10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to

Commission file number: 001-37716

Stratus Properties Inc.

(Exact name of registrant as specified in its charter)

Delaware	72-1211572
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

212 Lavaca Street, Suite 300
Austin	TX	78701
(Address of principal executive offices)		(Zip Code)

(512) 478-5788

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	STRS	The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

On August 9, 2023, there were 7,997,215 issued and outstanding shares of the registrant’s common stock, par value $0.01 per share.

STRATUS PROPERTIES INC.
TABLE OF CONTENTS
	Page
Part I. Financial Information	2
Item 1. Financial Statements	2
Consolidated Balance Sheets (Unaudited)	2
Consolidated Statements of Comprehensive (Loss) Income (Unaudited)	3
Consolidated Statements of Cash Flows (Unaudited)	4
Consolidated Statements of Equity (Unaudited)	5
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33
Part II. Other Information	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6. Exhibits	35
Signature	S-1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

STRATUS PROPERTIES INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In Thousands)

	June 30, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	44,145	$	37,666
Restricted cash	995		8,043
Real estate held for sale	1,773		1,773
Real estate under development	271,597		239,278
Land available for development	47,113		39,855
Real estate held for investment, net	94,478		92,377
Lease right-of-use assets	11,711		10,631
Deferred tax assets	38		38
Other assets	13,905		15,479
Total assets	$	485,755	$	445,140
LIABILITIES AND EQUITY
Liabilities:
Accounts payable	$	18,107	$	15,244
Accrued liabilities, including taxes	5,393		7,049
Debt	137,432		122,765
Lease liabilities	16,297		14,848
Deferred gain	3,066		3,519
Other liabilities	6,299		9,642
Total liabilities	186,594		173,067
Commitments and contingencies
Equity:
Stockholders’ equity:
Common stock	96		94
Capital in excess of par value of common stock	196,819		195,773
Retained earnings	30,350		41,452
Common stock held in treasury	(32,449)		(30,071)
Total stockholders’ equity	194,816		207,248
Noncontrolling interests in subsidiaries	104,345		64,825
Total equity	299,161		272,073
Total liabilities and equity	$	485,755	$	445,140

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

2

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(In Thousands, Except Per Share Amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues:
Real estate operations	$	58	$	7,925	$	2,551	$	7,944
Leasing operations	3,472		3,200		6,781		6,280
Total revenues	3,530		11,125		9,332		14,224
Cost of sales:
Real estate operations	2,697		5,432		7,184		6,798
Leasing operations	1,144		870		2,405		1,854
Depreciation and amortization	970		884		1,898		1,757
Total cost of sales	4,811		7,186		11,487		10,409
General and administrative expenses	4,071		3,444		8,790		6,611
Gain on sale of assets	—		—		—		(4,812)
Total	8,882		10,630		20,277		12,208
Operating (loss) income	(5,352)		495		(10,945)		2,016
Interest expense, net	—		—		—		(15)
Other income, net	544		80		1,029		86
(Loss) income before income taxes and equity in unconsolidated affiliate's loss	(4,808)		575		(9,916)		2,087
(Provision for) benefit from income taxes	(498)		(41)		(1,660)		261
Equity in unconsolidated affiliate's loss	(3)		(2)		(6)		(4)
Net (loss) income from continuing operations	(5,309)		532		(11,582)		2,344
Net income from discontinued operations	—		95,925		—		96,300
Net (loss) income and total comprehensive (loss) income	(5,309)		96,457		(11,582)		98,644
Total comprehensive loss attributable to noncontrolling interests	8		164		480		249
Net (loss) income and total comprehensive (loss) income attributable to common stockholders	$	(5,301)	$	96,621	$	(11,102)	$	98,893
Basic net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.59		—		11.66
	$	(0.64)	$	11.68	$	(1.35)	$	11.97
Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.44		—		11.51
	$	(0.64)	$	11.53	$	(1.35)	$	11.82
Weighted-average shares of common stock outstanding:
Basic	8,227		8,273		8,225		8,262
Diluted	8,227		8,383		8,225		8,369

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

3

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In Thousands)

	Six Months Ended
	June 30,
	2023		2022
Cash flow from operating activities:
Net (loss) income	$	(11,582)	$	98,644
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	1,898		1,757
Cost of real estate sold	2,087		3,599
Gain on sale of discontinued operations	—		(119,695)
Gain on sale of assets	—		(4,812)
Debt issuance cost amortization and stock-based compensation	1,443		1,107
Equity in unconsolidated affiliate’s loss	6		4
Deferred income taxes	—		5,832
Purchases and development of real estate properties	(21,084)		(12,091)
Decrease in other assets	601		3,112
Decrease in accounts payable, accrued liabilities and other	(123)		(21,098)
Net cash used in operating activities	(26,754)		(43,641)
Cash flow from investing activities:
Proceeds from sale of discontinued operations	—		105,813
Capital expenditures	(23,477)		(27,575)
Payments on master lease obligations	(484)		(418)
Other	9		—
Net cash (used in) provided by investing activities	(23,952)		77,820
Cash flow from financing activities:
Borrowings from revolving credit facility	—		30,000
Payments on revolving credit facility	—		(30,000)
Borrowings from project loans	22,828		12,455
Payments on project and term loans	(8,328)		(5,582)
Payment of dividends	(616)		—
Finance lease principal payments	(7)		—
Stock-based awards net payments	(789)		(452)
Noncontrolling interest contribution	40,000		—
Purchases of treasury stock	(1,589)		—
Financing costs	(1,362)		(205)
Net cash provided by financing activities	50,137		6,216
Net (decrease) increase in cash, cash equivalents and restricted cash	(569)		40,395
Cash, cash equivalents and restricted cash at beginning of year	45,709		70,139
Cash, cash equivalents and restricted cash at end of period	$	45,140	$	110,534

The accompanying Notes to Consolidated Financial Statements (Unaudited), which include information regarding noncash transactions, are an integral part of these consolidated financial statements.

4

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

(In Thousands)

	Stockholders’ Equity
								Common Stock Held in Treasury			Total
	Common Stock			Capital in Excess of Par Value		Retained Earnings							Noncontrolling Interests in Subsidiaries
	Number of Shares	At Par Value						Number of Shares	At Cost						Total Equity
Balance at December 31, 2022	9,439	$	94	$	195,773	$	41,452	1,448	$	(30,071)	$	207,248	$	64,825	$	272,073
Exercised and vested stock-based awards	40	—		—		—		—	—		—		—		—
Director fees paid in shares of common stock	—	—		6		—		—	—		6		—		6
Stock-based compensation	—	—		529		—		—	—		529		—		529
Tender of shares for stock-based awards	—	—		—		—		11	(216)		(216)		—		(216)
Common stock repurchases	—	—		—		—		44	(894)		(894)		—		(894)
Contributions from noncontrolling interests	—	—		—		—		—	—		—		40,000		40,000
Total comprehensive loss	—	—		—		(5,801)		—	—		(5,801)		(472)		(6,273)
Balance at March 31, 2023	9,479	$	94	$	196,308	$	35,651	1,503	$	(31,181)	$	200,872	$	104,353	$	305,225
Exercised and vested stock-based awards	93	2		—		—		—	—		2		—		2
Director fees paid in shares of common stock	—	—		6		—		—	—		6		—		6
Stock-based compensation	—	—		505		—		—	—		505		—		505
Tender of shares for stock-based awards	—	—		—		—		28	(573)		(573)		—		(573)
Common stock repurchases	—	—		—		—		31	(695)		(695)		—		(695)
Total comprehensive loss	—	—		—		(5,301)		—	—		(5,301)		(8)		(5,309)
Balance at June 30, 2023	9,572	$	96	$	196,819	$	30,350	1,562	$	(32,449)	$	194,816	$	104,345	$	299,161

5

STRATUS PROPERTIES INC.

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Continued)

(In Thousands)

	Stockholders’ Equity
								Common Stock Held in Treasury			Total
	Common Stock			Capital in Excess of Par Value		Retained Earnings (Accumulated Deficit)							Noncontrolling Interests in Subsidiaries
	Number of Shares	At Par Value						Number of Shares	At Cost						Total Equity
Balance at December 31, 2021	9,388	$	94	$	188,759	$	(8,963)	1,143	$	(21,753)	$	158,137	$	50,476	$	208,613
Exercised and vested stock-based awards	39	—		—		—		—	—		—		—		—
Stock-based compensation	—	—		212		—		—	—		212		—		212
Tender of shares for stock-based awards	—	—		—		—		11	(452)		(452)		—		(452)
Total comprehensive income (loss)	—	—		—		2,272		—	—		2,272		(85)		2,187
Balance at March 31, 2022	9,427	$	94	$	188,971	$	(6,691)	1,154	$	(22,205)	$	160,169	$	50,391	$	210,560
Stock-based compensation	—	—		347		—		—	—		347		—		347
Grant of restricted stock units (RSUs) under the Profit Participation Incentive Plan (PPIP)	—	—		5,292		—		—	—		5,292		—		5,292
Total comprehensive income (loss)	—	—		—		96,621		—	—		96,621		(164)		96,457
Balance at June 30, 2022	9,427	$	94	$	194,610	$	89,930	1,154	$	(22,205)	$	262,429	$	50,227	$	312,656

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

6

STRATUS PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.GENERAL

The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022, included in Stratus Properties Inc.’s (Stratus) Annual Report on Form 10-K for the year ended December 31, 2022 (Stratus 2022 Form 10-K) filed with the U.S. Securities and Exchange Commission on March 31, 2023. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported and consist of normal recurring adjustments. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. Refer to Note 4 for a discussion of Stratus' discontinued operations.

Related Party Transactions. Through the first quarter of 2022, Stratus had an arrangement with Whitefish Partners, LLC (Whitefish Partners), formerly known as Austin Retail Partners, LLC, for services provided by a consultant of Whitefish Partners who is the son of Stratus' President and Chief Executive Officer. Payments to Whitefish Partners for the consultant’s consulting services and expense reimbursements totaled $185 thousand for first-quarter 2022, which included $20 thousand as an annual incentive award for 2021 and a $135 thousand cash payment under Stratus’ Profit Participation Incentive Plan (PPIP). In April 2022, Stratus hired the consultant as an employee at an annual salary of $100 thousand. As an employee, he is eligible for the same health and retirement benefits provided to all Stratus employees and is also eligible for annual incentive awards and for awards under the PPIP and the Long-Term Incentive Plan (LTIP). In first-quarter 2023, he received $22 thousand as an annual incentive award for 2022, and his annual salary was increased to $120 thousand. As of June 30, 2023, the employee has two outstanding awards under the PPIP. The liability associated with these awards at June 30, 2023 is not significant to the consolidated financial statements. Refer to Note 7 for discussion of the PPIP and LTIP. For additional information regarding Stratus' related parties, including LCHM Holdings, LLC and JBM Trust, refer to Notes 1, 2 and 4 in the Stratus 2022 Form 10-K.

7

2. EARNINGS PER SHARE

Stratus’ basic net (loss) income per share of common stock was calculated by dividing the net (loss) income attributable to common stockholders by the weighted-average shares of common stock outstanding during the period. A reconciliation of net (loss) income and weighted-average shares of common stock outstanding for purposes of calculating diluted net (loss) income per share (in thousands, except per share amounts) follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net (loss) income from continuing operations	$	(5,309)	$	532	$	(11,582)	$	2,344
Net income from discontinued operations	—		95,925		—		96,300
Net (loss) income and total comprehensive (loss) income	(5,309)		96,457		(11,582)		98,644
Total comprehensive loss attributable to noncontrolling interests	8		164		480		249
Net (loss) income and total comprehensive (loss) income attributable to common stockholders	$	(5,301)	$	96,621	$	(11,102)	$	98,893
Basic weighted-average shares of common stock outstanding	8,227		8,273		8,225		8,262
Add shares issuable upon vesting of dilutive restricted stock units (RSUs) a	—		110		—		107
Diluted weighted-average shares of common stock outstanding	8,227		8,383		8,225		8,369
Basic net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.59		—		11.66
	$	(0.64)	$	11.68	$	(1.35)	$	11.97
Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.44		—		11.51
	$	(0.64)	$	11.53	$	(1.35)	$	11.82

a.Excludes 222 thousand shares for second-quarter 2023 and 259 thousand shares for the first six months of 2023 of common stock associated with RSUs that were anti-dilutive as a result of net losses. Excludes 2 thousand shares for the first six months of 2022 of common stock associated with RSUs that were anti-dilutive.

3. LIMITED PARTNERSHIPS

Stratus has entered into strategic partnerships for certain development projects. Stratus, through its subsidiaries, is a partner in the following limited partnerships: The Saint George Apartments, L.P. (10.0 percent indirect equity interest), Stratus Block 150, L.P. (31.0 percent indirect equity interest), The Saint June, L.P. (34.13 percent indirect equity interest), Holden Hills, L.P. (50.0 percent indirect equity interest) and Stratus Kingwood Place, L.P. (60.0 percent indirect equity interest). For additional information regarding Stratus' partnerships, refer to Notes 2 and 4 in the Stratus 2022 Form 10-K.

Holden Hills, L.P. In first-quarter 2023, Holden Hills, L.P. (the Holden Hills partnership), a Texas limited partnership and subsidiary of Stratus, was formed for the development of Holden Hills, Stratus’ final large residential development within the Barton Creek community in Austin, Texas, consisting of 495 acres and designed to feature 475 unique residences (Holden Hills Project). The Holden Hills partnership is governed by a limited partnership agreement between a wholly owned subsidiary of Stratus as Class A limited partner and an unaffiliated equity investor as Class B limited partner, and another wholly owned subsidiary of Stratus which serves as general partner. The partners made the following initial capital contributions to the Holden Hills partnership: (i) Stratus contributed the Holden Hills land and related personal property at an agreed value of $70.0 million and (ii) The Class B limited partner contributed $40.0 million in cash. Immediately following the Class B limited partner's initial capital contribution, $30.0 million of cash was distributed by the Holden Hills partnership to Stratus. Further, the Holden Hills partnership reimbursed Stratus for certain initial project costs and closing costs of approximately $5.8 million.

8

As a result of these transactions, Stratus holds, indirectly through its wholly owned subsidiaries, a 50.0 percent equity interest in the Holden Hills partnership, and the Class B limited partner holds the remaining 50.0 percent equity interest in the Holden Hills partnership. Stratus’ potential returns on its equity investment in the Holden Hills partnership may increase above its relative equity interest as negotiated return hurdles are achieved. Refer to “Potential Returns” below for further discussion. Stratus consolidates the Holden Hills partnership; therefore, its contribution of the Holden Hills land and related personal property was recorded at historical cost and the contribution from the Class B limited partner was accounted for as a noncontrolling interest in subsidiary.

In addition to each partner’s initial capital contribution, upon the call of the general partner from time to time, Stratus is obligated to make capital contributions up to an additional $10.0 million, and the Class B limited partner is also obligated to make capital contributions up to an additional $10.0 million.

Stratus has the authority to manage the day-to-day operations of the Holden Hills partnership, subject to approval rights of the Class B limited partner for specified “major decisions,” including project and operating budgets, the business plan and amendments thereto; sales, leases or transfers of any portion of the Holden Hills Project to any partner, affiliate of any partner, or to any unaffiliated third party other than as contemplated in the business plan; incurring any debt, mortgage or guaranty; capital calls in excess of those previously agreed upon; admitting a new partner; and certain transfers of direct or indirect interests in the Holden Hills partnership. The business plan includes rights of first refusal in favor of the Class B limited partner for sale of luxury residence sites to be developed in distinct communities or “pods” to a third party. A “deadlock” may be declared by any partner if any limited partner does not approve any two major decisions proposed by the general partner within any 12-month period. Prior to the third anniversary of the effective date of the limited partnership agreement, a buy-sell provision can be triggered only if there is a deadlock. On or after the third anniversary, any partner can initiate a buy-sell at any time by written notice to the other partner, specifying the buyout price.

Stratus has entered into a development agreement with the Holden Hills partnership pursuant to which the Holden Hills partnership will construct certain street, drainage, water, sidewalk, electric and gas improvements in order to extend the Tecoma Circle roadway on Section N land owned by Stratus from its current terminus to Southwest Parkway, estimated to cost approximately $14.7 million (the Tecoma Improvements), and Stratus will reimburse the partnership for 60 percent of the costs. The Tecoma Improvements will enable access and provide utilities necessary for the development of both Holden Hills and Section N. As of June 30, 2023, Stratus had $10.6 million remaining to complete the Tecoma Improvements.

The Holden Hills partnership has agreed to pay Stratus a development management fee of 4.00 percent of certain construction costs for Phase I of the project, and an asset management fee of $150 thousand per year starting 15 months after construction starts on the project payable from available cash flow after debt service.

Also in first-quarter 2023, the Holden Hills partnership entered into a loan agreement with Comerica Bank to finance the development of Phase I of the project. Refer to Note 6 for discussion of the loan agreement.

Operating Loans to Partnerships. In April 2023, Stratus made an operating loan of $1.5 million to Stratus Block 150, L.P. to facilitate the partnership’s ability to pay ongoing costs of The Annie B project during the pre-construction period. The loan bears interest at the one-month Bloomberg Short-Term Bank Yield Index (BSBY) Rate plus 5.00 percent and must be repaid before distributions may be made to the partners.

In June 2023, Stratus made an operating loan of $750 thousand to The Saint June, L.P. to support the partnership’s ability to pay its construction loan interest, which has risen above the amount originally budgeted due to rising interest rates. The loan bears interest at the Term Secured Overnight Financing Rate (SOFR) plus 5.00 percent and must be repaid before distributions may be made to the partners.

9

Potential Returns. The following table presents the distribution percentages for the limited partnerships in which Stratus’ potential returns may increase above its relative equity interest if certain hurdles are achieved.

	Distribution Percentages
	The Saint George Apartments, L.P.				The Saint June, L.P.				Holden Hills, L.P.				Stratus Kingwood Place, L.P.
	Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partners
Until all partners have received a return of their capital contributions and a 9.0 percent cumulative return;	10.00	%	90.00	%	34.13	%	65.87	%	50.00	%	50.00	%	60.00	%	40.00	%
Until all partners have received an 11.0 percent cumulative return;	—		—		—		—		—		—		68.00		32.00
Until the Class B limited partner has received a 12.0 percent cumulative return;	20.00		80.00		44.13		55.87		55.00		45.00		—		—
Until the Class B limited partner has received an 18.0 percent cumulative return;	30.00		70.00		—		—		—		—		—		—
Thereafter	50.00		50.00		54.13		45.87		65.00		35.00		76.00		24.00

Accounting for Limited Partnerships. Stratus has performed evaluations and concluded that The Saint George Apartments, L.P., Stratus Block 150, L.P., The Saint June, L.P., Stratus Kingwood Place, L.P. and Holden Hills, L.P. are variable interest entities and that Stratus is the primary beneficiary. Accordingly, the partnerships’ results are consolidated in Stratus’ financial statements. Stratus will continue to re-evaluate which entity is the primary beneficiary of these partnerships in accordance with applicable accounting guidance.

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

Stratus’ consolidated balance sheets include the following assets and liabilities of the partnerships, net of intercompany balances (including the operating loans), which are eliminated (in thousands):

	June 30, 2023 a		December 31, 2022
Assets: b
Cash and cash equivalents	$	4,745	$	7,744
Real estate under development	156,499		107,968
Land available for development	4,116		3,927
Real estate held for investment	33,389		31,415
Other assets	4,383		4,503
Total assets	203,132		155,557
Liabilities: c
Accounts payable and accrued liabilities	13,131		12,247
Debt	71,368		55,305
Total liabilities	84,499		67,552
Net assets	$	118,633	$	88,005

a.Includes the assets and liabilities of the Holden Hills partnership, which was formed in January 2023.

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

c.All of the debt is guaranteed by Stratus until certain conditions are met as provided in the applicable loan agreements. The creditors for the remaining liabilities do not have recourse to the general credit of Stratus.

10

4. ASSET SALES

Block 21 - Discontinued Operations. Block 21 was Stratus’ wholly owned mixed-use real estate property in downtown Austin, Texas containing the 251-room W Austin Hotel and Austin City Limits Live at the Moody Theater, a 2,750-seat entertainment venue, Class A office space, retail space and the 3TEN ACL Live entertainment venue. On May 31, 2022, Stratus completed the previously announced sale of Block 21 to Ryman Hospitality Properties, Inc. (Ryman) for $260.0 million, subject to certain purchase price adjustments, and including Ryman’s assumption of $136.2 million of existing mortgage debt, with the remainder paid in cash. Stratus’ net proceeds of cash and restricted cash totaled $112.3 million (including $6.9 million escrowed at closing and disbursed in full to Stratus in June 2023). Stratus recorded a pre-tax gain on the sale of $119.7 million in second-quarter 2022.

In accordance with accounting guidance, Stratus reported the results of operations of Block 21 as discontinued operations in the consolidated statement of comprehensive income for second-quarter 2022 and the first six months of 2022 because the disposal represents a strategic shift that had a major effect on operations. Block 21 did not have any other comprehensive income and Stratus' consolidated statements of cash flows are reported on a combined basis without separately presenting discontinued operations.

Block 21’s results of operations in the consolidated statements of comprehensive (loss) income consist of the following (in thousands):

	Two Months Ended		Five Months Ended
	May 31, 2022
Revenues: a
Hotel	$	6,782	$	12,653
Entertainment	4,650		9,990
Leasing operations and other	206		932
Total revenue	11,638		23,575
Cost of sales:
Hotel	4,487		9,230
Entertainment	3,624		7,763
Leasing operations and other	331		802
Depreciation b	—		—
Total cost of sales	8,442		17,795
General and administrative expenses	136		236
Gain on sale of assets	(119,695)		(119,695)
Operating income	122,755		125,239
Interest expense, net	(1,291)		(3,236)
Provision for income taxes	(25,539)		(25,703)
Net income from discontinued operations	$	95,925	$	96,300

a.In accordance with accounting guidance, amounts are net of eliminations of intercompany sales totaling $189 thousand for the two months ended May 31, 2022 and $510 thousand for the five months ended May 31, 2022.

b.In accordance with accounting guidance, depreciation is not recognized subsequent to classification as assets held for sale, which occurred in the fourth quarter of 2021.

Capital expenditures associated with discontinued operations totaled $31 thousand in second-quarter 2022 and $213 thousand the first six months of 2022.

The Oaks at Lakeway. In 2017, Stratus sold The Oaks at Lakeway to FHF I Oaks at Lakeway, LLC for $114.0 million in cash. The Oaks at Lakeway is an H-E-B, L.P.-anchored retail project located in Lakeway, Texas. The parties entered into three master lease agreements at closing: (1) one covering unleased in-line retail space, with a 5-year term (the In-line Master Lease), (2) one covering the hotel pad with a 99-year term (the Hotel Master Lease) and (3) one covering four unleased pad sites, three of which have 10-year terms, and one of which has a 15-year term (the Pad Site Master Lease).

The In-Line Master Lease expired in February 2022 and the Hotel Master Lease was terminated in November 2020. As such, Stratus has no further obligations under these two master leases. With respect to the Pad Site Master

11

Lease, Stratus has leased the one pad site with a 15-year term, reducing the monthly rent payment net of rent collections for this pad site to approximately $2,500. Stratus may assign this lease to the purchaser and terminate the obligation under the Pad Site Master Lease for this pad site with a payment of $560 thousand to the purchaser. The lease for the remaining three unleased pad sites under the Pad Site Master Lease expires in February 2027. To the extent leases are executed for the remaining three unleased pad sites, tenants open for business, and the leases are then assigned to the purchaser, the master lease obligation could be reduced further.

