What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-15 · 237 added, 159 removed, 344 unchanged (54% of the section changed)

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From time to time, when deemed appropriate by our Board of Directors (the Board) and permitted pursuant to the terms of our debt agreements, we may return capital to stockholders, as we did in 2022 and 2017 with special cash dividends totaling approximately $40 million and $8 million, respectively, and as we did during 2022 and 2023 through our $10.0 million share repurchase program, which was completed in October 2023.

In November 2023, our Board approved a new $5.0 million share repurchase program, and as of March 31, 2025, we had repurchased $2.0 million of our shares under the program.

In November 2023, our Board approved a new $5.0 million share repurchase program, and in June 2025, our Board approved an increase in the share repurchase program to $25.0 million.

As of August 8, 2025, we had repurchased $3.0 million of our shares under the program.

Our investment strategy focuses on projects that we believe will provide attractive long-term returns, while limiting our financial risk.

We plan to continue to develop properties using project-level debt and third-party equity capital through joint ventures in which we receive development management fees and asset management fees, with our potential returns increasing above our relative equity interest in each project as negotiated return hurdles are achieved.

We plan to continue to develop properties using project-level debt and third-party equity capital through joint ventures in which we receive development management fees and asset management fees, with our potential returns increasing above our relative equity interest in certain projects as negotiated return hurdles are achieved.

Refer to Note 3.

We expect to continue our limited use of our revolving credit facility and to retain sufficient cash to operate our business, taking into account risks associated with changing market conditions and the variability in cash flows from our business.

Our main sources of revenue and cash flow are expected to be sales of our properties to third parties or distributions from joint ventures, the timing of and proceeds from which are difficult to predict and depend on market conditions and other factors.

Our main sources of revenue and cash flow are expected to be sales of our properties to third parties, debt financings and distributions from joint ventures, the timing of and proceeds from which are difficult to predict and depend on market conditions and other factors.

We also generate cash flow from rental income in our leasing operations and from development and asset management fees received from our properties.

Due to the nature of our development-focused business, we do not expect to generate sufficient recurring cash flow to cover our general and administrative expenses each period.

However, we believe that the unique nature and location of our assets, and

our team’s ability to execute successfully on development projects, have provided and will continue to provide us with positive cash flows and net income over time, as evidenced by our sales of The Santal and The Saint Mary in 2021 and Block 21 in 2022, the cash distribution from the Holden Hills Phase 1 partnership in 2023 and our property sales in 2024.

Due to the nature of our development-focused business, we do not expect to generate sufficient recurring cash flow to cover our general

and administrative expenses each period.

However, we believe that the unique nature and location of our assets, and our team’s ability to execute successfully on development projects, have provided and will continue to provide us with positive cash flows and net income over time, as evidenced by our sales of The Santal and The Saint Mary in 2021 and Block 21 in 2022, the cash distributions from the Holden Hills Phase 1 partnership in 2023 and the Holden Hills Phase 2 partnership in June 2025 and our other property sales in 2024 and the first six months of 2025.

Further, we believe our investment strategy, current liquidity and portfolio of projects provide us with many opportunities to increase value for our stockholders.

We do not currently have any material commitments to contribute additional cash to our joint venture projects or wholly owned development projects other than the potential additional $10.0 million of capital that we may be required to contribute to our Holden Hills Phase 1 partnership and our share (related to Holden Hills Phase 2) of the cost of the Tecoma Improvements (as defined below).

As of March 31, 2025, the Holden Hills Phase 1 partnership had $3.0 million remaining to complete the Tecoma Improvements, of which our share totaled $1.8 million.

However, over the past two years and in first-quarter 2025, we made operating loans and a capital contribution to our joint ventures.

As of June 30, 2025, our share of the estimated remaining costs to complete the Tecoma Improvements totaled $1.0 million.

However, over the past two years and in the first six months of 2025, we made operating loans and a capital contribution to our joint ventures.

Refer to Note 3 herein and Note 2 of the 2024 Form 10-K for further discussion.

We anticipate making future operating loans to the limited partnership for The Annie B totaling up to $2.1 million and a capital contribution to the limited partnership for The Saint George of $370 thousand over the next 12 months, including potential costs of water leak remediation and repairs to be borne by the partnership as described in Note 10.

Our estimates of future operating loans and capital contributions are based on estimates of future costs of the partnerships.

Over the next 12 months, we anticipate making future operating loans to the limited partnership for The Annie B totaling up to $2.8 million and a capital contribution to the limited partnership for The Saint George of $430 thousand, representing our 10 percent equity share of debt service and project costs needed by the partnership, including potential costs of water leak damage remediation and repairs as described below in “Recent Development Activities”.

Our estimates of future operating loans and capital contributions are based on current estimates of future costs of the partnerships.

Refer to Note 3 and “Capital Resources and Liquidity” for further discussion.

In addition, our development plans for future projects require significant additional capital.

As of March 31, 2025, consolidated cash totaled $12.0 million and we had $34.5 million available under our revolving credit facility, net of $15.6 million of letters of credit committed against the facility and borrowings of $4.0 million.

In March 2025, our revolving credit facility was amended to extend the maturity and lower the interest rate.

We were challenged by difficult conditions in the real estate business over the past two years and in first-quarter 2025.

Largely as a result of the cash distribution from the Holden Hills Phase 2 partnership and recent property sales, as of June 30, 2025, we had consolidated cash of $59.4 million and $17.7 million available under our revolving credit facility, net of $11.6 million of letters of credit committed against the facility.

Refer to Note 6 for further discussion of our debt.

Our Board is carefully exploring opportunities for the use of cash from the Holden Hills Phase 2 partnership and recent asset sales, which will be based on evolving market conditions and may include a combination of further share repurchases, deleveraging, reinvesting in Stratus’ project pipeline and/or other cash returns to stockholders.

We were challenged by difficult conditions in the real estate business over the past two years and in the first six months of 2025.

Interest rates, which began rising in 2022, continued to increase during 2023, and costs remained elevated.

During 2024, interest rates stabilized, and in the latter part of 2024 and first-quarter 2025, interest rates generally declined;

During 2024, interest rates stabilized, and in the latter part of 2024 and the first six months of 2025, interest rates generally declined;

however, costs remained elevated.

We saw limited opportunities for transactions on favorable terms.

Nevertheless, we made important progress executing our business strategy during 2024 and first-quarter 2025.

Nevertheless, we made important progress executing our business strategy during 2024 and the first six months of 2025.

The Federal Reserve lowered interest rates in September 2024 for the first time in four years, and lowered interest rates again in November and December 2024.

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Also, in 2024, among other things, we completed the lease-up of The Saint June multi-family project, completed construction of six Amarra Villas homes, continued construction on The Saint George multi-family project and advanced road and utility infrastructure construction on Holden Hills Phase 1.

During first-quarter 2025, we also advanced construction on The Saint George, the last two Amarra Villas homes and the road and utility infrastructure for Holden Hills Phase 1.

The first units of The Saint George were available for occupancy in April 2025.

All of these projects are expected to be completed in second-quarter 2025.

During the first six months of 2025, we received a $47.8 million cash distribution from the Holden Hills Phase 2 partnership.

