STRS 10-K & 10-Q changes, risk factors and insider trading
Stratus Properties Inc. · OTC · Land Subdividers & Developers (No Cemeteries) · CIK 885508 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risk Factor Summary”
New heading “Risks Relating to the Plan of Liquidation”
New heading “Risks Relating to Our Business and Industry”
New heading “Risks Relating to Our Indebtedness”
New heading “Risks Relating to Real Estate Operations”
New heading “Risks Relating to Leasing Operations”
New heading “Risks Relating to Ownership of Shares of Our Common Stock”
New heading “Risks Relating to the Plan of Liquidation”
New heading “The amount and timing of any liquidating distributions to stockholders may vary substantially from the estimated range of potential liquidating distributions.”
New heading “The Plan of Liquidation requires stockholder approval and may not be completed on the timetable or on the terms currently contemplated.”
New heading “We may be unable to sell or otherwise monetize our assets on the terms or timeline expected in the estimated range of potential liquidating distributions.”
New heading “Our joint venture, partnership and subsidiary structures may limit our ability to control the timing and terms of dispositions and the timing of cash distributions to us.”
New heading “We may need additional capital, lender consents or waivers, refinancing or project-level expenditures to complete the winding-down process.”
New heading “If we rely on an out-of-court dissolution and winding up and the amounts reserved for claims, liabilities, expenses and obligations prove inadequate, liquidating distributions could be delayed or reduced and stockholders could be required to return prior distributions.”
New heading “The announcement and pendency of the Plan of Liquidation may adversely affect our business, relationships and ability to retain personnel.”
New heading “Winding-down costs, including public company costs, litigation, indemnification obligations, insurance and professional fees, may be substantial and may exceed our estimates.”
New heading “The market price of our common stock may fluctuate significantly during the pendency of the Plan of Liquidation and may bear little relationship to the amount ultimately distributed to stockholders.”
New heading “If we transfer remaining assets and liabilities to a liquidating trust, stockholders may receive illiquid interests and may incur tax liabilities without concurrent cash distributions.”
New heading “During the course of the liquidation and dissolution process, we expect to change our basis of accounting, which could require us to write down our assets.”
New heading “Changes in U.S. tariffs and trade policies could adversely affect our business.”
New heading “We may not receive, or may experience delays in receiving, reimbursements from MUDs for certain infrastructure costs we incur, which could adversely affect our liquidity and the profitability of our development projects.”
New heading “We are subject to litigation or other claims, which could materially and adversely affect us.”
Largest changes
“We are monitoring changes and potential changes to U.S. tariffs and trade policies under the current Presidential administration, along with reciprocal tariffs or other countermeasures imposed or that may be imposed by other countries in response. The current environment is dynamic and uncertain, as the current Presidential administration has imposed, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times since 2025. …”see in full comparison
“Our industry has been experiencing inflation, higher borrowing costs, tightened bank credit, more limited availability of equity capital, increased construction costs, higher labor costs, labor shortages, and supply chain constraints. Inflation increased rapidly during 2021 through June 2022. Since June 2022, the rate of inflation generally has declined; however, it began increasing in the later part of 2024 and has generally remained higher than the Federal Reserve’s target rate of inflation of two percent. …”see in full comparison
“In recent years, our industry has experienced, and may in the future experience, construction and labor cost increases, supply chain constraints, labor shortages, higher borrowing costs and tightened bank credit. Inflation has generally remained higher than the Federal Reserve’s target rate of inflation of two percent and interest rates continue to remain elevated compared to prior years. There is no guarantee that the Federal Reserve will take action to reduce rates in the future. …”see in full comparison
“In addition, if NASDAQ uses its discretionary authority to delist our common stock or we later fail to satisfy NASDAQ listing requirements, determine to delist our common stock, or suspend or terminate our reporting obligations under the Exchange Act in connection with the liquidation and dissolution process, trading in our common stock could become more limited, sporadic and volatile. …”see in full comparison
“We may not receive, or may experience delays in receiving, reimbursements from MUDs for certain infrastructure costs we incur, which could adversely affect our liquidity and the profitability of our development projects.”see in full comparison
“Winding-down costs, including public company costs, litigation, indemnification obligations, insurance and professional fees, may be substantial and may exceed our estimates.”see in full comparison
Full comparison: every changed paragraph (114)
This report contains “forward-looking statements” within the meaning of the United States (U.S.) federal securities laws. Forward-looking statements are all statements other than statements of historical fact, such as plans, projections or expectations. For additional information, refer to “Cautionary Statement” in MD&A.
Risk Factor Summary
Investing in our securities involves a high degree of risks and uncertainties. You should carefully consider the risks described below and the information included in other sections of this annual report on Form 10-K, including, but not limited to, Items 1. and 2. “Business and Properties,” Item 1C. “Cybersecurity,” MD&A and Item 3. “Legal Proceedings” prior to investing in our securities. If any of the following risks occur, they may have a material adverse impact on our business, financial performance, stock price, results of operations, operating flexibility, reputation, costs or liabilities and you could lose part or all of your investment. The summary and risks that follow are organized under headings as determined to be most applicable, but such risks also may be relevant to other headings. Moreover, the risk factors described herein are not all of the risks we may face and there may be other risks not presently known to us or that we currently believe are immaterial or general risks that apply to all companies operating in the U.S. and globally, which may emerge or become material.
