5.2 million, was repaid.

Amarra Villas.

In second-quarter 2025, Stratus sold two Amarra Villas homes for a total of $ 6.8 million .

In connection with these sales, the Amarra Villas credit facility, which had a balance of $ 1.7 million, was repaid.

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

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

35 unchanged sentences

23,588 22,428

The Annie B land loan 11,950 12,568

The Annie B land loan d

11,962 12,568

Construction loans:

2 unchanged sentences

Holden Hills Phase 1 18,530 15,265

West Killeen Market

Amarra Villas credit facility 1,662 1,631

West Killeen Market e

Amarra Villas credit facility f

$ 199,434 $ 194,853

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

In January and March 2025, the Comerica Bank revolving credit facility was amended, and in June 2025, the borrowing base was reduced pursuant to the terms of the loan agreement – see discussion below.

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.

In July 2025, The Annie B land loan was amended and the maturity date was extended to September 1, 2027.

In May 2025, Stratus repaid this loan in connection with the sale of the project.

In June 2025, Stratus repaid this credit facility and the credit facility was terminated.

Includes net reductions for unamortized debt issuance costs of $ 1.9 million at June 30, 2025, and $ 1.8 million at December 31, 2024.

Comerica Bank revolving credit facility.

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.

As of June 30, 2025, the maximum amount that could be borrowed under the Comerica Bank revolving credit facility was $ 29.3 million, resulting in availability of $ 17.7 million, net of $ 11.6 million of letters of credit.

In June 2025, the Holden Hills Phase 2 property was removed from the borrowing base for the revolving credit facility, in anticipation of a potential separate revolving credit facility for the property, and the maximum amount that could be borrowed was reduced.

Also, in June 2025, after the Amarra Villas credit facility was fully repaid and terminated, the remaining three Amarra Villas homes were added to the borrowing base for the Comerica Bank revolving credit facility.

The net effect of these changes was a decrease of $ 24.8 million to the maximum amount that could be borrowed .

Letters of credit have been issued under the revolving credit facility, $ 9.0 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 May 2025, a $ 4.0 million letter of credit relating to Holden Hills Phase 1 was terminated upon completion of the related obligations and the aggregate amount of letters of credit committed against the facility was reduced to $ 11.6 million.

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.

24 unchanged sentences

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

The Annie B land loan.

In July 2025, The Annie B land loan was modified to extend the maturity date to September 1, 2027.

Monthly principal payments of $ 49,875 in addition to interest will be required during the extended term.

Amarra Villas credit facility.

Under the Amarra Villas credit facility, principal paydowns occur as homes are sold, and additional amounts are borrowed as construction costs are incurred.

Paydowns made in connection with the 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 second-quarter 2025, Stratus made a $ 1.7 million principal payment on the credit facility upon the closing of a sale of one of the Amarra Villas homes, which fully repaid the credit facility, and the credit facility was terminated.

West Killeen Market construction loan.

In May 2025, this loan was repaid in full in connection with the sale of the West Killeen Market retail project.

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 $ 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.

Interest costs (before capitalized interest) totaled $ 3.9 million in second-quarter 2025, $ 3.9 million in second-quarter 2024, $ 7.6 million for the first six months of 2025 and $ 7.9 million for the first six months of 2024.

Stratus’ capitalized interest totaled $ 3.6 million in second-quarter 2025 and $ 7.4 million for the first six months of 2025.

All of Stratus’ interest costs were capitalized for first-quarter 2025 and both 2024 periods.

Capitalized interest is primarily related to development activities at Stratus’ Barton Creek properties (primarily Holden Hills Phases 1 and 2) and The Saint George for the 2025 periods.

Capitalized interest was primarily related to development activities at Stratus’ Barton Creek properties (primarily Holden Hills Phases 1 and 2 and The Saint June) and The Saint George for the 2024 periods.

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

Accrued liabilities included $ 28 thousand as of June 30, 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 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.

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

In June 2025, with written consent from Comerica Bank, Stratus’ Board approved an increase in the share repurchase program, authorizing repurchases of up to $ 25.0 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.

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.

In the first six months of 2025, Stratus acquired 26,819 shares of its common stock for a total cost of $ 0.5 million at an average price of $ 19.59 per share.

