What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-12 · 219 added, 164 removed, 417 unchanged (48% of the section changed)

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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.

As of November 7, 2025, we had repurchased $3.9 million of our shares under the program.

Largely as a result of the cash distribution from the Holden Hills Phase 2 partnership and recent property sales, as of September 30, 2025, we had consolidated cash of $55.0 million and $17.5 million available under our revolving credit facility, net of $11.6 million of letters of credit committed against the facility.

Subsequent to the end of the third quarter, we also entered into an agreement, as amended, to sell Lantana Place – Retail for approximately $57.4 million, which, if completed, will yield significant cash proceeds after payoff of the project loan.

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 and pending 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.

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 certain projects as negotiated return hurdles are achieved.

Table of Conten ts

potential returns increasing above our relative equity interest in certain projects as negotiated return hurdles are achieved.

Refer to Note 3.

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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 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.

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.

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 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.

As of September 30, 2025, our share of the estimated remaining costs for the completed Tecoma Improvements totaled $346 thousand.

However, over the past two years and in the first nine months of 2025, we made operating loans, advances and capital contributions to our joint ventures.

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

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”.

Over the next 12 months, we anticipate making future operating loans to the limited partnership for The Annie B totaling up to $1.8 million and a capital contribution to the limited partnership for The Saint George of $150 thousand, representing our 10 percent equity share of debt service and project costs needed by the partnership.

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

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

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.

We have faced difficult conditions in the real estate business over the past two years and in the first nine 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 the first six months of 2025, interest rates generally declined;

During 2024, interest rates stabilized, and in the latter part of 2024 and the first nine 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 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.

In our markets, retail market fundamentals, such as occupancy and rents, have shown stronger performance compared to the multi-family sector.

The market for new suburban multi-family development has continued to face headwinds.

Nevertheless, we made important progress executing our business strategy during 2024 and the first nine 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 and in September and October 2025.

We took advantage of lower interest rates and the success of our projects to refinance or amend certain of our project loans.

In fourth-quarter 2024, we extended the maturity of The Saint June construction loan for one year at a lower rate and generated additional cash proceeds of approximately $1.5 million after closing costs.

In fourth-quarter 2024 and again in September 2025, we extended the maturity of The Saint June construction loan for additional one-year terms at lower rates and generated aggregate additional cash proceeds of approximately $2.8 million after closing costs.

We also refinanced the Kingwood Place construction loan with a three-year term loan at a lower rate and generated additional cash proceeds of approximately $2.0 million after partnership expenses, closing costs and distributions to noncontrolling interest holders.

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In March 2025, we refinanced the Jones Crossing loan with a three-year term loan at a lower rate and generated additional cash proceeds of approximately $1.2 million after closing costs.

In March 2025, we also amended our revolving credit facility, extending the term and lowering the interest rate.

In March 2025, we amended our revolving credit facility, extending the term and lowering the interest rate.

During 2024, we sold 47 acres of undeveloped land at Magnolia Place for $14.5 million and also sold Magnolia Place – Retail for $8.9 million.

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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 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.

Table of Conten ts

During the first nine 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.

We substantially completed construction of the road and utility infrastructure for Holden Hills Phase 1, including the required landscaping, enabling us to proceed with Travis 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.

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

We also took steps to advance relationships and pursue opportunities related to our development pipeline, positioning ourselves to capture value, subject to market conditions.

In October 2025, we sold an Amarra Villa home for $3.7 million.

We also entered into an agreement, as amended, to sell Lantana Place – Retail for approximately $57.4 million, which subject to satisfaction of closing conditions, is expected to close in fourth-quarter 2025.

In addition, beginning in 2024 and through November 7, 2025, we returned $3.9 million to our stockholders through our share repurchase program.

Changes to U.S.

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

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

real estate market conditions.

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Our Real Estate Operations segment encompasses our activities associated with our entitlement, development, and sale of real estate.

The current focus of our real estate operations is multi-family and single-family residential properties and residential-centric mixed-use properties.

The current focus of our Real Estate Operations segment is multi-family and single-family residential properties and residential-centric mixed-use properties.

We may sell or lease the properties we develop, depending on 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 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.

Summary Financial Results for the Third-Quarter and First Nine Months of 2025.