In addition, we sold our stabilized West Killeen Market retail project for $13.3 million and two homes at

Amarra Villas for a total of $6.8 million.

We also completed construction on the last two Amarra Villas homes.

We substantially completed construction of the road and utility infrastructure for Holden Hills Phase 1 and are currently working on the required landscaping.

We are going through the process with Travis County for the county’s acceptance of the roadway.

The first units of The Saint George were available for occupancy in April 2025 and the project was completed in June 2025.

We have been focusing intently on the development of Holden Hills Phase 1 and on the development plans and future financing of Holden Hills Phase 2.

During the quarter, we entered into a contract to sell our stabilized West Killeen Market retail property for $13.3 million.

After repaying the project loan, we expect the sale to generate approximately $7.7 million of pre-tax net cash proceeds.

We continued to advance entitlements on our other development projects and to operate our four stabilized retail projects.

We continued to advance entitlements on our other development projects and to operate our three stabilized retail projects.

We also took steps to advance relationships and opportunities to position us to capture value when market conditions improve.

In addition, during 2024 and first-quarter 2025, we returned $2.0 million to our stockholders through our share repurchase program.

In addition, beginning in 2024 and through August 8, 2025, we returned $3.0 million to our stockholders through our share repurchase program.

Changes to U.S.

tariffs and trade policies during first-quarter 2025 have introduced additional uncertainties regarding future U.S.

tariffs and trade policies during the first six months of 2025 have introduced additional uncertainties regarding future U.S.

real estate market conditions.

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We also generate income from the sale of our leased properties from time to time, depending on market conditions.

Summary financial results for first-quarter 2025.

Our revenues totaled $5.0 million in first-quarter 2025 compared with $26.5 million in first-quarter 2024.

The $22.1 million decrease in revenues from our Real Estate Operations segment in first-quarter 2025, compared to first-quarter 2024, was primarily a result of the sales of 47 acres of undeveloped land at Magnolia Place for $14.5 million and two Amarra Villas homes for a total of $7.6 million, compared to no sales in first-quarter 2025.

Revenues from our Leasing Operations segment increased by $634 thousand in first-quarter 2025, primarily reflecting increased revenue from The Saint June, which was in the process of leasing up in first-quarter 2024, partially offset by a decrease in revenue from Magnolia Place – Retail, which was sold in third-quarter 2024.

Refer to “Results of Operations” below for further discussion of the results of operations of our segments.

Our net loss attributable to common stockholders totaled $(2.9) million, or $(0.36) per diluted share in first-quarter 2025, compared to net income attributable to common stockholders of $4.6 million, or $0.56 per diluted share, in first-quarter 2024.

Summary Financial Results for the Second-Quarter and First Six Months of 2025.

Our revenues totaled $11.6 million in second-quarter 2025 and $16.6 million for the first six months of 2025, compared with $8.5 million in second-quarter 2024 and $35.0 million for the first six months of 2024.

The $3.2 million increase in revenues in our Real Estate Operations segment in second-quarter 2025, compared to second-quarter 2024, is primarily a result of the sales of two Amarra Villas homes for an aggregate of $6.8 million in second-quarter 2025 compared to the sale of one Amarra Villas home for $3.6 million in second-quarter 2024.

The $18.9 million decrease in revenues from our Real Estate Operations segment in the first six months of 2025, compared to the first six months of 2024, was primarily a result of the sales of approximately 47 acres of undeveloped land at Magnolia Place for $14.5 million and three Amarra Villas homes for an aggregate of $11.2 million in the first six months of 2024, compared with the sales of two Amarra Villas homes in the first six months of 2025 for $6.8 million.

During the three and six months ended June 30, 2025, we recorded an approximately $5.0 million pre-tax gain on the sale of West Killeen Market.

Professional fees and allocated overhead costs in our real estate operations segment increased compared to the comparable 2024 periods primarily related to the impact of the formation of the Holden Hills Phase 2 partnership.

In addition, in second-quarter 2025, we recorded a $1.0 million charge in our real estate operations segment related to a write-off as described further below.

Refer to “Results of Operations” below for further discussion of our segments.

Our net income attributable to common stockholders totaled $0.3 million, or $0.03 per diluted share in second-quarter 2025, compared to net loss attributable to common stockholders of $1.7 million, or $0.21 per diluted share, in second-quarter 2024.

During the first six months of 2025 our net loss attributable to common stockholders totaled $2.6 million, or $0.32 per diluted share, compared to net income attributable to common stockholders of $2.8 million, or $0.35 per diluted share, during the first six months of 2024.

During second-quarter 2025, our cash and cash equivalents increased substantially, primarily due to the receipt of a $47.8 million distribution from the newly-formed Holden Hills Phase 2 partnership.

Refer to Note 3 for further discussion.

RECENT DEVELOPMENT ACTIVITIES

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

As of March 31, 2025, we have three completed homes in inventory and construction on the last two homes continues to progress and is expected to be completed in second-quarter 2025.

As of May 9, 2025, five homes remain available for sale.

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

In second-quarter 2025, we completed construction on the last two homes, and we sold two of the homes for a total of $6.8 million.

As of August 8, 2025, three completed homes remain available for sale.

The Saint June.

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We entered into a limited partnership agreement with a third-party equity investor for Holden Hills Phase 1 in January 2023, and in February 2023 obtained construction financing for road and utility infrastructure of Holden Hills Phase 1.

Construction on the road and utility infrastructure is expected to be completed in second-quarter 2025.

Construction of the road and utility infrastructure was substantially completed in second-quarter 2025 and we are currently working on the required landscaping.

We are going through the process with Travis County for the county’s acceptance of the roadway.

As a result of the removal of Holden Hills Phase 1 from Austin’s extraterritorial jurisdiction (ETJ) pursuant to Texas Senate Bill 2038 (the ETJ Law), as described below, our development plans for portions of Holden Hills Phase 1 are being adjusted to benefit from the new regulatory scheme.

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“Business and Properties” in our 2024 Form 10-K.

Further, we entered into a development agreement with the Holden Hills Phase 1 partnership (Development Agreement) that provides that, as part of the road and utility infrastructure, the Holden Hills Phase 1 partnership will construct certain street, drainage, water, sidewalk, electric and gas improvements in order to extend the Tecoma Circle roadway on Holden Hills Phase 2 land owned by us from its current terminus to Southwest Parkway, estimated to cost approximately $15.6 million (the Tecoma Improvements).

As of March 31, 2025, the remaining costs to complete the Tecoma Improvements totaled $3.0 million, of which our share totaled $1.8 million.

Further, we entered into a development agreement with the Holden Hills Phase 1 partnership (Development Agreement) pursuant to which, as part of the road and utility infrastructure, the Holden Hills Phase 1 partnership has constructed certain street, drainage, water, sidewalk, electric and gas improvements in order to extend the Tecoma Circle roadway on Holden Hills Phase 2 land from its previous terminus to Southwest Parkway (the Tecoma Improvements).

As of June 30, 2025, our share of the estimated costs to complete the Tecoma Improvements, primarily the required landscaping, is $1.0 million.

We capitalize infrastructure costs and may be eligible to receive Travis County municipal utility district (MUD) reimbursements for certain infrastructure costs incurred in the Barton Creek area.