In first-quarter 2022, Stratus reassessed its plans with respect to construction of the remaining buildings on the three remaining unleased pad sites and determined that, rather than execute leases and build the buildings, it is less costly to continue to pay the monthly rent (approximately $73 thousand per month) pursuant to the Pad Site Master Lease until the lease expires in February 2027. In connection with this determination, Stratus reversed an accrual of costs to lease and construct these buildings, resulting in recognition of an additional $4.8 million of pre-tax gain in first-quarter 2022. A contract liability is presented as a deferred gain in the consolidated balance sheets in the amount of $3.1 million at June 30, 2023 and $3.5 million at December 31, 2022. The reduction in the deferred gain balance primarily reflects Pad Site Master Lease payments. The remaining deferred gain balance is expected to be reduced primarily by future Pad Site Master Lease payments.

5. FAIR VALUE MEASUREMENTS

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

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

The fair value of Stratus’ debt also approximates fair value, as the interest rates are variable and approximate prevailing market interest rates available for similar mortgage debt. Stratus' debt is recorded at cost and is not actively traded. Fair value is estimated based on discounted future expected cash flows at estimated current market interest rates available for similar mortgage debt. Accordingly, Stratus' debt is classified within Level 2 of the fair value hierarchy. The fair value of debt does not represent the amounts that will ultimately be paid upon the maturities of the loans.

6. DEBT AND EQUITY

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

	June 30, 2023		December 31, 2022
Comerica Bank revolving credit facility	$	—	$	—
Jones Crossing loan	22,289		24,143
The Annie B land loan	13,950		13,969
New Caney land loan	—		4,047
Construction loans: a
Kingwood Place	28,044		27,507
The Saint June	24,617		13,829
Lantana Place	21,792		21,782
Amarra Villas revolving credit facility	10,951		5,366
Magnolia Place	8,006		6,816
West Killeen Market	5,276		5,306
The Saint George	2,507		—
Total debt b	$	137,432	$	122,765

a.The Holden Hills construction loan had no outstanding balance at June 30, 2023.

b.Includes net reductions for unamortized debt issuance costs of $2.0 million at June 30, 2023, and $1.1 million at December 31, 2022.

12

Comerica Bank revolving credit facility. As of June 30, 2023, Status had $42.7 million available under the Comerica Bank revolving credit facility net of letters of credit totaling $11.0 million issued to secure Stratus’ obligation to build certain roads and utilities facilities benefiting Holden Hills and Section N. In March 2023, Stratus entered into a modification of the revolving credit facility, which extended the maturity date of the revolving credit facility to March 27, 2025, and increased the floor of the one-month BSBY Rate. As amended, advances under the revolving credit facility bear interest at the one-month BSBY Rate (with a floor of 0.50 percent) plus 4.00 percent. In May 2023, Stratus entered into a modification of the revolving credit facility to increase the maximum amount of letters of credit that may be issued under the revolving credit facility from $11.5 million to $13.3 million. In July 2023, Stratus entered into a $2.3 million letter of credit to secure its obligations, which are subject to certain conditions, to construct and pay for certain utility infrastructure in Lakeway, Texas, estimated to cost approximately $2.3 million. The amount available under the revolving credit facility, net of letters of credit issued, was $40.4 million as of August 9, 2023.

Jones Crossing loan. The Jones Crossing loan requires the Jones Crossing project to meet a debt service coverage ratio (DSCR) test of 1.15 to 1.00 measured quarterly and, starting June 30, 2023, on a rolling 12 month basis. If the DSCR falls below 1.15 to 1.00, it is not an event of default, but a “Cash Sweep Period” (as defined in the Jones Crossing loan) results, which limits Stratus’ ability to receive cash from its Jones Crossing subsidiary, unless a principal payment is made on the loan to restore the DSCR to the required threshold. The DSCR fell below 1.15 to 1.00 in each of fourth-quarter 2022 and first-quarter 2023, and the Jones Crossing subsidiary made principal payments of $231 thousand and $1.7 million in February 2023 and May 2023, respectively, to bring the DSCR back above 1.15 to 1.00 and a Cash Sweep Period did not occur. The DSCR fell below 1.15 to 1.00 in second-quarter 2023 and the Jones Crossing subsidiary must make an additional principal payment of approximately $1.2 million in August 2023 or allow a Cash Sweep Period to commence.

The Annie B land loan. In February 2023, Stratus Block 150, L.P. entered into a modification agreement that extended the maturity date of The Annie B land loan to March 1, 2024, and changed the interest rate to the one-month BSBY Rate (with a floor of 0.50 percent) plus 3.00 percent. In connection with the modification agreement, Stratus Block 150, LP, escrowed an interest reserve of $0.6 million with the lender.

New Caney land loan. In March 2023, the New Caney land loan was repaid.

The Saint June construction loan. In January 2023, The Saint June construction loan was amended to change the interest rate for the loan to SOFR with a floor of 0.75 percent plus 2.85 percent, subject to an overall 3.50 percent floor.

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

Magnolia Place construction loan. In May 2023, the Magnolia Place construction loan was amended to change the interest rate for the loan to Term SOFR with a floor of 0.00 percent plus 3.36 percent, subject to an overall 3.50 percent floor.

Holden Hills construction loan. In February 2023, the Holden Hills partnership entered into a loan agreement with Comerica Bank to finance the development of Phase I of the Holden Hills Project.

The loan agreement provides for a senior secured construction loan in the aggregate principal amount of the least of (i) $26.1 million, (ii) 23 percent of the total development costs for Phase I or (iii) the amount that would result in a maximum loan-to-value ratio of 28 percent. The loan has a maturity date of February 8, 2026. Advances under the loan bear interest at the one-month BSBY Rate (with a floor of 0.50 percent), plus 3.00 percent. Payments of interest only on the loan are due monthly until the maturity date with the outstanding principal due at maturity. The Holden Hills partnership may prepay all or any portion of the loan without premium or penalty. Amounts repaid under the loan may not be reborrowed.

The loan is secured by the Holden Hills Project, including the land related to both Phase I and Phase II, and the Phase I improvements. After completion of construction of Phase I, the Holden Hills partnership may sell and obtain releases of the liens on single-family platted home sites, individual pods or the Phase II land, subject to specified conditions, and upon payment to the lender of specified amounts related to the parcel to be released. The Holden Hills partnership is not permitted to make distributions to its partners, including Stratus, while the loan is

13

outstanding. The Holden Hills partnership must apply all Municipal Utility District (MUD) reimbursements it receives and is entitled to retain as payments of principal on the loan.

Stratus has entered into a guaranty for the benefit of the lender pursuant to which Stratus has guaranteed the payment of the loan and the completion of Phase I, including the Tecoma Improvements (which benefit both the Holden Hills Project and Section N). Stratus is also liable for customary carve-out obligations and an environmental indemnity. Stratus must maintain, on a consolidated basis, a net asset value not less than $125.0 million, and a debt-to-gross-asset value not more than 50 percent (in each case as defined in the guaranty).

For additional information regarding Stratus' debt, refer to Note 6 in the Stratus 2022 Form 10-K.

Interest Expense and Capitalization. Interest costs (before capitalized interest) totaled $2.9 million in second-quarter 2023, $1.5 million in second-quarter 2022, $5.3 million for the first six months of 2023 and $2.6 million for the first six months of 2022. Substantially all of these interest costs were capitalized for the periods presented. Capitalized interest is primarily related to development activities at Barton Creek (primarily Holden Hills, Section N and The Saint June), The Saint George and The Annie B for the periods presented.

Equity. The Comerica Bank revolving credit facility, Amarra Villas revolving credit facility, The Annie B land loan, The Saint George construction loan, Kingwood Place construction loan and Holden Hills construction loan require Comerica Bank’s prior written consent for any common stock repurchases in excess of $1.0 million or any dividend payments. On September 1, 2022, after receiving written consent from Comerica Bank, Stratus’ Board of Directors (Board) declared a special cash dividend of $4.67 per share (totaling $40.0 million) on Stratus’ common stock, which was paid on September 29, 2022 to shareholders of record as of September 19, 2022. Accrued liabilities included $0.7 million as of June 30, 2023, and $1.3 million as of December 31, 2022, representing dividends accrued for unvested RSUs in accordance with the terms of the awards. The accrued dividends are paid to the holders of the RSUs as the RSUs vest.

In 2022, with written consent from Comerica Bank, Stratus’ Board also approved a share repurchase program, which authorizes repurchases of up to $10.0 million of Stratus’ common stock. The repurchase program authorizes Stratus, in management’s discretion, to repurchase shares from time to time, subject to market conditions and other factors. During the first six months of 2023, Stratus acquired 74,306 shares of its common stock under the share repurchase program for a total cost of $1.6 million at an average price of $21.36 per share. Through August 9, 2023, Stratus has acquired 381,889 shares of its common stock for a total cost of $9.8 million at an average price of $25.65 per share, and $0.2 million remains available for repurchases under the program.

7. PROFIT PARTICIPATION INCENTIVE PLAN AND LONG-TERM INCENTIVE PLAN

In July 2018, the Compensation Committee adopted the PPIP. In February 2023, the Committee approved the LTIP, which amends and restates the PPIP, and is effective for participation interests awarded under development projects on or after its effective date. As of June 30, 2023, there were not yet any participation interests awarded under the LTIP. Outstanding participation interests granted under the PPIP will continue to be governed by the terms of the prior PPIP. The PPIP and LTIP provide participants with economic incentives tied to the success of the development projects designated by the Committee as approved projects under the PPIP and LTIP. Estimates related to the awards may change over time as a result of differences between projected and actual development progress and costs, market conditions and the timing of capital transactions or valuation events. Refer to Notes 1 and 8 of the Stratus 2022 Form 10-K for further discussion.

The sale of The Saint Mary in January 2021 was a capital transaction under the PPIP. During February 2022, $2.1 million was paid in cash to eligible participants.

In September 2021, Lantana Place reached a valuation event under the PPIP. The profit pool was $3.9 million, of which $0.2 million was paid in cash during February 2022 and the remaining $3.7 million was settled in RSUs with a three-year vesting period awarded to eligible participants during second-quarter 2022 following stockholder approval of Stratus’ new stock incentive plan.

The sale of The Santal in December 2021 was a capital transaction under the PPIP. The profit pool was $6.7 million, of which $5.0 million was paid in cash to eligible participants during February 2022. The PPIP contains limits on cash compensation paid to certain officers and amounts due above the limits are converted to an equivalent number of RSUs with a one-year vesting period. Of the remaining amount, $1.6 million was settled in RSUs awarded to one participant during second-quarter 2022 following stockholder approval of Stratus’ new stock incentive plan.

14

During first-quarter 2022, the Compensation Committee designated The Saint June as an approved project under the PPIP, and the awards were granted in August 2022.

Under the terms of the PPIP and LTIP, the number of RSUs granted in connection with settlement of approved projects is determined by reference to the 12-month trailing average stock price for the year the project reaches a payment event, whereas the grant date fair value of the RSUs for accounting purposes is based on the grant date closing price. For the RSUs awarded in connection with Lantana Place and The Santal, the aggregate grant date value was $2.1 million greater than the accrued liability for the two projects as a result of this different valuation methodology. During second-quarter 2022, Stratus transferred the $5.3 million accrued liability balance under the PPIP for Lantana Place and The Santal that was settled in RSUs to capital in excess of par value and is amortizing the $2.1 million excess of the grant-date value over the accrued liability with a charge to general and administrative expenses and a credit to capital in excess of par value over the three-year or one-year vesting periods of the related RSUs.

A summary of PPIP costs follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Charged to general and administrative expense	$	141	$	119	$	289	$	134
Capitalized (credited) to project development costs	(9)		51		101		102
Total PPIP costs	$	132	$	170	$	390	$	236

The accrued liability for the PPIP totaled $3.3 million at June 30, 2023, and $3.0 million at December 31, 2022 (included in other liabilities).

8. INCOME TAXES

Stratus’ accounting policy for and other information regarding its income taxes are further described in Notes 1 and 7 in the Stratus 2022 Form 10-K.

Stratus has a full valuation allowance against its U.S. Federal net deferred tax assets as of both June 30, 2023 and December 31, 2022. Stratus has recorded a deferred tax asset totaling $38 thousand at both June 30, 2023 and December 31, 2022 related to state income taxes.

In evaluating the recoverability of the remaining deferred tax assets, management considered available positive and negative evidence, giving greater weight to the uncertainty regarding projected future financial results. Upon a change in facts and circumstances, management may conclude that sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance in the future, which would favorably impact Stratus' results of operations. Stratus’ future results of operations may be negatively impacted by an inability to realize a tax benefit for future tax losses or for items that will generate additional deferred tax assets that are not more likely than not to be realized.

During 2023, Stratus expects to incur current state income taxes in addition to U.S. Federal current income taxes primarily associated with taxable income generated from cash received in the Holden Hills transaction discussed in Note 3.

The difference between Stratus' consolidated effective income tax rate of (17) percent for the first six months of 2023 and the U.S. Federal statutory income tax rate of 21 percent was primarily attributable to state income taxes, noncontrolling interests in subsidiaries, the presence of a valuation allowance against its U.S. Federal net deferred tax assets as of June 30, 2023, and the executive compensation limitation. The difference between Stratus' consolidated effective income tax rate of (13) percent for the first six months of 2022 and the U.S. Federal statutory income tax rate of 21 percent was primarily attributable to the release of a reserve on uncertain tax positions related to the 2015 through 2017 U.S. Federal tax audit, which was closed in first-quarter 2022.

On August 16, 2022, the Inflation Reduction Act of 2022 (the IR Act) was enacted in the United States. Among other provisions, the IR Act imposes a new 1 percent excise tax on the fair market value of net corporate stock

15

repurchases made by covered corporations, effective for tax years beginning after December 31, 2022. Stratus is assessing the potential impacts of the IR Act but does not expect the IR Act to have a material impact on its consolidated financial statements.

9. BUSINESS SEGMENTS

As a result of the sale of Block 21, Stratus has two operating segments: Real Estate Operations and Leasing Operations. Block 21, which encompassed Stratus’ Hotel and Entertainment segments, along with some leasing operations, is presented as discontinued operations.

The Real Estate Operations segment is comprised of Stratus’ real estate assets (developed for sale, under development and available for development), which consists of its properties in Austin, Texas (including the Barton Creek Community, which includes Section N, Holden Hills, Amarra multi-family and commercial land, Amarra Villas, The Saint June, Amarra Drive lots and other vacant land; the Circle C community; the Lantana community, which includes a portion of Lantana Place planned for a multi-family phase now known as The Saint Julia; The Saint George; and the land for The Annie B); in Lakeway, Texas, located in the greater Austin area (Lakeway); in College Station, Texas (land for future phases of retail and multi-family development and retail pad sites at Jones Crossing); and in Magnolia, Texas (land for a future phase of retail development and for future multi-family use and retail pad sites at Magnolia Place), Kingwood, Texas (a retail pad site) and New Caney, Texas (New Caney), each located in the greater Houston area.

The Leasing Operations segment is comprised of Stratus’ real estate assets held for investment that are leased or available for lease and includes retail space at West Killeen Market, Lantana Place, Kingwood Place and the completed portions of Jones Crossing and Magnolia Place and retail pad sites subject to ground leases at Lantana Place, Kingwood Place and Jones Crossing.

Stratus uses operating income or loss to measure the performance of each segment. 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. The following segment information reflects management determinations that may not be indicative of what the actual financial performance of each segment would be if it were an independent entity.

Revenues from Contracts with Customers. Stratus' revenues from contracts with customers follow (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Real Estate Operations:
Developed property sales	$	—	$	2,382	$	2,493	$	2,382
Undeveloped property sales	—		5,444		—		5,444
Commissions and other	58		99		58		118
	58		7,925		2,551		7,944
Leasing Operations:
Rental revenue	3,472		3,200		6,781		6,280
	3,472		3,200		6,781		6,280
Total revenues from contracts with customers	$	3,530	$	11,125	$	9,332	$	14,224

16

Financial Information by Business Segment. Summarized financial information by segment for the three months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	58	$	3,472	$	—	$	3,530
Cost of sales, excluding depreciation	(2,697)		(1,144)		—		(3,841)
Depreciation and amortization	(50)		(924)		4		(970)
General and administrative expenses	—		—		(4,071)		(4,071)
Operating (loss) income	$	(2,689)	$	1,404	$	(4,067)	$	(5,352)
Capital expenditures and purchases and development of real estate properties	$	12,057	$	13,471	$	—	$	25,528
Total assets at June 30, 2023 c	328,033		111,252		46,470		485,755

a.Includes sales commissions and other revenues together with related expenses.

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

c.Corporate, eliminations and other includes cash and cash equivalents and restricted cash of $43.2 million. The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the three months ended June 30, 2022, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	7,925	$	3,200	$	—	$	11,125
Intersegment	2		—		(2)		—
Cost of sales, excluding depreciation	(5,432)		(870)		—		(6,302)
Depreciation and amortization	(24)		(865)		5		(884)
General and administrative expenses	—		—		(3,444)		(3,444)
Operating income (loss)	$	2,471	$	1,465	$	(3,441)	$	495
Capital expenditures and purchases and development of real estate properties	$	7,227	$	12,820	$	31	$	20,078
Total assets at June 30, 2022 c	265,929		106,020		112,711		484,660

a.Includes sales commissions and other revenues together with related expenses.

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

c.Corporate, eliminations and other includes $102.3 million of cash and cash equivalents and restricted cash, primarily received from the May 2022 sale of Block 21. The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

17

Summarized financial information by segment for the six months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	2,551	$	6,781	$	—	$	9,332
Cost of sales, excluding depreciation	(7,184)		(2,405)		—		(9,589)
Depreciation and amortization	(77)		(1,830)		9		(1,898)
General and administrative expenses	—		—		(8,790)		(8,790)
Operating (loss) income	$	(4,710)	$	2,546	$	(8,781)	$	(10,945)
Capital expenditures and purchases and development of real estate properties	$	21,084	$	23,477	$	—	$	44,561

a.Includes sales commissions and other revenues together with related expenses.

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

Summarized financial information by segment for the six months ended June 30, 2022, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	7,944	$	6,280	$	—	$	14,224
Intersegment	6		—		(6)		—
Cost of sales, excluding depreciation	(6,798)		(1,854)		—		(8,652)
Depreciation and amortization	(49)		(1,717)		9		(1,757)
General and administrative expenses	—		—		(6,611)		(6,611)
Gain on sale of assets c	—		4,812		—		4,812
Operating income (loss)	$	1,103	$	7,521	$	(6,608)	$	2,016
Capital expenditures and purchases and development of real estate properties	$	12,091	$	27,362	$	213	$	39,666

a.Includes sales commissions and other revenues together with related expenses.

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

c.Represents a pre-tax gain recognized on the reversal of accruals for costs to lease and construct buildings under a master lease arrangement that Stratus entered into in connection with its sale of The Oaks at Lakeway in 2017. Refer to Note 4 under the heading “The Oaks at Lakeway” for further discussion.

10. SUBSEQUENT EVENTS

Stratus evaluated events after June 30, 2023, and through the date the financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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, 2022 (2022 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 2022 Form 10-K 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.

OVERVIEW

We are a diversified real estate company with headquarters in Austin, Texas. We are engaged primarily in the acquisition, entitlement, development, management, leasing and sale of multi-family and single-family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. In addition to our developed properties, we have a development portfolio that consists of approximately 1,600 acres of commercial and multi-family and single-family residential projects under development or undeveloped land held for future use. Refer to Note 9 for discussion of our operating segments and “Business Strategy” below for a discussion of our business strategy.

BUSINESS STRATEGY

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. Our successful development program of acquiring properties, 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. 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. From time to time, when deemed appropriate by our Board of Directors (Board) and permitted pursuant to the terms of our debt agreements, we may return cash to shareholders, as we did in 2022 and 2017 with special cash dividends totaling approximately $40 million and $8 million respectively, and as we have been doing during 2022 and 2023 through our $10 million share repurchase program. Refer to “Business Strategy” in MD&A in our 2022 Form 10-K for a discussion of the evolution of our strategy during 2022.

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 Holden Hills, L.P. (the Holden Hills partnership) and our share (related to Section N) of the cost of the Tecoma Improvements discussed below under “Recent Development Activities – Current Residential Activities – Barton Creek – Holden Hills.” However, in second-quarter 2023, we made operating loans totaling $2.3 million to Stratus Block 150, L.P. and The Saint June, L.P. Refer to Note 3 and “Capital Resources and Liquidity – Revolving Credit Facility and Other Financing Arrangements” for further discussion. In addition, our development plans for future projects require significant additional capital. Our investment strategy focuses on projects that we believe will provide attractive long-term returns, while limiting our financial risk. We plan to continue to develop properties using project-level debt and third-party equity capital through joint ventures in which we receive development management fees and asset management fees, with our potential returns increasing above our relative equity interest in each project as negotiated return hurdles are achieved. Refer to Note 3.

We expect to reduce our reliance on our revolving credit facility and retain sufficient cash to operate our business, taking into account risks associated with changing market conditions and the variability in cash flows from our business. Our main sources of revenue and cash flow are expected to be sales of our properties to third parties or distributions from joint ventures, the timing of and proceeds from which are difficult to predict and depend on market conditions and other factors. 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-

19

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, as evidenced by our recent sales of The Saint Mary, The Santal and Block 21 in 2021 and 2022 and the cash distribution from the Holden Hills partnership in 2023. Further, we believe our investment strategy, current liquidity and pipeline of projects provide us with many years of opportunities to increase long-term value for our stockholders.

Largely as a result of our recent property sales and the cash distribution from the Holden Hills partnership, as of June 30, 2023 we had cash and cash equivalents of $44.1 million and availability under our revolving credit facility of $42.7 million. Given challenging market conditions discussed in more detail below, we are currently focused on successfully completing our projects under construction, managing our capital expenditures, advancing other projects through the planning, designing and entitlement process, maximizing cash flow from stabilized assets, controlling costs as much as possible in this inflationary environment, and working to manage and expand our credit and joint venture partner relationships. We will re-evaluate our strategy as development progresses on the projects in our pipeline and as market conditions continue to evolve.

OVERVIEW OF FINANCIAL RESULTS

Sources of Revenue and Income

Our Real Estate Operations encompass our activities associated with our acquisition, 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. We may sell or lease the real estate we develop, depending on market conditions. Multi-family and retail rental properties that we develop are reclassified to our Leasing Operations segment when construction is completed and they are ready for occupancy. Revenue in our Real Estate Operations may be generated from the sale of properties that are developed, undeveloped or under development, depending on market conditions. Developed property sales can include an individual tract of land that has been developed and permitted for residential use or a developed lot with a residence built on it.

Revenue in our Leasing Operations is generated from the lease of space at retail and mixed-use properties and residences in the multi-family properties that we developed. We may also generate income from the sale of our leased properties, depending on market conditions.

Summary Financial Results for the Second-Quarter and First Six Months of 2023

Our revenues totaled $3.5 million in second-quarter 2023 and $9.3 million for the first six months of 2023, compared with $11.1 million in second-quarter 2022 and $14.2 million for the first six months of 2022. The decrease in revenues in second-quarter 2023 and the first six months of 2023, compared to second-quarter 2022 and the first six months of 2022, is primarily a result of the sales of undeveloped real estate properties in our Real Estate Operations segment in second-quarter 2022 partially offset by an increase in revenue in our Leasing Operations segment primarily reflecting revenue from Magnolia Place, which had no rental revenue in the 2022 periods. We had no property sales in second-quarter 2023. Refer to "Results of Operations" below for further discussion of our segments.