Risks Relating to the Plan of Liquidation
•Uncertain amount and timing of any liquidating distributions;
•Failure to obtain stockholder approval of the Plan of Liquidation, or its delay, modification or abandonment;
•Asset sales not occurring on expected terms or timeline;
•Joint venture, partnership and subsidiary structures constraining dispositions and upstreamed cash flows;
•Need for additional capital, lender consents, waivers, refinancing or project-level spending;
•Inadequate reserves delaying distributions and triggering repayment claims;
•Adverse impacts on business, relationships and personnel retention;
•Substantial or estimate-exceeding winding-down costs;
•Stock price volatility and lack of correlation between stock price and ultimate liquidation value;
•Liquidating trust risks; and
•Future liquidation-related accounting changes.
Risks Relating to Our Business and Industry
•Successfulness of business strategy;
•Inflation, limited availability of equity capital, tighter credit and rising costs;
•U.S. tariffs and trade policies changes;
•Adverse economic conditions, particularly in Austin, Texas;
•Concentration risks;
•Inability to raise additional capital on acceptable terms;
•Inability to maintain strategic relationships with key tenants;
•Loss of key personnel;
•Risks associated with joint ventures;
•Adverse weather conditions and other potentially catastrophic events;
•Insurance, information technology and cybersecurity, and public health risks; and
•Failure to succeed in new markets.
Risks Relating to Our Indebtedness
•Significant debt and debt service needs; and
•Financial and restrictive covenants in financing arrangements.
Risks Relating to Real Estate Operations
•U.S. real estate industry market conditions;
•Development project risks;
•Holden Hills Phase 1 development and ETJ-related risks;
•Substantial amounts of undeveloped land and land under development;
•Failure to obtain or delays in receiving MUD reimbursements;
•Difficulties in selling real estate at advantageous times or prices;
•Competition risks;
•Regulatory approvals and opposition from environmental and special interest groups;
•Environmental regulations and evolving governmental and societal expectations on sustainability matters; and
•Litigation risks.
Risks Relating to Leasing Operations
•Inability to sustain satisfactory occupancy and rental rates; and
•Increased leasing costs.
Risks Relating to Ownership of Shares of Our Common Stock
•Thin trading and price volatility of common stock;
•Impact of anti-takeover provisions in our charter documents and under Delaware law; and
•Uncertainty and constraints on future dividends and share repurchases.
Risks Relating to the Plan of Liquidation
The amount and timing of any liquidating distributions to stockholders may vary substantially from the estimated range of potential liquidating distributions.
There can be no assurance that the actual aggregate amount or per share amount of any liquidating distributions will be within the estimated range. Although we have provided an estimated range of potential liquidating distributions of $29.73 to $37.69 per share and, if our stockholders approve the Plan of Liquidation, we would expect to make one or more liquidating distributions over time, the timing and amount of those distributions may vary substantially from the estimated range of potential liquidating distributions based on a number of factors, and we cannot determine at this time when, or whether, we will be able to make any liquidating distributions to our stockholders or the amount of any such distributions.
The estimated range of potential liquidating distributions is based on numerous judgments, assumptions and estimates, including assumptions regarding the estimated values and timing of sales of our real estate assets; the amount of indebtedness secured by our properties and other indebtedness, including any fees or costs associated with repayment; the amount of cash on hand; estimated cash flow and net working capital to be generated from continuing operations during the liquidation process; estimated expenses to be incurred in connection with asset sales and the winding down and dissolution of the Company; the effect of distributions from partnerships in project entities; the amount and duration of reserves for known, contingent and future claims, liabilities and expenses; and the number of shares of common stock outstanding on a fully-diluted basis. Those judgments, assumptions and estimates may prove to be inaccurate and may not reflect future changes in interest rates, market volatility, economic conditions, local real estate market conditions or other developments.
If those judgments, assumptions and estimates prove incorrect, if the prices obtained in asset sales are lower than expected, if asset sales are delayed, if costs, taxes, indebtedness, liabilities or reserves are greater than anticipated, if operating cash flow or net working capital is lower than anticipated, or if we are required to retain assets or reserves for longer than expected, the aggregate amount and per share amount of any liquidating distributions could be substantially lower than the estimated range of potential liquidating distributions and the timing of any liquidating distributions could be delayed. In addition, the estimated range of potential liquidating distributions was determined as of a specified date and does not reflect changes that may occur after that date, including changes in market conditions, interest rates or other factors that could affect the actual amount and timing of any liquidating distributions.
The Plan of Liquidation requires stockholder approval and may not be completed on the timetable or on the terms currently contemplated.
Although our Board has approved the Plan of Liquidation, we cannot implement the dissolution and liquidation of our assets unless the Plan of Liquidation is approved by the requisite vote of our stockholders. Even if our stockholders do approve the Plan of Liquidation, we would retain broad discretion, to the extent permitted by Delaware law and the Plan of Liquidation, to determine whether and when to file the certificate of dissolution and how to sequence the winding-down process. Before the certificate of dissolution is filed, the Board could delay implementation, modify the Plan of Liquidation or abandon it if the Board determines that changed circumstances, new information or alternative courses of action make that advisable. If stockholder approval of the Plan of Liquidation is not obtained, or if the Board delays, modifies or abandons the Plan of Liquidation, there can be no assurance that we would be able to pursue an alternative strategy that provides equal or greater value, or that any value would be realized on a comparable timetable. In that event, we would continue to bear the risks, costs and uncertainties of operating as a public real estate company while also having incurred transaction costs in connection with the Plan of Liquidation.