Our revenues totaled $5.0 million in third-quarter 2025 and $21.6 million for the first nine months of 2025, compared with $8.9 million in third-quarter 2024 and $43.9 million for the first nine months of 2024.

The decreases in revenues for the three and nine-month periods were due to decreases in revenues in our Real Estate Operations segment, as revenues from our Leasing Operations segment were consistent for these periods.

The $3.9 million decrease in revenues in our Real Estate Operations segment in third-quarter 2025, compared to third-quarter 2024, was primarily a result of the sale of one Amarra Villas home for $4.0 million in third-quarter 2024 compared to no sales in third-quarter 2025.

The $22.9 million decrease in revenues from our Real Estate Operations segment in the first nine months of 2025, compared to the first nine 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 four Amarra Villas homes for an aggregate of $15.2 million in the first nine months of 2024, compared with the sales of two Amarra Villas homes in the first nine months of 2025 for $6.8 million.

Table of Conten ts

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

In third-quarter 2024, we recorded an approximately $1.6 million pre-tax gain on the sale of Magnolia Place – Retail.

In third-quarter 2025, we terminated a lease for a potential development project in Austin, Texas, and recorded a charge to professional fees 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 previously paid to the lessor to extend the review period.

In third-quarter 2024, we recorded a charge to professional fees of approximately $721 thousand to write off previously capitalized costs related to a change in development plans for one property.

The formation of the Holden Hills Phase 2 partnership also contributed to the increase in professional fees and allocated overhead costs in our Real Estate Operations segment in the first nine months of 2025, compared to the first nine months of 2024.

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.

Our net loss attributable to common stockholders totaled $(5.0) million, or $(0.62) per diluted share in third-quarter 2025, compared to net loss attributable to common stockholders of $(0.4) million, or $(0.05) per diluted share, in third-quarter 2024.

During the first nine months of 2025 our net loss attributable to common stockholders totaled $(7.6) million, or $(0.94) per diluted share, compared to net income attributable to common stockholders of $2.5 million, or $0.30 per diluted share, during the first nine months of 2024.

During the first nine months of 2025, our cash and cash equivalents increased substantially, primarily due to the receipt of a $47.8 million distribution from the formation of the Holden Hills Phase 2 partnership.

Refer to Note 3 for further discussion.

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

In third-quarter 2024, we sold one of the homes for $4.0 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.

In October 2025, we sold one of the homes for $3.7 million.

As of November 7, 2025, two 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 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.

We have substantially completed the initial road and utility infrastructure, including the required landscaping, enabling us to proceed with Travis County’s acceptance of the roadway.

The County’s acceptance of the roadway will then permit us to continue efforts to replat the initial portion of Holden Hills Phase 1 to take advantage of changes in regulations, which we believe will result in improved home sites.

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.

We anticipate being in a position to start building homes and/or selling home sites in late 2025, assuming regulators timely fulfill their permit processing obligations and there are no further changes in the regulatory environment.

We anticipate being in a position to start building homes and/or selling home sites in 2026, assuming regulators timely fulfill their permit processing obligations and there are no further changes in the regulatory environment.

For additional discussion, refer to Items 1.

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

Table of Conten ts

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.

As of September 30, 2025, our share of the estimated remaining costs of the completed Tecoma Improvements, primarily the required landscaping, is $346 thousand.

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.

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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.

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.

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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.

The Holden Hills Phase 2 partnership intends to use the facility to reimburse Stratus for approximately $1.6 million of project costs, including certain 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.

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“Risk Factors” in our 2024 Form 10-K.

Table of Conten ts

The Saint George

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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.

As of November 7, 2025, we had signed leases for approximately 39 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.

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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.

After extensive negotiation with the City of Lakeway, utility suppliers and neighboring property owners, we secured the right in 2023 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.

Construction of the required road infrastructure is scheduled to commence in fourth-quarter 2025.

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 costs potentially reimbursable in the future by the Magnolia MUD.

Following these sales, 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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Due to the ETJ process, we are adjusting our development plans for Holden Hills Phase 2.

Table of Conten ts

Stabilized Retail Projects

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

As of September 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 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.

As of September 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 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.

As of September 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.

In October 2025, we entered into an agreement, as amended, to sell Lantana Place – Retail for approximately $57.4 million.