Portions of the costs incurred in connection with the Holden Hills Phase 1 project and the Tecoma Improvements totaling approximately $9.7 million and $6.9 million, respectively, are expected to be eligible to be reimbursed in the future by MUDs.

All MUD reimbursements that the Holden Hills Phase 1 partnership receives and is entitled to retain at the partnership level must be applied as payments of principal on the Holden Hills Phase 1 construction loan.

The Holden Hills Phase 1 partnership has agreed to deliver to Stratus 60 percent of any MUD reimbursements for Tecoma Improvement costs when such reimbursements are received by the partnership.

The amount and timing of MUD reimbursements depends upon each MUD having a sufficient tax base within its district to issue bonds, obtaining the necessary state

approval for the sale of the bonds and the successful sale of the bonds, among other things.

Accordingly, the amount and timing of the receipt of MUD reimbursements is uncertain.

MUD reimbursements received for infrastructure costs are recorded as reductions of the related asset’s carrying amount.

Holden Hills Phase 2.

Using an entitlement strategy similar to that used for Holden Hills Phase 1, we continue to progress the development plans and future financing for Holden Hills Phase 2, our approximately 570-acre tract located along Southwest Parkway in the southern portion of the Barton Creek community adjacent to Holden Hills Phase 1.

Holden Hills Phase 2 is being designed as a mixed-use project, with extensive residential uses, coupled with limited entertainment and hospitality uses, surrounded by extensive outdoor recreational and greenspace amenities.

The new regulatory scheme is expected to result in a significant increase in development density as compared to our prior plans.

Our approximately 570-acre tract located along Southwest Parkway in the southern portion of the Barton Creek community, Holden Hills Phase 2, is adjacent to Holden Hills Phase 1.

We are planning both Holden Hills Phase 1 and Holden Hills Phase 2 as one interconnected development branded as Holden Hills.

Holden Hills Phase 2 is being designed as a mixed-use project, including a range of commercial and extensive residential uses, surrounded by extensive outdoor recreational and greenspace amenities.

We have removed the majority of Holden Hills Phase 2 from Austin’s ETJ pursuant to the ETJ Law, as described below, and are adjusting our development plans to benefit from the new regulatory scheme, which is expected to result in a significant increase in development density as compared to our prior plans.

We entered into a limited partnership agreement with a third-party equity investor in June 2025 (the Holden Hills Phase 2 partnership) for the development of Holden Hills Phase 2 (Holden Hills Phase 2 project).

We contributed to the Holden Hills Phase 2 partnership the Holden Hills Phase 2 land and related personal property at an agreed value of approximately $95.7 million, and our 50.0 percent partner contributed $47.8 million in cash.

Immediately thereafter, the Holden Hills Phase 2 partnership distributed $47.8 million of cash to us.

We consolidate the Holden Hills Phase 2 partnership;

therefore, our contribution of the Holden Hills Phase 2 land and related personal property was recorded at historical cost and the contribution from our 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.

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 Stratus for the initial project costs of approximately $0.8 million, fund the approved operating budget for 2025 and fund future partnership activities approved by the partners.

Refer to Note 2 for further discussion.

ETJ Process .

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We entered into a construction loan for this project and began construction in third-quarter 2022.

The first units were available for occupancy in April 2025 and the project is expected to be completed in second-quarter 2025.

Refer to Note 10 for information regarding remediation and repairs for a water leak at the project that occurred in April 2025.

The first units were available for occupancy in April 2025 and the project was completed in second-quarter 2025.

As of August 8, 2025, we had signed leases for approximately 26 percent of the units.

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, resulting in damage that cost $1.9 million to remediate and repair.

The event was filed as a builder’s risk insurance claim.

Remediation and repairs were completed in second-quarter 2025.

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 no more than $1.0 million.

Lakeway Multi-Family

After extensive negotiation with the City of Lakeway, utility suppliers and neighboring property owners, during 2023 we secured the right to develop a multi-family project on approximately 35 acres of undeveloped property in Lakeway, Texas located in the greater Austin area.

The multi-family project is expected to utilize the road, drainage and utility infrastructure we are required to build, subject to certain conditions, which is secured by a $2.3 million

letter of credit under our revolving credit facility.

The multi-family project is expected to utilize the road, drainage

and utility infrastructure we are required to build, subject to certain conditions, which is secured by a $2.3 million letter of credit under our revolving credit facility.

Refer to Note 6 and “Capital Resources and Liquidity – Revolving Credit Facility and Other Financing Arrangements” below for additional discussion.

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

Following the sale, we retained our potential development of approximately 11 acres planned for 275 multi-family units and approximately $12 million of potential future reimbursement from the municipal utility district (MUD).

Following the sale, we retained our potential development of approximately 11 acres planned for 275 multi-family units and approximately $12 million of costs potentially reimbursable in the future by the Magnolia MUD.

Other Residential

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Stabilized Retail Projects

As of March 31, 2025, we also owned and operated the following stabilized retail projects that we developed:

• West Killeen Market is our H-E-B shadow-anchored retail project in West Killeen, Texas, near Fort Cavazos.

As of March 31, 2025, we had signed leases for approximately 74 percent of the 44,493-square-foot retail space.

In first-quarter 2025, we entered into a contract to sell West Killeen Market for $13.3 million, which we expect to close in second-quarter 2025.

After repaying the project loan, we expect the sale to generate approximately $7.7 million of pre-tax net cash proceeds.

As of June 30, 2025, we also owned and operated the following stabilized retail projects that we developed:

• Jones Crossing is part of our H-E-B-anchored mixed-use project in College Station, Texas, the location of Texas A&M University.

As of March 31, 2025, we had signed leases for substantially all of the completed retail space, including the H-E-B grocery store, totaling 154,092 square feet, and a ground lease on one retail pad site.

As of June 30, 2025, we had signed leases for substantially all of the completed retail space, including the H-E-B grocery store, totaling 154,092 square feet, and a ground lease on one retail pad site.

Four retail pad sites remain available for lease.

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• Lantana Place is part of our mixed-use development project within the Lantana community south of Barton Creek in Austin, Texas.

As of March 31, 2025, we had signed leases for substantially all of the 99,377-square-foot retail space, including the anchor tenant, Moviehouse & Eatery, and a ground lease for an AC Hotel by Marriott that opened in November 2021.

As of June 30, 2025, we had signed leases for substantially all of the 99,377-square-foot retail space, including the anchor tenant, Moviehouse & Eatery, and a ground lease for an AC Hotel by Marriott that opened in November 2021.

• Kingwood Place is our H-E-B-anchored, mixed-use development project in Kingwood, Texas (in the greater Houston area).

We have constructed 151,877 square feet of retail space at Kingwood Place, including an H-E-B grocery store.

As of March 31, 2025, we had signed leases for substantially all of the retail space,

including the H-E-B grocery store.

As of June 30, 2025, we had signed leases for substantially all of the retail space, including the H-E-B grocery store.

We have also signed ground leases on four of the retail pad sites.

One retail pad site remains available for lease.

In second-quarter 2025, we 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 $5.2 million project loan, and a pre-tax gain of approximately $5.0 million.