If the Plan of Liquidation is approved, stockholders would not be entitled to vote separately on most implementation decisions, including decisions regarding the timing and terms of most asset sales, the size and duration of reserves, whether to delay dispositions to seek improved values, whether to establish a liquidating trust, whether to retain directors, officers, employees or consultants to assist in the winding-down process, or whether to obtain or maintain insurance coverage. In addition, after the dissolution is effected by filing a certificate of dissolution with the Office of the Delaware Secretary of State, we will not hold annual meetings of stockholders to reelect directors, or elect successor directors, upon the expiration of director terms. As a result, stockholders will have limited ability to influence the execution of the liquidation and dissolution after approval of the Plan of Liquidation.
We may be unable to sell or otherwise monetize our assets on the terms or timeline expected in the estimated range of potential liquidating distributions.
The estimated range of potential liquidating distributions necessarily depends in significant part on assumptions regarding the timing, structure and pricing of future asset sales or other monetization transactions. Real estate assets are relatively illiquid, values can change materially over time and actual sale prices can be affected by a number of factors, including local and general economic conditions, interest rates, the availability of financing, buyer demand, the supply of competing properties, property-level operating performance, needed capital expenditures, zoning or regulatory issues and other factors outside our control. In addition, prospective buyers may seek to use the public announcement of the Plan of Liquidation, and the perception that we are a motivated seller, to negotiate lower prices or more favorable terms. If we are unable to complete asset dispositions on the terms or timeline currently assumed, or if we determine that quicker sales are preferable to reduce duration and risk, the liquidating distributions could be delayed or substantially reduced.
Our joint venture, partnership and subsidiary structures may limit our ability to control the timing and terms of dispositions and the timing of cash distributions to us.
Management's Discussion & Analysis (MD&A)
Not available: the section could not be located automatically in both filings (non-standard layout or incorporated by reference). See the original filing. Open the filing on SEC.gov.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to our risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.
Removed heading “Changes in U.S. tariffs and trade policies could adversely affect our business.”
Largest changes
“We are monitoring changes and potential changes to U.S. tariffs and trade policies under the current Presidential administration, along with reciprocal tariffs or other countermeasures imposed or that may be imposed by other countries in response. The current environment is dynamic and uncertain, as the U.S. President has imposed, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times since taking office in January 2025. …”see in full comparison
“Changes in U.S. tariffs and trade policies could adversely affect our business.”see in full comparison
“We are supplementing the risk factors described under Part I, Item 1A. “Risk Factors” of our 2024 Form 10-K with the risk factor set forth below, which should be read in conjunction with the risk factors and other disclosures in this report and in our 2024 Form 10-K.”see in full comparison
“There have been no material changes to our risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.”see in full comparison
Full comparison: every changed paragraph (4)
There have been no material changes to our risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.
We are supplementing the risk factors described under Part I, Item 1A. “Risk Factors” of our 2024 Form 10-K with the risk factor set forth below, which should be read in conjunction with the risk factors and other disclosures in this report and in our 2024 Form 10-K.
Changes in U.S. tariffs and trade policies could adversely affect our business.
We are monitoring changes and potential changes to U.S. tariffs and trade policies under the current Presidential administration, along with reciprocal tariffs or other countermeasures imposed or that may be imposed by other countries in response. The current environment is dynamic and uncertain, as the U.S. President has imposed, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times since taking office in January 2025. A number of important construction materials, including steel and lumber, are either currently subject to higher tariffs or have been threatened with higher tariffs in the future, which we believe is likely to further disrupt supply chains and increase construction costs. The lack of predictability regarding future U.S. tariffs and trade policies creates uncertainties that make it more challenging for construction contractors to price projects and for developers and investors to make projections. Changing U.S. tariffs and trade policies could also cause higher inflation and interest rates and slower economic growth or a recession in the U.S. These changes and uncertainties regarding future changes could result in, among other things, higher costs to our business generally, higher costs and more limited availability of capital, lower demand from buyers of our real estate and higher tenant default rates, and could cause our real estate development projects in planning to be less profitable, delayed or cancelled. These factors could have a material adverse effect on our business, profitability and cash flow.
Management's Discussion & Analysis (MD&A)
New heading “General and Administrative Expenses”
Largest changes
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, the risks associated with the Plan of Liquidation, including the availability, timing and amount of the distributions to stockholders in connection with the Plan of Liquidation, including changes in the amount and timing of the total liquidating distributions, including as a result of unexpected levels of transaction costs, delayed or terminated closings, liquidation costs or unpaid or additional liabilities and obligations, the amounts that will need to be set aside by us, the adequacy of such reserves to satisfy our obligations, risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the Plan of Liquidation, our ability to favorably resolve potential tax claims, any litigation matters, including any litigation relating to the Plan of Liquidation and related matters, and other unresolved contingent liabilities, our ability to successfully execute the Plan of Liquidation, including the ability to market and sell all or substantially all of our assets, the amount of proceeds that might be realized from the sale or other disposition of our assets, the application of, and any changes in, applicable tax laws, regulations, administrative practices, principles and interpretations, the incurrence of expenses and the diversion of management’s time in connection with the Plan of Liquidation, our ability to retain and hire key personnel, consultants and other resources and maintain relationships with partners, suppliers, employees, stockholders and others as we carry out the Plan of Liquidation and on our operating results and business generally, the possibility of converting to a liquidating trust or other liquidating entity, the possibility that our stockholders will not approve the Plan of Liquidation, the ability of our Board to abandon, modify or delay implementation of the Plan of Liquidation, even after stockholder approval, potential adverse effects on our stock price from the announcement, suspension or consummation of the Plan of Liquidation, the occurrence of any event, change or other circumstances, including market, regulatory and other factors, that could give rise to the termination of the Plan of Liquidation, whether we and the purchasers will satisfy our respective obligations and conditions to closing under the agreements or offers, as applicable, for the retail component of Jones Crossing, the New Caney land and an Amarra Villas home in the anticipated timeframe or at all, 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,see in full comparisonelevatedinflation and elevated 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, 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 theongoingchallengeslitigation challengingto the ETJ Law and our ability to implement revised development plans in light of the ETJLaw,Law and the letter from the City of Austin, 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. “Risk Factors” of our20242025 Form 10-K, filed with theSEC, and Part II, Item 1A. “Risk Factors” of this report.SEC.