Subject to satisfaction of closing conditions, the sale is expected to close in fourth-quarter 2025.

Using the proceeds from the sale, we expect to repay the project loan with an approximately $29.8 million principal balance as of September 30, 2025.

Following the sale, we would retain the property planned for The Saint Julia (discussed above).

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

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

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.

We have engaged a broker to explore the potential sale of Kingwood Place, subject to market conditions.

Potential Development Projects and Pipeline

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 working to establish a credit facility to fund certain 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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Market Conditions

Our industry has been experiencing construction and labor cost increases, supply chain constraints, labor shortages, higher borrowing costs and tightening bank credit.

Our industry has experienced construction and labor cost increases, supply chain constraints, labor shortages, higher borrowing costs and tightened bank credit.

Inflation increased rapidly during 2021 through June 2022.

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As inflation began to decline, the Federal Reserve began to focus on improving the labor market and price stability.

Between September 2024 and December 2024, the Federal Reserve lowered the federal funds target rate by 100 basis points on a cumulative basis.

Between September 2024 and September 2025, the Federal Reserve lowered the federal funds target rate by 125 basis points on a cumulative basis, and in October 2025, the Federal Reserve lowered the federal funds target rate by another 25 basis points.

Elevated inflation and interest rates increase our costs of materials, services, labor and capital.

Changing U.S.

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

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

Refer to Part II, Item 1A.

“Risk Factors” herein.

Table of Conten ts

To manage the risks of rising construction and labor costs, we go through extensive pricing exercises culminating with competitive bids from reputable contractors based on final plans and specifications.

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however, rising costs and delays in delivery of materials may increase the risk of default by contractors and subcontractors.

Also, as discussed elsewhere in this report, higher costs and project delays have required us to make operating loans and an equity contribution to some of our joint ventures, and we expect to make additional operating loans and capital contributions during the next 12 months.

Also, as discussed elsewhere in this report, higher costs and project delays have required us to make operating loans and equity contributions to some of our joint ventures, and we expect to make additional operating loans and capital contributions during the next 12 months.

Refer to Part I, Item 1A.

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This surge in population growth spurred a rapid increase in multi-family construction which caused rental rates in 2024 to drop from the previous year while occupancy rates have remained high.

Retail market fundamentals, such as occupancy and rents, have shown stronger performance compared to the multi-family sector.

The market for new suburban multi-family development has continued to face headwinds.

Despite macroeconomic challenges, we continue to see reasons for optimism regarding real estate market conditions in our Texas markets over the next 12 months, as rents have been strong at The Saint June, absorption of new downtown Austin multi-family units has been encouraging and we continue to see some opportunities for sales transactions for our properties.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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(3,866) (3,363) (11,474) (11,670)

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

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

Net income (loss) attributable to common stockholders

Operating loss (8,093) (1,519) (12,447) (754)

Net loss (8,007) (1,414) (14,059) (495)

Net (loss) income attributable to common stockholders

$ (4,978) $ (364) $ (7,593) $ 2,463

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.

The three and nine-month periods ended September 30, 2025 include a charge of approximately $2.8 million representing previously capitalized architectural, engineering and consulting fees incurred in connection with planning and evaluating a potential project that was terminated in third-quarter 2025.

The nine-month period ended September 30, 2025 includes 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.

The nine-month period ended September 30, 2025 includes an approximately $5.0 million pre-tax gain on the sale of the West Killeen Market retail project and a portion of a previously deferred gain of $0.2 million related to The Oaks at Lakeway.

The three- and nine-month periods ended September 30, 2024 include a pre-tax gain on the sale of Magnolia Place – Retail for $1.6 million.

Refer to Note 4 for further discussion.

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The following is a discussion of our operating results by segment.

We use operating (loss) income before general and administrative expenses to measure the performance of our business segments.

Table of Conten ts

We use operating loss before general and administrative expenses to measure the performance of our business segments.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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

Three Months Ended June 30,

Three Months Ended September 30,

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

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Total Residential — $ — 1 $ 3,950

Six Months Ended June 30,

Nine Months Ended September 30,

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

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Total Residential 2 $ 6,760 4 $ 15,198

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.

The decrease in revenues from developed property sales for third-quarter 2025, compared to third-quarter 2024, reflects the sale of one Amarra Villas homes in third-quarter 2024 for $4.0 million compared to no sales in third-quarter 2025.