Potential Development Projects and Pipeline

Our development plans for The Annie B, Holden Hills Phase 2, The Saint Julia and multi-family projects at Lakeway and College Station will require significant additional capital, which we currently intend to pursue through project-level debt and third-party equity capital arrangements through joint ventures in which we receive development management fees and asset management fees and with our potential returns increasing above our relative equity interest in certain projects as negotiated return hurdles are achieved.

We anticipate seeking additional debt to finance the future development in Holden Hills Phase 1.

In 2022, we entered into a lease agreement for land in Austin, Texas for a potential development project.

The lease is subject to a review period during which the lease may be terminated by us.

The review period, as previously extended, will expire on September 1, 2025.

We intend to request modifications of the lease terms and/or an extension of the review period from the lessor prior to that date.

If we decide to terminate the lease on or before expiration of the review period, we expect to record a charge in third-quarter 2025 of approximately $2.8 million representing previously capitalized architectural, engineering and consulting fees incurred in connection with planning and evaluating the potential project and fees paid to the lessor to extend the review period.

Our development plans for The Annie B, The Saint Julia and multi-family projects at Lakeway and College Station will require significant additional capital, which we currently intend to pursue through project-level debt and third-party equity capital arrangements through joint ventures in which we may also receive development management fees and asset management fees and potential returns increasing above our relative equity interest in certain projects as negotiated return hurdles are achieved.

We are working to establish a credit facility to fund initial project costs and future partnership activities for Holden Hills Phase 2 and anticipate seeking additional debt to finance the future development in Holden Hills Phase 1.

We are also pursuing other development projects.

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Changing U.S.

tariffs and trade policies commencing in first-quarter 2025 present additional risks to our business.

tariffs and trade policies commencing in the first six months of 2025 present additional risks to our business.

Refer to Part II, Item 1A.

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The following table summarizes our operating results (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Operating (loss) income:

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$ (3,536) $ (839) $ (5,038) $ 5,962

Leasing Operations 1,958 1,349

General and administrative expenses b

Leasing Operations b

6,334 1,761 8,292 3,110

General and administrative expenses c

(3,557) (3,842) (7,608) (8,307)

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

Net (loss) income (2,295) (2,778) (6,052) 919

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

Net income (loss) attributable to common stockholders

$ 260 $ (1,725) $ (2,615) $ 2,827

Includes sales commissions and other revenues together with related expenses.

The three- and six-month periods ended June 30, 2025 include 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 us for a share of historical costs incurred to develop the land.

Second-quarter 2025 includes an approximately $5.0 million pre-tax gain on the sale of the West Killeen Market retail project and the six months ended June 30, 2025 also includes 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.

Includes employee compensation and other costs.

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The following table summarizes our Real Estate Operations segment results (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Developed property sales $ 6,760 $ 3,625 $ 6,760 $ 11,248

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

Segment expenses:

Cost of real estate sold (6,244) (3,173) (6,244) (17,122)

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Developed Property Sales.

The following table summarizes our developed property sales (dollars in thousands):

Three Months Ended March 31,

The following tables summarize our developed property sales (dollars in thousands):

Three Months Ended June 30,

Homes Revenues Average Cost Per Home Homes Revenues Average Cost Per Home

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Amarra Villas homes 2 $ 6,760 $ 3,122 1 $ 3,625 $ 3,618

Total — $ — 2 $ 7,623

The decrease in revenues from developed property sales for first-quarter 2025, compared to first-quarter 2024, reflects the sale of two Amarra Villas homes in first-quarter 2024 compared to no sales in first-quarter 2025.

Total Residential 2 $ 6,760 1 $ 3,625

Six Months Ended June 30,

Homes Revenues Average Cost Per Home Homes Revenues Average Cost Per Home

Amarra Drive:

Amarra Villas homes 2 $ 6,760 $ 3,122 3 $ 11,248 $ 3,143

Total Residential 2 $ 6,760 3 $ 11,248

The increase in revenues from developed property sales for second-quarter 2025, compared to second-quarter 2024, reflects the sales of two Amarra Villas homes in second-quarter 2025 for a total of $6.8 million compared to the sale of one Amarra Villas home in second-quarter 2024 for $3.6 million.

The decrease in revenues for the first six months of 2025 compared to the first six months of 2024, reflects the sales of two Amarra Villas homes for $6.8 million in the 2025 period compared to the sales of three Amarra Villas homes for $11.2 million in the 2024 period.

Undeveloped Property Sales.

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

There were no undeveloped property sales in first-quarter 2025.

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

Real Estate Operations Expenses.

Real Estate Operations expenses include cost of real estate sold, property taxes and insurance, lease expense, professional fees, allocated overhead costs, other segment items and depreciation and amortization.

Real Estate Operations expenses include cost of real estate sold, property taxes and insurance, lease expense, professional fees, allocated overhead costs, other segment items and depreciation

and amortization.

Other segment items primarily include advertising, property owner association fees, maintenance and utilities.

In second-quarter 2025, we 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 us for a share of historical costs incurred to develop the land.

Cost of real estate sold is directly related to property sales.

Cost of real estate sold decreased $13.9 million in first-quarter 2025, compared to first-quarter 2024, primarily due to the sale of undeveloped property at Magnolia Place and the sales of two Amarra Villas homes in first-quarter 2024 compared to no property sales in first-quarter 2025.

Cost of real estate sold increased $3.1 million in second-quarter 2025, compared to second-quarter 2024, primarily due to the sales of two Amarra Villas homes in second-quarter 2025 compared to the sale of one Amarra Villas home in second-quarter 2024.

Cost of real estate sold decreased $10.9 million in the first six months of 2025, compared to the first six months of 2024, primarily due to the sales of two Amarra Villas homes in the 2025 period compared to the sale of undeveloped property at Magnolia Place and the sales of three Amarra Villas homes in the 2024 period.

Professional fees and allocated overhead costs both increased in the 2025 periods compared to the 2024 periods, primarily related to the impact of the formation of the Holden Hills Phase 2 partnership in 2025.

Leasing Operations

The following table summarizes our Leasing Operations segment results (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

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

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Other segment items (253)

(244) (525) (472)

Depreciation (1,327) (1,358) (2,674) (2,715)

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Operating income $ 6,334 $ 1,761 $ 8,292 $ 3,110

$ 1,958 $ 1,349

Rental Revenue.

In first-quarter 2025 and first-quarter 2024, rental revenue primarily included revenue from our retail and mixed-use projects Lantana Place – Retail, Kingwood Place, Jones Crossing – Retail and West Killeen Market and our multi-family property, The Saint June.

In first-quarter 2024, rental revenue also included revenue from Magnolia Place – Retail, which was sold in third-quarter 2024.

The increase in rental revenue in first-quarter 2025, compared with first-quarter 2024, primarily reflects increased revenue from The Saint June, which was in the process of leasing up in first-quarter 2024, partially offset by a decrease in revenue from Magnolia Place – Retail, which was sold in third-quarter 2024.

For the 2025 periods, rental revenue primarily included revenue from our retail and mixed-use projects Lantana Place – Retail, Kingwood Place, Jones Crossing – Retail and West Killeen Market and our multi-family properties, The Saint June and The Saint George.