“Changes to 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. Refer to Part II, Item 1A. “Risk Factors” herein. We believe we have sufficient liquidity and access to capital to sell properties when market conditions are favorable to us and to hold or refinance our properties or to continue to develop our properties, as applicable, through the market cycle. …”see in full comparison
“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; …”see in full comparison
“Our construction loans typically permit advances only in accordance with budgeted allocations and subject to specified conditions and require lender consent for changes to plans and specifications exceeding specified amounts. If the lender deems undisbursed proceeds insufficient to meet costs of completing the project, the lender may decline to make additional advances until the borrower deposits with the lender sufficient additional funds to cover the deficiency the lender deems to exist. …”see in full comparison
“In March 2025, the Jones Crossing loan was refinanced. The new loan has a principal amount of $24.0 million and matures April 1, 2028. The loan bears interest at one-month Term SOFR plus 1.95 percent, with a floor of 3.00 percent. 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. Upon expiration, as required by the loan, College Station 1892 Properties, L.L.C. …”see in full comparison
“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: borrow additional money or issue guarantees; pay dividends, repurchase equity or make other distributions to equity holders; make loans, advances or other investments; create liens on assets; sell assets; enter into sale-leaseback transactions; enter into transactions with affiliates; permit a change of control or change in management; sell all or substantially all of its assets; …”see in full comparison
Full comparison: every changed paragraph (130)
In Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), “we,” “us,” “our” and “Stratus” refer to Stratus Properties Inc. and all entities owned or controlled by Stratus Properties Inc. You should read the following discussion in conjunction with our consolidated financial statements and accompanying notes, related MD&A and discussion of our business and properties included in our Annual Report on Form 10-K for the year ended December 31, 20242025 (20242025 Form 10-K) filed with the United States (U.S.) Securities and Exchange Commission (SEC) and the unaudited consolidated financial statements and accompanying notes included in this Form 10-Q. The results of operations reported and summarized below are not necessarily indicative of future operating results, and future results could differ materially from those anticipated in forward-looking statements (refer to “Cautionary Statement” and Part I, Item 1A. “Risk Factors” of our 20242025 Form 10-K and Part II, Item 1A. “Risk Factors” herein for further discussion). All subsequent references to “Notes” refer to Notes to Consolidated Financial Statements (Unaudited) located in Part I, Item 1. “Financial Statements” herein, unless otherwise stated.
In December 2025, our Board initiated a review of strategic alternatives to maximize stockholder value. On March 24, 2026, after concluding that review and following consultation with external financial, tax and legal advisors, our Board approved, subject to stockholder approval, a plan of complete liquidation and dissolution of us (Plan of Liquidation) and announced an estimated range of potential liquidating distributions. If approved by our stockholders, the Plan of Liquidation provides that we will be dissolved, and we will conduct an orderly sale of all or substantially all of our assets and distribute the net proceeds over time to our stockholders, after payment of or reasonable provision for our liabilities and obligations, in accordance with the provisions of the Delaware General Corporation Law. Accordingly, historical results may not be indicative of future periods, and our capital allocation, financing, operating and disposition decisions are being evaluated in light of the Plan of Liquidation.
Our primary objective is to maximize value for stockholders. On March 24, 2026, after concluding the strategic alternatives review announced in December 2025, our Board approved the Plan of Liquidation and determined to submit it to our stockholders for approval. In connection with the Plan of Liquidation, we announced an estimated range of potential liquidating distributions of $29.73 to $37.69 per share.
Pending stockholder approval of the Plan of Liquidation, our near-term strategy is to preserve and enhance the value of our assets, and, where appropriate, monetize our properties in a manner intended to optimize value, continue to operate and lease our stabilized properties, complete or fund only those development, infrastructure, maintenance and other activities that we believe are necessary or advisable to preserve and enhance value or facilitate monetization, manage our debt and other obligations, seek any required lender, partner and third-party consents, and opportunistically pursue asset sales at times and on terms that our Board believes are favorable. Our capital allocation and financing decisions are being evaluated in light of the Plan of Liquidation and may differ from the approach described in prior periods. If stockholders do not approve the Plan of Liquidation, then we will continue our corporate existence and the Board expects to continue our current business strategy and may further explore strategic alternatives. The Plan of Liquidation has not been approved by our stockholders, and there can be no assurance that stockholder approval will be obtained or that the Plan of Liquidation will be implemented on the currently contemplated terms or timetable. The current business and investment strategy reflected in this report does not reflect our anticipated business and investment strategy if stockholders approve the Plan of Liquidation. For additional discussion, refer to Part I, Item 1A. “Risk Factors” in our 2025 Form 10-K.
Our primary business objective is to create value for stockholders by methodically developing and enhancing the value of our properties and then selling them or holding them for lease. We endeavor to sell properties at times when we believe market conditions are favorable to us. We are focused on the development of pure residential and residential-centric mixed-use projects in Austin and other select markets in Texas, which we believe continue to be attractive locations. Our successful development program of securing and maintaining development entitlements, developing and stabilizing properties, and selling them or holding them as part of our Leasing Operations is a key element of our strategy. We may also seek to refinance properties in order to benefit from, when available, an increase in the value of the property or from lower interest rates, or for other reasons.