The decrease in revenues for the first nine months of 2025 compared to the first nine months of 2024, reflects the sales of two Amarra Villas homes for $6.8 million in the 2025 period compared to the sales of four Amarra Villas homes for a total of $15.2 million in the 2024 period.

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Undeveloped Property Sales.

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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.

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

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.

Cost of real estate sold decreased $3.3 million in third-quarter 2025, compared to third-quarter 2024, primarily due to the sale of one Amarra Villas home in third-quarter 2024 compared to no sales in third-quarter 2025.

Cost of real estate sold decreased $14.1 million in the first nine months of 2025, compared to the first nine 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 four Amarra Villas homes in the 2024 period.

In third-quarter 2024, we recorded a charge to professional fees of approximately $721 thousand to write off previously capitalized costs related to a change in development plans for one property.

Leasing Operations

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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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.

In second-quarter 2025, we sold West Killeen Market and began recognizing rental revenue from The Saint George.

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.

The increase in rental revenue in the first nine months of 2025, compared with the first nine months of 2024, primarily reflects revenue from The Saint June, which was in the process of leasing up in the first nine months of 2024, and The Saint George, which began leasing up in second-quarter 2025, 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.

In October 2025, we entered into an agreement, as amended, to sell Lantana Place – Retail, which, subject to satisfaction of closing conditions, is

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expected to close in fourth-quarter 2025.

The Lantana Place – Retail project made up approximately 26 percent of the rental revenue for each period presented.

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.

Increases in property taxes and insurance and depreciation in the 2025 periods were primarily attributable to the commencement of leasing operations at The Saint George in second-quarter 2025.

Approximately 18 percent and 24 percent of Leasing Operations expenses (excluding gain on sale of assets) were attributable to Lantana Place – Retail for third-quarter 2025 and 2024, respectively, and approximately 20 percent for the first nine months of both 2025 and 2024.

Gain on Sale of Assets.

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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.

The nine months ended September 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.

In third-quarter 2024, we closed on the sale of Magnolia Place – Retail for $8.9 million.

The sale generated a pre-tax gain of approximately $1.6 million.

Refer to Note 4 for further discussion.

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Interest Expense, Net.

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.

Interest costs (before capitalized interest) totaled $3.8 million in third-quarter 2025 and $11.5 million for the first nine months of 2025, compared with $4.0 million in third-quarter 2024 and $11.9 million for the first nine months of 2024.

As of September 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 $3.1 million in third-quarter 2025 and $10.4 million for the first nine months of 2025.

All of our interest costs were capitalized for both 2024 periods.

Capitalized interest for the 2025 periods is primarily related to development activities at Holden Hills Phases 1 and 2.

The first nine months of 2025 also included capitalized interest related to the development of The Saint George before it was completed in second-quarter 2025.

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

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 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.

Other (loss) income, net in the first nine months of 2025 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.

Benefit from (Provision for) Income Taxes.

We recorded a benefit from income taxes of $321 thousand in third-quarter 2025 and provision for income taxes of $166 thousand for the first nine months of 2025, compared to a provision of $58 thousand in third-quarter 2024 and $204 thousand for the first nine 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 $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.

Our partners’ share of losses totaled $3.0 million in third-quarter 2025 and $6.5 million for the first nine months of 2025, compared to $1.1 million in third-quarter 2024 and $3.0 million for the first nine 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.

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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 Six Months Ended June 30, 2025 and 2024

Comparison of Cash Flows for the Nine Months Ended September 30, 2025 and 2024

Operating Activities.

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.

Cash used in operating activities totaled $24.1 million for the first nine months of 2025, compared with $2.4 million for the first nine months of 2024.

The decline in operating cash flow was primarily attributable to reduced revenue resulting from fewer property sales in the first nine months of 2025.

Expenditures for purchases and development of real estate properties totaled $20.5 million for the first nine months of 2025, primarily

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related to development of Holden Hills Phase 1, and $22.9 million for the first nine months of 2024, primarily related to development of Amarra Villas and Holden Hills Phase 1.

Investing Activities.

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.

Cash provided by (used in) investing activities totaled $4.6 million for the first nine months of 2025 and $(15.0) million for the first nine months of 2024.