Our net loss totaled $5.3 million, or $0.64 per diluted share in second-quarter 2023, compared to net income of $96.6 million, or $11.53 per diluted share, in second-quarter 2022. During the first six months of 2023 our net loss attributable to common stockholders totaled $11.1 million, or $1.35 per diluted share, compared to net income attributable to common stockholders of $98.9 million, or $11.82 per diluted share, during the first six months of 2022. Our results for second-quarter 2022 and the first six months of 2022 include a $119.7 million pre-tax gain on the sale of Block 21. Refer to Note 4 under the heading “Block 21 - Discontinued Operations” for additional discussion. The results during the first six months of 2022 also include a $4.8 million pre-tax gain recognized on the reversal of accruals for costs to lease and construct buildings under a master lease arrangement that we entered into in connection with our sale of The Oaks at Lakeway in 2017. Refer to Note 4 under the heading “The Oaks at Lakeway” for additional discussion.

20

Holden Hills Partnership and Cash Distribution in First-Quarter 2023

In first-quarter 2023, we obtained third-party equity and debt financing for and commenced construction on Holden Hills, our final large residential development within the Barton Creek community in Austin, Texas. We contributed to the partnership the Holden Hills land and related personal property at an agreed value of $70.0 million and our 50.0 percent partner contributed $40.0 million in cash. The partnership distributed and paid $35.8 million in cash to us in connection with these transactions. Refer to Note 11 in our 2022 Form 10-K, and “Recent Development Activities – Current Residential Activities – Barton Creek – Holden Hills” and Note 3 in this report for further discussion.

Sale of Block 21 in May 2022

On May 31, 2022, we completed the previously announced sale of Block 21 to Ryman for $260.0 million, subject to certain purchase price adjustments, and including Ryman’s assumption of $136.2 million of existing mortgage debt, with the remainder paid in cash. Our net proceeds of cash and restricted cash totaled $112.3 million (including $6.9 million escrowed at closing and disbursed in full to Stratus in June 2023). We recorded a pre-tax gain on the sale of $119.7 million in second-quarter 2022. Block 21 was our wholly owned mixed-use real estate property in downtown Austin, Texas, containing the 251-room W Austin Hotel, Austin City Limits Live at the Moody Theater, a 2,750-seat entertainment venue, Class A office space, retail space and the 3TEN ACL Live entertainment venue. The sale of Block 21 eliminated our Hotel and Entertainment segments. As a result, our hotel and entertainment operations, as well as the leasing operations associated with Block 21, are reported as discontinued operations for the 2022 periods presented in the consolidated financial statements included in this Form 10-Q. Refer to Note 4 for further discussion.

RECENT DEVELOPMENT ACTIVITIES

Current Residential Activities

The discussion below focuses on our recent significant residential activity. For a description of our properties containing additional information, refer to Items 1. and 2. “Business and Properties” in our 2022 Form 10-K.

Barton Creek

Amarra Drive Phase III. In second-quarter 2022, we sold a six-acre undeveloped multi-family tract of land for $2.5 million. As of June 30, 2023, two developed Amarra Drive Phase III lots remained unsold.

Amarra Villas. The Villas at Amarra Drive (Amarra Villas) project is a 20-unit development in Barton Creek. In first-quarter 2023, we completed and sold one home for $2.5 million. Construction on the last ten units continues to progress, and as of August 9, 2023, one home was under contract to sell and nine homes remain available for sale.

The Saint June. In third-quarter 2021, we began construction on The Saint June, a 182-unit luxury garden-style multi-family project within the Amarra development. The Saint June is comprised of multiple buildings featuring one, two and three bedroom units for lease with amenities that include a resort-style clubhouse, fitness center, pool and extensive green space. The first units were ready for occupancy in July 2023, and the project is expected to be completed in September 2023.

Holden Hills. Our final large residential development within the Barton Creek community, Holden Hills, consists of 495 acres and the community is designed to feature 475 unique residences to be developed in two phases with a focus on health and wellness, sustainability and energy conservation. Phases I and II of the Holden Hills development plan encompass the development of the home sites. Phase I is expected to consist of 337 luxury residence sites to be developed in nine distinct communities or “pods,” and 12 single-family platted home sites or “estate lots” and includes related amenities and infrastructure. Phase I also includes the Tecoma Improvements, described below. Phase II is expected to consist of 63 luxury residence sites to be developed in five pods and 63 single-family platted estate lots, and includes related amenities and infrastructure. The luxury residences are expected to range in size from 2,000 square feet to 4,600 square feet. The estate lots are expected to range in size from 0.9 acres to 2.7 acres.

We entered into a limited partnership agreement with a third-party equity investor for this project in January 2023, and in February 2023 obtained construction financing for Phase I of the project and commenced infrastructure construction. We contributed to the partnership the Holden Hills land and related personal property at an agreed value of $70.0 million, and our 50.0 percent partner contributed $40.0 million in cash. Immediately thereafter, the

21

Holden Hills partnership distributed $30.0 million of cash to us. Further, the Holden Hills partnership reimbursed us for certain initial project costs and closing costs of approximately $5.8 million. We consolidate the Holden Hills partnership, and the contribution from our partner was accounted for as a noncontrolling interest in subsidiary. Refer to Notes 3 and 6 for further discussion.

We and the equity investor have agreed to contribute up to an additional $10 million each to the partnership if called upon by the general partner. The initial and potential additional equity contributions are projected to constitute a sufficient amount of equity capital to develop both Phase I and Phase II of the Holden Hills project. The partnership anticipates securing additional debt financing for the development of Phase II. The construction of homes on the pods or estate lots would require additional capital. We expect to complete site work for Phase I, including the construction of road, utility, drainage and other required infrastructure, in late 2024. Accordingly, our current projections anticipate that we could start building homes and/or selling home sites in late 2024 or 2025. We may sell the developed pods and estate lots or may elect to build and sell, or build and lease, homes on some or all of the pods and estate lots, depending on financing and market conditions. Pods and estate lots may also be acquired from the Holden Hills partnership by a limited partner for further development under procedures approved by the partners.

We entered into a development agreement with the Holden Hills partnership (Development Agreement) that provides that, as part of Phase I, the Holden Hills partnership will construct certain street, drainage, water, sidewalk, electric and gas improvements in order to extend the Tecoma Circle roadway on Section N land owned by us from its current terminus to Southwest Parkway, estimated to cost approximately $14.7 million (the Tecoma Improvements). The Tecoma Improvements will enable access and provide utilities necessary for the development of both Holden Hills and Section N. Pursuant to the Development Agreement, we will reimburse the Holden Hills partnership for 60 percent of the costs of the Tecoma Improvements. We have posted standby letters of credit with the City of Austin under our revolving credit facility with Comerica Bank totaling approximately $11 million as fiscal security for completion of certain infrastructure improvements benefiting the Holden Hills project and have agreed to leave such fiscal security in place until the improvements are completed. As of June 30, 2023, we had $10.6 million remaining to complete the Tecoma Improvements.

The Holden Hills partnership is expected to be eligible to be reimbursed in the future by Travis County Municipal Utility Districts (MUD) for a portion of costs of the Tecoma Improvements and also for a portion of costs related only to the Holden Hills project, with such MUD reimbursements currently estimated to be up to a maximum of $6.4 million for the Tecoma Improvements and $8.0 million for only the Holden Hills project. The Holden Hills partnership has agreed to deliver to us 60 percent of any MUD reimbursements for Tecoma Improvement costs paid directly by us, when such reimbursements are received by the partnership. The amount and timing of MUD reimbursements depends upon, among other factors, the amount and timing of actual costs incurred, the MUD having a sufficient tax base within its district to issue bonds and obtaining the necessary state approval for the sale of the bonds. Accordingly, the amount and timing of the receipt of MUD reimbursements is uncertain.

Section N. Using an entitlement strategy similar to that used for Holden Hills, we continue to progress the development plans for Section N, our approximately 570-acre tract located along Southwest Parkway in the southern portion of the Barton Creek community adjacent to Holden Hills. We are designing a dense, mid-rise, mixed-use project, with extensive multi-family and retail components, coupled with limited office, entertainment and hospitality uses, surrounded by extensive outdoor recreational and greenspace amenities, which is expected to result in a significant increase in development density as compared to our prior plans.

The Saint George

In fourth-quarter 2021, we purchased the land for The Saint George, a 316-unit luxury wrap-style, multi-family project in north-central Austin. We entered into a construction loan for this project and began construction in third-quarter 2022. We currently expect to achieve substantial completion by mid-2024.

The Annie B

In third-quarter 2021, we purchased the land and announced plans for The Annie B, a proposed luxury high-rise rental project in downtown Austin to be developed as a 400-foot tower, consisting of approximately 420,000 square feet with 316 luxury multi-family units. We continue to work to finalize our development plans with a goal of beginning construction in late 2024 or 2025, subject to obtaining financing and other market conditions.

22

The Saint Julia

We have advanced development plans for The Saint Julia, an approximately 300-unit multi-family project that is part of Lantana Place, a partially developed, mixed-use development project located south of Barton Creek in Austin. We currently do not expect to begin construction prior to 2024, and The Saint Julia project remains subject to financing and market conditions.

Lakeway Multi-Family

After extensive negotiation with the City of Lakeway, utility suppliers and neighboring property owners, we secured the right to develop a multi-family project on our remaining land in Lakeway, Texas. 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 the $2.3 million letter of credit under our revolving credit facility. Refer to Note 6 and “Capital Resources and Liquidity – Revolving Credit Facility and Other Financing Arrangements” below for additional discussion.

Other Residential

In October 2022, we entered into a contract to sell approximately 11 acres planned for 275 multi-family units in Magnolia Place for $4.3 million, which is currently expected to close by mid-2024. Upon the anticipated closing of the sale, we would have 18 acres planned for up to 600 multi-family units remaining in Magnolia Place.

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.

Current Commercial Activities

The discussion below focuses on our recent significant commercial activity. For a description of our properties containing additional information, refer to Items 1. and 2. “Business and Properties” in our 2022 Form 10-K.

Magnolia Place

The retail component of Magnolia Place, our H-E-B shadow-anchored retail project in Magnolia, Texas, is currently planned to consist of up to four retail buildings totaling approximately 34,000 square feet and up to nine retail pad sites to be sold or ground leased. The first phase of development consists of two retail buildings totaling 18,582 square feet, all pad sites, and the road, utility and drainage infrastructure necessary to support the entire development. Except for a storm water drainage pond and certain City of Magnolia water supply upgrades, which are expected to be completed by the end of 2023, the first phase of development was completed in third-quarter 2022, and the two retail buildings were turned over to our retail tenants to begin their finish-out process. As of June 30, 2023, we had signed leases for all the retail space in the first phase of development, and tenants representing 89 percent of the space were open for business. We sold two retail pad sites in 2022 for a total of $3.4 million, leaving up to seven additional pad sites available for lease or sale.

Jones Crossing

Jones Crossing, our H-E-B shadow-anchored mixed-use project in College Station, Texas, the location of Texas A&M University, has additional commercial development potential of approximately 104,750 square feet of commercial space.

Other Commercial

We also own and operate the following stabilized retail projects that we developed:

•West Killeen Market is our H-E-B shadow-anchored retail project in West Killeen, Texas, near Fort Hood. As of June 30, 2023, we had signed leases for approximately 74 percent of the 44,493-square-foot retail space.

•At Jones Crossing, as of June 30, 2023, we had signed leases for substantially all of the completed retail space, including the H-E-B grocery store, totaling 154,117 square feet, and a ground lease on one retail pad site. Four retail pad sites remain available for lease.

•Lantana Place is our mixed-use development project within the Lantana community south of Barton Creek in Austin, Texas. As of June 30, 2023, we had signed leases for approximately 92 percent of the 99,379-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.

23

•Kingwood Place is our H-E-B-anchored, mixed-use development project in Kingwood, Texas (in the greater Houston area). We have constructed 151,855 square feet of retail space at Kingwood Place, including an H-E-B grocery store, and as of June 30, 2023, we had signed leases for approximately 96 percent 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.

Potential Development Projects and Pipeline

Our development plans for The Annie B, Section N and The Saint Julia will require significant additional capital, which we currently intend to pursue through project-level debt and third-party equity capital arrangements through joint ventures in which we receive development management fees and asset management fees and with our potential returns increasing above our relative equity interest in each project as negotiated return hurdles are achieved. We anticipate seeking additional debt to finance the development of Phase II of Holden Hills. We are also pursuing other development projects. These potential development projects and projects in our pipeline 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.

Market Conditions

Inflation reached a near 40-year high in late 2021, driven in large part by economic recovery from the ongoing COVID-19 pandemic, and continued rising through June 2022. Since then, the rate of inflation has generally decelerated; however, it has remained at historically high levels. In response, the Federal Reserve has raised the federal funds target interest rate by an aggregate of 525 basis points during 2022 and through July 2023, to a target range between 5.25 percent and 5.50 percent, the highest level in over 20 years, and it may increase rates again during the remainder of 2023. Because all of our debt is variable rate, these increases in market interest rates have substantially increased our borrowing costs. Refer to “Capital Resources and Liquidity – Debt Maturities and Other Contractual Obligations” below for further discussion.

In addition, we, along with our industry, have been experiencing tightening bank credit, higher costs and more limited availability of equity capital, and a weak market for real estate sales. Higher construction and labor costs, supply chain disruptions and constraints and labor shortages have persisted. These factors are having an adverse impact on the cash flows of our existing projects and the projected profitability of our new projects, and on our asset values. These factors have also caused delays in projects under construction and a pause in sales processes and the start of new development projects.

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. Refer to Part I, Item 1A. “Risk Factors” of our 2022 Form 10-K for more information regarding our risk factors.

Although current market conditions are challenging, we believe our liquidity position, experienced team and development opportunities in Austin and other Texas markets will enable us to capture value for our stockholders when market conditions improve.

RESULTS OF OPERATIONS

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 sales, joint ventures or other arrangements. As a result, and because of numerous factors affecting our business activities as described herein and in our 2022 Form 10-K, our past operating results are not necessarily indicative of our future results. We use operating income or loss to measure the performance of our operating segments. Corporate, eliminations and other include consolidated general and administrative expenses, which primarily consist of employee compensation and other costs described herein.

24

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Operating (loss) income:
Real Estate Operations a	$	(2,689)	$	2,471	$	(4,710)	$	1,103
Leasing Operations b	1,404		1,465		2,546		7,521
Corporate, eliminations and other c	(4,067)		(3,441)		(8,781)		(6,608)
Operating (loss) income	(5,352)		495		(10,945)		2,016
Interest expense, net	—		—		—		(15)
Net (loss) income from continuing operations	(5,309)		532		(11,582)		2,344
Net income from discontinued operations d	—		95,925		—		96,300
Total comprehensive loss attributable to noncontrolling interests	8		164		480		249
Net (loss) income attributable to common stockholders	$	(5,301)	$	96,621	$	(11,102)	$	98,893

a.Includes sales commissions and other revenues together with related expenses.

b.The first six months of 2022 includes a $4.8 million pre-tax gain recognized on the reversal of accruals for costs to lease and construct buildings under a master lease arrangement that we entered into in connection with our sale of The Oaks at Lakeway in 2017. Refer to Note 4 under the heading “The Oaks at Lakeway” for additional discussion.

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

d.The 2022 periods include a $119.7 million pre-tax gain on the May 2022 sale of Block 21.

As a result of the sale of Block 21, we currently have two operating segments: Real Estate Operations and Leasing Operations (refer to Note 9). The following is a discussion of our operating results by segment.

Real Estate Operations

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues:
Developed property sales	$	—	$	2,382	$	2,493	$	2,382
Undeveloped property sales	—		5,444		—		5,444
Commissions and other	58		101		58		124
Total revenues	58		7,927		2,551		7,950
Cost of sales, including depreciation	(2,747)		(5,456)		(7,261)		(6,847)
Operating (loss) income	$	(2,689)	$	2,471	$	(4,710)	$	1,103

Developed Property Sales. The following table summarizes our developed property sales (dollars in thousands):

	Three Months Ended June 30,
	2023					2022
	Homes	Revenues		Average Cost Per Home		Lots	Revenues		Average Cost Per Lot
Barton Creek
Amarra Drive:
Amarra Villas homes	—	$	—	$	—	1	$	2,382	$	2,382
Total Residential	—	$	—			1	$	2,382

25

	Six Months Ended June 30,
	2023					2022
	Homes	Revenues		Average Cost Per Home		Lots/Units	Revenues		Average Cost Per Lot/Unit
Barton Creek
Amarra Drive:
Amarra Villas homes	1	$	2,493	$	2,249	1	$	2,382	$	2,382
Total Residential	1	$	2,493			1	$	2,382

We had no sales of developed properties in second-quarter 2023. During the periods presented, we sold one Amarra Villas home in the second quarter of 2022 and one in the first quarter of 2023.

Undeveloped Property Sales. In second-quarter 2022 and the first six months of 2022, we closed $5.4 million of undeveloped property sales consisting of (i) a six-acre multi-family tract of land in Amarra Drive for $2.5 million, (ii) a completed pad site at Magnolia Place for $2.3 million and (iii) a tract of land in Austin for $0.6 million.

Cost of Sales. Cost of sales includes costs of property sold, project operating and marketing expenses and allocated overhead costs. Cost of sales decreased to $2.7 million in second-quarter 2023, compared to $5.5 million in second-quarter 2022, primarily due to the sale of an Amarra Villas home and the undeveloped property sold in second-quarter 2022 while there were no property sales in second-quarter 2023. In addition, second-quarter 2023 cost of sales includes a $1.2 million charge to write off a forfeited earnest money deposit and other pursuit costs associated with terminating a contract to purchase land. Cost of sales increased to $7.3 million for the first six months of 2023, compared to $6.8 million for the first six months of 2022, primarily due to the $1.2 million charge discussed above and $1.0 million of expenses related to the formation of the Holden Hills partnership in first-quarter 2023.

Leasing Operations

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Rental revenue	$	3,472	$	3,200	$	6,781	$	6,280
Rental cost of sales, excluding depreciation and amortization	(1,144)		(870)		(2,405)		(1,854)
Depreciation and amortization	(924)		(865)		(1,830)		(1,717)
Gain on sale of assets	—		—		—		4,812
Operating income	$	1,404	$	1,465	$	2,546	$	7,521

Rental Revenue.  In the 2023 periods, rental revenue primarily included revenue from Lantana Place, Kingwood Place, Jones Crossing, West Killeen Market and Magnolia Place. In the 2022 periods, rental revenue primarily included revenue from Lantana Place, Jones Crossing, Kingwood Place and West Killeen Market. The increase in rental revenue in the 2023 periods, compared with the 2022 periods, primarily reflects revenue from Magnolia Place, which had no rental revenue in either period for 2022, and increased revenue at Kingwood Place.

Rental Cost of Sales and Depreciation. Rental cost of sales and depreciation expense increased in the 2023 periods compared with the 2022 periods, primarily as a result of The Saint June and Magnolia Place, both of which had no operating expenses in the 2022 periods, and costs of landscaping repairs and replacements at retail properties following the Texas winter storm in February 2023.

Gain on Sale of Assets. For the first six months of 2022, we recognized a $4.8 million pre-tax gain on the reversal of accruals for costs to lease and construct buildings under a master lease arrangement that we entered into in connection with our sale of The Oaks at Lakeway in 2017. Refer to Note 4 under the heading “The Oaks at Lakeway” for further discussion.

26

Corporate, Eliminations and Other

Corporate, eliminations and other (refer to Note 9) includes consolidated general and administrative expenses, which primarily consist of employee compensation and other costs. Consolidated general and administrative expenses increased to $4.1 million in second-quarter 2023 and $8.8 million for the first six months of 2023, compared to $3.4 million in second-quarter 2022 and $6.6 million for the first six months of 2022 primarily as a result of higher compensation costs for salary increases and estimated cash incentive awards for 2023, as well as charges for restricted stock units (RSUs) granted in second-quarter 2022 in connection with the Profit Participation Incentive Plan (PPIP) payouts for Lantana Place and The Santal. Fees related to a new consulting arrangement in 2023 to help raise third-party equity capital and office rent, which was eliminated in consolidation prior to the sale of Block 21, also contributed to the increases in the 2023 periods.

Non-Operating Results

Interest Expense, Net. Interest costs (before capitalized interest) totaled $2.9 million in second-quarter 2023 and $5.3 million for the first six months of 2023, compared with $1.5 million in second-quarter 2022 and $2.6 million for the first six months of 2022. Interest costs in the 2023 periods were higher, compared to the 2022 periods, primarily reflecting rising interest rates as well as an increase in average debt balances. As of June 30, 2023, all of our debt was variable-rate debt, and for all of such debt, the interest rates have increased over the past year, including the first six months of 2023, and may continue to rise in the future if prevailing market interest rates continue to climb.

Substantially all of the interest costs were capitalized for the periods presented. Capitalized interest is primarily related to development activities at Barton Creek (primarily Holden Hills, Section N and The Saint June), The Saint George and The Annie B for all periods presented.

(Provision for) Benefit from Income Taxes. We recorded a (provision for) benefit from income taxes of $(0.5) million in second-quarter 2023 and $(1.7) million for the first six months of 2023, compared to less than $(0.1) million in second-quarter 2022 and $0.3 million for the first six months of 2022. Refer to Note 8 for further discussion of income taxes.

Net Income from Discontinued Operations. As a result of the sale of Block 21 in May 2022, we did not have any net income from discontinued operations in second-quarter 2023 or the first six months of 2023. Net income from discontinued operations totaled $95.9 million in second-quarter 2022 and $96.3 million for the first six months of 2022. The net income in the 2022 periods primarily reflects a $119.7 million pre-tax gain on the sale of Block 21.

Total Comprehensive Loss Attributable to Noncontrolling Interests in Subsidiaries. Our partners' share of losses totaled less than $0.1 million in second-quarter 2023 and $0.5 million for the first six months of 2023, compared to $0.2 million in both second-quarter 2022 and for the first six months of 2022.

CAPITAL RESOURCES AND LIQUIDITY

Volatility in the real estate market, including the markets in which we operate, can impact the timing of and proceeds received from sales of our properties, which may cause uneven cash flows from period to period. 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, 2023 and 2022

Operating Activities. Cash used in operating activities totaled $26.8 million for the first six months of 2023, compared with $43.6 million for the first six months of 2022. Expenditures for purchases and development of real estate properties totaled $21.1 million for the first six months of 2023 and $12.1 million for the first six months of 2022, both primarily related to development of our Barton Creek properties, particularly Amarra Villas and Holden Hills. The cash outflow resulting from the decrease in accounts payable, accrued liabilities and other for the first six months of 2022 is primarily related to the payment of awards under our PPIP and the timing of tax payments, including property taxes.

Investing Activities. Cash (used in) provided by investing activities totaled $(24.0) million for the first six months of 2023 and $77.8 million for the first six months of 2022. During the first six months of 2022, we received net proceeds from the sale of Block 21 of $105.8 million (excluding the release of reserves previously presented as restricted cash but including $6.9 million escrowed at closing). As no claims were made against the escrowed amounts, the $6.9 million was disbursed in full to us in June 2023.

27

Capital expenditures totaled $23.5 million for the first six months of 2023, primarily for The Saint George and The Saint June, and $27.6 million for the first six months of 2022, primarily for The Saint June and Magnolia Place projects.