From time to time, whenWhen deemed appropriate by our Board of Directors (the Board) and permitted pursuant to the terms of our debt agreements, we mayhave returnreturned 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 in June 2025, our Board approved an increase in the share repurchase program to $25.0 million. As of November 7, 2025, we had repurchased $3.9 million of our shares under the program.
Largely as a result of a cash distribution from the Holden Hills Phase 2 partnership and recent property sales, including the sales of Lantana Place – Retail, which generated pre-tax cash proceeds of approximately $26.9 million, and Kingwood Place, which generated pre-tax cash proceeds of $16.2 million, as of March 31, 2026, we had consolidated cash and cash equivalents of $73.5 million and $24.7 million available under our revolving credit facility, net of $3.4 million of letters of credit committed against the facility. Refer to Note 6 herein and Note 6 of our 2025 Form 10-K for further discussion of our debt.
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 current 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. Refer to Note 3.3 herein and Note 2 of our 2025 Form 10-K. 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, 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 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, 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, Lantana Place – Retail in November 2025, and Kingwood Place in January 2026, 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 20242025 and the first nine 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.2026.
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 partnershipjoint and our share (related to Holden Hills Phase 2) of the cost of the Tecoma Improvements (as defined below). As of September 30, 2025, our share of the estimated remaining costs for the completed Tecoma Improvements totaled $346 thousand.venture. However, oversince the past two years and in the first nine months of 2025,2023, we made operating loans, advancescapital contributions and capital contributionsadvances to our joint ventures. Refer to Note 3 herein and Note 2 of the 20242025 Form 10-K for further discussion. Over the next 12 months, weWe anticipate making future operating loans or advances to the limited partnershippartnerships for The Annie BB, The Saint George and Holden Hills Phase 1 totaling up to $1.8$6.0 million and a capital contribution toover the limitednext partnership12 for The Saint George of $150 thousand, representing our 10 percent equity share of debt service and project costs needed by the partnership.months. Our estimates of future operating loans andor capital contributionsadvances 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.
We havewere facedchallenged by difficult conditions in the real estate business over the past twothree years and in the first nine months of 2025.years. 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 nine months ofthrough 2025, interest rates generally declined; however, costs remained elevated. 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 20242025 and theinto first2026. nineAccordingly, monthswe ofhave 2025.been continuing to work to maintain our business, operate our stabilized retail and multi-family properties, advance our projects under construction or development, control costs and advance entitlements, relationships and opportunities to position us to capture value.
We also expect that, if market rates continue to decline, interest on our outstanding debt, all of which is variable rate, will continue to decline. We believe we have sufficient liquidity and access to capital to sell properties when market conditions are favorable to us and to hold or refinance our properties or to continue to develop our properties, as applicable, through the market cycle. We expect to re-evaluate our strategy as sales and development progress on the projects in our portfolio and as market conditions continue to evolve, and pending stockholder approval of the Plan of Liquidation. However, if the Plan of Liquidation is approved by our stockholders, our business strategy will shift from the continuation of our historical operating and development strategy toward an orderly monetization of assets and winding-down process. Under the Plan of Liquidation, we expect to have the ability to continue to develop and/or complete any projects or activities that are in process, so long as we determine that doing so will increase or otherwise enhance the value of the project, property or asset for sale or other disposition.
During 2025, we received a $47.8 million cash distribution from the Holden Hills Phase 2 partnership. In addition, we sold Lantana Place – Retail for $57.5 million, West Killeen Market for $13.3 million and three homes at Amarra Villas for a total of $10.5 million. We also completed construction on the last two Amarra Villas homes. We completed construction of the road and utility infrastructure for Holden Hills Phase 1. 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. In first-quarter 2026, we sold Kingwood Place for $60.8 million. In April 2026, we sold one Amarra Villas home for $3.6 million. We entered into contracts to sell the New Caney land for $12.7 million and the last Amarra Villas home for $3.6 million, which sales are subject to satisfaction or waiver of closing conditions. An offer has been received for the retail component of Jones Crossing, including undeveloped commercial land, for $46.5 million. In addition, beginning in 2024 and through April 30, 2026, we returned $5.2 million to our stockholders through our share repurchase program.
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 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. In January 2025, we refinanced the Lantana Place construction loan with a four-year term loan at a lower rate and generated additional cash proceeds of approximately $3.0 million after property taxes and closing costs. 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 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. We sold five homes at Amarra Villas for a total of $18.9 million and one Amarra Drive Phase III lot for $1.4 million. 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 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, 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. 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. 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 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 nine months of 2025 have introduced additional uncertainties regarding future U.S. real estate market conditions. Refer to Part II, Item 1A. “Risk Factors” herein. We believe we have sufficient liquidity and access to capital to sell properties when market conditions are favorable to us and to hold or refinance our properties or to continue to develop our properties, as applicable, through the market cycle. We expect to re-evaluate our strategy as sales and development progress on the projects in our portfolio and as market conditions continue to evolve.
Summary Financial Results for First-Quarter 2026. Our revenues totaled $3.8 million in first-quarter 2026 compared with $5.0 million in first-quarter 2025. Revenues from our Real Estate Operations segment in first-quarter 2026 remained relatively flat compared to first-quarter 2025. Revenues from our Leasing Operations segment in first-quarter 2026 decreased compared to first-quarter 2025, primarily due to decreased revenue from Lantana Place – Retail, which was sold in fourth-quarter 2025, and Kingwood Place, which was sold in first-quarter 2026, partially offset by increased revenue from The Saint George, which began lease-up in second-quarter 2025. Refer to “Results of Operations” below for further discussion of the results of operations of our segments.