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

Also, during the first nine months of 2025, our investing cash flows included $0.4 million of Barton Creek MUD reimbursements of infrastructure costs incurred for development of The Saint June.

Capital expenditures totaled $8.1 million for the first nine months of 2025, primarily for The Saint George, and $23.0 million for the first nine 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 $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.

Cash provided by financing activities totaled $53.9 million for the first nine months of 2025 and $5.3 million for the first nine months of 2024.

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

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

During the first nine months of 2025, net borrowings on other project and term loans totaled $8.0 million, primarily reflecting borrowings from Holden Hills Phase 1 and The Saint George construction loans and the refinancing of the Lantana Place and The Saint June construction loans 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 nine months of 2024, net repayments on other project and term loans totaled $2.6 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 September 30, 2025.

During the first nine 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 nine 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.

During the first nine months of 2025, the Class B limited partner contributed additional cash of $2.9 million in cash to The Saint George Apartments, L.P., representing its 90 percent share to support the partnership’s ability to pay debt service and project costs, including costs related to water leak damage remediation and repairs as described in “Recent Development Activities.” During the first nine months of 2024, the Class B limited partner contributed additional capital of $3.6 million in cash to The Saint George Apartments, L.P., representing its 90 percent share to support the partnership’s ability to pay its construction loan interest.

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.

During the first nine months of 2025, $246 thousand of accrued dividends for unvested RSUs were paid to the holders upon the vesting of the RSUs, leaving $18 thousand of dividends accrued for unvested RSUs presented in accrued liabilities as of September 30, 2025.

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

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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 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.

In the first nine months of 2025, we acquired 100,967 shares of our common stock for a total cost of $2.0 million at an average price of $19.50 per share.

As of November 7, 2025, we have acquired 180,899 shares of our common stock for a total cost of $3.9 million at an average price of $21.59 per share, and $21.1 million remains available for repurchases under the program.

Table of Conten ts

Revolving Credit Facility and Other Financing Arrangements

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.

As of September 30, 2025, we had $55.0 million in cash and cash equivalents and restricted cash of $0.5 million, and no amount was borrowed under our revolving credit facility.

Of the $55.0 million in consolidated cash and cash equivalents at September 30, 2025, $3.8 million held at certain consolidated subsidiaries was subject to restrictions on distribution to the parent company pursuant to project loan agreements.

In the third quarters of 2025 and 2024, development and asset management fees of $289 thousand and $216 thousand, respectively, were paid by the limited partnerships to Stratus.

In the first nine months of 2025 and 2024, development and asset fees of $830 thousand and $1.2 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 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.

As of September 30, 2025, we had total debt of $205.7 million based on the principal amounts outstanding compared with $196.7 million at December 31, 2024.

As of September 30, 2025, the maximum amount that could be borrowed under the Comerica Bank revolving credit facility was $29.1 million, resulting in availability of $17.5 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.

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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 June 30, 2025.

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 September 30, 2025.

In October 2025, we amended the revolving credit facility to further reduce the maximum loan amount to the lesser of $35.0 million or the borrowing base limit, in order to reduce our fees associated with the facility.

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.

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 third-quarter 2024, we made an operating loan of $1.1 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.

In third-quarter 2025, we made an operating loan of $1.1 million.

As of September 30, 2025, our operating loans outstanding to Stratus Block 150, L.P.

totaled $8.3 million.

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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 third-quarter 2025, The Saint June partnership was amended to allow up to $3.0 million of distributions to the partners prior to the repayment of the operating loans.

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.

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.

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

As of September 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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As required by the loan, College Station 1892 Properties, L.L.C.

purchased an interest rate cap with a Term SOFR strike rate equal to 5.00 percent, a notional amount of $24.0 million and an expiration date of April 1, 2026.

purchased an interest rate cap with a Term

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SOFR strike rate equal to 5.00 percent, a notional amount of $24.0 million and an expiration date of April 1, 2026.

Upon expiration, as required by the loan, College Station 1892 Properties, L.L.C.

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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.