Financing Activities. Cash provided by financing activities totaled $50.1 million for the first six months of 2023 and $6.2 million for the first six months of 2022. During both the first six months of 2023 and 2022, we had no net borrowings on the Comerica Bank revolving credit facility. During the first six months of 2023, net borrowings on other project and term loans totaled $14.5 million, primarily reflecting borrowings on The Saint June construction loan and the Amarra Villas revolving credit facility, partially offset by the payoff of the New Caney land loan. During the first six months of 2022, net repayments on other project and term loans totaled $6.9 million, primarily reflecting borrowings on the Magnolia Place and The Saint June construction loans. Refer to “Revolving Credit Facility and Other Financing Arrangements” below for a discussion of our outstanding debt at June 30, 2023.

During the first six months of 2023, we received a contribution from a noncontrolling interest owner of $40.0 million, related to the Holden Hills partnership.

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 shareholders of record as of September 19, 2022. During the first six months of 2023, $0.6 million of accrued dividends for unvested RSUs were paid to the holders upon the vesting of the RSUs, leaving $0.7 million of dividends accrued for unvested RSUs presented in accrued liabilities as of June 30, 2023. The remaining accrued dividends will be paid to the holders of the RSUs as the RSUs vest.

In 2022, with written consent from Comerica Bank, our Board also approved a share repurchase program, which authorizes repurchases of up to $10.0 million of our common stock. The repurchase program authorizes us, in management’s discretion, to repurchase shares from time to time, subject to market conditions and other factors. As of June 30, 2023, we repurchased 369,006 shares of our common stock for a total of $9.5 million at an average price of $25.61. Through August 9, 2023, we have acquired 381,889 shares of our common stock for a total cost of $9.8 million at an average price of $25.65 per share, and $0.2 million remains available for repurchases under the program.

The timing, price and number of shares that may be repurchased under the program will be based on market conditions, applicable securities laws and other factors considered by management. Share repurchases under the program may be made from time to time through solicited or unsolicited transactions in the open market, in privately negotiated transactions or by other means in accordance with securities laws. 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.

Revolving Credit Facility and Other Financing Arrangements

As of June 30, 2023, we had $44.1 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 $44.1 million in consolidated cash and cash equivalents at June 30, 2023, $4.7 million held at certain consolidated subsidiaries is subject to restrictions on distribution to the parent company pursuant to project loan agreements. We have taken steps to obtain Federal Deposit Insurance Corporation (FDIC) protection for much of our deposits; however, we typically have some cash balances on deposit with banks in excess of FDIC insured limits. Any loss of uninsured deposits could have a material adverse effect on our future financial condition, liquidity and operations. As of June 30, 2023, $31.4 million was invested in an FDIC insured cash sweep platform.

As of June 30, 2023, we had total debt of $139.4 million based on the principal amounts outstanding compared with $123.9 million at December 31, 2022. As of June 30, 2023, the maximum amount that could be borrowed under the Comerica Bank revolving credit facility was $53.7 million, resulting in availability of $42.7 million, net of letters of credit totaling $11.0 million issued under the revolving credit facility to secure our obligation to build certain roads and utilities facilities benefiting Holden Hills and Section N. In March 2023, we entered into a modification of the revolving credit facility, which extended the maturity date to March 27, 2025 and increased the floor of the facility’s benchmark rate. As amended, advances under the revolving credit facility bear interest at the one-month Bloomberg Short-Term Bank Yield Index (BSBY) Rate (with a floor of 0.50 percent) plus 4.00 percent. In May 2023, we entered into another modification of the revolving credit facility to increase the maximum amount of letters of credit that may be issued under the revolving credit facility from $11.5 million to $13.3 million. In July 2023, we entered into a $2.3 million letter of credit to secure our obligations to construct and pay for certain utility infrastructure in Lakeway,

28

Texas, estimated to cost approximately $2.3 million. The amount available under the revolving credit facility, net of letters of credit issued, was $40.4 million as of August 9, 2023. Refer to Note 6 for additional discussion. 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, 2023.

In April 2023, we made an operating loan of $1.5 million to Stratus Block 150, L.P. to facilitate the partnership’s ability to pay ongoing costs of The Annie B project during the pre-construction period. The loan bears interest at the one-month BSBY Rate plus 5.00 percent, is subordinate to The Annie B land loan and must be repaid before distributions may be made to the partners.

In June 2023, we made an operating loan of $750 thousand to The Saint June, L.P. to support the partnership’s ability to pay its construction loan interest, which has risen above the amount originally budgeted due to rising interest rates. The loan bears interest at the Term Secured Overnight Financing Rate (SOFR) plus 5.00 percent, is subordinate to The Saint June construction loan and must be repaid before distributions may be made to the partners.

In February 2023, The Annie B land loan’s maturity was extended to March 1, 2024. Also in February 2023, our subsidiary Holden Hills, L.P. entered into a $26.1 million construction loan with Comerica Bank due February 8, 2026 to finance the development of Phase I of the Holden Hills project. In March 2023, we repaid the $4.1 million New Caney land loan. In response to the phase-out of London Interbank Offered Rate (LIBOR) as a benchmark interest rate, in the first six months of 2023, interest terms were modified for The Saint June construction loan, The Annie B land loan, and the Magnolia Place construction loan to replace the LIBOR benchmark rate with either Term SOFR or the one-month BSBY Rate. Refer to Note 6 for further discussion.

Our debt agreements require compliance with specified financial covenants. Refer to Note 6 and MD&A in our 2022 Form 10-K for a discussion of the financial covenants in our debt agreements. As of June 30, 2023, we were in compliance with all of our financial covenants. However, our Jones Crossing project did not pass the debt service coverage ratio (DSCR) test under the Jones Crossing loan in each of fourth-quarter 2022 and first-quarter 2023. The DSCR test under the Jones Crossing loan is not a financial covenant and not meeting the DSCR test is not an event of default; however, to avoid a “Cash Sweep Period,” as defined in the loan agreement, we made principal payments of $231 thousand and $1.7 million in February 2023 and May 2023, respectively, to restore the DSCR to the required threshold. The DSCR fell below 1.15 to 1.00 in second-quarter 2023 and we must make an additional principal payment of approximately $1.2 million in August 2023 or allow a Cash Sweep Period to commence. If the $1.2 million principal payment is made in August 2023, based on our current estimates of the Jones Crossing project’s operating income and interest rates, we project that we will meet the DSCR test over the next 12 months. A Cash Sweep Period limits our ability to receive cash from our Jones Crossing subsidiary, and is projected not to be material to our overall liquidity position over the next 12 months. Once a Cash Sweep Period has commenced, it is terminated when the DSCR is at least 1.20 to 1.00 at the end of any two consecutive fiscal quarters (or by making additional principal payments to achieve that level). As permitted under the loan agreement, in August 2023 the Jones Crossing subsidiary separated the ground lease for the multi-family parcel from the primary ground lease, and the multi-family parcel has been released from the loan collateral.

Stratus’ and its subsidiaries’ debt arrangements 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 equityholders; 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; and engage in mergers, consolidations or other business combinations. Our Comerica Bank revolving credit facility, Amarra Villas revolving credit facility, The Annie B land loan, The Saint George construction loan, Kingwood Place construction loan and Holden Hills construction loan require Comerica Bank’s prior written consent for any common stock repurchases in excess of $1.0 million or any dividend payments, which was obtained in 2022 in connection with the special cash dividend and share repurchase program. Any future declaration of dividends or decision to repurchase our common stock is at the discretion of our Board, subject to restrictions under our Comerica Bank debt agreements, and will depend on our financial results, cash requirements, projected compliance with covenants in our debt agreements, outlook and other factors deemed relevant by our Board. Our 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.

29

Our project loans are generally secured by all or substantially all of the assets of the projects, and our Comerica Bank revolving credit facility is secured by substantially all of our assets other than those encumbered by separate project financing. In addition, we are typically required to guarantee all or part of the payment of our project loans, in some cases until certain development milestones and/or financial conditions are met, except for the Jones Crossing loan guaranty, which is generally limited to non-recourse carve-out obligations. We were released as guarantor under the Lantana Place construction loan guaranty in 2022. Refer to Note 6 to our consolidated financial statements in our 2022 Form 10-K for additional discussion.

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. The inability to satisfy a condition to receive advances for a specified time period after lender’s refusal, or the failure to complete a project by a specified completion date, may be an event of default, subject to exceptions for force majeure.

Debt Maturities and Other Contractual Obligations

The following table summarizes our debt maturities based on the principal amounts outstanding as of June 30, 2023 (in thousands):

	2023		2024		2025		2026		2027		Thereafter		Total
Comerica Bank revolving credit facility a	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Jones Crossing loan	—		—		—		22,594				—		22,594
The Annie B land loan b	—		14,000		—		—		—		—		14,000
Construction loans:
Kingwood Place c	28,099		—		—		—		—		—		28,099
The Saint June	—		24,851		—		—		—		—		24,851
Lantana Place	94		244		268		289		20,985		—		21,880
Amarra Villas revolving credit facility	—		10,951		—		—		—		—		10,951
Magnolia Place	—		8,143		—		—		—		—		8,143
West Killeen Market	28		61		5,195		—		—		—		5,284
The Saint George	—		—		—		3,597		—		—		3,597
Total d	$	28,221	$	58,250	$	5,463	$	26,480	$	20,985	$	—	$	139,399

a.In March 2023, we entered into a modification of the revolving credit facility, which extended the maturity date of the revolving credit facility to March 27, 2025. Refer to Note 6 for further information.

b.In February 2023, we extended the maturity date of this loan to March 1, 2024.

c.The maturity date is December 6, 2023. We have the option to extend the maturity date for one additional 12-month period, subject to certain debt service coverage conditions; we project that we will meet the conditions and expect to exercise the option to extend the maturity.

d.The Holden Hills construction loan did not have an outstanding balance at June 30, 2023.

30

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,
	2023		2022		2023		2022 a
Comerica Bank revolving credit facility b	—	%	4.94	%	—	%	4.97	%
Jones Crossing loan	7.19		2.91		6.97		2.65
The Annie B land loan	7.90		3.71		7.65		3.60
New Caney land loan c	—		3.41		—		3.21
Construction loans:
Kingwood Place	7.67		3.22		7.41		2.95
The Saint June d	7.82		3.87		7.54		3.87
Lantana Place	7.40		3.54		7.17		3.27
Amarra Villas revolving credit facility	7.98		3.79		7.74		3.56
Magnolia Place	8.27		4.13		8.04		3.89
West Killeen Market	7.71		3.54		7.47		3.27
The Saint George e	7.41		—		7.41		—

a.At March 31, 2022, we had an outstanding balance of $38 thousand for the loan under the Paycheck Protection Program (PPP loan). The PPP loan bore interest at 1.00 percent. The PPP loan matured and the remaining balance was repaid on April 15, 2022.

b.We did not have an outstanding balance during second-quarter 2023 or the first six months of 2023. At June 30, 2023, the interest rate for the revolving credit facility was 9.20 percent.

c.In March 2023, we repaid this loan.

d.We did not have an outstanding balance during first-quarter 2022.

e.We did not have an outstanding balance during either period in 2022 or during first-quarter 2023.

Liquidity Outlook

We had firm commitments totaling approximately $75 million at June 30, 2023 primarily related to construction of The Saint George, Holden Hills and Amarra Villas. We have construction loans, as well as remaining equity capital contributed to The Saint George and Holden Hills partnerships, to fund the projected cash outlays for these projects over the next 12 months except for 60 percent of the costs of the Tecoma Improvements for which we have agreed to reimburse the Holden Hills partnership. As of June 30, 2023, we had $10.6 million remaining to complete the Tecoma Improvements. Refer to "Recent Development Activities – Current Residential Activities – Barton Creek – Holden Hills” above for further discussion of the Tecoma Improvements. Also, we anticipate making additional operating loans to Stratus Block 150, L.P. of up to $3 million over the next 12 months to enable the partnership to pay debt service and project costs during the pre-construction period. The operating loans would bear interest at the one-month BSBY Rate plus 5.00 percent and would be repaid before distributions may be made to the partners.

We project that we will be able to meet our debt service and other cash obligations for at least the next 12 months. Our stabilized commercial properties (West Killeen Market, Jones Crossing, Lantana Place and Kingwood Place) are projected to generate sufficient cash flow to cover debt service over the next 12 months. As discussed above, we may be required to make additional principal payments on the Jones Crossing loan over the next 12 months or allow a Cash Sweep Period to commence. For other projected pre-development costs, much of which are discretionary, and for our costs of the Tecoma Improvements and projected operating loans to partnerships and general and administrative expenses, we had cash on hand of $44.1 million at June 30, 2023 and availability under our revolving credit facility (which matures on March 27, 2025) of approximately $40.4 million as of August 9, 2023 in amounts expected to be sufficient to fund these cash requirements for the next 12 months.

We expect to successfully extend the maturities or refinance our debt that matures in the next 12 months. For future potential significant development projects, we would not plan to enter into commitments to incur material costs for the projects until we obtain what we project to be adequate financing to cover anticipated cash outlays. As discussed under “Business Strategy” above, our main source of revenue and cash flow is expected to come from sales of our properties to third parties or distributions from joint ventures, the timing of and proceeds from which are

31

difficult to predict and depend on market conditions and other factors. We also generate cash flow from rental revenue in our leasing operations and from development and asset management fees received from our properties. Due to the nature of our development-focused business, we do not expect to generate sufficient recurring cash flow to cover our general and administrative expenses each period. However, we believe that the unique nature and location of our assets, and our team’s ability to execute successfully on development projects, will provide us with positive cash flows and net income over time. No assurances can be given that the results anticipated by our projections will occur. Refer to Note 6 in this report and in our 2022 Form 10-K and “Risk Factors” included in Part I, Item 1A. of our 2022 Form 10-K for further discussion.

Our ability to meet our cash obligations over the longer term will depend on our future operating and financial performance and cash flows, including our ability to sell or lease properties profitably and extend or refinance debt as it becomes due, which is subject to economic, financial, competitive and other factors beyond our control.

CRITICAL ACCOUNTING ESTIMATES

There have been no changes in our critical accounting estimates from those discussed in our 2022 Form 10-K.

NEW ACCOUNTING STANDARDS

No new accounting pronouncements adopted or issued by the Financial Accounting Standards Board had or may have a material impact on our consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

In the ordinary course of business, we engage in certain activities that are not reflected on our consolidated balance sheets, generally referred to as off-balance sheet arrangements. For additional information regarding these types of activities, refer to the discussion about our firm commitments in “Capital Resources and Liquidity – Liquidity Outlook” above and Note 9 to our consolidated financial statements in our 2022 Form 10-K.

CAUTIONARY STATEMENT

This Quarterly Report on Form 10-Q contains forward-looking statements in which we discuss factors we believe may affect our future performance. Forward-looking statements are all statements other than statements of historical fact, such as plans, projections or expectations related to the impact of inflation and interest rate changes, supply chain constraints and tightening bank credit, our ability to meet our future debt service and other cash obligations, future cash flows and liquidity, our expectations about the Austin and Texas real estate markets, the planning, financing, development, construction, completion and stabilization of our development projects, plans to sell, recapitalize, or refinance properties, future operational and financial performance, MUD reimbursements for infrastructure costs, regulatory matters, 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, the impacts of any major public health crisis, and 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 and/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 was obtained in connection with the special cash dividend and share repurchase program. Any future declaration of dividends or decision to repurchase our common stock is at the discretion of our Board, subject to restrictions under our Comerica Bank debt agreements, and will depend on our financial results, cash requirements, projected compliance with covenants in our debt agreements, outlook and other factors deemed relevant by our Board. Our 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

32

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 and the cost of building materials and labor, increases in inflation and interest rates, supply chain constraints, tightening bank credit, defaults by contractors and subcontractors, 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 and business conditions, including as a result of the war in Ukraine, potential U.S. or local economic downturn or recession, the availability and terms of financing for development projects and other corporate purposes, the failure of any bank in which we deposit our funds, any major public health crisis, 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, 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, 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, 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 under the heading “Risk Factors” in Part I, Item 1A. of our 2022 Form 10-K, filed with the SEC.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made. Further, we may make changes to our business plans that could affect our results. We caution investors that we undertake no obligation to update our forward-looking statements, which speak only as of the date made, notwithstanding any changes in our assumptions, business plans, actual experience, or other changes.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a)           Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, they have concluded that our disclosure controls and procedures were effective as of June 30, 2023.

(b)          Changes in internal control over financial reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

33

PART II. OTHER INFORMATION

Item 1A. Risk Factors.

There have been no material changes to our risk factors previously disclosed in Part 1, Item 1A. “Risk Factors” of our 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of our equity securities during the three months ended June 30, 2023.

The following table provides a summary of repurchases of shares of our common stock by our company and any “affiliated purchaser” as defined by the SEC during the three months ended June 30, 2023, and the approximate dollar value of shares that may yet be purchased pursuant to our share repurchase program as of June 30, 2023:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs a	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs a
April 1, 2023 through April 30, 2023	13,087	$	20.49	13,087	$	974,540
May 1, 2023 through May 31, 2023	10,919	$	23.75	10,919	$	715,208
June 1, 2023 through June 30, 2023	6,676	$	24.95	6,676	$	548,639
Total	30,682	$	22.62	30,682	$	548,639

a.On September 2, 2022, we announced that our Board approved a share repurchase program authorizing repurchases of up to $10.0 million of our common stock. The timing, price and number of shares that may be repurchased under the program will be based on market conditions, applicable securities laws and other factors considered by management. Share repurchases under the program may be made from time to time through solicited or unsolicited transactions in the open market, in privately negotiated transactions or by other means in accordance with securities laws. 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. Through August 9, 2023, we have acquired 381,889 shares of our common stock for a total cost of $9.8 million at an average price of $25.65 per share, and $0.2 million remains available for repurchases under the program.

34

Item 6. Exhibits.

			Incorporated by Reference
Exhibit Number	Exhibit Title	Filed with this Form 10-Q	Form	File No.	Date Filed
2.1	Agreement of Sale and Purchase, dated February 15, 2017, between Stratus Lakeway Center, LLC and FHF I Oaks at Lakeway, LLC.		8-K	001-37716	2/21/2017
2.2	Agreement of Sale and Purchase, dated October 26, 2021 between Stratus Block 21, L.L.C. and Ryman Hospitality Properties, Inc.		10-K	001-37716	3/31/2022
2.3	Membership Interest Purchase Agreement, dated October 26, 2021 between Stratus Block 21 Investments, L.P. and Ryman Hospitality Properties, Inc.		10-K	001-37716	3/31/2022
2.4	Agreement of Sale and Purchase, by and between Santal, L.L.C., as seller, and BG-QR GP, LLC, as purchaser, dated as of September 20, 2021.		10-Q	001-37716	11/15/2021
2.5	First Amendment to Agreement of Sale and Purchase, by and between Santal, L.L.C., as seller, and BG-QR GP, LLC, as purchaser, effective as of October 13, 2021.		10-Q	001-37716	11/15/2021
2.6	Second Amendment to Agreement of Sale and Purchase, by and between Santal, L.L.C., as seller, and Berkshire Multifamily Income Realty-OP, L.P., as purchaser, dated as of November 3, 2021.		10-Q	001-37716	11/15/2021
3.1	Composite Certificate of Incorporation of Stratus Properties Inc.		10-Q	001-37716	5/15/2023
3.2	Second Amended and Restated By-Laws of Stratus Properties Inc., as amended effective August 3, 2017.		10-Q	001-37716	8/9/2017
4.1	Investor Rights Agreement by and between Stratus Properties Inc. and Moffett Holdings, LLC dated as of March 15, 2012.		8-K	000-19989	3/20/2012
4.2	Assignment and Assumption Agreement by and among Moffett Holdings, LLC, LCHM Holdings, LLC and Stratus Properties Inc., dated as of March 3, 2014.		13D	005-42652	3/5/2014
10.1	Sixth Modification Agreement by and between Stratus Properties Inc., certain of its subsidiaries and Comerica Bank, effective as of May 31, 2023.	X
10.2*	Stratus Properties Inc. Long-Term Incentive Plan and Form of Award Notice.		10-Q	001-37716	5/15/2023
10.3*	Stratus Properties Inc. Executive Annual Incentive Plan (effective January 2023).		10-Q	001-37716	5/15/2023
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).	X
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.	X
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.	X
101.INS	XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	X
101.SCH	Inline XBRL Taxonomy Extension Schema.	X

35

			Incorporated by Reference
Exhibit Number	Exhibit Title	Filed with this Form 10-Q	Form	File No.	Date Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase.	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase.	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase.	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase.	X
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).	X

* Indicates management contract or compensatory plan or arrangement.

36

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

STRATUS PROPERTIES INC.

By:	/s/ Erin D. Pickens
	Erin D. Pickens
	Senior Vice President and Chief Financial Officer (authorized signatory and Principal Financial Officer and Principal Accounting Officer)

Date: August 14, 2023

S-1

EX-10.1

When recorded, return to:    RECORD IN DEED OF TRUST RECORDS
    TRAVIS COUNTY, TEXAS
Holland & Knight LLP

1722 Routh Street, Suite 1500    
Dallas, Texas 75201    
Attention: Monica Hart

NOTICE OF CONFIDENTIALITY RIGHTS; IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER

SIXTH MODIFICATION AGREEMENT

This SIXTH MODIFICATION AGREEMENT (this “Agreement”) is dated effective as of May 31, 2023 (the “Effective Date”) by and between STRATUS PROPERTIES INC., a Delaware corporation (“Stratus”), STRATUS PROPERTIES OPERATING CO., L.P., a Delaware limited partnership (“SPOC”), CIRCLE C LAND, L.P., a Texas limited partnership (“Circle C”), AUSTIN 290 PROPERTIES, INC., a Texas corporation (“Austin”), THE VILLAS AT AMARRA DRIVE, L.L.C., a Texas limited liability company (“Amarra”), and STRATUS LAKEWAY CENTER, L.L.C., a Texas limited liability company (“Lakeway”) (Stratus, SPOC, Circle C, Austin, Amarra, and Lakeway are sometimes referred to in this Agreement severally as “Borrower”), and COMERICA BANK (“Lender”);

W I T N E S S E T H:

A.The following documents were previously executed and delivered by Borrower, Magnolia East 149, L.L.C., a Texas limited liability company (“Magnolia”) and 210 Lavaca Holdings, L.L.C., a Texas limited liability company (“Lavaca”), to Lender, interalia, relating to a loan (the “Loan”) in the original principal sum of $60,000,000.00, each dated June 29, 2018:

i.that certain Loan Agreement (the “Loan Agreement”);

ii.that certain Revolving Promissory Note, payable to the order of Lender in the original principal sum of $60,000,000.00 (the “Original Note”);

iii.that certain Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents from Stratus to Brian P. Foley, Trustee, securing the payment of the

-1-

Note, covering certain real and personal property described therein, recorded under Clerk’s File No. 2018103071 of the Official Public Records of Travis County, Texas (the “Stratus Deed of Trust”);

iv.that certain Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents from Circle C to Brian P. Foley, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk’s File No. 2018103077 of the Official Public Records of Travis County, Texas (the “Circle C Deed of Trust”);

v.that certain Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents from SPOC to Brian P. Foley, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk’s File No. 2018103072 of the Official Public Records of Travis County, Texas, as affected by that certain Partial Release of Deed of Trust Lien dated effective as of February 8, 2023, executed by Lender, recorded under Clerk's File No. 2023013188 of the Official Public Records of Travis County, Texas (the “SPOC Deed of Trust”);

vi.that certain Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents from Amarra to Brian P. Foley, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk’s File No. 2018103073 of the Official Public Records of Travis County, Texas (the “Amarra Deed of Trust”);

vii.that certain Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents from Lakeway to Brian P. Foley, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk’s File No. 2018103076 of the Official Public Records of Travis County, Texas (the “Lakeway Deed of Trust”)

viii.that certain Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents from Austin to Brian P. Foley, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk’s File No. 2018103078 of the Official Public Records of Travis County, Texas, (the “Austin Deed of Trust”; and together with the Stratus Deed of Trust, the Circle C Deed of Trust, the SPOC Deed of Trust, the Amarra Deed of Trust, and the Lakeway Deed of Trust, as they may be affected by various partial releases of lien executed by Lender prior to the Effective Date, are collectively referred to as the “Deed of Trust”);

ix.that certain Subordination Agreement, recorded under Clerk’s File No. 2018106189 of the Official Public Records of Travis County, Texas, executed by SPOC in favor of Lender (the “Subordination Agreement”);

x.that certain Security Agreement, executed by Stratus in favor of Lender (the “Stratus Security Agreement”); and

-2-

xi.that certain Assignment of Reimbursables, Credits and Other Fees executed by Borrower, Magnolia and Lavaca in favor of Lender (the “Assignment of Reimbursables”).