In second-quarter 2025, we sold West Killeen Market.

For the 2024 periods, rental revenue primarily included revenue from our retail and mixed-use projects Lantana Place – Retail, Kingwood Place, Jones Crossing – Retail, West Killeen Market and Magnolia Place – Retail and our multi-family property, The Saint June.

In third-quarter 2024, we sold Magnolia Place – Retail.

The increase in rental revenue in the first six months of 2025, compared with the first six months of 2024, primarily reflects revenue from The Saint June, which was in the process of leasing up in the first six months of 2024, partially offset by a decrease in revenue resulting from the sales of Magnolia Place – Retail, which was sold in third-quarter 2024, and West Killeen Market, which was sold in second-quarter 2025.

Leasing Operations Expenses.

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Other segment items primarily includes amortization of leasing costs, property owner association fees, professional and consulting fees, and office and computer equipment.

Gain on Sale of Assets.

In second-quarter 2025, we closed on the sale of the West Killeen Market project for $13.3 million.

The sale generated a pre-tax gain of approximately $5.0 million.

The six months ended June 30, 2025 also includes 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.

Non-Operating Results

Interest Expense, Net.

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

Interest costs in first-quarter 2025 were lower, compared to first-quarter 2024, primarily reflecting lower interest rates partially offset by an increase in average debt balances.

As of March 31, 2025, all of our debt was variable-rate debt, and for all of such debt, the interest rates have decreased over the past year primarily from amending or refinancing loans with lower rates over the last six months as well as overall interest rates declining.

All of our interest costs in first-quarter 2025 and first-quarter 2024 were capitalized.

Capitalized interest in first-quarter 2025 is 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 is 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.

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

the first six months of 2024.

As of June 30, 2025, all of our debt was variable-rate debt, and for all of such debt, the interest rates have decreased over the past year primarily from amending or refinancing loans with lower rates over the last nine months as well as overall interest rates declining.

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

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

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

Other (Loss) Income, Net.

Other (loss) income, net in both 2025 periods includes a $1.0 million charge to record the estimated cost to The Saint George Apartments, L.P., of the repair of the damage caused by a water leak in second-quarter 2025.

Provision for Income Taxes.

We recorded provisions for income taxes of $30 thousand in first-quarter 2025 and $102 thousand in first-quarter 2024.

We recorded a provision for income taxes of $457 thousand in second-quarter 2025 and $487 thousand for the first six months of 2025, compared to a provision of $44 thousand in second-quarter 2024 and $146 thousand for the first six months of 2024.

Refer to Note 8 for further discussion of income taxes.

Total Comprehensive Loss Attributable to Noncontrolling Interests in Subsidiaries .

Our partners' share of losses totaled $0.9 million in both first-quarter 2025 and first-quarter 2024.

Our partners’ share of losses totaled $2.6 million in second-quarter 2025 and $3.4 million for the first six months of 2025, compared to $1.1 million in second-quarter 2024 and $1.9 million for the first six months of 2024.

The increases in both periods were primarily due to the initial operating expenses for The Saint George Apartments, L.P., which was completed in second-quarter 2025.

CAPITAL RESOURCES AND LIQUIDITY

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However, we believe that the unique nature and location of our assets will provide us positive cash flows over time.

Comparison of Cash Flows for the Three Months Ended March 31, 2025 and 2024

Comparison of Cash Flows for the Six Months Ended June 30, 2025 and 2024

Operating Activities.

Cash (used in) provided by operating activities totaled $(13.5) million in first-quarter 2025, compared with $6.5 million in first-quarter 2024.

The decrease in operating cash flow is primarily due to property sales in first-quarter 2024 compared to no property sales in first-quarter 2025.

Expenditures for purchases and development of real estate properties totaled $7.2 million in first-quarter 2025, primarily related to development of Holden Hills Phase 1, and $9.0 million in first-quarter 2024, primarily related to development of our Barton Creek properties, particularly Holden Hills Phase 1 and Amarra Villas.

The cash outflow resulting from the decrease in accounts payable, accrued liabilities and other in first-quarter 2025 and first-quarter 2024 is primarily related to the timing of property tax payments.

Cash used in operating activities totaled $15.2 million for the first six months of 2025, compared with $1.7 million for the first six months of 2024.

Expenditures for purchases and development of real estate properties totaled $14.4 million for the first six months of 2025, primarily related to development of Holden Hills Phase 1, and $16.3 million for the first six months of 2024, primarily related to development of Amarra Villas and Holden Hills Phase 1.

Investing Activities.

Cash used in investing activities totaled $4.7 million in first-quarter 2025 and $8.4 million in first-quarter 2024.

Capital expenditures totaled $4.5 million in first-quarter 2025, primarily for The Saint George, and $8.1 million in first-quarter 2024, primarily for The Saint George and to a lesser extent for tenant improvements at Lantana Place – Retail.

Cash provided by (used in) investing activities totaled $5.8 million for the first six months of 2025 and $(16.5) million for the first six months of 2024.

The first six months of 2025 includes proceeds after transaction costs from the sale of West Killeen Market of $13.0 million.

Also, during the first six months of 2025, our investing cash flows included Barton Creek MUD reimbursements of infrastructure costs incurred for development of The Saint June.

Capital expenditures totaled $7.2 million for the first six months of 2025, primarily for The Saint George, and $16.1 million for the first six months of 2024, primarily for The Saint George and to a lesser extent for tenant improvements at Lantana Place – Retail.

Financing Activities.

Cash provided by (used in) financing activities totaled $10.0 million in first-quarter 2025 and $(9.1) million in first-quarter 2024.

In first-quarter 2025, we had borrowings of $4.0 million on the Comerica Bank revolving credit facility and we had no borrowings on the facility in first-quarter 2024.

In first-quarter 2025, net borrowings on project and term loans totaled $9.1 million, primarily reflecting borrowings from The Saint George and Holden Hills Phase 1 construction loans and the refinancing of the Lantana Place construction loan and the Jones Crossing loan, partially offset by paydowns on The Annie B land loan.

In first-quarter 2024 net borrowings on project and term loans totaled $8.3 million, primarily reflecting the payoff of the Magnolia Place construction loan and paydowns on the Amarra Villas credit facility and the Annie B land loan, partially offset primarily by borrowings on The Saint George and Holden Hills Phase 1 construction loans and the Amarra Villas credit facility.

Refer to “Revolving Credit Facility and Other Financing Arrangements” and “Debt Maturities and Other Contractual Obligations” below for a discussion of our outstanding debt at March 31, 2025.

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

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

During first-quarter 2024, $0.4 million of accrued dividends for

unvested restricted stock units (RSUs) were paid to the holders upon the vesting of the RSUs, and during first-quarter 2025, $236 thousand of accrued dividends for unvested RSUs were paid to the holders upon the vesting of the RSUs, leaving $28 thousand of dividends accrued for unvested RSUs presented in accrued liabilities as of March 31, 2025.

Cash provided by (used in) financing activities totaled $48.6 million for the first six months of 2025 and $(0.2) million for the first six months of 2024.

During the first six months of 2025, we borrowed and repaid $4.0 million on the Comerica Bank revolving credit facility.