In September 2025, The Saint June construction loan was modified to (i) extend the maturity date of the loan to October 2, 2027;

(ii) provide for advances of an additional $1.5 million, bringing the outstanding principal balance of the loan to $32.9 million with no funds remaining available for additional principal advances;

(iii) decrease the interest rate applicable margin from 2.35 percent to 2.00 percent;

(iv) eliminate the requirement to make monthly principal payments prior to maturity;

and (v) add a new property-level minimum debt yield financial covenant, which replaced a property-level debt service coverage ratio.

If the debt yield financial covenant is not met, the principal balance of the loan must be paid down in an amount sufficient to achieve the minimum debt yield.

The amendments permit the partnership to distribute up to $1.5 million to the partners.

Accordingly, the loan bears interest at the one-month Term SOFR plus 2.00 percent, subject to a 3.50 percent floor.

Payments of interest only on the Loan are due monthly with the outstanding principal due at maturity.

After closing costs, the partnership used the remaining portion of the $1.3 million proceeds of the loan to establish reserves for partnership expenses and make cash distributions to the partners.

In October 2025, The Saint June, L.P.

made distributions of approximately $435 thousand and $225 thousand to the Class B limited partner in The Saint June partnership and Stratus, respectively.

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

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

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

As of September 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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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.

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

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.

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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 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.

As of September 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.

Our payment guarantee on

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The Saint June construction loan is limited to 50.0 percent and on The Saint George construction loan is limited to 25.0 percent 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 June 30, 2025 (in thousands):

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

2025 2026 2027 2028 2029 Thereafter Total

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— — — 24,000 — 24,000

The Annie B land loan a

11,970 — — — — — 11,970

The Annie B land loan — — 11,920 — — — 11,920

Construction loans:

The Saint George — 52,533 — — — — 52,533

The Saint June b

The Saint June a

— — 33,376 — — — 33,376

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

Holden Hills Phase 1 b

— 21,096 — — — — 21,096

Total $ — $ 73,924 $ 78,664 $ 24,388 $ 28,749 $ — $ 205,725

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.

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 maturity date of the Holden Hills Phase 1 construction loan is February 8, 2026.

We are currently evaluating options to modify the loan and expect to extend 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,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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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.

We did not have an outstanding balance during third-quarter 2025, third-quarter 2024 or the first nine months of 2024.

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

Table of Conten ts

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 $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.

We had firm commitments totaling approximately $5.2 million at September 30, 2025 primarily related to construction of the road and utility infrastructure we are required to build in Lakeway Texas, and Holden Hills Phase 1.

We have a construction loan to fund the projected cash outlays for Holden Hills Phase 1 over the next 12 months following this filing.

We expect to make a capital contribution to The Saint George partnership of $150 thousand representing our 10 percent equity share of debt service and project costs in the next 12 months.

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 September 30, 2025, our share of the estimated remaining costs totaled $346 thousand.

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

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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 $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.

In October 2025, we entered into an agreement, as amended, to sell Lantana Place – Retail for approximately $57.4 million.

Subject to satisfaction of closing conditions, the sale is expected to close in fourth-quarter 2025 and to yield substantial cash proceeds after payment of the project loan.

We expect to sell the two remaining 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 $55.0 million at September 30, 2025 and availability under our revolving credit facility (which matures on March 27, 2027) of approximately $17.5 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.

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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.

We also generate cash flow from rental revenue in our Leasing Operations segment 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 ASU also requires additional footnote disclosure about selling expenses.

The amendments are effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and early adoption is permitted.

The amendments are effective for fiscal years beginning after December 15, 2026 and interim periods beginning after

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December 15, 2027 and early adoption is permitted.

Stratus is currently assessing adoption timing and the effect that the updated standard will have on its financial statement disclosures.

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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.

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.

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, statements regarding the exploration of opportunities for the use of cash proceeds from the Holden Hills Phase 2 partnership formation and recent and pending asset sales, and whether and when the sale of Lantana Place – Retail will be completed, potential costs for which The Saint George Apartments, L.P.

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, 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.

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 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.

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 results of our Board’s exploration of opportunities for the use of cash proceeds from the Holden Hills Phase 2 partnership formation and recent and pending asset sales, the occurrence of any event, change or other circumstance that could delay the closing of the sale of Lantana Place – Retail or result in the termination of the agreement to sell Lantana Place – Retail, 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, 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,

Table of Conten ts

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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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 2. Management’s Discussion and Analysis