The instruments described above, the Prior Modifications, this Agreement, the Amended and Restated Note, and all other documents evidencing, securing or otherwise executed in connection with the Loan, being herein collectively called the “Loan Documents”;

B.The Loan Documents were previously modified by that certain Modification Agreement dated April 14, 2020, executed by Borrower, Magnolia, Lavaca and Lender (the “First Modification”), that certain Second Modification Agreement dated June 12, 2020, executed by Borrower, Magnolia, Lavaca and Lender, recorded under Clerk's File No. 2020057667 of the Official Public Records of Montgomery County, Texas and recorded under Clerk's File No. 2020097580 of the Official Public Records of Travis County, Texas (the “Second Modification”), that certain Third Modification Agreement dated May 13, 2022, executed by Borrower and Lender, recorded under Clerk's File No. 2022087674 of the Official Public Records of Travis County, Texas (the “Third Modification”), that certain Fourth Modification Agreement dated November 8, 2022, executed by Borrower and Lender (the “Fourth Modification”), and that certain Fifth Modification Agreement dated March 10, 2023, executed by Borrower and Lender (the “Fifth Modification”, and together with the First Modification, the Second Modification, the Third Modification, and the Fourth Modification, collectively, the “Prior Modifications”);

C.Borrower executed and delivered to Lender that certain Amended and Restated Revolving Promissory Note (together with any and all renewals, modifications, rearrangements, reinstatements, enlargements, or extensions of such promissory note or of any promissory note or notes given in renewal, substitution or replacement therefor, the “Amended and Restated Promissory Note” or the “Note”) dated May 13, 2022, in the stated principal amount of Sixty Million and No/100 Dollars ($60,000,000.00), in substitution of the Original Note;

D.The parties desire to modify certain terms in the Loan Documents, and Lender is willing to do so on the terms and conditions set forth below; and

E.Lender is the owner and holder of the Original Note and the Amended and Restated Promissory Note and Borrower is the owner of the legal and equitable title to the Mortgaged Property.

NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Defined Terms. Capitalized terms used but not defined in this Agreement shall have the meaning given to such capitalized terms in the Loan Agreement.

2.Modification of Loan Agreement.

(a)Section 2 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

-3-

Subject to the terms, conditions and procedures of this Agreement and each other Loan Document including, but not limited to, the terms, conditions and procedures set forth in the Defined Terms Addendum and Loan Terms, Conditions and Procedures Addendum, Bank agrees to make credit available to the Borrowers on such dates and in such amounts as the Borrowers shall request from time to time or as may otherwise be agreed to by Borrowers and Bank.

The Loan is a $60,000,000 revolving credit facility that is evidenced by the Note and the other Loan Documents, and which is subject to the Letter of Credit Sublimit. At no time shall the Letter of Credit Liabilities exceed $13,300,000 and Borrower shall not have the right to request Bank issue a new Letter of Credit at any time the Letter of Credit Liabilities equals or exceeds $13,300,000.

(b)The following definition in Section 1.1 of Addendum 1 to the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“Letter of Credit Sublimit” shall mean a maximum of $13,300,000 of the Loan that may be allocated for Letter of Credit Liabilities, subject to the terms and conditions of this Agreement.

3.Letters of Credit. As of the date hereof, five (5) Letters of Credit in the aggregate face amount of $10,981.605.50 have been issued under and are outstanding pursuant to the Loan Agreement.

4.Representations and Warranties. Borrower hereby represents and warrants that (a) Borrower is the sole legal and beneficial owner of the Mortgaged Property (other than the Mortgaged Property which has been released by Lender from the liens of the Deed of Trust); (b) Borrower is duly organized and legally existing under the laws of the state of its organizations and is duly qualified to do business in the State of Texas; (c) the execution and delivery of, and performance under this Agreement are within Borrower’s power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of law or the powers of Borrower’s articles of incorporation and bylaws; (d) this Agreement constitutes the legal, valid and binding obligations of Borrower enforceable in accordance with its terms; (e) the execution and delivery of this Agreement by Borrower do not contravene, result in a breach of or constitute a default under any deed of trust, loan agreement, indenture or other contract, agreement or undertaking to which Borrower is a party or by which Borrower or any of its properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both) and do not violate or contravene any law, order, decree, rule or regulation to which Borrower is subject; and (f) to the best of Borrower’s knowledge there exists no uncured default under any of the Loan Documents. Borrower agrees to indemnify and hold Lender harmless against any loss, claim, damage, liability or expense (including without limitation reasonable attorneys’ fees) incurred as a result of any representation or warranty made by it herein proving to be untrue in any respect.

-4-

5.Further Assurances. Borrower, upon request from Lender, agrees to execute such other and further documents as may be reasonably necessary or appropriate to consummate the transactions contemplated herein or to perfect the liens and security interests intended to secure the payment of the loan evidenced by the Note.

6.Default; Remedies. If Borrower shall fail to keep or perform any of the covenants or agreements contained herein or if any statement, representation or warranty contained herein is false, misleading or erroneous in any material respect, subject to the applicable notice and/or cure periods provided in Section 6.1 of the Loan Agreement, Borrower shall be deemed to be in default under the Deed of Trust and Lender shall be entitled at its option to exercise any and all of the rights and remedies granted pursuant to the any of the Loan Documents or to which Lender may otherwise be entitled, whether at law or in equity.

7.Endorsement to Mortgagee Title Policy. As an accommodation to Borrower, Lender has agreed to waive the requirement for recordation of this Agreement and issuance of an endorsement to the Title Policy at this time. At Lender’s request, Borrower shall, at its sole cost and expense, arrange for recordation of this Agreement in each county where the Mortgaged Property is located and obtain and deliver to Lender an endorsement of the Title Policy insuring the lien of the Deed of Trust, under Procedural Rule P-9b(3) of the applicable title insurance rules and regulations, in form and content acceptable to Lender, stating that the company issuing said Title Policy will not claim that policy coverage has terminated or that policy coverage has been reduced, solely by reason of the execution of this Agreement.

8.Ratification of Loan Documents. Except as provided herein, the terms and provisions of the Loan Documents shall remain unchanged and shall remain in full force and effect. Any modification herein of any of the Loan Documents shall in no way adversely affect the security of the Deed of Trust and the other Loan Documents for the payment of the Note. The Loan Documents as modified and amended hereby are hereby ratified and confirmed in all respects. All liens, security interests, mortgages and assignments granted or created by or existing under the Loan Documents remain unchanged and continue, unabated, in full force and effect, to secure Borrower’s obligation to repay the Note.

9.Liens Valid; No Offsets or Defenses. Borrower hereby acknowledges that the liens, security interests and assignments created and evidenced by the Loan Documents are valid and subsisting and further acknowledges and agrees that there are no offsets, claims or defenses to any of the Loan Documents.

10.Merger; No Prior Oral Agreements. This Agreement supersedes and merges all prior and contemporaneous promises, representations and agreements. No modification of this Agreement or any of the Loan Documents, or any waiver of rights under any of the foregoing, shall be effective unless made by supplemental agreement, in writing, executed by Lender and Borrower. Lender and Borrower further agree that this Agreement may not in any way be explained or supplemented by a prior, existing or future course of dealings between the parties or by any prior, existing, or future performance between the parties pursuant to this Agreement or otherwise.

-5-

11.Costs and Expenses. Contemporaneously with the execution and delivery hereof, Borrower shall pay, or cause to be paid, all costs and expenses incident to the preparation hereof and the consummation of the transactions specified herein, including without limitation title insurance policy endorsement charges, recording fees and fees and expenses of legal counsel to Lender.

12.Release of Lender. Borrower hereby releases, remises, acquits and forever discharges Lender, together with its employees, agents, representatives, consultants, attorneys, fiduciaries, servants, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (all of the foregoing hereinafter called the “Released Parties”), from any and all actions and causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, whether heretofore or hereafter accruing, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the Effective Date, and in any way directly or indirectly arising out of or in any way connected to this Agreement or any of the Loan Documents or any of the transactions associated therewith, or the Mortgaged Property, including specifically but not limited to claims of usury.

13.Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.

14.Severability. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition or provision herein contained.

15.Time of the Essence. It is expressly agreed by the parties hereto that time is of the essence with respect to this Agreement.

16.Representation by Counsel. The parties acknowledge and confirm that each of their respective attorneys have participated jointly in the review and revision of this Agreement and that it has not been written solely by counsel for one party. The parties hereto therefore stipulate and agree that the rule of construction to the effect that any ambiguities are to or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor either party against the other.

17.Governing Law. This Agreement and the rights and duties of the parties hereunder shall be governed for all purposes by the law of the State of Texas and the law of the United States applicable to transactions within said State.

18.Successors and Assigns. The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

-6-

19.Notice of No Oral Agreements. Borrower and Lender hereby take notice of and agree to the following:

A.    PURSUANT TO SUBSECTION 26.02(b) OF THE TEXAS BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED THEREIN EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY’S AUTHORIZED REPRESENTATIVE.

B.    PURSUANT TO SUBSECTION 26.02(c) OF THE TEXAS BUSINESS AND COMMERCE CODE, THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO THE LOAN DOCUMENTS SHALL BE DETERMINED SOLELY FROM THE LOAN DOCUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO THE LOAN DOCUMENTS.

C.    THE LOAN DOCUMENTS AND THIS AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES THERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURE PAGES FOLLOW]

-7-

IN WITNESS WHEREOF, this Agreement is executed on the respective dates of acknowledgement below but is effective as of the date first above written.

BORROWER:

STRATUS PROPERTIES INC., a Delaware corporation By:/s/ Erin D. Pickens                 Erin D. Pickens, Senior Vice President	AUSTIN 290 PROPERTIES, INC., a Texas corporation By: /s/ Erin D. Pickens                 Erin D. Pickens, Senior Vice President
STRATUS PROPERTIES OPERATING CO., L.P., a Delaware limited partnership By:    STRS L.L.C., a Delaware limited     liability company, General Partner     By    Stratus Properties Inc., a Delaware corporation, Sole Member         By:/s/ Erin D. Pickens         Erin D. Pickens, Senior Vice President	THE VILLAS AT AMARRA DRIVE, L.L.C.,a Texas limited liability company By:    STRS L.L.C., a Delaware limited     liability company, Manager     By    Stratus Properties Inc., a Delaware corporation, Sole Member         By: /s/ Erin D. Pickens         Erin D. Pickens, Senior              Vice President
CIRCLE C LAND, L.P., a Texas limited partnership By:     Circle C GP, L.L.C., a Delaware limited liability company, General Partner     By    Stratus Properties Inc., a Delaware corporation, Sole Member         By: /s/ Erin D. Pickens         Erin D. Pickens, Senior Vice President	STRATUS LAKEWAY CENTER, L.L.C., a Texas limited liability company By:    STRS L.L.C., a Delaware limited      liability company, Manager     By:    Stratus Properties Inc., a             Delaware corporation, Sole             Member                   By: /s/ Erin D. Pickens         Erin D. Pickens, Senior Vice President

[Signature Page – Sixth Modification Agreement]

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 26th day of May, 2023, by Erin D. Pickens, Senior Vice President of Stratus Properties Inc., a Delaware corporation, on behalf of said corporation.

[SEAL]

/s/ Leticia L. Silva    

Notary Public, State of Texas

My Commission Expires: February 23, 2027    

Printed Name of Notary: Leticia L. Silva        

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 26th day of May, 2023, by Erin D. Pickens, Senior Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability company, General Partner of Stratus Properties Operating Co., L.P.,a Delaware limited partnership, on behalf of said corporation, limited liability company and limited partnership.

[SEAL]

/s/ Leticia L. Silva    

Notary Public, State of Texas

My Commission Expires: February 23, 2027    

Printed Name of Notary: Leticia L. Silva        

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 26th day of May, 2023, by Erin D. Pickens, Senior Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of Circle C GP, L.L.C., a Delaware limited liability company, General Partner of Circle C Land, L.P.,a Texas limited partnership, on behalf of said corporation, limited liability company and limited partnership.

[SEAL]

/s/ Leticia L. Silva    

Notary Public, State of Texas

My Commission Expires: February 23, 2027    

Printed Name of Notary: Leticia L. Silva        

[Signature Page – Sixth Modification Agreement]

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 26th day of May, 2023, by Erin D. Pickens, Senior Vice President of Austin 290 Properties, Inc., a Texas corporation, on behalf of said corporation.

[SEAL]

/s/ Leticia L. Silva    

Notary Public, State of Texas

My Commission Expires: February 23, 2027    

Printed Name of Notary: Leticia L. Silva        

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 26th day of May, 2023, by Erin D. Pickens, Senior Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability company, Manager of The Villas at Amarra Drive, L.L.C., a Texas limited liability company, on behalf of said corporation and limited liability companies.

[SEAL]

/s/ Leticia L. Silva    

Notary Public, State of Texas

My Commission Expires: February 23, 2027    

Printed Name of Notary: Leticia L. Silva        

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 26th day of May, 2023, by Erin D. Pickens, Senior Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability company, Manager of Stratus Lakeway Center, L.L.C., a Texas limited liability company, on behalf of said corporation and limited liability companies.

[SEAL]

/s/ Leticia L. Silva    

Notary Public, State of Texas

My Commission Expires: February 23, 2027    

Printed Name of Notary: Leticia L. Silva        

[Signature Page – Sixth Modification Agreement]

LENDER:

COMERICA BANK

                        By:/s/ Elaine K. Houston                            

Elaine K. Houston, Vice President

STATE OF TEXAS        §

§

COUNTY OF TRAVIS    §

This instrument was acknowledged before me on the 30 day of May, 2023, by Elaine K. Houston, Vice President of Comerica Bank, on behalf of said bank.

[SEAL]

/s/ Steven Ruiz    

Notary Public, State of Texas

My Commission Expires: 2/20/2025    

Printed Name of Notary: Steven Ruiz            

[Signature Page – Sixth Modification Agreement]

EX-31.1

Exhibit 31.1

Certification

I, William H. Armstrong III, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Stratus Properties Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2023
	By:	/s/ William H. Armstrong III
		William H. Armstrong III
		Chairman of the Board,
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Erin D. Pickens, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Stratus Properties Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2023
	By:	/s/ Erin D. Pickens
		Erin D. Pickens
		Senior Vice President and
		Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q of Stratus Properties Inc. (the “Company”) for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), William H. Armstrong III, as Chairman of the Board, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2023
	By:	/s/ William H. Armstrong III
		William H. Armstrong III
		Chairman of the Board,
		President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q of Stratus Properties Inc. (the “Company”) for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Erin D. Pickens, as Senior Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2023
	By:	/s/ Erin D. Pickens
		Erin D. Pickens
		Senior Vice President and
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Cover Page Cover Page - shares	6 Months Ended
	Jun. 30, 2023	Aug. 09, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-37716
Entity Registrant Name	Stratus Properties Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	72-1211572
Entity Address, Address Line One	212 Lavaca Street, Suite 300
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	512
Local Phone Number	478-5788
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	STRS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		7,997,215
Entity Central Index Key	0000885508
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 44,145	$ 37,666
Restricted cash	995	8,043
Real estate held for sale	1,773	1,773
Real estate under development	271,597	239,278
Land available for development	47,113	39,855
Real estate held for investment, net	94,478	92,377
Lease right-of-use assets	11,711	10,631
Deferred tax assets	38	38
Other assets	13,905	15,479
Total assets	485,755	445,140
Liabilities:
Accounts payable	18,107	15,244
Accrued liabilities, including taxes	5,393	7,049
Debt	137,432	122,765
Lease liabilities	16,297	14,848
Deferred gain	3,066	3,519
Other liabilities	6,299	9,642
Total liabilities	186,594	173,067
Commitments and contingencies
Stockholders’ equity:
Common stock	96	94
Capital in excess of par value of common stock	196,819	195,773
Retained earnings	30,350	41,452
Common stock held in treasury	(32,449)	(30,071)
Total stockholders’ equity	194,816	207,248
Noncontrolling interests in subsidiaries	104,345	64,825
Total equity	299,161	272,073
Total liabilities and equity	$ 485,755	$ 445,140

XML

Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Real estate operations	$ 58	$ 7,925	$ 2,551	$ 7,944
Leasing operations	3,472	3,200	6,781	6,280
Total revenues	3,530	11,125	9,332	14,224
Cost of sales:
Cost of sales	3,841	6,302	9,589	8,652
Depreciation and amortization	970	884	1,898	1,757
Total cost of sales	4,811	7,186	11,487	10,409
General and administrative expenses	4,071	3,444	8,790	6,611
Gain on sale of assets	0	0	0	(4,812)
Total	8,882	10,630	20,277	12,208
Operating (loss) income	(5,352)	495	(10,945)	2,016
Interest expense, net	0	0	0	(15)
Other income, net	544	80	1,029	86
(Loss) income before income taxes and equity in unconsolidated affiliate's loss	(4,808)	575	(9,916)	2,087
(Provision for) benefit from income taxes	(498)	(41)	(1,660)	261
Equity in unconsolidated affiliate's loss	(3)	(2)	(6)	(4)
Net (loss) income from continuing operations	(5,309)	532	(11,582)	2,344
Net income from discontinued operations	0	95,925	0	96,300
Net (loss) income and total comprehensive (loss) income	(5,309)	96,457	(11,582)	98,644
Total comprehensive loss attributable to noncontrolling interests	8	164	480	249
Net (loss) income and total comprehensive (loss) income attributable to common stockholders	$ (5,301)	$ 96,621	$ (11,102)	$ 98,893
(Loss) Income from Continuing Operations, Per Basic Share	$ (0.64)	$ 0.09	$ (1.35)	$ 0.31
Income (Loss) from Discontinued Operations, Per Basic Share	0	11.59	0	11.66
Basic net (loss) income per share attributable to common stockholders (in usd per share)	(0.64)	11.68	(1.35)	11.97
(Loss) Income from Continuing Operations, Per Diluted Share	(0.64)	0.09	(1.35)	0.31
Income (Loss) from Discontinued Operations, Per Diluted Share	0	11.44	0	11.51
Diluted net (loss) income per share attributable to common stockholders (in usd per share)	$ (0.64)	$ 11.53	$ (1.35)	$ 11.82
Basic weighted average number of shares outstanding, basic (in shares)	8,227	8,273	8,225	8,262
Diluted weighted average number of shares outstanding, basic (in shares)	8,227	8,383	8,225	8,369
Real estate operations
Revenues:
Real estate operations	$ 58	$ 7,925	$ 2,551	$ 7,944
Cost of sales:
Cost of sales	2,697	5,432	7,184	6,798
Leasing operations
Cost of sales:
Cost of sales	$ 1,144	$ 870	$ 2,405	$ 1,854

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flow from operating activities:
Net (loss) income	$ (11,582)	$ 98,644
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	1,898	1,757
Cost of real estate sold	2,087	3,599
Gain on sale of discontinued operations	0	(119,695)
Gain on sale of assets	0	(4,812)
Debt issuance cost amortization and stock-based compensation	1,443	1,107
Equity in unconsolidated affiliate’s loss	6	4
Deferred income taxes	0	5,832
Purchases and development of real estate properties	(21,084)	(12,091)
Decrease in other assets	601	3,112
Decrease in accounts payable, accrued liabilities and other	(123)	(21,098)
Net cash used in operating activities	(26,754)	(43,641)
Cash flow from investing activities:
Proceeds from sale of discontinued operations	0	105,813
Capital expenditures	(23,477)	(27,575)
Payments on master lease obligations	(484)	(418)
Other	9	0
Net cash (used in) provided by investing activities	(23,952)	77,820
Cash flow from financing activities:
Borrowings from revolving credit facility	0	30,000
Payments on revolving credit facility	0	(30,000)
Borrowings from project loans	22,828	12,455
Payments on project and term loans	(8,328)	(5,582)
Payment of dividends	(616)	0
Finance lease principal payments	(7)	0
Stock-based awards net payments	(789)	(452)
Noncontrolling interest contribution	40,000	0
Purchases of treasury stock	(1,589)	0
Financing costs	(1,362)	(205)
Net cash provided by financing activities	50,137	6,216
Net (decrease) increase in cash, cash equivalents and restricted cash	(569)	40,395
Cash, cash equivalents and restricted cash at beginning of year	45,709	70,139
Cash, cash equivalents and restricted cash at end of period	$ 45,140	$ 110,534

XML

Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands	Total	Parent [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	Noncontrolling Interest [Member]
Balance (in shares) at Dec. 31, 2021			9,388,000
Balance at Dec. 31, 2021	$ 208,613	$ 158,137	$ 94	$ 188,759	$ (8,963)		$ 50,476
Treasury balance (in shares) at Dec. 31, 2021						1,143,000
Treasury balance at Dec. 31, 2021						$ (21,753)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercised and issued stock-based awards (in shares)			39,000
Stock-based compensation	212	212		212
Tender of shares for stock-based awards (in shares)						11,000
Tender of shares for stock-based awards	(452)	(452)				$ (452)
Total comprehensive loss	2,187	2,272			2,272		(85)
Balance (in shares) at Mar. 31, 2022			9,427,000
Balance at Mar. 31, 2022	210,560	160,169	$ 94	188,971	(6,691)		50,391
Treasury balance (in shares) at Mar. 31, 2022						1,154,000
Treasury balance at Mar. 31, 2022						$ (22,205)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	347	347		347
Total comprehensive loss	96,457	96,621			96,621		(164)
Grant of restricted stock units (RSUs) under the Profit Participation Incentive Plan (PPIP)	5,292	5,292		5,292
Balance (in shares) at Jun. 30, 2022			9,427,000
Balance at Jun. 30, 2022	312,656	262,429	$ 94	194,610	89,930		50,227
Treasury balance (in shares) at Jun. 30, 2022						1,154,000
Treasury balance at Jun. 30, 2022						$ (22,205)
Balance (in shares) at Dec. 31, 2022			9,439,000
Balance at Dec. 31, 2022	272,073	207,248	$ 94	195,773	41,452		64,825
Treasury balance (in shares) at Dec. 31, 2022						1,448,000
Treasury balance at Dec. 31, 2022						$ (30,071)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercised and issued stock-based awards (in shares)			40,000
Stock Issued During Period, Value, Issued for Services	6	6		6
Stock-based compensation	529	529		529
Tender of shares for stock-based awards (in shares)						11,000
Tender of shares for stock-based awards	(216)	(216)				$ (216)
Stock Repurchased During Period, Shares						44,000
Stock Repurchased During Period, Value	(894)	(894)				$ (894)
Total comprehensive loss	(6,273)	(5,801)			(5,801)		(472)
Contributions from noncontrolling interests	40,000						40,000
Balance (in shares) at Mar. 31, 2023			9,479,000
Balance at Mar. 31, 2023	305,225	200,872	$ 94	196,308	35,651		104,353
Treasury balance (in shares) at Mar. 31, 2023						1,503,000
Treasury balance at Mar. 31, 2023						$ (31,181)
Balance (in shares) at Dec. 31, 2022			9,439,000
Balance at Dec. 31, 2022	$ 272,073	207,248	$ 94	195,773	41,452		64,825
Treasury balance (in shares) at Dec. 31, 2022						1,448,000
Treasury balance at Dec. 31, 2022						$ (30,071)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Repurchased During Period, Shares	74,306
Stock Repurchased During Period, Value	$ (1,600)
Balance (in shares) at Jun. 30, 2023			9,572,000
Balance at Jun. 30, 2023	299,161	194,816	$ 96	196,819	30,350		104,345
Treasury balance (in shares) at Jun. 30, 2023						1,562,000
Treasury balance at Jun. 30, 2023						$ (32,449)
Balance (in shares) at Mar. 31, 2023			9,479,000
Balance at Mar. 31, 2023	305,225	200,872	$ 94	196,308	35,651		104,353
Treasury balance (in shares) at Mar. 31, 2023						1,503,000
Treasury balance at Mar. 31, 2023						$ (31,181)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercised and issued stock-based awards (in shares)			93,000
Exercised and vested stock-based awards	2	2	$ 2
Stock Issued During Period, Value, Issued for Services	6	6		6
Stock-based compensation	505	505		505
Tender of shares for stock-based awards (in shares)						28,000
Tender of shares for stock-based awards	(573)	(573)				$ (573)
Stock Repurchased During Period, Shares						31,000
Stock Repurchased During Period, Value	(695)	(695)				$ (695)
Total comprehensive loss	(5,309)	(5,301)			(5,301)		(8)
Balance (in shares) at Jun. 30, 2023			9,572,000
Balance at Jun. 30, 2023	$ 299,161	$ 194,816	$ 96	$ 196,819	$ 30,350		$ 104,345
Treasury balance (in shares) at Jun. 30, 2023						1,562,000
Treasury balance at Jun. 30, 2023						$ (32,449)

XML

General

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

GENERAL

The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022, included in Stratus Properties Inc.’s (Stratus) Annual Report on Form 10-K for the year ended December 31, 2022 (Stratus 2022 Form 10-K) filed with the U.S. Securities and Exchange Commission on March 31, 2023. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported and consist of normal recurring adjustments. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. Refer to Note 4 for a discussion of Stratus' discontinued operations.