Through August 8, 2025, Stratus has acquired 135,620 shares of its common stock for a total cost of $ 3.0 million at an average price of $ 22.13 per share, and $ 22.0 million remains available for repurchases under the program.

PROFIT PARTICIPATION INCENTIVE PLAN AND LONG-TERM INCENTIVE PLAN

2 unchanged sentences

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.

Estimates related to the awards may change over time as a result of differences between projected and actual development progress and costs, market conditions and the timing of capital transactions or valuation events.

3 unchanged sentences

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 and LTIP costs follows (in thousands):

Three Months Ended

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

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Charged to general and administrative expense

$ 30 $ 76 $ 98 $ 159

Capitalized to project development costs 8 2 16 113

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).

Total PPIP/LTIP costs

$ 38 $ 78 $ 114 $ 272

At June 30, 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 $ 2.0 million at June 30, 2025, and $ 1.9 million 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 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.

Federal net deferred tax assets as of both June 30, 2025 and December 31, 2024.

Stratus has recorded a deferred tax asset totaling $ 153 thousand at both June 30, 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 ( 1 ) percent for the first three months of 2025 and the U.S.

During 2025, Stratus expects to incur current state income taxes in addition to U.S.

Federal current income taxes primarily associated with taxable income generated from cash received in the Holden Hills Phase 2 transaction discussed in Note 3.

The difference between Stratus’ consolidated effective income tax rate of ( 9 ) percent for the first six 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 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 net deferred tax assets as of June 30, 2025, the Holden Hills Phase 2 transaction discussed in Note 3 and the executive compensation limitation.

The difference between Stratus’ consolidated effective income tax rate of 14 percent for the first six 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 March 31, 2024, and the executive compensation limitation.

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

BUSINESS SEGMENTS

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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;

the Lantana community, which includes a portion of Lantana Place planned for a multi-family phase known as The Saint Julia;

The Saint George;

and the land for The Annie B);

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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 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.

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 George (which was completed in second-quarter 2025 and moved from the Real Estate Operations segment to the Leasing Operations segment), The Saint June, Kingwood Place, the retail portion of Lantana 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 segment also included West Killeen Market prior to its sale in second-quarter 2025 and the retail portion of Magnolia Place prior to its sale in third-quarter 2024.

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

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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.

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

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Real Estate Operations:

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Commissions and other 38 4 63 4

6,798 3,629 6,823 25,752

Leasing Operations:

Rental revenue 4,807 4,861 9,825 9,245

4,807 4,861 9,825 9,245

Total revenues from contracts with customers $ 11,605 $ 8,490 $ 16,648 $ 34,997

Financial Information by Reportable Segment.

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

Financial Information by Business Segment.

Summarized financial information by reportable segment for the three months ended June 30, 2025, follows (in thousands):

Leasing Operations Total

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Segment expenses:

Cost of real estate sold ( 6,244 ) ( 6,244 )

Property taxes and insurance ( 385 ) ( 923 ) ( 1,308 )

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Depreciation and amortization ( 49 ) ( 1,327 ) ( 1,376 )

Gain on sale of assets — 200 200

Gain on sale of assets c

— 5,000 5,000

Segment (loss) profit ( 3,536 ) 6,334 2,798

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Operating loss ( 759 )

Interest expense, net ( 277 )

Loss on interest rate cap agreements ( 9 )

Other (loss) income, net ( 793 )

Net loss before income taxes $ ( 1,838 )

Capital expenditures and purchases and development of real estate properties

$ 7,185 $ 2,634 $ 9,819

MUD reimbursements applied to real estate under development d

$ — $ 409 $ 409

Includes sales commissions and other revenues together with related expenses.

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

In second-quarter 2025, Stratus recorded a $ 1.0 million charge to write off receivables, included in other assets on the consolidated balance sheet, from owners of properties previously sold by Stratus for a share of historical costs incurred to develop the land .

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

Reflects an approximately $ 5.0 million pre-tax gain on the sale of the West Killeen Market retail project.

In second-quarter 2025, Stratus received $ 409 thousand of proceeds related to MUD reimbursements of infrastructure costs incurred for development of The Saint June.

This was recorded as a reduction of real estate under development on the consolidated balance sheet.