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.
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 lossincome attributable to common stockholders totaled $(5.0)$6.6 million, or $(0.62)$0.82 per diluted share in third-quarterfirst-quarter 2025,2026, compared to net loss attributable to common stockholders of $(0.42.9) million, or $(0.050.36) per diluted share, in third-quarterfirst-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 2024.2025.
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.
Amarra Villas. The Villas at Amarra Drive (Amarra Villas) project is a 20-unit development in Barton Creek. In first-quarterApril 2024, we sold two of the homes for a total of $7.6 million. In second-quarter 2024,2026, we sold one ofAmarra theVillas homeshome for $3.6 million. In third-quarterMay 2024,2026, we soldentered oneinto ofa thecontract homesto for $4.0 million. In second-quarter 2025, we completed construction onsell the last twoAmarra homes,Villas andhome wefor sold$3.6 twomillion, which is subject to satisfaction of theclosing homes for a total of $6.8 million. 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.condtions.
The Saint June. In third-quarter 2021, we began construction on The Saint June, a 182-unit luxury garden-style multi-family projectproperty within the Amarra development. The first units were available for occupancy in July 2023, and construction was completed in fourth-quarter 2023. We completed the initial lease-up of The Saint June during 2024. As of March 31, 2026, occupancy at The Saint June was approximately 95 percent.
Holden Hills Phase 1. Our final large residential development within the Barton Creek community, Holden Hills Phase 1, consists of approximately 495 acres. The current conceptual design of the community has been designed to featurefeatures unique luxury residences to be developed in multiple sections with a focus on health and wellness, sustainability and energy conservation.
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. We have substantially completed the initial road and utility infrastructure, including the required landscaping, enabling us to proceed withobtain 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 in an effort to take advantage of changes in regulations, which we believe willmay 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),Law, as described below, we are working on modifications to our development plans for portions of Holden Hills Phase 1 are being adjusted to benefit from the new regulatoryregulations. scheme.However, Wechallenges anticipateto beingthe ETJ Law and the City of Austin’s recent letter reversing its prior certification of the release of Holden Hills Phases 1 and 2 from the City’s ETJ (refer to – ETJ Process below), are expected to cause delays in aimplementing positiondevelopment to start building homesplans and/or selling home sitessites. inWe 2026,may assuming regulators timely fulfill their permit processing obligations and there are no further changesalso, in the regulatoryfuture, environment.decide to build homes on certain of the home sites, depending on market conditions, available financing and other factors. For additional discussion, refer to Items 1. and 2. “Business and Properties” in our 20242025 Form 10-K.
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 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 reimbursements from Travis County municipalMunicipal utilityUtility districtDistricts (MUDMUDs) 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 $9.3 million and $6.9 million, respectively, are expected to be eligible to be reimbursed inby MUDs. The amount and timing of MUD reimbursements depends upon each MUD having a sufficient tax base within its district to issue bonds, obtaining the futurenecessary bystate MUDs.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. 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. TheIn amountApril and2026, 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 saleone of the Barton Creek MUDs sold bonds that resulted in reimbursements of costs incurred in connection with the Holden Hills Phase 1 project and the successfulTecoma saleImprovements of approximately $13.0 million and payment of interest of $1.4 million to the Holden Hills Phase 1 partnership and us. Of the total, $10.5 million was paid to the Holden Hills Phase 1 partnership, and $3.9 million (including our share of the bonds,Tecoma amongImprovement costs) was paid to us. From this bond offering, we also received payment of interest, including interest deferred from previous bond offerings, totaling $1.1 million and reimbursement of other things.costs Accordingly,of the$200 amountthousand. andThe timingHolden Hills Phase 1 partnership used its $10.5 million share of the receiptreimbursement ofand MUDinterest reimbursementsto ispay uncertain.down the Holden Hills Phase 1 construction loan. MUD reimbursements received for infrastructure costs are recorded as reductions of the related asset’s carrying amount.amount, and interest is recorded as income.
Holden Hills Phase 2. 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 removedworked to remove the majority of Holden Hills Phase 2 from Austin’s ETJ pursuant to the ETJ Law, as described below, and are adjustingworking on modifications to our development plans to benefit from the new regulatory scheme, whichwhich, isunder expectedfavorable tomarket resultand infinancing aconditions, significantcould accommodate an increase in design flexibility and development density as compared to our prior plans. If the new regulatory scheme survives challenge, and we are able to benefit from increased design flexibility and density, we cannot be sure whether the added infrastructure and other costs associated with redesign work and increasing density, coupled with market and financing uncertainty, will make increasing density a profitable risk-rewarded venture. Challenges to the ETJ Law and the City of Austin’s recent reversal of its prior certification of the release of Holden Hills Phases 1 and 2, are expected to cause delays in implementing development planning.
The Holden Hills Phase 2 partnership is working to establish aan separateapproximately $10.0 million revolving credit facility for the Holden Hills Phase 2 project, which is expected to be sized as needed for future operating costs.project. The Holden Hills Phase 2 partnership intends to use the facility to reimburse Stratus for approximately $1.6$3.0 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.