During the first six months of 2024, we had no borrowings or repayments on the Comerica Bank revolving credit facility.

During the first six months of 2025, net borrowings on other project and term loans totaled $4.0 million, primarily reflecting borrowings from The Saint George and Holden Hills Phase 1 construction loans and the refinancing of the Lantana Place construction loan and the Jones Crossing loan, partially offset by the payoff of the West Killeen construction loan and the Amarra Villas credit facility and paydowns on The Annie B land loan.

During the first six months of 2024, net repayments on other project and term loans totaled $0.5 million, primarily reflecting borrowings on The Saint George and Holden Hills Phase 1 construction loans and the Amarra Villas credit facility partially offset by the payoff of the Magnolia Place construction loan and paydowns on the Amarra Villas credit facility and the Annie B land loan.

Refer to “Revolving Credit Facility and Other Financing Arrangements” below for a discussion of our outstanding debt at June 30, 2025.

During the first six months of 2025, we received a contribution of $47.8 million from a noncontrolling interest holder related to the Holden Hills Phase 2 partnership.

Also, during the first six months of 2025, in connection with the refinancing of the Kingwood Place construction loan in November 2024, which generated additional cash proceeds, we paid distributions of $856 thousand to noncontrolling interest holders.

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

During the first six months of 2025, $0.2 million of accrued dividends for unvested RSUs were paid to the holders upon the vesting of the RSUs, leaving $28 thousand of dividends accrued for unvested RSUs presented in accrued liabilities as of June 30, 2025.

The remaining accrued dividends will be paid to the holders of the RSUs as the RSUs vest.

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

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

In June 2025, with written consent from Comerica Bank, our Board approved an increase in the share repurchase program from up to $5.0 million to up to $25.0 million of our common stock.

The repurchase program authorizes us, 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.

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The share repurchase program does not obligate us to repurchase any specific amount of shares, does not have an expiration date, and may be suspended, modified or discontinued at any time without prior notice.

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

As of March 31, 2025, we have acquired 83,380 shares of our 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, we acquired 26,819 shares of our common stock for a total cost of $0.5 million at an average price of $19.59 per share.

As of August 8, 2025, we have acquired 135,620 shares of our 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.

Revolving Credit Facility and Other Financing Arrangements

As of March 31, 2025, we had $12.0 million in cash and cash equivalents and restricted cash of $1.0 million.

We had borrowings of $4.0 million under our revolving credit facility.

Of the $12.0 million in consolidated cash and cash equivalents at March 31, 2025, $2.7 million held at certain consolidated subsidiaries is subject to restrictions on distribution to the parent company pursuant to project loan agreements.

In first-quarter 2025 and first-quarter 2024, development and asset management fees of $299 thousand and $580 thousand, respectively, were paid by the limited partnerships to Stratus.

As of June 30, 2025, we had $59.4 million in cash and cash equivalents and restricted cash of $1.0 million, and no amount was borrowed under our revolving credit facility.

Of the $59.4 million in consolidated cash and cash equivalents at June 30, 2025, $2.4 million held at certain consolidated subsidiaries was subject to restrictions on distribution to the parent company pursuant to project loan agreements.

In the second quarters of 2025 and 2024, development and asset management fees of $242 thousand and $443 thousand, respectively, were paid by the limited partnerships to Stratus.

In the first six months of 2025 and 2024, development and asset fees of $541 thousand and $1.0 million, respectively, were paid by the limited partnerships to Stratus.

The payments of these intercompany fees resulted in increases in cash available to the parent company, and the income to Stratus and cost to the partnerships have been eliminated in the consolidated financial statements.

As of March 31, 2025, we had total debt of $210.0 million based on the principal amounts outstanding compared with $196.7 million at December 31, 2024.

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 letters of credit totaling $15.6 million issued under the revolving credit facility and borrowings of $4.0 million.

As of June 30, 2025, we had total debt of $201.3 million based on the principal amounts outstanding compared with $196.7 million at December 31, 2024.

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 letters of credit totaling $11.6 million issued under the revolving credit facility.

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.

Refer to “Debt Maturities and Other Contractual Obligations” below for a table illustrating the timing of principal payments due on our outstanding debt as of March 31, 2025.

In January 2025, we entered into a modification of the Comerica Bank revolving credit facility 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, we entered into an additional $2.3 million letter of credit to secure our obligation to build certain roads and utilities facilities benefiting Holden Hills Phases 1 and 2.

In March 2025, we entered into an amendment to our 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.

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

Refer to “Debt Maturities and Other Contractual Obligations” below for a table illustrating the timing of principal payments due on our outstanding debt as of June 30, 2025.

We have 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.

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, we made an operating loan of $2.4 million.

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

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

As of June 30, 2025, our 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.

to support the partnership’s ability to pay its construction loan interest, which has exceeded the amount anticipated because of interest rate increases.

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 second-quarter 2024, Stratus made an operating loan of $85 thousand, and the Class B limited partner made an operating loan of $165 thousand.

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.

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

During first-quarter 2025, we increased borrowings under our revolving credit facility, and The Saint George and Holden Hills Phase 1 construction loans.

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.

During the first six months of 2025, we increased borrowings under The Saint George and Holden Hills Phase 1 construction loans.

We also increased the principal amounts outstanding in connection with refinancing the Lantana Place construction loan and the Jones Crossing loan.

We paid off the Amarra Villas credit facility and the West Killeen construction loan and paid down The Annie B land loan.

Refer to Note 6 for further discussion.

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Refer to Note 6 and MD&A in our 2024 Form 10-K for a discussion of the financial covenants in our debt agreements.

As of March 31, 2025, we were in compliance with all of our financial covenants.

As of June 30, 2025, we were in compliance with all of our financial covenants.

Stratus’ and its subsidiaries’ debt arrangements, including Stratus’ guaranty agreements, contain significant limitations that may restrict Stratus’ and its subsidiaries’ ability to, among other things:

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and engage in mergers, consolidations or other business combinations.

Our Comerica Bank revolving credit facility, Amarra Villas credit facility, The Annie B land loan, The Saint George construction loan and the 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, which was obtained in connection with our current $5.0 million share repurchase program.

Any future declaration of dividends or decision to repurchase our common stock is at the discretion of our Board, subject to restrictions under our Comerica Bank debt agreements, and will depend on our financial results, cash requirements, projected compliance with covenants in our debt agreements, outlook and other factors deemed relevant by our Board.

Our Comerica Bank revolving credit facility, The Annie B land loan, and The Saint George and the 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, which was obtained in connection with our current $25.0 million share repurchase program.

Our future debt agreements, future refinancings of or amendments to existing debt agreements or other future agreements may restrict our ability to declare dividends or repurchase shares.

Our project loans are generally secured by all or substantially all of the assets of the project, and our Comerica Bank revolving credit facility is secured by substantially all of our assets other than those encumbered by separate project level financing.

In anticipation of a separate revolving credit facility for the Holden Hills Phase 2 project, Comerica Bank released the Holden Hills Phase 2 property from the collateral pool for the Comerica Bank revolving credit facility.

In addition, we, as the parent company, are typically required to guarantee all or a significant portion of the payment of our project loans, in some cases until certain development milestones and/or financial conditions are met, in some cases on a full recourse basis and in other cases on a more limited recourse basis.