Related Party Transactions. Through the first quarter of 2022, Stratus had an arrangement with Whitefish Partners, LLC (Whitefish Partners), formerly known as Austin Retail Partners, LLC, for services provided by a consultant of Whitefish Partners who is the son of Stratus' President and Chief Executive Officer. Payments to Whitefish Partners for the consultant’s consulting services and expense reimbursements totaled $185 thousand for first-quarter 2022, which included $20 thousand as an annual incentive award for 2021 and a $135 thousand cash payment under Stratus’ Profit Participation Incentive Plan (PPIP). In April 2022, Stratus hired the consultant as an employee at an annual salary of $100 thousand. As an employee, he is eligible for the same health and retirement benefits provided to all Stratus employees and is also eligible for annual incentive awards and for awards under the PPIP and the Long-Term Incentive Plan (LTIP). In first-quarter 2023, he received $22 thousand as an annual incentive award for 2022, and his annual salary was increased to $120 thousand. As of June 30, 2023, the employee has two outstanding awards under the PPIP. The liability associated with these awards at June 30, 2023 is not significant to the consolidated financial statements. Refer to Note 7 for discussion of the PPIP and LTIP. For additional information regarding Stratus' related parties, including LCHM Holdings, LLC and JBM Trust, refer to Notes 1, 2 and 4 in the Stratus 2022 Form 10-K.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Stratus’ basic net (loss) income per share of common stock was calculated by dividing the net (loss) income attributable to common stockholders by the weighted-average shares of common stock outstanding during the period. A reconciliation of net (loss) income and weighted-average shares of common stock outstanding for purposes of calculating diluted net (loss) income per share (in thousands, except per share amounts) follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net (loss) income from continuing operations	$	(5,309)	$	532	$	(11,582)	$	2,344
Net income from discontinued operations	—		95,925		—		96,300
Net (loss) income and total comprehensive (loss) income	(5,309)		96,457		(11,582)		98,644
Total comprehensive loss attributable to noncontrolling interests	8		164		480		249
Net (loss) income and total comprehensive (loss) income attributable to common stockholders	$	(5,301)	$	96,621	$	(11,102)	$	98,893
Basic weighted-average shares of common stock outstanding	8,227		8,273		8,225		8,262
Add shares issuable upon vesting of dilutive restricted stock units (RSUs) a	—		110		—		107
Diluted weighted-average shares of common stock outstanding	8,227		8,383		8,225		8,369
Basic net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.59		—		11.66
	$	(0.64)	$	11.68	$	(1.35)	$	11.97
Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.44		—		11.51
	$	(0.64)	$	11.53	$	(1.35)	$	11.82

a.Excludes 222 thousand shares for second-quarter 2023 and 259 thousand shares for the first six months of 2023 of common stock associated with RSUs that were anti-dilutive as a result of net losses. Excludes 2 thousand shares for the first six months of 2022 of common stock associated with RSUs that were anti-dilutive.

XML

Limited Partnerships

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Limited Partnerships

LIMITED PARTNERSHIPS

Stratus has entered into strategic partnerships for certain development projects. Stratus, through its subsidiaries, is a partner in the following limited partnerships: The Saint George Apartments, L.P. (10.0 percent indirect equity interest), Stratus Block 150, L.P. (31.0 percent indirect equity interest), The Saint June, L.P. (34.13 percent indirect equity interest), Holden Hills, L.P. (50.0 percent indirect equity interest) and Stratus Kingwood Place, L.P. (60.0 percent indirect equity interest). For additional information regarding Stratus' partnerships, refer to Notes 2 and 4 in the Stratus 2022 Form 10-K.

Holden Hills, L.P. In first-quarter 2023, Holden Hills, L.P. (the Holden Hills partnership), a Texas limited partnership and subsidiary of Stratus, was formed for the development of Holden Hills, Stratus’ final large residential development within the Barton Creek community in Austin, Texas, consisting of 495 acres and designed to feature 475 unique residences (Holden Hills Project). The Holden Hills partnership is governed by a limited partnership agreement between a wholly owned subsidiary of Stratus as Class A limited partner and an unaffiliated equity investor as Class B limited partner, and another wholly owned subsidiary of Stratus which serves as general partner. The partners made the following initial capital contributions to the Holden Hills partnership: (i) Stratus contributed the Holden Hills land and related personal property at an agreed value of $70.0 million and (ii) The Class B limited partner contributed $40.0 million in cash. Immediately following the Class B limited partner's initial capital contribution, $30.0 million of cash was distributed by the Holden Hills partnership to Stratus. Further, the Holden Hills partnership reimbursed Stratus for certain initial project costs and closing costs of approximately $5.8 million.

As a result of these transactions, Stratus holds, indirectly through its wholly owned subsidiaries, a 50.0 percent equity interest in the Holden Hills partnership, and the Class B limited partner holds the remaining 50.0 percent equity interest in the Holden Hills partnership. Stratus’ potential returns on its equity investment in the Holden Hills partnership may increase above its relative equity interest as negotiated return hurdles are achieved. Refer to “Potential Returns” below for further discussion. Stratus consolidates the Holden Hills partnership; therefore, its contribution of the Holden Hills land and related personal property was recorded at historical cost and the contribution from the Class B limited partner was accounted for as a noncontrolling interest in subsidiary.

In addition to each partner’s initial capital contribution, upon the call of the general partner from time to time, Stratus is obligated to make capital contributions up to an additional $10.0 million, and the Class B limited partner is also obligated to make capital contributions up to an additional $10.0 million.

Stratus has the authority to manage the day-to-day operations of the Holden Hills partnership, subject to approval rights of the Class B limited partner for specified “major decisions,” including project and operating budgets, the business plan and amendments thereto; sales, leases or transfers of any portion of the Holden Hills Project to any partner, affiliate of any partner, or to any unaffiliated third party other than as contemplated in the business plan; incurring any debt, mortgage or guaranty; capital calls in excess of those previously agreed upon; admitting a new partner; and certain transfers of direct or indirect interests in the Holden Hills partnership. The business plan includes rights of first refusal in favor of the Class B limited partner for sale of luxury residence sites to be developed in distinct communities or “pods” to a third party. A “deadlock” may be declared by any partner if any limited partner does not approve any two major decisions proposed by the general partner within any 12-month period. Prior to the third anniversary of the effective date of the limited partnership agreement, a buy-sell provision can be triggered only if there is a deadlock. On or after the third anniversary, any partner can initiate a buy-sell at any time by written notice to the other partner, specifying the buyout price.

Stratus has entered into a development agreement with the Holden Hills partnership pursuant to which the Holden Hills partnership will construct certain street, drainage, water, sidewalk, electric and gas improvements in order to extend the Tecoma Circle roadway on Section N land owned by Stratus from its current terminus to Southwest Parkway, estimated to cost approximately $14.7 million (the Tecoma Improvements), and Stratus will reimburse the partnership for 60 percent of the costs. The Tecoma Improvements will enable access and provide utilities necessary for the development of both Holden Hills and Section N. As of June 30, 2023, Stratus had $10.6 million remaining to complete the Tecoma Improvements.

The Holden Hills partnership has agreed to pay Stratus a development management fee of 4.00 percent of certain construction costs for Phase I of the project, and an asset management fee of $150 thousand per year starting 15 months after construction starts on the project payable from available cash flow after debt service.

Also in first-quarter 2023, the Holden Hills partnership entered into a loan agreement with Comerica Bank to finance the development of Phase I of the project. Refer to Note 6 for discussion of the loan agreement.

Operating Loans to Partnerships. In April 2023, Stratus made an operating loan of $1.5 million to Stratus Block 150, L.P. to facilitate the partnership’s ability to pay ongoing costs of The Annie B project during the pre-construction period. The loan bears interest at the one-month Bloomberg Short-Term Bank Yield Index (BSBY) Rate plus 5.00 percent and must be repaid before distributions may be made to the partners.

In June 2023, Stratus made an operating loan of $750 thousand to The Saint June, L.P. to support the partnership’s ability to pay its construction loan interest, which has risen above the amount originally budgeted due to rising interest rates. The loan bears interest at the Term Secured Overnight Financing Rate (SOFR) plus 5.00 percent and must be repaid before distributions may be made to the partners.

Potential Returns. The following table presents the distribution percentages for the limited partnerships in which Stratus’ potential returns may increase above its relative equity interest if certain hurdles are achieved.

	Distribution Percentages
	The Saint George Apartments, L.P.				The Saint June, L.P.				Holden Hills, L.P.				Stratus Kingwood Place, L.P.
	Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partners
Until all partners have received a return of their capital contributions and a 9.0 percent cumulative return;	10.00	%	90.00	%	34.13	%	65.87	%	50.00	%	50.00	%	60.00	%	40.00	%
Until all partners have received an 11.0 percent cumulative return;	—		—		—		—		—		—		68.00		32.00
Until the Class B limited partner has received a 12.0 percent cumulative return;	20.00		80.00		44.13		55.87		55.00		45.00		—		—
Until the Class B limited partner has received an 18.0 percent cumulative return;	30.00		70.00		—		—		—		—		—		—
Thereafter	50.00		50.00		54.13		45.87		65.00		35.00		76.00		24.00

Accounting for Limited Partnerships. Stratus has performed evaluations and concluded that The Saint George Apartments, L.P., Stratus Block 150, L.P., The Saint June, L.P., Stratus Kingwood Place, L.P. and Holden Hills, L.P. are variable interest entities and that Stratus is the primary beneficiary. Accordingly, the partnerships’ results are consolidated in Stratus’ financial statements. Stratus will continue to re-evaluate which entity is the primary beneficiary of these partnerships in accordance with applicable accounting guidance.

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

Stratus’ consolidated balance sheets include the following assets and liabilities of the partnerships, net of intercompany balances (including the operating loans), which are eliminated (in thousands):

	June 30, 2023 a		December 31, 2022
Assets: b
Cash and cash equivalents	$	4,745	$	7,744
Real estate under development	156,499		107,968
Land available for development	4,116		3,927
Real estate held for investment	33,389		31,415
Other assets	4,383		4,503
Total assets	203,132		155,557
Liabilities: c
Accounts payable and accrued liabilities	13,131		12,247
Debt	71,368		55,305
Total liabilities	84,499		67,552
Net assets	$	118,633	$	88,005

a.Includes the assets and liabilities of the Holden Hills partnership, which was formed in January 2023.

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

c.All of the debt is guaranteed by Stratus until certain conditions are met as provided in the applicable loan agreements. The creditors for the remaining liabilities do not have recourse to the general credit of Stratus.

XML

Dispositions

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Dispositions

ASSET SALES

Block 21 - Discontinued Operations. Block 21 was Stratus’ wholly owned mixed-use real estate property in downtown Austin, Texas containing the 251-room W Austin Hotel and Austin City Limits Live at the Moody Theater, a 2,750-seat entertainment venue, Class A office space, retail space and the 3TEN ACL Live entertainment venue. On May 31, 2022, Stratus completed the previously announced sale of Block 21 to Ryman Hospitality Properties, Inc. (Ryman) for $260.0 million, subject to certain purchase price adjustments, and including Ryman’s assumption of $136.2 million of existing mortgage debt, with the remainder paid in cash. Stratus’ net proceeds of cash and restricted cash totaled $112.3 million (including $6.9 million escrowed at closing and disbursed in full to Stratus in June 2023). Stratus recorded a pre-tax gain on the sale of $119.7 million in second-quarter 2022.

In accordance with accounting guidance, Stratus reported the results of operations of Block 21 as discontinued operations in the consolidated statement of comprehensive income for second-quarter 2022 and the first six months of 2022 because the disposal represents a strategic shift that had a major effect on operations. Block 21 did not have any other comprehensive income and Stratus' consolidated statements of cash flows are reported on a combined basis without separately presenting discontinued operations.

Block 21’s results of operations in the consolidated statements of comprehensive (loss) income consist of the following (in thousands):

	Two Months Ended		Five Months Ended
	May 31, 2022
Revenues: a
Hotel	$	6,782	$	12,653
Entertainment	4,650		9,990
Leasing operations and other	206		932
Total revenue	11,638		23,575
Cost of sales:
Hotel	4,487		9,230
Entertainment	3,624		7,763
Leasing operations and other	331		802
Depreciation b	—		—
Total cost of sales	8,442		17,795
General and administrative expenses	136		236
Gain on sale of assets	(119,695)		(119,695)
Operating income	122,755		125,239
Interest expense, net	(1,291)		(3,236)
Provision for income taxes	(25,539)		(25,703)
Net income from discontinued operations	$	95,925	$	96,300

a.In accordance with accounting guidance, amounts are net of eliminations of intercompany sales totaling $189 thousand for the two months ended May 31, 2022 and $510 thousand for the five months ended May 31, 2022.

b.In accordance with accounting guidance, depreciation is not recognized subsequent to classification as assets held for sale, which occurred in the fourth quarter of 2021.

Capital expenditures associated with discontinued operations totaled $31 thousand in second-quarter 2022 and $213 thousand the first six months of 2022.

The Oaks at Lakeway. In 2017, Stratus sold The Oaks at Lakeway to FHF I Oaks at Lakeway, LLC for $114.0 million in cash. The Oaks at Lakeway is an H-E-B, L.P.-anchored retail project located in Lakeway, Texas. The parties entered into three master lease agreements at closing: (1) one covering unleased in-line retail space, with a 5-year term (the In-line Master Lease), (2) one covering the hotel pad with a 99-year term (the Hotel Master Lease) and (3) one covering four unleased pad sites, three of which have 10-year terms, and one of which has a 15-year term (the Pad Site Master Lease).

The In-Line Master Lease expired in February 2022 and the Hotel Master Lease was terminated in November 2020. As such, Stratus has no further obligations under these two master leases. With respect to the Pad Site Master

Lease, Stratus has leased the one pad site with a 15-year term, reducing the monthly rent payment net of rent collections for this pad site to approximately $2,500. Stratus may assign this lease to the purchaser and terminate the obligation under the Pad Site Master Lease for this pad site with a payment of $560 thousand to the purchaser. The lease for the remaining three unleased pad sites under the Pad Site Master Lease expires in February 2027. To the extent leases are executed for the remaining three unleased pad sites, tenants open for business, and the leases are then assigned to the purchaser, the master lease obligation could be reduced further.

In first-quarter 2022, Stratus reassessed its plans with respect to construction of the remaining buildings on the three remaining unleased pad sites and determined that, rather than execute leases and build the buildings, it is less costly to continue to pay the monthly rent (approximately $73 thousand per month) pursuant to the Pad Site Master Lease until the lease expires in February 2027. In connection with this determination, Stratus reversed an accrual of costs to lease and construct these buildings, resulting in recognition of an additional $4.8 million of pre-tax gain in first-quarter 2022. A contract liability is presented as a deferred gain in the consolidated balance sheets in the amount of $3.1 million at June 30, 2023 and $3.5 million at December 31, 2022. The reduction in the deferred gain balance primarily reflects Pad Site Master Lease payments. The remaining deferred gain balance is expected to be reduced primarily by future Pad Site Master Lease payments.

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

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

The fair value of Stratus’ debt also approximates fair value, as the interest rates are variable and approximate prevailing market interest rates available for similar mortgage debt. Stratus' debt is recorded at cost and is not actively traded. Fair value is estimated based on discounted future expected cash flows at estimated current market interest rates available for similar mortgage debt. Accordingly, Stratus' debt is classified within Level 2 of the fair value hierarchy. The fair value of debt does not represent the amounts that will ultimately be paid upon the maturities of the loans.

XML

Debt

6 Months Ended

Jun. 30, 2023

Capitalization, Long-Term Debt and Equity [Abstract]

Debt

DEBT AND EQUITY

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

	June 30, 2023		December 31, 2022
Comerica Bank revolving credit facility	$	—	$	—
Jones Crossing loan	22,289		24,143
The Annie B land loan	13,950		13,969
New Caney land loan	—		4,047
Construction loans: a
Kingwood Place	28,044		27,507
The Saint June	24,617		13,829
Lantana Place	21,792		21,782
Amarra Villas revolving credit facility	10,951		5,366
Magnolia Place	8,006		6,816
West Killeen Market	5,276		5,306
The Saint George	2,507		—
Total debt b	$	137,432	$	122,765

a.The Holden Hills construction loan had no outstanding balance at June 30, 2023.

b.Includes net reductions for unamortized debt issuance costs of $2.0 million at June 30, 2023, and $1.1 million at December 31, 2022.

Comerica Bank revolving credit facility. As of June 30, 2023, Status had $42.7 million available under the Comerica Bank revolving credit facility net of letters of credit totaling $11.0 million issued to secure Stratus’ obligation to build certain roads and utilities facilities benefiting Holden Hills and Section N. In March 2023, Stratus entered into a modification of the revolving credit facility, which extended the maturity date of the revolving credit facility to March 27, 2025, and increased the floor of the one-month BSBY Rate. As amended, advances under the revolving credit facility bear interest at the one-month BSBY Rate (with a floor of 0.50 percent) plus 4.00 percent. In May 2023, Stratus entered into a modification of the revolving credit facility to increase the maximum amount of letters of credit that may be issued under the revolving credit facility from $11.5 million to $13.3 million. In July 2023, Stratus entered into a $2.3 million letter of credit to secure its obligations, which are subject to certain conditions, to construct and pay for certain utility infrastructure in Lakeway, Texas, estimated to cost approximately $2.3 million. The amount available under the revolving credit facility, net of letters of credit issued, was $40.4 million as of August 9, 2023.

Jones Crossing loan. The Jones Crossing loan requires the Jones Crossing project to meet a debt service coverage ratio (DSCR) test of 1.15 to 1.00 measured quarterly and, starting June 30, 2023, on a rolling 12 month basis. If the DSCR falls below 1.15 to 1.00, it is not an event of default, but a “Cash Sweep Period” (as defined in the Jones Crossing loan) results, which limits Stratus’ ability to receive cash from its Jones Crossing subsidiary, unless a principal payment is made on the loan to restore the DSCR to the required threshold. The DSCR fell below 1.15 to 1.00 in each of fourth-quarter 2022 and first-quarter 2023, and the Jones Crossing subsidiary made principal payments of $231 thousand and $1.7 million in February 2023 and May 2023, respectively, to bring the DSCR back above 1.15 to 1.00 and a Cash Sweep Period did not occur. The DSCR fell below 1.15 to 1.00 in second-quarter 2023 and the Jones Crossing subsidiary must make an additional principal payment of approximately $1.2 million in August 2023 or allow a Cash Sweep Period to commence.

The Annie B land loan. In February 2023, Stratus Block 150, L.P. entered into a modification agreement that extended the maturity date of The Annie B land loan to March 1, 2024, and changed the interest rate to the one-month BSBY Rate (with a floor of 0.50 percent) plus 3.00 percent. In connection with the modification agreement, Stratus Block 150, LP, escrowed an interest reserve of $0.6 million with the lender.

New Caney land loan. In March 2023, the New Caney land loan was repaid.

The Saint June construction loan. In January 2023, The Saint June construction loan was amended to change the interest rate for the loan to SOFR with a floor of 0.75 percent plus 2.85 percent, subject to an overall 3.50 percent floor.

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

Magnolia Place construction loan. In May 2023, the Magnolia Place construction loan was amended to change the interest rate for the loan to Term SOFR with a floor of 0.00 percent plus 3.36 percent, subject to an overall 3.50 percent floor.

Holden Hills construction loan. In February 2023, the Holden Hills partnership entered into a loan agreement with Comerica Bank to finance the development of Phase I of the Holden Hills Project.

The loan agreement provides for a senior secured construction loan in the aggregate principal amount of the least of (i) $26.1 million, (ii) 23 percent of the total development costs for Phase I or (iii) the amount that would result in a maximum loan-to-value ratio of 28 percent. The loan has a maturity date of February 8, 2026. Advances under the loan bear interest at the one-month BSBY Rate (with a floor of 0.50 percent), plus 3.00 percent. Payments of interest only on the loan are due monthly until the maturity date with the outstanding principal due at maturity. The Holden Hills partnership may prepay all or any portion of the loan without premium or penalty. Amounts repaid under the loan may not be reborrowed.

The loan is secured by the Holden Hills Project, including the land related to both Phase I and Phase II, and the Phase I improvements. After completion of construction of Phase I, the Holden Hills partnership may sell and obtain releases of the liens on single-family platted home sites, individual pods or the Phase II land, subject to specified conditions, and upon payment to the lender of specified amounts related to the parcel to be released. The Holden Hills partnership is not permitted to make distributions to its partners, including Stratus, while the loan is

outstanding. The Holden Hills partnership must apply all Municipal Utility District (MUD) reimbursements it receives and is entitled to retain as payments of principal on the loan.