ETJ Process. The ETJ Law became effective September 1, 2023. We have completed the statutory process to remove all of our relevant land subject to development, including primarily Holden Hills Phases 1 and 2,2 from the extraterritorial jurisdiction (ETJ) of the City of Austin, as permitted by the ETJ Law. We have also made filings with Travis County in an effort to grandfather Holden Hills Phases 1 and 2 under most laws in effect in Travis County at the time of the filings. A number of cities in Texas have brought lawsuits challenging the ETJ Law. One lawsuit, initially dismissed on procedural and jurisdictional grounds, has been appealed to a three-judge appellate panel, which after hearing argument on the merits, has taken the matter under advisement. There is no certainty as to how or when the appellate court will rule. In addition, on March 13, 2026, we received a letter from the City of Austin asserting that it had made an error in certifying the release of our properties from the ETJ in March 2024. The City of Austin asserts that it recently discovered that our properties are within five miles of a specific type of military installation, which the City of Austin claims disqualifies our properties for release. We are currently reviewing potential challenges to the City of Austin’s reversal of the release of our properties from the ETJ. If the ETJ Law is upheld,upheld and the removal of our property is permitted by the City of Austin, we expectwill thatwork to confirm whether the removal of our properties from the ETJ of the City of Austin will streamline the development permitting process, allow greater flexibility in the design of projects, potentially decrease certain development costs, and potentially permit meaningful increases in development density. If the ETJ Law is not upheld or the City of Austin does not permit the removal of our property from the ETJ, there may be substantial adverse impacts to our development plans, including reduction in aggregate development density, and additional cost and delay. In light of the challenges to the ETJ Law, and depending on the outcome of those challenges, our development plans for portions of Holden Hills Phases 1 and 2 aremay beingneed adjusted.to be modified. For additional discussion, refer to Part I, Item 1A. “Risk Factors” in our 20242025 Form 10-K.
The Saint George is a 316-unit luxury wrap-style, multi-family projectproperty in north-central Austin. We purchased the land and entered into third-party equity financing for the projectproperty in December 2021. We entered into a construction loan for this projectproperty and began construction in third-quarter 2022. The first units were available for occupancy in April 2025 and the projectproperty was completed in second-quarter 2025. As of NovemberApril 7,30, 2025, we had signed leases for2026, approximately 3982 percent of the units.units had been leased.
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.,L.P. towill pay $1.0 million of the extentcosts notof remediation and repairs, and the remainder will be covered by the insurance company and the general contractor, are currently estimated to be no more than $1.0 million.contractor.
After extensive negotiation with the City of Lakeway, utility suppliers and neighboring property owners, during 2023 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 commencebegan in fourth-quarter 2025.2025 and is expected to be completed by the end of 2026. Under our current strategy, our goal is to prepare the site for construction on the multi-family project or to sell the site, as soon as infrastructure construction is complete and market conditions warrant. Refer to Note 6 and “Capital Resources and Liquidity – Revolving Credit Facility and Other Financing Arrangements” below for additional discussion.
In third-quarter 2021, we purchased the land and announced plans for The Annie B, a proposed luxury high-rise project in downtown Austin to be developed as a 400-foot tower, consisting of approximately 420,000 square feet with 316 luxury residential units. Stratus Block 150, L.P. raised third-party equity capital and entered into a loan to finance part of the costs of land acquisition and budgeted pre-development costs for The Annie B. We continue to work to finalize our development plans and to evaluate whether the project is mostmore profitable as a for rent or for sale product. OurUnder our current strategy, our goal is to commenceprepare the site for construction to commence as soon as financing and other market conditions warrant.
We own approximately 11 acres planned for 275 multi-family units in Magnolia, Texas, and have approximately $9.5 million of costs potentially reimbursable in the future by the Magnolia MUD, with no project debt. In April 2026, the Magnolia MUD sold bonds and we were reimbursed costs totaling $1.6 million and were paid interest of $186 thousand.
New Caney
In 2018, we purchased a 38-acre tract of land, in partnership with H-E-B, in New Caney, Texas (in the greater Houston area), originally planned for the future development of an H-E-B-anchored, mixed-use project with approximately 145,000 square feet, five pad sites and approximately 275 multi-family units. In March 2026, we entered into a contract to sell the New Caney land for approximately $12.7 million, which is subject to satisfaction of closing conditions.
In first-quarter 2024, we completed the sale of 47 acres of undeveloped land in Magnolia, Texas planned for a second phase of retail development, all remaining pad sites and up to 600 multi-family units, for $14.5 million. In connection with the sale, the Magnolia Place construction loan, which had a balance of $8.8 million was repaid. 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.
We have advanced development plans for The Saint Julia, an approximately 210-unit multi-family project that is part of Lantana Place, a partially developed, mixed-use development project located south of Barton Creek in Austin. OurUnder our current strategy, our goal is to commenceprepare the site for construction orto sell the site,commence as soon as financing and/or market conditions warrant.
Jones Crossing is an H-E-B-anchored, mixed-use development located in College Station, Texas, the location of Texas A&M University, that also includes a 21-acre multi-family component. During 2023, we separated the ground lease for the multi-family parcel from the primary ground lease.
We continue to evaluate options for the 21-acre multi-family component of Jones Crossing, an H-E-B grocery anchored, mixed-use development located in College Station, Texas.
As described above under the heading “Recent Residential Activities,” Holden Hills Phase 2 has been envisioned to include a significant commercial component. DueIn light of the challenges to the ETJ process,Law, weand aredepending adjustingon the outcome of those challenges, our development plans for portions of Holden Hills PhasePhases 2.1 and 2 may need to be modified.
Jones Crossing – Retail
Stabilized Retail Projects
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 SeptemberMarch 30,31, 2025,2026, we had signed leases for substantially all of the completed retail space,space in Jones Crossing, including the H-E-B grocery store, totaling 154,092 square feet, and a ground leaseleases on onetwo retail pad site.sites. FourThe retail padcomponent sites remain available for lease. Theof Jones Crossing sitealso hasincludes additionalapproximately 22 undeveloped commercial acres with estimated future development potential of approximately 104,750 square feet of commercial space onand approximatelyup 22to undevelopedseven acres.retail pad sites available for lease. As previously discussed, we received an offer for the retail component of Jones Crossing for $46.5 million and are negotiating a sales contract. There can be no assurance that a sales contract will be completed or a sale consummated.