Summarized financial information by reportable segment for the three months ended June 30, 2024, follows (in thousands):

Leasing Operations Total

Revenue from unaffiliated customers $ 3,629 $ 4,861 $ 8,490

Segment expenses

Cost of real estate sold ( 3,173 ) ( 3,173 )

Property taxes and insurance ( 307 ) ( 775 ) ( 1,082 )

Lease expense ( 285 ) ( 285 )

Professional fees ( 362 ) ( 362 )

Maintenance and repairs ( 492 ) ( 492 )

Allocated overhead costs ( 252 ) ( 252 )

Property management fees and payroll ( 209 ) ( 209 )

Utilities ( 22 ) ( 22 )

Other segment items b

( 45 ) ( 244 ) ( 289 )

Depreciation and amortization ( 44 ) ( 1,358 ) ( 1,402 )

Segment (loss) profit ( 839 ) 1,761 922

General and administrative expenses ( 3,842 )

Operating loss ( 2,920 )

Other (loss) income, net 186

Net loss before income taxes $ ( 2,734 )

Capital expenditures and purchases and development of real estate properties $ 7,360 $ 8,001 $ 15,361

Includes sales commissions and other revenues together with related expenses.

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 six months ended June 30, 2025, follows (in thousands):

Leasing Operations Total

Revenue from unaffiliated customers $ 6,823 $ 9,825 $ 16,648

Segment expenses:

Cost of real estate sold ( 6,244 ) ( 6,244 )

Property taxes and insurance ( 742 ) ( 1,730 ) ( 2,472 )

Lease expense ( 570 ) ( 570 )

Professional fees ( 1,169 ) ( 1,169 )

Maintenance and repairs ( 1,006 ) ( 1,006 )

Allocated overhead costs ( 1,546 ) ( 1,546 )

Property management fees and payroll ( 574 ) ( 574 )

Utilities ( 224 ) ( 224 )

Other segment items b

( 1,494 ) ( 525 ) ( 2,019 )

Depreciation and amortization ( 96 ) ( 2,674 ) ( 2,770 )

Gain on sale of assets c

— 5,200 5,200

Segment (loss) profit ( 5,038 ) 8,292 3,254

General and administrative expenses ( 7,608 )

Operating loss ( 4,354 )

Interest expense, net ( 277 )

Loss on interest rate cap agreements ( 22 )

Loss on extinguishment of debt ( 183 )

Other income 64

Other (loss) income, net ( 729 )

Net loss before income taxes $ ( 5,565 )

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$ 14,397 $ 7,161 $ 21,558

MUD reimbursements applied to real estate under development d

$ — $ 409 $ 409

Includes sales commissions and other revenues together with related expenses.

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):

Reflects an approximately $ 5.0 million pre-tax gain on the sale of the West Killeen Market retail project in second-quarter 2025 and a portion of a previously deferred gain of $ 0.2 million related to The Oaks at Lakeway in first-quarter 2025.

Refer to Note 4 for further discussion.

In second-quarter 2025, Stratus received $ 409 thousand of proceeds related to MUD reimbursements of infrastructure costs incurred for development of The Saint June.

This was recorded as a reduction of real estate under development on the consolidated balance sheet.

Summarized financial information by reportable segment for the six months ended June 30, 2024, follows (in thousands):

Leasing Operations Total

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Loss on extinguishment of debt ( 59 )

Other income 173

Other (loss) income, net 359

Net income before income taxes $ 1,065

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Total assets $ 574,821 $ 514,016

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.

Corporate and other includes cash and cash equivalents and restricted cash of $ 59.2 million and $ 12.6 million at June 30, 2025 and 2024, respectively.

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

Corporate and other also includes elimination of intersegment balances.

SUBSEQUENT EVENTS

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.

Subsequent to June 30, 2025, the One Big Beautiful Bill Act (OBBB) was enacted into law.

Key tax components of OBBB include extension of certain expiring tax provisions from the 2017 Tax Cuts and Jobs Act, the reinstatement of immediate expensing of qualifying business property, full expensing of domestic research and experimental expenditures and changes to interest expense limitations.

Stratus is currently evaluating the tax provisions of OBBB and does not expect a material impact to its 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