Stratus has entered into a guaranty for the benefit of the lender pursuant to which Stratus has guaranteed the payment of the loan and the completion of Phase I, including the Tecoma Improvements (which benefit both the Holden Hills Project and Section N). Stratus is also liable for customary carve-out obligations and an environmental indemnity. Stratus must maintain, on a consolidated basis, a net asset value not less than $125.0 million, and a debt-to-gross-asset value not more than 50 percent (in each case as defined in the guaranty).

For additional information regarding Stratus' debt, refer to Note 6 in the Stratus 2022 Form 10-K.

Interest Expense and Capitalization. Interest costs (before capitalized interest) totaled $2.9 million in second-quarter 2023, $1.5 million in second-quarter 2022, $5.3 million for the first six months of 2023 and $2.6 million for the first six months of 2022. Substantially all of these interest costs were capitalized for the periods presented. Capitalized interest is primarily related to development activities at Barton Creek (primarily Holden Hills, Section N and The Saint June), The Saint George and The Annie B for the periods presented.

Equity. The Comerica Bank revolving credit facility, Amarra Villas revolving credit facility, The Annie B land loan, The Saint George construction loan, Kingwood Place construction loan and Holden Hills construction loan require Comerica Bank’s prior written consent for any common stock repurchases in excess of $1.0 million or any dividend payments. On September 1, 2022, after receiving written consent from Comerica Bank, Stratus’ Board of Directors (Board) declared a special cash dividend of $4.67 per share (totaling $40.0 million) on Stratus’ common stock, which was paid on September 29, 2022 to shareholders of record as of September 19, 2022. Accrued liabilities included $0.7 million as of June 30, 2023, and $1.3 million as of December 31, 2022, representing dividends accrued for unvested RSUs in accordance with the terms of the awards. The accrued dividends are paid to the holders of the RSUs as the RSUs vest.

In 2022, with written consent from Comerica Bank, Stratus’ Board also approved a share repurchase program, which authorizes repurchases of up to $10.0 million of Stratus’ common stock. The repurchase program authorizes Stratus, in management’s discretion, to repurchase shares from time to time, subject to market conditions and other factors. During the first six months of 2023, Stratus acquired 74,306 shares of its common stock under the share repurchase program for a total cost of $1.6 million at an average price of $21.36 per share. Through August 9, 2023, Stratus has acquired 381,889 shares of its common stock for a total cost of $9.8 million at an average price of $25.65 per share, and $0.2 million remains available for repurchases under the program.

XML

Profit Participation Incentive Plan

6 Months Ended

Jun. 30, 2023

Profit Participation Plan [Abstract]

Profit Participation Incentive Plan

PROFIT PARTICIPATION INCENTIVE PLAN AND LONG-TERM INCENTIVE PLAN

In July 2018, the Compensation Committee adopted the PPIP. In February 2023, the Committee approved the LTIP, which amends and restates the PPIP, and is effective for participation interests awarded under development projects on or after its effective date. As of June 30, 2023, there were not yet any participation interests awarded under the LTIP. Outstanding participation interests granted under the PPIP will continue to be governed by the terms of the prior PPIP. The PPIP and LTIP provide participants with economic incentives tied to the success of the development projects designated by the Committee as approved projects under the PPIP and LTIP. Estimates related to the awards may change over time as a result of differences between projected and actual development progress and costs, market conditions and the timing of capital transactions or valuation events. Refer to Notes 1 and 8 of the Stratus 2022 Form 10-K for further discussion.

The sale of The Saint Mary in January 2021 was a capital transaction under the PPIP. During February 2022, $2.1 million was paid in cash to eligible participants.

In September 2021, Lantana Place reached a valuation event under the PPIP. The profit pool was $3.9 million, of which $0.2 million was paid in cash during February 2022 and the remaining $3.7 million was settled in RSUs with a three-year vesting period awarded to eligible participants during second-quarter 2022 following stockholder approval of Stratus’ new stock incentive plan.

The sale of The Santal in December 2021 was a capital transaction under the PPIP. The profit pool was $6.7 million, of which $5.0 million was paid in cash to eligible participants during February 2022. The PPIP contains limits on cash compensation paid to certain officers and amounts due above the limits are converted to an equivalent number of RSUs with a one-year vesting period. Of the remaining amount, $1.6 million was settled in RSUs awarded to one participant during second-quarter 2022 following stockholder approval of Stratus’ new stock incentive plan.

During first-quarter 2022, the Compensation Committee designated The Saint June as an approved project under the PPIP, and the awards were granted in August 2022.

Under the terms of the PPIP and LTIP, the number of RSUs granted in connection with settlement of approved projects is determined by reference to the 12-month trailing average stock price for the year the project reaches a payment event, whereas the grant date fair value of the RSUs for accounting purposes is based on the grant date closing price. For the RSUs awarded in connection with Lantana Place and The Santal, the aggregate grant date value was $2.1 million greater than the accrued liability for the two projects as a result of this different valuation methodology. During second-quarter 2022, Stratus transferred the $5.3 million accrued liability balance under the PPIP for Lantana Place and The Santal that was settled in RSUs to capital in excess of par value and is amortizing the $2.1 million excess of the grant-date value over the accrued liability with a charge to general and administrative expenses and a credit to capital in excess of par value over the three-year or one-year vesting periods of the related RSUs.

A summary of PPIP costs follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Charged to general and administrative expense	$	141	$	119	$	289	$	134
Capitalized (credited) to project development costs	(9)		51		101		102
Total PPIP costs	$	132	$	170	$	390	$	236

The accrued liability for the PPIP totaled $3.3 million at June 30, 2023, and $3.0 million at December 31, 2022 (included in other liabilities).

XML

Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Stratus’ accounting policy for and other information regarding its income taxes are further described in Notes 1 and 7 in the Stratus 2022 Form 10-K.

Stratus has a full valuation allowance against its U.S. Federal net deferred tax assets as of both June 30, 2023 and December 31, 2022. Stratus has recorded a deferred tax asset totaling $38 thousand at both June 30, 2023 and December 31, 2022 related to state income taxes.

In evaluating the recoverability of the remaining deferred tax assets, management considered available positive and negative evidence, giving greater weight to the uncertainty regarding projected future financial results. Upon a change in facts and circumstances, management may conclude that sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance in the future, which would favorably impact Stratus' results of operations. Stratus’ future results of operations may be negatively impacted by an inability to realize a tax benefit for future tax losses or for items that will generate additional deferred tax assets that are not more likely than not to be realized.

During 2023, Stratus expects to incur current state income taxes in addition to U.S. Federal current income taxes primarily associated with taxable income generated from cash received in the Holden Hills transaction discussed in Note 3.

The difference between Stratus' consolidated effective income tax rate of (17) percent for the first six months of 2023 and the U.S. Federal statutory income tax rate of 21 percent was primarily attributable to state income taxes, noncontrolling interests in subsidiaries, the presence of a valuation allowance against its U.S. Federal net deferred tax assets as of June 30, 2023, and the executive compensation limitation. The difference between Stratus' consolidated effective income tax rate of (13) percent for the first six months of 2022 and the U.S. Federal statutory income tax rate of 21 percent was primarily attributable to the release of a reserve on uncertain tax positions related to the 2015 through 2017 U.S. Federal tax audit, which was closed in first-quarter 2022.

On August 16, 2022, the Inflation Reduction Act of 2022 (the IR Act) was enacted in the United States. Among other provisions, the IR Act imposes a new 1 percent excise tax on the fair market value of net corporate stock

repurchases made by covered corporations, effective for tax years beginning after December 31, 2022. Stratus is assessing the potential impacts of the IR Act but does not expect the IR Act to have a material impact on its consolidated financial statements.

XML

Business Segments

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS

As a result of the sale of Block 21, Stratus has two operating segments: Real Estate Operations and Leasing Operations. Block 21, which encompassed Stratus’ Hotel and Entertainment segments, along with some leasing operations, is presented as discontinued operations.

The Real Estate Operations segment is comprised of Stratus’ real estate assets (developed for sale, under development and available for development), which consists of its properties in Austin, Texas (including the Barton Creek Community, which includes Section N, Holden Hills, Amarra multi-family and commercial land, Amarra Villas, The Saint June, Amarra Drive lots and other vacant land; the Circle C community; the Lantana community, which includes a portion of Lantana Place planned for a multi-family phase now known as The Saint Julia; The Saint George; and the land for The Annie B); in Lakeway, Texas, located in the greater Austin area (Lakeway); in College Station, Texas (land for future phases of retail and multi-family development and retail pad sites at Jones Crossing); and in Magnolia, Texas (land for a future phase of retail development and for future multi-family use and retail pad sites at Magnolia Place), Kingwood, Texas (a retail pad site) and New Caney, Texas (New Caney), each located in the greater Houston area.

The Leasing Operations segment is comprised of Stratus’ real estate assets held for investment that are leased or available for lease and includes retail space at West Killeen Market, Lantana Place, Kingwood Place and the completed portions of Jones Crossing and Magnolia Place and retail pad sites subject to ground leases at Lantana Place, Kingwood Place and Jones Crossing.

Stratus uses operating income or loss to measure the performance of each segment. 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. The following segment information reflects management determinations that may not be indicative of what the actual financial performance of each segment would be if it were an independent entity.

Revenues from Contracts with Customers. Stratus' revenues from contracts with customers follow (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Real Estate Operations:
Developed property sales	$	—	$	2,382	$	2,493	$	2,382
Undeveloped property sales	—		5,444		—		5,444
Commissions and other	58		99		58		118
	58		7,925		2,551		7,944
Leasing Operations:
Rental revenue	3,472		3,200		6,781		6,280
	3,472		3,200		6,781		6,280
Total revenues from contracts with customers	$	3,530	$	11,125	$	9,332	$	14,224

Financial Information by Business Segment. Summarized financial information by segment for the three months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	58	$	3,472	$	—	$	3,530
Cost of sales, excluding depreciation	(2,697)		(1,144)		—		(3,841)
Depreciation and amortization	(50)		(924)		4		(970)
General and administrative expenses	—		—		(4,071)		(4,071)
Operating (loss) income	$	(2,689)	$	1,404	$	(4,067)	$	(5,352)
Capital expenditures and purchases and development of real estate properties	$	12,057	$	13,471	$	—	$	25,528
Total assets at June 30, 2023 c	328,033		111,252		46,470		485,755

a.Includes sales commissions and other revenues together with related expenses.

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

c.Corporate, eliminations and other includes cash and cash equivalents and restricted cash of $43.2 million. The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the three months ended June 30, 2022, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	7,925	$	3,200	$	—	$	11,125
Intersegment	2		—		(2)		—
Cost of sales, excluding depreciation	(5,432)		(870)		—		(6,302)
Depreciation and amortization	(24)		(865)		5		(884)
General and administrative expenses	—		—		(3,444)		(3,444)
Operating income (loss)	$	2,471	$	1,465	$	(3,441)	$	495
Capital expenditures and purchases and development of real estate properties	$	7,227	$	12,820	$	31	$	20,078
Total assets at June 30, 2022 c	265,929		106,020		112,711		484,660

a.Includes sales commissions and other revenues together with related expenses.

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

c.Corporate, eliminations and other includes $102.3 million of cash and cash equivalents and restricted cash, primarily received from the May 2022 sale of Block 21. The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the six months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	2,551	$	6,781	$	—	$	9,332
Cost of sales, excluding depreciation	(7,184)		(2,405)		—		(9,589)
Depreciation and amortization	(77)		(1,830)		9		(1,898)
General and administrative expenses	—		—		(8,790)		(8,790)
Operating (loss) income	$	(4,710)	$	2,546	$	(8,781)	$	(10,945)
Capital expenditures and purchases and development of real estate properties	$	21,084	$	23,477	$	—	$	44,561

a.Includes sales commissions and other revenues together with related expenses.

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

Summarized financial information by segment for the six months ended June 30, 2022, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	7,944	$	6,280	$	—	$	14,224
Intersegment	6		—		(6)		—
Cost of sales, excluding depreciation	(6,798)		(1,854)		—		(8,652)
Depreciation and amortization	(49)		(1,717)		9		(1,757)
General and administrative expenses	—		—		(6,611)		(6,611)
Gain on sale of assets c	—		4,812		—		4,812
Operating income (loss)	$	1,103	$	7,521	$	(6,608)	$	2,016
Capital expenditures and purchases and development of real estate properties	$	12,091	$	27,362	$	213	$	39,666

a.Includes sales commissions and other revenues together with related expenses.

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

c.Represents a pre-tax gain recognized on the reversal of accruals for costs to lease and construct buildings under a master lease arrangement that Stratus entered into in connection with its sale of The Oaks at Lakeway in 2017. Refer to Note 4 under the heading “The Oaks at Lakeway” for further discussion.

XML

Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS Stratus evaluated events after June 30, 2023, and through the date the financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements.

XML

General (Policies)	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting	The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022, included in Stratus Properties Inc.’s (Stratus) Annual Report on Form 10-K for the year ended December 31, 2022 (Stratus 2022 Form 10-K) filed with the U.S. Securities and Exchange Commission on March 31, 2023. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported and consist of normal recurring adjustments. The results of operations for any interim period are not necessarily indicative of the results of operations for any other future interim period or for a full fiscal year. Refer to Note 4 for a discussion of Stratus' discontinued operations.
Related Party Transactions	Related Party Transactions. Through the first quarter of 2022, Stratus had an arrangement with Whitefish Partners, LLC (Whitefish Partners), formerly known as Austin Retail Partners, LLC, for services provided by a consultant of Whitefish Partners who is the son of Stratus' President and Chief Executive Officer. Payments to Whitefish Partners for the consultant’s consulting services and expense reimbursements totaled $185 thousand for first-quarter 2022, which included $20 thousand as an annual incentive award for 2021 and a $135 thousand cash payment under Stratus’ Profit Participation Incentive Plan (PPIP). In April 2022, Stratus hired the consultant as an employee at an annual salary of $100 thousand. As an employee, he is eligible for the same health and retirement benefits provided to all Stratus employees and is also eligible for annual incentive awards and for awards under the PPIP and the Long-Term Incentive Plan (LTIP). In first-quarter 2023, he received $22 thousand as an annual incentive award for 2022, and his annual salary was increased to $120 thousand. As of June 30, 2023, the employee has two outstanding awards under the PPIP. The liability associated with these awards at June 30, 2023 is not significant to the consolidated financial statements. Refer to Note 7 for discussion of the PPIP and LTIP. For additional information regarding Stratus' related parties, including LCHM Holdings, LLC and JBM Trust, refer to Notes 1, 2 and 4 in the Stratus 2022 Form 10-K.

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of net (loss) income and weighted-average shares of common stock outstanding for purposes of calculating diluted net (loss) income per share (in thousands, except per share amounts) follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net (loss) income from continuing operations	$	(5,309)	$	532	$	(11,582)	$	2,344
Net income from discontinued operations	—		95,925		—		96,300
Net (loss) income and total comprehensive (loss) income	(5,309)		96,457		(11,582)		98,644
Total comprehensive loss attributable to noncontrolling interests	8		164		480		249
Net (loss) income and total comprehensive (loss) income attributable to common stockholders	$	(5,301)	$	96,621	$	(11,102)	$	98,893
Basic weighted-average shares of common stock outstanding	8,227		8,273		8,225		8,262
Add shares issuable upon vesting of dilutive restricted stock units (RSUs) a	—		110		—		107
Diluted weighted-average shares of common stock outstanding	8,227		8,383		8,225		8,369
Basic net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.59		—		11.66
	$	(0.64)	$	11.68	$	(1.35)	$	11.97
Diluted net (loss) income per share attributable to common stockholders:
Continuing operations	$	(0.64)	$	0.09	$	(1.35)	$	0.31
Discontinued operations	—		11.44		—		11.51
	$	(0.64)	$	11.53	$	(1.35)	$	11.82

a.Excludes 222 thousand shares for second-quarter 2023 and 259 thousand shares for the first six months of 2023 of common stock associated with RSUs that were anti-dilutive as a result of net losses. Excludes 2 thousand shares for the first six months of 2022 of common stock associated with RSUs that were anti-dilutive.

XML

Limited Partnerships (Tables)

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Schedule of Assets and Liabilities of the VIE Partnerships

Stratus’ consolidated balance sheets include the following assets and liabilities of the partnerships, net of intercompany balances (including the operating loans), which are eliminated (in thousands):

	June 30, 2023 a		December 31, 2022
Assets: b
Cash and cash equivalents	$	4,745	$	7,744
Real estate under development	156,499		107,968
Land available for development	4,116		3,927
Real estate held for investment	33,389		31,415
Other assets	4,383		4,503
Total assets	203,132		155,557
Liabilities: c
Accounts payable and accrued liabilities	13,131		12,247
Debt	71,368		55,305
Total liabilities	84,499		67,552
Net assets	$	118,633	$	88,005

a.Includes the assets and liabilities of the Holden Hills partnership, which was formed in January 2023.

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

c.All of the debt is guaranteed by Stratus until certain conditions are met as provided in the applicable loan agreements. The creditors for the remaining liabilities do not have recourse to the general credit of Stratus.

Schedule of Assets and Liabilities of the VIE Partnerships

Potential Returns. The following table presents the distribution percentages for the limited partnerships in which Stratus’ potential returns may increase above its relative equity interest if certain hurdles are achieved.

	Distribution Percentages
	The Saint George Apartments, L.P.				The Saint June, L.P.				Holden Hills, L.P.				Stratus Kingwood Place, L.P.
	Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partner		Stratus		Third-party Class B Limited Partners
Until all partners have received a return of their capital contributions and a 9.0 percent cumulative return;	10.00	%	90.00	%	34.13	%	65.87	%	50.00	%	50.00	%	60.00	%	40.00	%
Until all partners have received an 11.0 percent cumulative return;	—		—		—		—		—		—		68.00		32.00
Until the Class B limited partner has received a 12.0 percent cumulative return;	20.00		80.00		44.13		55.87		55.00		45.00		—		—
Until the Class B limited partner has received an 18.0 percent cumulative return;	30.00		70.00		—		—		—		—		—		—
Thereafter	50.00		50.00		54.13		45.87		65.00		35.00		76.00		24.00

XML

Discontinued Operations and Disposal Groups (Tables)

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

Block 21’s results of operations in the consolidated statements of comprehensive (loss) income consist of the following (in thousands):

	Two Months Ended		Five Months Ended
	May 31, 2022
Revenues: a
Hotel	$	6,782	$	12,653
Entertainment	4,650		9,990
Leasing operations and other	206		932
Total revenue	11,638		23,575
Cost of sales:
Hotel	4,487		9,230
Entertainment	3,624		7,763
Leasing operations and other	331		802
Depreciation b	—		—
Total cost of sales	8,442		17,795
General and administrative expenses	136		236
Gain on sale of assets	(119,695)		(119,695)
Operating income	122,755		125,239
Interest expense, net	(1,291)		(3,236)
Provision for income taxes	(25,539)		(25,703)
Net income from discontinued operations	$	95,925	$	96,300

a.In accordance with accounting guidance, amounts are net of eliminations of intercompany sales totaling $189 thousand for the two months ended May 31, 2022 and $510 thousand for the five months ended May 31, 2022.

b.In accordance with accounting guidance, depreciation is not recognized subsequent to classification as assets held for sale, which occurred in the fourth quarter of 2021.

XML

Debt Summary of Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Table [Abstract]

Schedule of debt

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

	June 30, 2023		December 31, 2022
Comerica Bank revolving credit facility	$	—	$	—
Jones Crossing loan	22,289		24,143
The Annie B land loan	13,950		13,969
New Caney land loan	—		4,047
Construction loans: a
Kingwood Place	28,044		27,507
The Saint June	24,617		13,829
Lantana Place	21,792		21,782
Amarra Villas revolving credit facility	10,951		5,366
Magnolia Place	8,006		6,816
West Killeen Market	5,276		5,306
The Saint George	2,507		—
Total debt b	$	137,432	$	122,765

a.The Holden Hills construction loan had no outstanding balance at June 30, 2023.

b.Includes net reductions for unamortized debt issuance costs of $2.0 million at June 30, 2023, and $1.1 million at December 31, 2022.

XML

Compensation Related Costs, General (Tables)

6 Months Ended

Jun. 30, 2023

Compensation Related Costs [Abstract]

Share-based Payment Arrangement, Cost by Plan

A summary of PPIP costs follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Charged to general and administrative expense	$	141	$	119	$	289	$	134
Capitalized (credited) to project development costs	(9)		51		101		102
Total PPIP costs	$	132	$	170	$	390	$	236

XML

Business Segments (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Revenue from External Customers by Products and Services [Table Text Block]

Revenues from Contracts with Customers. Stratus' revenues from contracts with customers follow (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Real Estate Operations:
Developed property sales	$	—	$	2,382	$	2,493	$	2,382
Undeveloped property sales	—		5,444		—		5,444
Commissions and other	58		99		58		118
	58		7,925		2,551		7,944
Leasing Operations:
Rental revenue	3,472		3,200		6,781		6,280
	3,472		3,200		6,781		6,280
Total revenues from contracts with customers	$	3,530	$	11,125	$	9,332	$	14,224

Schedule of Segment Reporting Information by Segment [Table Text Block]

Financial Information by Business Segment. Summarized financial information by segment for the three months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	58	$	3,472	$	—	$	3,530
Cost of sales, excluding depreciation	(2,697)		(1,144)		—		(3,841)
Depreciation and amortization	(50)		(924)		4		(970)
General and administrative expenses	—		—		(4,071)		(4,071)
Operating (loss) income	$	(2,689)	$	1,404	$	(4,067)	$	(5,352)
Capital expenditures and purchases and development of real estate properties	$	12,057	$	13,471	$	—	$	25,528
Total assets at June 30, 2023 c	328,033		111,252		46,470		485,755

a.Includes sales commissions and other revenues together with related expenses.

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

c.Corporate, eliminations and other includes cash and cash equivalents and restricted cash of $43.2 million. The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the three months ended June 30, 2022, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	7,925	$	3,200	$	—	$	11,125
Intersegment	2		—		(2)		—
Cost of sales, excluding depreciation	(5,432)		(870)		—		(6,302)
Depreciation and amortization	(24)		(865)		5		(884)
General and administrative expenses	—		—		(3,444)		(3,444)
Operating income (loss)	$	2,471	$	1,465	$	(3,441)	$	495
Capital expenditures and purchases and development of real estate properties	$	7,227	$	12,820	$	31	$	20,078
Total assets at June 30, 2022 c	265,929		106,020		112,711		484,660

a.Includes sales commissions and other revenues together with related expenses.

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

c.Corporate, eliminations and other includes $102.3 million of cash and cash equivalents and restricted cash, primarily received from the May 2022 sale of Block 21. The remaining cash and cash equivalents and restricted cash is reflected in the operating segments’ assets.

Summarized financial information by segment for the six months ended June 30, 2023, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	2,551	$	6,781	$	—	$	9,332
Cost of sales, excluding depreciation	(7,184)		(2,405)		—		(9,589)
Depreciation and amortization	(77)		(1,830)		9		(1,898)
General and administrative expenses	—		—		(8,790)		(8,790)
Operating (loss) income	$	(4,710)	$	2,546	$	(8,781)	$	(10,945)
Capital expenditures and purchases and development of real estate properties	$	21,084	$	23,477	$	—	$	44,561

a.Includes sales commissions and other revenues together with related expenses.