•Lantana Place is part of our mixed-use development project within the Lantana community south of Barton Creek in Austin, Texas. 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 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.
Our development plans for The Annie B, The Saint Julia and multi-family projects atin 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 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. These potential development projects and projects in our portfolio could require extensive additional permitting and will be dependent on market conditions and financing. Because of the nature and cost of the approval and development process and uncertainty regarding market demand for a particular use, there is uncertainty regarding the nature of the final development plans and whether we will be able to successfully execute the plans.
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. Since June 2022, the rate of inflation generally has declined but has generally remained higher than the Federal Reserve’s target rate of inflation of two percent. In response, the Federal Reserve raised the federal funds target rate multiple times from March 2022 through July 2023, by 525 basis points on a cumulative basis. As inflation began to decline, the Federal ReserveReserve’s beganpolicy todecisions focusreflected ona improvingbalancing theof progress toward price stability with evolving labor market and price stability.conditions. Between September 2024 and SeptemberDecember 2025, the Federal Reserve lowered the federal funds target rate by 125175 basis points on a cumulative basis, and in October 2025, the Federal Reserve lowered the federal funds target rate by another 25 basis points.basis. Elevated inflation and interest rates increaseincreased our costs of materials, services, labor and capital. Changing U.S. tariffs and trade policies commencing in the first nine months of 2025 present additional risks to our business. Refer to Part II,I, Item 1A. “Risk Factors” herein.of our 2025 Form 10-K for further discussion.
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. Because we typically engage third-party general contractors to construct our projects on a fixed-price or guaranteed maximum price basis, our exposure to construction and labor cost increases on projects under construction is limited; 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 loansloans, advances and equity contributions to some of our joint ventures, and we expect to make additional operating loans andor capital contributionsadvances during the next 12 months. Refer to Part I, Item 1A. “Risk Factors” of our 20242025 Form 10-K and Part II, Item 1A. “Risk Factors” herein for more information regarding our risk factors.
We are continually evaluating the development and sale potential of our properties and will continue to consider opportunities to enter into transactions involving our properties, including possible joint ventures, refinancings or other arrangements. As a result, and becauseBecause of numerous factors affecting our business activities as described herein and in our 2024 Form 10-K,herein, our past operating results are not necessarily indicative of our future results.
a.Includes sales commissions and other revenues together with related expenses. 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.
b.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.
STRS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 11 filings (4 insiders, 17 trade dates, 347,013 shares, about $10.0M). Net open-market shares: -347,013 (purchases minus sales); net value about -$10.0M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-08 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 20,000 | $27.51 | $550.2K |
| 2026-07-08 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 8,720 | $27.50 | $239.8K |
| 2026-07-07 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 20,000 | $27.50 | $550.0K |
| 2026-07-07 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $27.52 | $275.2K |
| 2026-07-02 | Fischer Seth |
Open-market sale | 117,612 | $28.03 | $3.3M |
| 2026-06-30 | Fischer Seth |
Open-market sale | 10,000 | $28.90 | $289.0K |
| 2026-06-03 | Joseph James |
Open-market sale | 3,380 | $27.77 | $93.9K |
| 2026-06-01 | Rhone Neville L. Jr. |
Grant/award | 2,286 | — | — |
| 2026-06-01 | Porter Charles W. |
Grant/award | 2,286 | — | — |
| 2026-06-01 | Madden Michael D |
Grant/award | 2,286 | — | — |
| 2026-06-01 | Joseph James |
Grant/award | 2,286 | — | — |
| 2026-06-01 | Henriksen Kate |
Grant/award | 2,286 | — | — |
| 2026-06-01 | Dotter Laurie L. |
Grant/award | 2,286 | — | — |
| 2026-05-26 | Oasis Management Co Ltd. |
Open-market sale | 10,000 | $29.05 | $290.5K |
| 2026-05-18 | Joseph James |
Open-market sale | 12,335 | $29.08 | $358.7K |
| 2026-05-07 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 720 | $30.03 | $21.6K |
| 2026-05-04 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $29.71 | $297.1K |
| 2026-04-28 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 4,916 | $30.03 | $147.6K |
| 2026-04-27 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.00 | $300.0K |
| 2026-04-27 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.00 | $300.0K |
| 2026-04-24 | Fischer Seth |
Open-market sale | 10,000 | $29.89 | $298.9K |
| 2026-04-22 | Fischer Seth |
Open-market sale | 493 | $30.19 | $14.9K |
| 2026-04-20 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 4,483 | $30.02 | $134.6K |
| 2026-04-17 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.00 | $300.0K |
| 2026-04-17 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 14,323 | $29.90 | $428.3K |
| 2026-04-17 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.00 | $300.0K |
| 2026-04-17 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.03 | $300.3K |
| 2026-04-16 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 4,188 | $30.00 | $125.6K |
| 2026-04-16 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.02 | $300.2K |
| 2026-04-16 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 5,600 | $29.95 | $167.7K |
| 2026-04-16 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.22 | $302.2K |
| 2026-04-15 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 10,000 | $30.29 | $302.9K |
| 2026-04-15 | Oasis Investments Ii Master Fund Ltd. |
Open-market sale | 243 | $30.70 | $7.5K |
Well-known investors holding STRS (13F)
None of the 59 investors we track reported a position in their latest 13F.