As of March 31, 2025, we, as the parent company, guaranteed the payment of all of the project loans, except for the Kingwood Place loan, the Jones Crossing loan, the Lantana Place loan and the West Killeen Market construction loan.

Our guarantees of the Kingwood Place loan, the Jones Crossing loan and the Lantana Place loan are generally limited to non-recourse carve-out obligations.

Our payment guarantee on The Saint June construction loan is limited to 50.0 percent and on The Saint George construction loan is limited to 25.0 percent, in each case

until certain conditions are met.

As of June 30, 2025, we, as the parent company, guaranteed the payment of all of the project loans, except for the Kingwood Place, Jones Crossing and Lantana Place loans.

Our guarantees of the Kingwood Place, Jones Crossing and Lantana Place loans are generally limited to non-recourse carve-out obligations.

Our payment guarantee on The Saint June construction loan is limited to 50.0 percent and on The Saint George construction loan is limited to 25.0 percent, in each case until certain conditions are met.

Refer to Note 6 to our consolidated financial statements in our 2024 Form 10-K for additional discussion.

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Debt Maturities and Other Contractual Obligations

The following table summarizes our debt maturities based on the principal amounts outstanding as of March 31, 2025 (in thousands):

The following table summarizes our debt maturities based on the principal amounts outstanding as of June 30, 2025 (in thousands):

2025 2026 2027 2028 2029 Thereafter Total

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Kingwood Place loan

— — 33,000 — — — 33,000

Lantana Place loan

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The Saint George — 51,885 — — — — 51,885

— 51,247 — — — — 51,247

The Saint June b

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Holden Hills Phase 1 — 18,716 — — — — 18,716

West Killeen Market c

5,177 — — — — — 5,177

Amarra Villas credit facility — 1,662 — — — — 1,662

Total $ 43,931 $ 70,894 $ 33,365 $ 24,385 $ 28,757 $ — $ 201,332

The maturity date is September 1, 2025.

The maturity date was September 1, 2025.

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

Includes operating loans from our third-party partner of $493 thousand.

The maturity date of The Saint June construction loan is October 2, 2025.

The maturity date is July 31, 2025.

In first-quarter 2025, we entered into a contract to sell West Killeen Market for $13.3 million, which we expect to close in second-quarter 2025 and to use a portion of the proceeds to repay the project loan.

The following table summarizes the weighted-average interest rate of each loan, all of which have variable rates, for the periods presented, and reflects the interest rate terms of loan agreements as in effect during the periods presented, as described in Note 6 of this report and in our 2024 Form 10-K:

Three Months Ended

We have the option to extend the maturity for an additional 12-month term.

We are currently evaluating options to refinance the loan and expect to extend or refinance the loan on or before the maturity date.

The following table summarizes the weighted-average interest rate of each loan, all of which have variable rates, for the periods presented:

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Comerica Bank revolving credit facility a

7.42 % — % 7.43 % — %

Kingwood Place loan 6.12 8.18 6.12 8.19

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Jones Crossing loan

6.27 7.69 6.27 7.69

The Annie B land loan 7.42 8.42 7.44 8.41

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Holden Hills Phase 1 7.42 8.36 7.44 8.37

West Killeen Market

Amarra Villas credit facility

We did not have an outstanding balance during first-quarter 2024.

We had firm commitments totaling approximately $8.3 million at March 31, 2025 primarily related to construction of The Saint George and Holden Hills Phase 1.

West Killeen Market b

— 8.07 — 8.08

Amarra Villas credit facility c

— 8.36 — 8.38

In second-quarter 2025, we repaid the amount outstanding on the revolving credit facility.

We did not have an outstanding balance during second-quarter 2024 or the first six months of 2024.

In May 2025, we repaid this loan in connection with the sale of the property.

In June 2025, this credit facility was terminated after the outstanding balance was repaid.

Liquidity Outlook

We had firm commitments totaling approximately $5.8 million at June 30, 2025 primarily related to construction of Holden Hills Phase 1.

Except as noted below, we have construction loans, as well as remaining equity capital, to fund these projected cash outlays for these projects over the next 12 months following this filing.

We expect to make a capital contribution to The Saint George partnership of $370 thousand over the next 12 months to enable the partnership to pay debt service and project costs, including potential costs of water leak remediation and repairs to be borne by the partnership as described in Note 10.

With respect to Holden Hills Phase 1, we have agreed to reimburse the Holden Hills Phase 1 partnership for 60 percent of the costs of the Tecoma Improvements.

As of March 31, 2025, the remaining costs to complete the Tecoma Improvements totaled $3.0 million, of which our share totaled $1.8 million.

We expect to make a capital contribution to The Saint George partnership of $430 thousand representing our 10 percent equity share of debt service and project costs needed by the partnership, including potential costs of water leak damage remediation and repairs as described in “Recent Development Activities.” With respect to Holden Hills Phase 1, we have agreed to reimburse the Holden Hills Phase 1 partnership for 60 percent of the costs of the Tecoma Improvements.

As of June 30, 2025, our share of the estimated remaining costs totaled $1.0 million.

Also, we anticipate making future operating loans to Stratus Block 150, L.P.

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We project that we will be able to meet our debt service and other cash obligations for at least the next 12 months.

Our stabilized retail and multi-family properties (West Killeen Market, Jones Crossing – Retail, Lantana Place – Retail, Kingwood Place and The Saint June) are projected to generate sufficient cash flow to cover debt service over the next 12 months.

In first-quarter 2025, we entered into a contract to sell West Killeen Market for $13.3 million, which we expect to close in second-quarter 2025.

After repaying the project loan, we expect the sale to generate approximately $7.7 million of pre-tax net cash proceeds.

Our stabilized retail and multi-family properties (Jones Crossing – Retail, Lantana Place – Retail, Kingwood Place and The Saint June) are projected to generate sufficient cash flow to cover debt service over the next 12 months.

We expect to sell additional Amarra Villas homes and may sell other properties.

For other projected pre-development costs, much of which are discretionary, and for our costs of the Tecoma Improvements and projected general and administrative expenses, we had cash and cash equivalents of $12.0 million at March 31, 2025 and availability under our revolving credit facility (which matures on March 27, 2027) of approximately $34.5 million, net of letters of credit and borrowings, which is expected to be sufficient to fund these cash requirements for the next 12 months.

We expect to successfully extend the maturities of, or to refinance, our outstanding debt that matures in the next 12 months, and to repay the West Killeen Market project loan upon the closing of that transaction.

For other projected pre-development costs, much of which are discretionary, and for our costs of the Tecoma Improvements and projected general and administrative expenses, we had cash and cash equivalents of $59.4 million at June 30, 2025 and availability under our revolving credit facility (which matures on March 27, 2027) of approximately $17.7 million, net of letters of credit, which is expected to be sufficient to fund these cash requirements for the next 12 months.

We expect to successfully extend the maturities of, or to refinance, our outstanding debt that matures in the next 12 months.

For future potential significant development projects, we would not plan to enter into commitments to incur material costs for the projects until we obtain what we project to be adequate financing to cover anticipated cash outlays.