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

Summarized financial information by segment for the six months ended June 30, 2022, based on Stratus’ internal financial reporting system utilized by its chief operating decision maker, follows (in thousands):

	Real Estate Operations a		Leasing Operations		Corporate, Eliminations and Other b		Total
Revenues:
Unaffiliated customers	$	7,944	$	6,280	$	—	$	14,224
Intersegment	6		—		(6)		—
Cost of sales, excluding depreciation	(6,798)		(1,854)		—		(8,652)
Depreciation and amortization	(49)		(1,717)		9		(1,757)
General and administrative expenses	—		—		(6,611)		(6,611)
Gain on sale of assets c	—		4,812		—		4,812
Operating income (loss)	$	1,103	$	7,521	$	(6,608)	$	2,016
Capital expenditures and purchases and development of real estate properties	$	12,091	$	27,362	$	213	$	39,666

a.Includes sales commissions and other revenues together with related expenses.

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

c.Represents a pre-tax gain recognized on the reversal of accruals for costs to lease and construct buildings under a master lease arrangement that Stratus entered into in connection with its sale of The Oaks at Lakeway in 2017. Refer to Note 4 under the heading “The Oaks at Lakeway” for further discussion.

XML

General (Details) - Immediate Family Member of Management or Principal Owner - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2022	Mar. 31, 2023	Mar. 31, 2022	Jun. 30, 2023
Product Information [Line Items]
Selling, General and Administrative Expense	$ 100			$ 120
Annual Incentive Award
Product Information [Line Items]
Selling, General and Administrative Expense		$ 22
Whitefish Partners LLC
Product Information [Line Items]
Selling, General and Administrative Expense			$ 185
Whitefish Partners LLC | Annual Incentive Award
Product Information [Line Items]
Selling, General and Administrative Expense			20
Whitefish Partners LLC | Deferred Profit Sharing
Product Information [Line Items]
Selling, General and Administrative Expense			$ 135

XML

Earnings Per Share - Schedule of Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Net (loss) income from continuing operations	$ (5,309)	$ 532	$ (11,582)	$ 2,344
Net income from discontinued operations	0	95,925	0	96,300
Net (loss) income and total comprehensive (loss) income	(5,309)	96,457	(11,582)	98,644
Total comprehensive loss attributable to noncontrolling interests	8	164	480	249
Net (loss) income and total comprehensive (loss) income attributable to common stockholders	$ (5,301)	$ 96,621	$ (11,102)	$ 98,893
Basic weighted average number of shares outstanding, basic (in shares)	8,227	8,273	8,225	8,262
Add shares issuable upon exercise or vesting of dilutive restricted stock units (RSUs) (in shares)	0	110	0	107
Diluted weighted average number of shares outstanding, basic (in shares)	8,227	8,383	8,225	8,369
(Loss) Income from Continuing Operations, Per Basic Share	$ (0.64)	$ 0.09	$ (1.35)	$ 0.31
Income (Loss) from Discontinued Operations, Per Basic Share	0	11.59	0	11.66
Basic net (loss) income per share attributable to common stockholders (in usd per share)	(0.64)	11.68	(1.35)	11.97
(Loss) Income from Continuing Operations, Per Diluted Share	(0.64)	0.09	(1.35)	0.31
Income (Loss) from Discontinued Operations, Per Diluted Share	0	11.44	0	11.51
Diluted net (loss) income per share attributable to common stockholders (in usd per share)	$ (0.64)	$ 11.53	$ (1.35)	$ 11.82
Weighted-average shares excluded from computation of earnings per share (in shares)	222		259	2

XML

Limited Partnerships (Details) - USD ($) $ in Thousands		1 Months Ended		6 Months Ended
	Aug. 14, 2023	Jun. 30, 2023	Apr. 30, 2023	Jun. 30, 2023
Saint George L.P. | Stratus Properties Inc
Limited Partnerships [Line Items]
Equity Method Investment, Ownership Percentage		10.00%		10.00%
Stratus Block 150, L.P. | Stratus Properties Inc
Limited Partnerships [Line Items]
Equity Method Investment, Ownership Percentage		31.00%		31.00%
Intercompany Loans, Description			In April 2023, Stratus made an operating loan of $1.5 million to Stratus Block 150, L.P. to facilitate the partnership’s ability to pay ongoing costs of The Annie B project during the pre-construction period.
Intercompany Loan, Amount			$ 1,500
Stratus Block 150, L.P. | Stratus Properties Inc | Bloomberg short-term bank yield index
Limited Partnerships [Line Items]
Basis spread on variable rate			5.00%
Saint June, L.P. | Stratus Properties Inc
Limited Partnerships [Line Items]
Equity Method Investment, Ownership Percentage		34.13%		34.13%
Intercompany Loans, Description		In June 2023, Stratus made an operating loan of $750 thousand to The Saint June, L.P. to support the partnership’s ability to pay its construction loan interest, which has risen above the amount originally budgeted due to rising interest rates.
Intercompany Loan, Amount		$ 750		$ 750
Saint June, L.P. | Stratus Properties Inc | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Limited Partnerships [Line Items]
Basis spread on variable rate			5.00%
Holden Hills
Limited Partnerships [Line Items]
Initial project and closing cost				$ 5,800
Property Management Fee, Percent Fee				4.00%
Management Fee Expense				$ 150
Holden Hills | Stratus Properties Inc
Limited Partnerships [Line Items]
Proceeds from Partnership Contribution				$ 70,000
Equity Method Investment, Ownership Percentage		50.00%		50.00%
Payments of Distributions to Affiliates				$ 30,000
Municipal improvements				$ 14,700
Percentage of costs reimbursed		60.00%		60.00%
Municipal improvements remaining		$ 10,600		$ 10,600
Holden Hills | Stratus Properties Inc | Forecast | Maximum [Member]
Limited Partnerships [Line Items]
Payments to Acquire Interest in Subsidiaries and Affiliates	$ 10,000
Holden Hills | Unrelated Equity Investor
Limited Partnerships [Line Items]
Proceeds from Partnership Contribution				$ 40,000
Equity Method Investment, Ownership Percentage		50.00%		50.00%
Holden Hills | Unrelated Equity Investor | Forecast | Maximum [Member]
Limited Partnerships [Line Items]
Payments to Acquire Interest in Subsidiaries and Affiliates	$ 10,000
Stratus Kingwood, L.P. [Member] | Stratus Properties Inc
Limited Partnerships [Line Items]
Equity Method Investment, Ownership Percentage		60.00%		60.00%

XML

Limited Partnerships (Schedule of Assets and Liabilities of the VIE Partnerships (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Limited Partnerships [Line Items]
Cash and cash equivalents	$ 44,145	$ 37,666
Real estate under development	271,597	239,278
Land available for development	47,113	39,855
Real estate held for investment, net	94,478	92,377
Other assets	13,905	15,479
Total assets	485,755	445,140	$ 484,660
Debt	137,432	122,765
Total liabilities	186,594	173,067
Limited Partnerships [Member]
Limited Partnerships [Line Items]
Cash and cash equivalents	4,745	7,744
Real estate under development	156,499	107,968
Land available for development	4,116	3,927
Real estate held for investment, net	33,389	31,415
Other assets	4,383	4,503
Total assets	203,132	155,557
Accounts payable and accrued liabilities	13,131	12,247
Debt	71,368	55,305
Total liabilities	84,499	67,552
Net assets	$ 118,633	$ 88,005

XML

Limited Partnerships (Schedule of Potential Returns) (Details)	Jun. 30, 2023
Saint George L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	10.00%
Saint June, L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	34.13%
Holden Hills | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	50.00%
Holden Hills | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	50.00%
Stratus Kingwood, L.P. [Member] | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	60.00%
9% Cumulative Return | Saint George L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	10.00%
9% Cumulative Return | Saint George L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	90.00%
9% Cumulative Return | Saint June, L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	34.13%
9% Cumulative Return | Saint June, L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	65.87%
9% Cumulative Return | Holden Hills | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	50.00%
9% Cumulative Return | Holden Hills | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	50.00%
9% Cumulative Return | Stratus Kingwood, L.P. [Member] | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	60.00%
9% Cumulative Return | Stratus Kingwood, L.P. [Member] | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	40.00%
11% Cumulative Return | Stratus Kingwood, L.P. [Member] | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	68.00%
11% Cumulative Return | Stratus Kingwood, L.P. [Member] | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	32.00%
12% Cumulative Return | Saint George L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	20.00%
12% Cumulative Return | Saint George L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	80.00%
12% Cumulative Return | Saint June, L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	44.13%
12% Cumulative Return | Saint June, L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	55.87%
12% Cumulative Return | Holden Hills | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	55.00%
12% Cumulative Return | Holden Hills | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	45.00%
18% Cumulative Return | Saint George L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	30.00%
18% Cumulative Return | Saint George L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	70.00%
Thereafter Cumulative Return | Saint George L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	50.00%
Thereafter Cumulative Return | Saint George L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	50.00%
Thereafter Cumulative Return | Saint June, L.P. | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	54.13%
Thereafter Cumulative Return | Saint June, L.P. | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	45.87%
Thereafter Cumulative Return | Holden Hills | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	65.00%
Thereafter Cumulative Return | Holden Hills | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	35.00%
Thereafter Cumulative Return | Stratus Kingwood, L.P. [Member] | Stratus Properties Inc
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	76.00%
Thereafter Cumulative Return | Stratus Kingwood, L.P. [Member] | Unrelated Equity Investor
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Equity Method Investment, Ownership Percentage	24.00%

XML

Dispositions Income Statement (Details) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		5 Months Ended	6 Months Ended
	May 31, 2022	Jun. 30, 2023	Jun. 30, 2022	May 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues		$ 3,530	$ 11,125		$ 9,332	$ 14,224
Leasing operations		3,472	3,200		6,781	6,280
Cost of Goods and Service, Excluding Depreciation, Depletion, and Amortization		3,841	6,302		9,589	8,652
Depreciation and amortization		970	884		1,898	1,757
Cost of Revenue		4,811	7,186		11,487	10,409
General and administrative expenses		4,071	3,444		8,790	6,611
Operating income (loss)		(5,352)	495		(10,945)	2,016
Interest expense, net		0	0		0	(15)
(Provision for) benefit from income taxes		(498)	(41)		(1,660)	261
Net (loss) income		(5,309)	96,457		(11,582)	98,644
Eliminations and Other
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues			0			0
Discontinued Operations, Disposed of by Sale | Block 21
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	$ 11,638			$ 23,575
Leasing operations	206			932
Depreciation and amortization	0			0
Cost of Revenue	8,442			17,795
General and administrative expenses	136			236
Other Operating Income	(119,695)			(119,695)
Operating income (loss)	122,755			125,239
Interest expense, net	(1,291)			(3,236)
(Provision for) benefit from income taxes	(25,539)			(25,703)
Net (loss) income	95,925			96,300
Discontinued Operations, Disposed of by Sale | Block 21 | Eliminations and Other
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Revenue	189			510
Hotel [Member] | Discontinued Operations, Disposed of by Sale | Block 21
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	6,782			12,653
Cost of Goods and Service, Excluding Depreciation, Depletion, and Amortization	4,487			9,230
Entertainment [Member] | Discontinued Operations, Disposed of by Sale | Block 21
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	4,650			9,990
Cost of Goods and Service, Excluding Depreciation, Depletion, and Amortization	3,624			7,763
Leasing operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cost of Goods and Service, Excluding Depreciation, Depletion, and Amortization		$ 1,144	$ 870		$ 2,405	$ 1,854
Leasing operations | Discontinued Operations, Disposed of by Sale | Block 21
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cost of Goods and Service, Excluding Depreciation, Depletion, and Amortization	$ 331			$ 802

XML

Dispositions (Details)		3 Months Ended		6 Months Ended		12 Months Ended
	May 31, 2022 USD ($) theater_seat hotel_room	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2017 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of assets		$ 0	$ 0	$ 0	$ 4,812,000
Deferred gain		3,066,000		3,066,000			$ 3,519,000
Lakeway Master Lease Retail
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Term of contract								5 years
Lakeway Master Lease Hotel
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Term of contract								99 years
Lakeway Master Lease Unleased 3 Pad Sites
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Term of contract								10 years
Lakeway Master Lease Unleased 1 Pad Site
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Term of contract								15 years
Discontinued Operations, Disposed of by Sale | Block 21
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from Sale of Property Held-for-sale	$ 260,000,000
Loans Assumed	136,200,000
Proceeds from Sale of Productive Assets	112,300,000
Escrow deposits related to property sales	6,900,000
Gain on sale of assets	$ 119,700,000
Number of Hotel Rooms | hotel_room	251
Number Of Theater Seats | theater_seat	2,750
Capital Expenditure, Discontinued Operations			$ 31,000		$ 213,000
Disposal by sale | The Oaks at Lakeway
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from Sale of Real Estate Held-for-investment						$ 114,000,000
Lessee, Operating Lease, Monthly Rent Payment				2,500
Payments for Cancellation of Operating Lease				560,000
Contractual Obligation								$ 73,000
Deferred Revenue, Revenue Recognized						$ 4,800,000
Deferred gain		$ 3,100,000		$ 3,100,000			$ 3,500,000

XML

Debt (Details)			1 Months Ended					3 Months Ended			6 Months Ended		13 Months Ended
	May 11, 2023 USD ($)	Sep. 01, 2022 USD ($) $ / shares	Aug. 31, 2023 USD ($)	Jul. 31, 2023 USD ($)	Mar. 31, 2023 USD ($)	Feb. 28, 2023 USD ($)	Jan. 31, 2023	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Aug. 09, 2023 USD ($) $ / shares shares	Jul. 01, 2023 USD ($)	May 01, 2023 USD ($)	Dec. 31, 2022 USD ($)	May 01, 2022 USD ($)
Debt Instrument [Line Items]
Debt								$ 137,432,000			$ 137,432,000					$ 122,765,000
Unamortized debt issuance costs								2,000,000			2,000,000					1,100,000
Common Stock, Dividends, Per Share, Declared | $ / shares		$ 4.67
Interest costs incurred								2,900,000		$ 1,500,000	5,300,000	$ 2,600,000
Dividends, Common Stock, Cash		$ 40,000,000
Stock Repurchase Program, Authorized Amount		$ 10,000,000
Dividends Payable								700,000			700,000					1,300,000
Stock Repurchased During Period, Value								695,000	$ 894,000		$ 1,600,000
Stock Repurchased During Period, Shares | shares											74,306
Treasury Stock Acquired, Average Cost Per Share | $ / shares											$ 21.36
Subsequent event
Debt Instrument [Line Items]
Stock Repurchased During Period, Value													$ 9,800,000
Stock Repurchased During Period, Shares | shares													381,889
Treasury Stock Acquired, Average Cost Per Share | $ / shares													$ 25.65
Stock Repurchase Program, Remaining Authorized Repurchase Amount													$ 200,000
Comerica Bank revolving credit facility
Debt Instrument [Line Items]
Debt								0			$ 0					0
Comerica Bank revolving credit facility | Letter of Credit
Debt Instrument [Line Items]
Letters of credit committed								11,000,000			11,000,000
Comerica Bank revolving credit facility | Letter of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity															$ 13,300,000		$ 11,500,000
Comerica Bank revolving credit facility | Letter of Credit | Revolving Credit Facility | Subsequent event | Lakeway
Debt Instrument [Line Items]
New letter of credit														$ 2,300,000
Municipal improvements				$ 2,300,000
Comerica Bank revolving credit facility | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, available borrowing capacity								42,700,000			42,700,000
Debt Instrument, Debt Covenant, Consent for Common Stock Repurchases, Amount								1,000,000			1,000,000
Comerica Bank revolving credit facility | Revolving Credit Facility | Subsequent event
Debt Instrument [Line Items]
Credit facility, available borrowing capacity													$ 40,400,000
Comerica Bank revolving credit facility | Revolving Credit Facility | Bloomberg short-term bank yield index
Debt Instrument [Line Items]
Debt Instrument, Interest Rate Floor					(0.50%)
Basis spread on variable rate					4.00%
Jones Crossing loan
Debt Instrument [Line Items]
Debt								22,289,000			$ 22,289,000					24,143,000
Repayments of Debt	$ 1,700,000					$ 231,000
Debt Instrument, Covenant, Debt Service Coverage Ratio											1.15
Jones Crossing loan | Subsequent event
Debt Instrument [Line Items]
Repayments of Debt			$ 1,200,000
The Annie B land loan
Debt Instrument [Line Items]
Debt								13,950,000			$ 13,950,000					13,969,000
Debt instrument, interest reserve						$ 600,000
The Annie B land loan | Bloomberg short-term bank yield index
Debt Instrument [Line Items]
Debt Instrument, Interest Rate Floor						(0.50%)
Basis spread on variable rate						3.00%
New Caney land loan
Debt Instrument [Line Items]
Debt								0			0					4,047,000
Kingwood Place
Debt Instrument [Line Items]
Debt								28,044,000			28,044,000					27,507,000
Lantana Place
Debt Instrument [Line Items]
Debt								21,792,000			21,792,000					21,782,000
The Saint June
Debt Instrument [Line Items]
Debt								24,617,000			24,617,000					13,829,000
The Saint June | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Debt Instrument, Interest Rate Floor							(0.75%)
Basis spread on variable rate							2.85%
Debt Instrument, Basis Spread Floor							3.50%
Magnolia Place Construction Loan [Member]
Debt Instrument [Line Items]
Debt								8,006,000			8,006,000					6,816,000
Magnolia Place Construction Loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Debt Instrument, Interest Rate Floor	0.00%
Basis spread on variable rate	3.36%
Debt Instrument, Basis Spread Floor	3.50%
West Killeen Market
Debt Instrument [Line Items]
Debt								5,276,000			5,276,000					5,306,000
Amarra Villas revolving credit facility
Debt Instrument [Line Items]
Debt								10,951,000			10,951,000					5,366,000
Amarra Villas revolving credit facility | Line of credit
Debt Instrument [Line Items]
Repayments of Debt					$ 2,200,000
Holden Hills construction loan | Construction Loan Payable
Debt Instrument [Line Items]
Debt Instrument, Covenant, Loan to Value Ratio						0.28
Debt Covenant, net asset value						$ 125,000,000
Debt principal						$ 26,100,000
Construction cost percent						23.00%
Holden Hills construction loan | Construction Loan Payable | Bloomberg short-term bank yield index
Debt Instrument [Line Items]
Debt Instrument, Interest Rate Floor						(0.50%)
Basis spread on variable rate						3.00%
Saint George construction loan
Debt Instrument [Line Items]
Debt								$ 2,507,000			$ 2,507,000					$ 0

XML

Profit Participation Incentive Plan (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 28, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Other liabilities		$ 6,299		$ 6,299		$ 9,642
Accrued Liability, Balance Transferred			$ 5,300
Deferred Profit Sharing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Other liabilities		3,300		3,300		$ 3,000
Grant Date Fair Value, Value Greater than Accrued Liability			2,100		$ 2,100
Share-based Payment Arrangement, Expense		132	170	390	236
Deferred Profit Sharing | Charged to general and administrative expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Payment Arrangement, Expense		141	119	289	134
Deferred Profit Sharing | Project Development Costs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Payment Arrangement, Expense		$ (9)	51	$ 101	102
Deferred Profit Sharing | The Saint Mary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation arrangement with individual, distribution paid	$ 2,100
Deferred Profit Sharing | Lantana Place
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation arrangement with individual, distribution paid	200
Other liabilities			3,700		3,700
Profit Participation Incentive Plan Pool, Amortizable Balance								$ 3,900
Deferred Profit Sharing | The Santal
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation arrangement with individual, distribution paid	$ 5,000
Other liabilities			$ 1,600		$ 1,600
Profit Participation Incentive Plan Pool, Amortizable Balance							$ 6,700

XML

Income Taxes (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	(17.00%)	(13.00%)
Deferred Tax Assets, State Taxes	$ 38		$ 38

XML

Business Segments Revenues from External Customers for Products and Services (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue from External Customer [Line Items]
Real estate revenue	$ 58	$ 7,925	$ 2,551	$ 7,944
Leasing operations	3,472	3,200	6,781	6,280
Revenues	3,530	11,125	9,332	14,224
Real estate operations
Revenue from External Customer [Line Items]
Real estate revenue	58	7,925	2,551	7,944
Real Estate Operations | Developed Property
Revenue from External Customer [Line Items]
Real estate revenue	0	2,382	2,493	2,382
Real Estate Operations | Undeveloped Property
Revenue from External Customer [Line Items]
Real estate revenue	0	5,444	0	5,444
Real Estate Operations | Commissions and other
Revenue from External Customer [Line Items]
Real estate revenue	58	99	58	118
Leasing Operations
Revenue from External Customer [Line Items]
Leasing operations	$ 3,472	$ 3,200	$ 6,781	$ 6,280

XML

Business Segments Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Segment Reporting Information [Line Items]
Number of Operating Segments | segment			2
Revenues:
Real estate operations	$ 58	$ 7,925	$ 2,551	$ 7,944
Leasing operations	3,472	3,200	6,781	6,280
Unaffiliated customers	3,530	11,125	9,332	14,224
Cost of sales, excluding depreciation	(3,841)	(6,302)	(9,589)	(8,652)
Depreciation and amortization	(970)	(884)	(1,898)	(1,757)
General and administrative expenses	(4,071)	(3,444)	(8,790)	(6,611)
Gain on sale of assets	0	0	0	4,812
Operating income (loss)	(5,352)	495	(10,945)	2,016
Capital expenditures and purchases and development of real estate properties	25,528	20,078
Total assets	485,755	484,660	485,755	484,660	$ 445,140
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	45,140	110,534	45,140	110,534	$ 45,709	$ 70,139
Leasing Operations
Revenues:
Leasing operations	3,472	3,200	6,781	6,280
Eliminations and Other
Revenues:
Real estate operations	0	0	0	0
Cost of sales, excluding depreciation	0	0	0	0
Depreciation and amortization	4	5	9	9
General and administrative expenses	(4,071)	(3,444)	(8,790)	(6,611)
Gain on sale of assets				0
Operating income (loss)	(4,067)	(3,441)	(8,781)	(6,608)
Capital expenditures and purchases and development of real estate properties	0	31	0	213
Total assets	46,470	112,711	46,470	112,711
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	43,200	102,300	43,200	102,300
Operating Segments
Revenues:
Capital expenditures and purchases and development of real estate properties			44,561	39,666
Operating Segments | Real Estate Operations
Revenues:
Real estate operations	58	7,925	2,551	7,944
Cost of sales, excluding depreciation	(2,697)	(5,432)	(7,184)	(6,798)
Depreciation and amortization	(50)	(24)	(77)	(49)
General and administrative expenses	0	0	0	0
Gain on sale of assets				0
Operating income (loss)	(2,689)	2,471	(4,710)	1,103
Capital expenditures and purchases and development of real estate properties	12,057	7,227	21,084	12,091
Total assets	328,033	265,929	328,033	265,929
Operating Segments | Leasing Operations
Revenues:
Leasing operations	3,472	3,200	6,781	6,280
Cost of sales, excluding depreciation	(1,144)	(870)	(2,405)	(1,854)
Depreciation and amortization	(924)	(865)	(1,830)	(1,717)
General and administrative expenses	0	0	0	0
Gain on sale of assets				4,812
Operating income (loss)	1,404	1,465	2,546	7,521
Capital expenditures and purchases and development of real estate properties	13,471	12,820	23,477	27,362
Total assets	$ 111,252	106,020	$ 111,252	106,020
Eliminations and Other
Revenues:
Unaffiliated customers		0		0
Eliminations and Other | Real Estate Operations
Revenues:
Real estate operations		2		6
Eliminations and Other | Leasing Operations
Revenues:
Leasing operations		0		0
Eliminations and Other | Eliminations and Other
Revenues:
Real estate operations		$ (2)		$ (6)