As discussed under “Business Strategy” above, our main sources of revenue and cash flow are expected to be sales of our properties to third parties or distributions from joint ventures, the timing of and proceeds from which are difficult to predict and depend on market conditions and other factors.

As discussed under “Business Strategy” above, our main sources of revenue and cash flow are expected to be sales of our properties to third parties, debt financings or distributions from joint ventures, the timing of and proceeds from which are difficult to predict and depend on market conditions and other factors.

We also generate cash flow from rental revenue in our leasing operations and from development and asset management fees received from our properties.

Due to the nature of our development-focused business, we do not expect to generate sufficient recurring cash flow to cover our general and administrative expenses each period.

However, we believe that the unique nature and location of our assets, and our team’s ability to execute successfully on development projects, will provide us with positive cash

flows and net income over time.

However, we believe that the unique nature and location of our assets, and our team’s ability to execute successfully on development

projects, will provide us with positive cash flows and net income over time.

No assurances can be given that the results anticipated by our projections will occur.

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This Quarterly Report on Form 10-Q contains forward-looking statements in which we discuss factors we believe may affect our future performance.

Forward-looking statements are all statements other than statements of historical fact, such as plans, projections or expectations related to inflation, interest rates, tariffs and trade policies, supply chain constraints, our ability to pay or refinance our debt obligations as they become due, availability of bank credit, our ability to meet our future debt service and other cash obligations, projected future operating loans or capital contributions to our joint ventures, potential costs and timing to remediate and repair the water leak at The Saint George and the potential costs for which The Saint George Apartments, L.P.

may be responsible, future cash flows and liquidity, the Austin and Texas real estate markets, the planning, financing, development, construction, completion and stabilization of our development projects, including projected costs and estimated times to complete construction, plans to sell, recapitalize or refinance properties and estimated timing for closing properties under contract, future operational and financial performance, MUD reimbursements for infrastructure costs, regulatory matters, including the expected impact of the ETJ Law and related ongoing litigation, leasing activities, tax rates, future capital expenditures and financing plans, possible joint ventures, partnerships or other strategic relationships, other plans and objectives of management for future operations and development projects, and potential future cash returns to stockholders, including the timing and amount of repurchases under our share repurchase program.

may be responsible for the remediation and repair of damage caused by the water leak at The Saint George, future cash flows and liquidity, the Austin and Texas real estate markets, the planning, financing, development, construction, completion and stabilization of our development projects, including projected costs and estimated times to complete construction, plans to sell, recapitalize or refinance properties and estimated timing for closing properties under contract, future operational and financial performance, MUD reimbursements for infrastructure costs, regulatory matters, including the expected impact of the ETJ Law and related ongoing litigation, a potential $2.8 million charge in third-quarter 2025 relating to a lease for a development project that we may terminate, leasing activities, tax rates, future capital expenditures and financing plans, possible joint ventures, partnerships or other strategic relationships, other plans and objectives of management for future operations and development projects, and potential future cash returns to stockholders, including the timing and amount of repurchases under our share repurchase program.

The words “anticipate,” “may,” “can,” “plan,” “believe,” “potential,” “estimate,” “expect,” “project,” “target,” “intend,” “likely,” “will,” “should,” “to be” and any similar expressions or statements are intended to identify those assertions as forward-looking statements.

Under our Comerica Bank debt agreements, we are not permitted to repurchase our common stock in excess of $1.0 million or pay dividends on our common stock without Comerica Bank's prior written consent, which we obtained in connection with our current $25.0 million share repurchase program.

Our future debt

agreements, future refinancings of or amendments to existing debt agreements or other future agreements may restrict our ability to declare dividends or repurchase shares.

Any future declaration of dividends or decision to repurchase our common stock outside of the approved share repurchase program is at the discretion of our Board, subject to restrictions under our Comerica Bank debt agreements, and will depend on our financial results, cash requirements, projected compliance with covenants in our debt agreements, outlook and other factors

deemed relevant by our Board.

Our future debt agreements, future refinancings of or amendments to existing debt agreements or other future agreements may restrict our ability to declare dividends or repurchase shares.

We caution readers that forward-looking statements are not guarantees of future performance, and our actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements.

Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, our ability to implement our business strategy successfully, including our ability to develop, construct and sell or lease properties on terms our Board considers acceptable, increases in operating and construction costs, including real estate taxes, maintenance and insurance costs, and the cost of building materials and labor, elevated inflation and interest rates, the effect of changes in tariffs and trade policies, including threatened tariffs, supply chain constraints, our ability to pay or refinance our debt, extend maturity dates of our loans or comply with or obtain waivers of financial and other covenants in debt agreements and to meet other cash obligations, availability of bank credit, defaults by contractors and subcontractors, the outcome of our analysis and discussions with the insurance company and general contractor regarding responsibility for payment of costs to remediate and repair the water leak at The Saint George, declines in the market value of our assets, market conditions or corporate developments that could preclude, impair or delay any opportunities with respect to plans to sell, recapitalize or refinance properties, a decrease in the demand for real estate in select markets in Texas where we operate, particularly in Austin, changes in economic, market, tax, business and geopolitical conditions, potential U.S.

Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, our ability to implement our business strategy successfully, including our ability to develop, construct and sell or lease properties on terms our Board considers acceptable, increases in operating and construction costs, including real estate taxes, maintenance and insurance costs, and the cost of building materials and labor, elevated inflation and interest rates, the effect of changes in tariffs and trade policies, including threatened tariffs, supply chain constraints, our ability to pay or refinance our debt, extend maturity dates of our loans or comply with or obtain waivers of financial and other covenants in debt agreements and to meet other cash obligations, availability of bank credit, defaults by contractors and subcontractors, the outcome of our analysis and discussions with the insurance company and general contractor regarding responsibility for payment of costs to remediate and repair the damage caused by the water leak at The Saint George, the outcome of our request for modifications of the lease terms and/or an extension of the review period for the lease for a development project that we may terminate, declines in the market value of our assets, market conditions or corporate developments that could preclude, impair or delay any opportunities with respect to plans to sell, recapitalize or refinance properties, a decrease in the demand for real estate in select markets in Texas where we operate, particularly in Austin, changes in economic, market, tax, business and geopolitical conditions, potential U.S.

or local economic downturn or recession, the availability and terms of financing for development projects and other corporate purposes, our ability to collect anticipated rental payments and close projected asset sales, loss of key personnel, our ability to enter into and maintain joint ventures, partnerships or other strategic relationships, including risks associated with such joint ventures, any major public health crisis, eligibility for and potential receipt and timing of receipt of MUD reimbursements, industry risks, changes in buyer preferences, potential additional impairment charges, competition from other real estate developers, our ability to obtain various entitlements and permits, changes in laws, regulations or the regulatory environment affecting the development of real estate, opposition from special interest groups or local governments with respect to development projects, weather- and climate-related risks, environmental and litigation risks, including the timing and resolution of the ongoing litigation challenging the ETJ Law and our ability to implement revised development plans in light of the ETJ Law, the failure to attract buyers or tenants for our developments or such buyers’ or tenants’ failure to satisfy their purchase commitments or leasing obligations, cybersecurity incidents and other factors described in more detail in Part I, Item 1A.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis