Stratus Properties Inc. Reports Year Ended December 31, 2018 Results
Stratus Properties Inc. (NASDAQ: STRS), a diversified real estate
company with multi-family and single-family residential real estate
development, real estate leasing, hotel and entertainment businesses in
the Austin, Texas area and other select, fast-growing markets in Texas,
today reported year ended December 31, 2018 results.
Financial Highlights:
-
Net loss attributable to common stockholders totaled $4.0 million,
$0.49 per share, for 2018, compared with net income attributable
to common stockholders of $3.9 million, $0.47 per share, for 2017. -
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA) totaled $10.8 million for 2018,
compared with $9.7 million for 2017. For a reconciliation of net
(loss) income attributable to common stockholders to Adjusted EBITDA,
see the supplemental schedule, “Adjusted EBITDA,” on page V. -
Real estate operations revenues increased by 51 percent to $16.8
million and operating income increased by 150 percent to $1.3 million.
During 2018, Stratus sold 17 developed properties for a total of $16.5
million, including 3 Amarra Drive Phase II lots, 9 Amarra
Drive Phase III lots, 4 Amarra Villas townhomes and 1
condominium at the W Austin Hotel & Residences. -
Increased aggregate borrowing capacity of revolving credit
facility with Comerica Bank from $52.5 million to $60.0 million and extended
maturity date from November 30, 2018 to June 29, 2020. As of
December 31, 2018, consolidated debt totaled $295.5 million and
consolidated cash totaled $19.0 million, with $7.6 million available
under Stratus’ credit facility. -
Capital expenditures and purchases and development of real
estate increased to $105.6 million in 2018, compared with $48.5
million in 2017, primarily reflecting investment in development
projects.
Operational Highlights:
-
Completed construction of the first phase at Lantana Place, a
mixed-use development in southwest Austin, and the first phase of the
retail component of Jones Crossing, a mixed-use development in
College Station. -
Substantially completed construction of Santal Phase II, a
212-unit multi-family project located directly adjacent to the
previously completed Santal Phase I, a 236-unit multi-family
project, in Barton Creek. As of December 31, 2018, 33 percent of Phase
II’s total units were leased and 95 percent of Phase I was leased. -
Obtained project financing and commenced construction of The Saint
Mary, a 240-unit luxury garden-style apartment project in the
Circle C community. -
Purchased a 54-acre tract of land, obtained project financing and
commenced construction of Kingwood Place, an H-E-B, L.P.
(HEB)-anchored, mixed-use project in Kingwood, Texas. -
In partnership with HEB, purchased a 38-acre tract of land in New
Caney, Texas, for the future development of an HEB-anchored,
mixed-use project. -
As of December 31, 2018, had executed commercial leases for (1) 68
percent of West Killeen Market, an HEB-anchored retail
development project, (2) 71 percent of the retail space at Lantana
Place as well as a ground lease for an AC Hotel by Marriott, and
(3) 87 percent of the retail space at Jones Crossing.
William H. Armstrong III, Chairman, President and Chief Executive
Officer, stated, “We remained focused on execution of our strategy
throughout 2018 and made significant progress in advancing our active
development projects on schedule and within budget. We completed
construction of the initial phases of Lantana Place and Jones Crossing
and substantially completed construction of Santal Phase II. We obtained
construction financing and broke ground on The Saint Mary and Kingwood
Place projects. In addition, we expanded our portfolio of development
projects with the addition of Kingwood Place and New Caney.”
Armstrong continued, “The city of Austin continues to flourish.
Despite the increased competition from new hotels in downtown Austin,
the W Austin Hotel and our entertainment venues finished the year
strong. As a diversified real estate company with a strong reputation
and solid relationships in our markets, we are pleased to see
high-profile tech companies expand into and drive excellent growth
opportunities in Austin and beyond. Looking ahead to 2019, our full
cycle active development program of acquiring, developing and
stabilizing, and then preparing properties for sale or refinancing
remains the focus of our strategy. We currently have projects in each of
these stages and we are well positioned to take advantage of favorable
market conditions in Texas generally, and in Austin in particular, in
order to create value for our stockholders.”
|
Summary Financial Results |
|||||||||||||
| Years Ended December 31, | |||||||||||||
| 2018 | 2017 | ||||||||||||
| (In Thousands, Except Per Share Amounts) | |||||||||||||
|
Revenues |
|||||||||||||
| Real estate operations | $ | 16,831 | $ | 11,144 | |||||||||
| Leasing operations | 11,319 | 8,856 | |||||||||||
| Hotel | 38,222 | 38,681 | |||||||||||
| Entertainment | 22,691 | 23,232 | |||||||||||
| Corporate, eliminations and other | (1,463 | ) | (1,573 | ) | |||||||||
| Total Consolidated Revenue | $ | 87,600 | $ | 80,340 | |||||||||
|
Operating income (loss): |
|||||||||||||
| Real estate operations | $ | 1,305 | a | $ | 522 | ||||||||
| Leasing operations | 2,897 | 24,217 | b | ||||||||||
| Hotel | 6,348 | 6,553 | |||||||||||
| Entertainment | 3,426 | 4,045 | |||||||||||
| Corporate, eliminations and other | (11,803 | ) | (12,100 | ) | |||||||||
| Total Consolidated Operating Income | $ | 2,173 | $ | 23,237 | |||||||||
| Net (loss) income attributable to common stockholdersc | $ | (3,982 | ) | d | $ | 3,879 | |||||||
| Diluted net (loss) income per share | $ | (0.49 | ) | $ | 0.47 | ||||||||
| Dividends declared per share of common stock | $ | — | $ | 1.00 | |||||||||
| Adjusted EBITDA | $ | 10,803 | $ | 9,741 | |||||||||
|
Capital expenditures and purchases and development of real estate properties |
$ | 105,592 | $ | 48,474 | |||||||||
| Diluted weighted average shares of common stock outstanding | 8,153 | 8,171 | |||||||||||
a. Includes $0.4 million of reductions to cost of sales associated
with collection of prior-years’ assessments of properties in Barton
Creek.
b. Includes gains of $25.4 million ($16.4 million to net income
attributable to common stockholders or $2.01 per share) associated with
the recognition of the majority of the gain on the sale of The Oaks at
Lakeway and the sale of a bank building and an adjacent undeveloped 4.1
acre tract of land in Barton Creek, partly offset by a charge of $2.5
million ($1.6 million to net income attributable to common stockholders
or $0.20 per share) for profit participation associated with the sale of
The Oaks at Lakeway.
c. Includes tax charges totaling $0.2 million ($0.03 per share) for
2018 and $7.6 million ($0.93 per share) for 2017 associated with U.S.
tax reform.
d. Includes $1.15 million ($0.14 per share) from equity in
unconsolidated affiliates’ income reflecting Stratus’ interest in
Crestview Station. During 2018, Crestview Station sold its last tract of
land and its multi-family entitlements.
The 51 percent increase in revenue and 150 percent increase in operating
income from the Real Estate Operations segment in 2018, compared
with 2017, primarily reflects higher revenues from the sales of higher
priced residential units, including Amarra Villas townhomes and a W
Austin Hotel & Residences condominium. Stratus sold three Amarra Drive
Phase II lots, nine Amarra Drive Phase III lots, four Amarra Villas
townhomes and one condominium at the W Austin Hotel & Residences for
$16.5 million during 2018. Since December 31, 2018, Stratus closed on
the sales of one Amarra Villas townhome and two Amarra Drive Phase III
lots for $2.9 million. Ten Amarra Drive Phase III lots and one Amarra
Villas townhome are currently under contract.
The 28 percent increase in revenue from the Leasing Operations
segment for 2018, compared with 2017, primarily reflects the
commencement of leases at Stratus’ recently completed properties,
Lantana Place, West Killeen Market, Santal Phase I and Phase II, and
Jones Crossing. The 88 percent decrease in operating income for 2018,
compared with 2017, primarily reflects the 2017 recognition of a portion
($24.3 million) of the deferred gain associated with the sale of The
Oaks at Lakeway. During 2017, Stratus also had a $2.5 million profit
participation charge associated with the sale of the Oaks at Lakeway,
partly offset by a $1.1 million gain on the sale of a 3,085-square-foot
bank building and an adjacent 4.1 acre undeveloped tract of land in
Barton Creek.
Revenue and operating income from the Hotel segment decreased
slightly in 2018, compared with 2017, primarily as a result of a lower
number of reservations made by large groups. Revenue per available room
(RevPAR), which is calculated by dividing total room revenue by the
average number of total rooms available during the year, was $245 in
2018, compared with $253 in 2017. According to a report published by the
city of Austin’s hotel and motel association, between 2010 (the year the
W Austin Hotel opened) and 2018, the central business district room
count increased from 6,226 rooms to 10,660 rooms, or by 71 percent.
While Stratus remains positive on the long-term outlook of the W Austin
Hotel based on continued population growth and increased tourism in the
Austin market, a continued increase in competition resulting from the
anticipated opening of additional hotel rooms in downtown Austin during
2019 is expected to have an ongoing impact on Stratus’ hotel revenues.
The decrease in revenue and operating income from the Entertainment
segment for 2018, compared with 2017, primarily reflects lower event
attendance. The ACL Live venue hosted 240 events and sold approximately
285,900 tickets in 2018, compared with 224 events and the sale of
approximately 297,100 tickets in 2017. As of February 28, 2019, ACL Live
had events booked through December 2020. The ACL Live entertainment
space is promoted through the broadcast of Austin City Limits by KLRU, a
local public television station. In 2018, ACL Live extended its
agreement with KLRU and Austin City Limits for an additional ten years.
The 3TEN ACL Live venue hosted 216 events in 2018 with estimated
attendance of 38,100, compared with 228 events in 2017 with estimated
attendance of 40,600. As of February 28, 2019, 3TEN ACL Live had events
booked through December 2019.
Debt and Liquidity
At December 31, 2018, consolidated debt totaled $295.5 million and
consolidated cash totaled $19.0 million, compared with consolidated debt
of $221.5 million and consolidated cash of $14.6 million at December 31,
2017.
Purchases and development of real estate properties (included in
operating cash flows) and capital expenditures (included in investing
cash flows) totaled $105.6 million for 2018, primarily related to the
purchase of the Kingwood Place land and development of Santal Phase II,
Lantana Place, Jones Crossing and The Saint Mary projects. This compares
with $48.5 million for 2017, primarily for the development of Barton
Creek properties, Lantana Place, Santal Phase II, West Killeen Market
and Jones Crossing.
Stockholder Return
The cumulative total stockholder return of 45 percent on Stratus' common
stock over the five years ending December 31, 2018, was comparable to
the returns of the S&P 500 Index (50 percent) and the Dow Jones U.S.
Real Estate Index (47 percent) and significantly exceeded the returns of
a group of peer real estate-related companies, which had a 24 percent
loss. The peer group is comprised of Alexander & Baldwin, Inc.,
Consolidated-Tomoka Land Co., Forestar Group Inc., The Howard Hughes
Corporation, Maui Land & Pineapple Company, Inc., The St. Joe Company
and Tejon Ranch Co. This comparison assumes $100.00 invested at December
31, 2013, with all dividends reinvested. The stock price performance is
not necessarily indicative of future performance.
----------------------------------------------
Conference Call Information
Stratus will conduct an investor conference call to discuss its year
ended December 31, 2018, financial and operating results today,
March 18, 2019, at 11:00 a.m. ET. The public is invited to listen to the
conference call by dialing (877) 418-4843 for domestic access and (412)
902-6766 for international access. A replay of the conference call will
be available at the conclusion of the call for five days by dialing
(877) 344-7529 for domestic access and by dialing (412) 317-0088 for
international access. Please use replay ID: 10128653. The replay will be
available on Stratus’ website at stratusproperties.com
until March 23, 2019.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND
REGULATION G DISCLOSURE.
This press release contains forward-looking statements in which
Stratus discusses factors it believes may affect its future performance.
Forward-looking statements are all statements other than statements of
historical fact, such as statements regarding projections or
expectations related to the planning, financing, development,
construction, completion and stabilization of Stratus’ development
projects, plans to sell or refinance properties (including, but not
limited to, Amarra Drive lots, Amarra Villas townhomes, West Killeen
Market, the retail building at Barton Creek Village, The Saint Mary, and
Santal), operational and financial performance, expectations regarding
future cash flows, municipal utility district reimbursements for
infrastructure costs, regulatory matters, leasing activities, estimated
costs and timeframes for development and stabilization of properties,
liquidity, tax rates, the impact of interest rate changes, capital
expenditures, financing plans, possible joint venture, partnership,
strategic relationships or other arrangements, Stratus’ projections with
respect to its obligations under the master lease agreements entered
into in connection with the sale of The Oaks at Lakeway, other plans and
objectives of management for future operations and development projects,
and future dividend payments and share repurchases. The words
“anticipates,” “may,” “can,” “plans,” “believes,” “potential,”
“estimates,” “expects,” “projects,” “targets,” “intends,” “likely,”
“will,” “should,” “to be” and any similar expressions are intended to
identify those assertions as forward-looking statements.
Under Stratus’ loan agreement with Comerica Bank, Stratus is not
permitted to pay dividends on common stock without Comerica’s prior
written consent. The declaration of dividends is at the discretion of
Stratus’ Board of Directors (Board), subject to restrictions under
Stratus’ loan agreement with Comerica Bank, and will depend on Stratus’
financial results, cash requirements, projected compliance with
covenants in its debt agreements, outlook and other factors deemed
relevant by the Board.
Stratus cautions readers that forward-looking statements are not
guarantees of future performance, and its actual results may differ
materially from those anticipated, expected, projected or assumed in the
forward-looking statements. Important factors that can cause Stratus’
actual results to differ materially from those anticipated in the
forward-looking statements include, but are not limited to, Stratus’
ability to refinance and service its debt, the availability and terms of
financing for development projects and other corporate purposes,
Stratus’ ability to enter into and maintain joint venture, partnership,
strategic relationships or other arrangements, Stratus’ ability to
effect its business strategy successfully, including its ability to sell
properties at prices its Board considers acceptable, Stratus’ ability to
obtain various entitlements and permits, a decrease in the demand for
real estate in the Austin, Texas area and other select markets in Texas
where Stratus operates, changes in economic, market and business
conditions, reductions in discretionary spending by consumers and
businesses, competition from other real estate developers, hotel
operators and/or entertainment venue operators and promoters, challenges
associated with booking events and selling tickets and event
cancellations at Stratus’ entertainment venues, the termination of sales
contracts or letters of intent due to, among other factors, the failure
of one or more closing conditions or market changes, Stratus’ ability to
secure qualifying tenants for the space subject to the master lease
agreements entered into in connection with the sale of The Oaks at
Lakeway and to assign such leases to the purchaser and remove the
corresponding property from the master leases, the failure to attract
customers or tenants for its developments or such customers’ or tenants’
failure to satisfy their purchase commitments or leasing obligations,
increases in interest rates and the phase out of the London Interbank
Offered Rate, declines in the market value of Stratus’ assets, increases
in operating costs, including real estate taxes and the cost of building
materials and labor, changes in external perception of the W Austin
Hotel, changes in consumer preferences, industry risks, 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-related risks,
loss of key personnel, cybersecurity incidents and other factors
described in more detail under the heading “Risk Factors” in Stratus’
Annual Report on Form 10-K for the year ended December 31, 2018, filed
with the U.S. Securities and Exchange Commission.
This press release also includes Adjusted EBITDA, which is not
recognized under U.S. generally accepted accounting principles (GAAP).
Stratus believes this measure can be helpful to investors in evaluating
its business. Adjusted EBITDA is a financial measure frequently used by
securities analysts, lenders and others to evaluate Stratus’ recurring
operating performance. Adjusted EBITDA is intended to be a performance
measure that should not be regarded as more meaningful than a GAAP
measure. Other companies may calculate Adjusted EBITDA differently. As
required by SEC Regulation G, a reconciliation of Stratus’ net loss
attributable to common stockholders to Adjusted EBITDA is included in
the supplemental schedules of this press release.
Investors are cautioned that many of the assumptions upon which
Stratus’ forward-looking statements are based are likely to change after
the forward-looking statements are made, some of which Stratus may not
be able to control. Further, Stratus may make changes to its business
plans that could affect its results. Stratus cautions investors that it
does not intend to update its forward-looking statements more frequently
than quarterly notwithstanding any changes in its assumptions, business
plans, actual experience, or other changes, and Stratus undertakes no
obligation to update any forward-looking statements.
A copy of this release is available on Stratus’ website, stratusproperties.com.
| STRATUS PROPERTIES INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||
|
(In Thousands, Except Per Share Amounts) |
||||||||||||
| Years Ended December 31, | ||||||||||||
| 2018 | 2017 | |||||||||||
| Revenues: | ||||||||||||
| Real estate operations | $ | 16,800 | $ | 11,001 | ||||||||
| Leasing operations | 10,389 | 7,981 | ||||||||||
| Hotel | 37,905 | 38,360 | ||||||||||
| Entertainment | 22,506 | 22,998 | ||||||||||
| Total revenues | 87,600 | 80,340 | ||||||||||
| Cost of sales: | ||||||||||||
| Real estate operations | 15,277 | 10,378 | ||||||||||
| Leasing operations | 5,056 | 4,797 | ||||||||||
| Hotel | 28,160 | 28,478 | ||||||||||
| Entertainment | 17,089 | 17,121 | ||||||||||
| Depreciation | 8,571 | 7,853 | ||||||||||
| Total cost of sales | 74,153 | 68,627 | ||||||||||
| General and administrative expenses | 11,274 | 11,401 | ||||||||||
| Profit participation in sale of The Oaks at Lakeway | — | 2,538 | ||||||||||
| Gain on sale of assets | — | (25,463 | ) | |||||||||
| Total | 85,427 | 57,103 | ||||||||||
| Operating income | 2,173 | 23,237 | ||||||||||
| Interest expense, net | (7,856 | ) | (6,742 | ) | ||||||||
| Gain on interest rate derivative instruments | 187 | 293 | ||||||||||
| Loss on early extinguishment of debt | — | (532 | ) | |||||||||
| Other income, net | 55 | 1,581 | ||||||||||
|
(Loss) income before income taxes and equity in unconsolidated affiliates’ income (loss) |
(5,441 | ) | 17,837 | |||||||||
| Equity in unconsolidated affiliates’ income (loss) | 1,150 | a | (49 | ) | ||||||||
| Benefit from (provision for) income taxes | 305 | (13,904 | ) | |||||||||
| Net (loss) income | (3,986 | ) | 3,884 | |||||||||
|
Net loss (income) attributable to noncontrolling interests in subsidiaries |
4 | (5 | ) | |||||||||
| Net (loss) income attributable to common stockholders | $ | (3,982 | ) | $ | 3,879 | |||||||
| Net (loss) income per share attributable to common stockholders: | ||||||||||||
| Basic | $ | (0.49 | ) | $ | 0.48 | |||||||
| Diluted | $ | (0.49 | ) | $ | 0.47 | |||||||
| Weighted-average shares of common stock outstanding: | ||||||||||||
| Basic | 8,153 | 8,122 | ||||||||||
| Diluted | 8,153 | 8,171 | ||||||||||
| Dividends declared per share of common stock | $ | — | $ | 1.00 | ||||||||
a. Represents Stratus’ interest in their unconsolidated
affiliate, Crestview Station, and reflects the sale of Crestview
Station’s last tract of land and its multi-family entitlements during
2018.
| STRATUS PROPERTIES INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||||||
|
(In Thousands) |
||||||||||||
| December 31, | ||||||||||||
| 2018 | 2017 | |||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 19,004 | $ | 14,611 | ||||||||
| Restricted cash | 19,915 | 24,779 | ||||||||||
| Real estate held for sale | 16,396 | 22,612 | ||||||||||
| Real estate under development | 136,678 | 118,484 | ||||||||||
| Land available for development | 24,054 | 14,804 | ||||||||||
| Real estate held for investment, net | 253,074 | 188,390 | ||||||||||
| Deferred tax assets | 11,834 | 11,461 | ||||||||||
| Other assets | 15,538 | 10,852 | ||||||||||
| Total assets | $ | 496,493 | $ | 405,993 | ||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Liabilities: | ||||||||||||
| Accounts payable | $ | 20,602 | $ | 22,809 | ||||||||
| Accrued liabilities, including taxes | 11,914 | 13,429 | ||||||||||
| Debt | 295,531 | 221,470 | ||||||||||
| Deferred gain | 9,270 | 11,320 | ||||||||||
| Other liabilities | 12,525 | 9,575 | ||||||||||
| Total liabilities | 349,842 | 278,603 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Equity: | ||||||||||||
| Stratus stockholders’ equity: | ||||||||||||
| Common stock | 93 | 93 | ||||||||||
| Capital in excess of par value of common stock | 186,256 | 185,395 | ||||||||||
| Accumulated deficit | (41,103 | ) | (37,121 | ) | ||||||||
| Common stock held in treasury | (21,260 | ) | (21,057 | ) | ||||||||
| Total stockholders’ equity | 123,986 | 127,310 | ||||||||||
| Noncontrolling interests in subsidiaries | 22,665 | a | 80 | |||||||||
| Total equity | 146,651 | 127,390 | ||||||||||
| Total liabilities and equity | $ | 496,493 | $ | 405,993 | ||||||||
a. Includes $18.0 million of capital contributions from
the Class B limited partners in the Kingwood Place and The Saint Mary
limited partnerships and $4.6 million received from HEB for its
contribution for the purchase of the land for the future New Caney
project.
| STRATUS PROPERTIES INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||
|
(In Thousands) |
|||||||||||
| Years Ended December 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Cash flow from operating activities: | |||||||||||
| Net (loss) income | $ | (3,986 | ) | $ | 3,884 | ||||||
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|||||||||||
| Depreciation | 8,571 | 7,853 | |||||||||
| Cost of real estate sold | 10,283 | 5,774 | |||||||||
| Gain on sale of assets | — | (25,463 | ) | ||||||||
| U.S. tax reform charge | 215 | 7,580 | |||||||||
| Gain on interest rate derivative contracts | (187 | ) | (293 | ) | |||||||
| Loss on early extinguishment of debt | — | 532 | |||||||||
| Debt issuance cost amortization and stock-based compensation | 1,859 | 1,573 | |||||||||
| Equity in unconsolidated affiliates’ (income) loss | (1,150 | ) | 49 | ||||||||
| Return on investment in unconsolidated affiliate | 1,251 | — | |||||||||
| Increase (decrease) in deposits | 507 | (1,322 | ) | ||||||||
| Deferred income taxes, excluding U.S. tax reform charge | (588 | ) | (1,675 | ) | |||||||
| Purchases and development of real estate properties | (43,660 | ) | (14,395 | ) | |||||||
| Municipal utility districts reimbursements | — | 13,799 | |||||||||
| (Increase) decrease in other assets | (4,038 | ) | 4,750 | ||||||||
|
(Decrease) increase in accounts payable, accrued liabilities and other |
(966 | ) | 10,126 | ||||||||
| Net cash (used in) provided by operating activities | (31,889 | ) | 12,772 | ||||||||
| Cash flow from investing activities: | |||||||||||
| Capital expenditures | (61,932 | ) | (34,079 | ) | |||||||
| Proceeds from sales of assets | — | 117,261 | |||||||||
| Payments on master lease obligations | (2,112 | ) | (2,196 | ) | |||||||
| Return of investment in (investment in) unconsolidated affiliates | 26 | (37 | ) | ||||||||
| Net cash (used in) provided by investing activities | (64,018 | ) | 80,949 | ||||||||
| Cash flow from financing activities: | |||||||||||
| Borrowings from credit facility | 34,436 | 47,200 | |||||||||
| Payments on credit facility | (9,981 | ) | (67,981 | ) | |||||||
| Borrowings from project loans | 56,999 | 15,793 | |||||||||
| Payments on project and term loans | (6,693 | ) | (64,761 | ) | |||||||
| Cash dividend paid | (32 | ) | (8,133 | ) | |||||||
| Stock-based awards net payments | (131 | ) | (235 | ) | |||||||
| Noncontrolling interests’ contributions | 22,589 | — | |||||||||
| Financing costs | (1,751 | ) | (1,703 | ) | |||||||
| Net cash provided by (used in) financing activities | 95,436 | (79,820 | ) | ||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (471 | ) | 13,901 | ||||||||
| Cash, cash equivalents and restricted cash at beginning of year | 39,390 | 25,489 | |||||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 38,919 | $ | 39,390 | |||||||
STRATUS PROPERTIES INC.
BUSINESS SEGMENTS
Stratus currently has four operating segments: Real Estate Operations,
Leasing Operations, Hotel and Entertainment.
The Real Estate Operations segment is comprised of Stratus’ real estate
assets (developed for sale, under development and available for
development), which includes its properties in Austin, Texas (the Barton
Creek community, including a portion of Santal Phase II still under
development; the Circle C community, including The Saint Mary; the
Lantana community, including a portion of Lantana Place still under
development; and one condominium unit at the W Austin Hotel &
Residences); in Lakeway, Texas, located in the greater Austin area
(Lakeway); in College Station, Texas (a portion of Jones Crossing still
under development); and in Magnolia, Texas (Magnolia), Kingwood, Texas
(Kingwood Place) and New Caney, Texas (New Caney), located in the
greater Houston area.
The Leasing Operations segment includes the office and retail space at
the W Austin Hotel & Residences, Barton Creek Village, Santal Phase I,
West Killeen Market in Killeen, Texas, and completed portions of the
Santal Phase II, Lantana Place and Jones Crossing projects.
The Hotel segment includes the W Austin Hotel located at the W Austin
Hotel & Residences in downtown Austin, Texas.
The Entertainment segment includes ACL Live, a live music and
entertainment venue, and 3TEN ACL Live, both located at the W Austin
Hotel & Residences. In addition to hosting concerts and private events,
ACL Live is the home of Austin City Limits, the longest running music
series in American television history.
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.
Segment information presented below was prepared on the same basis as
Stratus’ consolidated financial statements (in thousands).
|
Real Estate |
Leasing |
Hotel | Entertainment |
Eliminations |
Total | |||||||||||||||||||||||
| Year Ended December 31, 2018: | ||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||
| Unaffiliated customers | $ | 16,800 | $ | 10,389 | $ | 37,905 | $ | 22,506 | $ | — | $ | 87,600 | ||||||||||||||||
| Intersegment | 31 | 930 | 317 | 185 | (1,463 | ) | — | |||||||||||||||||||||
| Cost of sales, excluding depreciation | 15,276 | c | 5,088 | 28,312 | 17,702 | (796 | ) | 65,582 | ||||||||||||||||||||
| Depreciation | 250 | 3,334 | 3,562 | 1,563 | (138 | ) | 8,571 | |||||||||||||||||||||
| General and administrative expenses | — | — | — | — | 11,274 | 11,274 | ||||||||||||||||||||||
| Operating income (loss) | $ | 1,305 | $ | 2,897 | $ | 6,348 | $ | 3,426 | $ | (11,803 | ) | $ | 2,173 | |||||||||||||||
|
Capital expenditures and purchases and development of real estate properties |
$ | 43,660 | $ | 60,759 | $ | 775 | $ | 398 | $ | — | $ | 105,592 | ||||||||||||||||
| Total assets at December 31, 2018 | 177,617 | 175,889 | 100,248 | 35,899 | 6,840 | 496,493 | ||||||||||||||||||||||
| STRATUS PROPERTIES INC. | ||||||||||||||||||||||||||||||
| BUSINESS SEGMENTS (continued) | ||||||||||||||||||||||||||||||
|
Real Estate |
Leasing |
Hotel | Entertainment |
Eliminations |
Total | |||||||||||||||||||||||||
| Year Ended December 31, 2017: | ||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||
| Unaffiliated customers | $ | 11,001 | $ | 7,981 | $ | 38,360 | $ | 22,998 | $ | — | $ | 80,340 | ||||||||||||||||||
| Intersegment | 143 | 875 | 321 | 234 | (1,573 | ) | — | |||||||||||||||||||||||
| Cost of sales, excluding depreciation | 10,377 | 4,829 | 28,584 | 17,719 | (735 | ) | 60,774 | |||||||||||||||||||||||
| Depreciation | 232 | 2,693 | 3,544 | 1,523 | (139 | ) | 7,853 | |||||||||||||||||||||||
| General and administrative expenses | — | — | — | — | 11,401 | 11,401 | ||||||||||||||||||||||||
| Profit participation | — | 2,538 | — | — | — | 2,538 | ||||||||||||||||||||||||
| Loss (gain) on sales of assets | 13 | (25,421 | ) | d | — | (55 | ) | — | (25,463 | ) | ||||||||||||||||||||
| Operating income (loss) | $ | 522 | $ | 24,217 | $ | 6,553 | $ | 4,045 | $ | (12,100 | ) | $ | 23,237 | |||||||||||||||||
|
Capital expenditures and purchases and development of real estate properties |
$ | 14,395 | $ | 33,290 | $ | 506 | $ | 283 | $ | — | $ | 48,474 | ||||||||||||||||||
| Total assets at December 31, 2017 | 189,832 | 71,851 | 102,491 | 35,446 | 6,373 | 405,993 | ||||||||||||||||||||||||
a. Includes sales commissions and other revenues together with
related expenses.
b. Includes consolidated general and administrative expenses and
eliminations of intersegment amounts.
c. Includes $0.4 million of reductions to cost of sales associated
with collection of prior-years’ assessments of properties in Barton
Creek.
d. Includes $24.3 million associated with recognition of the
majority of the gain on the sale of The Oaks at Lakeway.
RECONCILIATION OF NON-GAAP MEASURE
ADJUSTED EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-GAAP (U.S. generally accepted accounting
principles) financial measure that is frequently used by securities
analysts, investors, lenders and others to evaluate companies’ recurring
operating performance, including, among other things, profitability
before the effect of financing and similar decisions. Because securities
analysts, investors, lenders and others use Adjusted EBITDA, management
believes that Stratus’ presentation of Adjusted EBITDA affords them
greater transparency in assessing Stratus’ financial performance. This
information differs from net (loss) income attributable to common
stockholders determined in accordance with GAAP and should not be
considered in isolation or as a substitute for measures of performance
determined in accordance with GAAP. Adjusted EBITDA may not be
comparable to similarly titled measures reported by other companies, as
different companies may calculate such measures differently. Management
strongly encourages investors to review Stratus’ consolidated financial
statements and publicly filed reports in their entirety. A
reconciliation of Stratus’ net (loss) income attributable to common
stockholders to Adjusted EBITDA follows (in thousands).
| Years Ended | |||||||||||
| December 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Net (loss) income attributable to common stockholders | $ | (3,982 | ) | $ | 3,879 | ||||||
| Depreciation | 8,571 | 7,853 | |||||||||
| Interest expense, net | 7,856 | 6,742 | |||||||||
| (Benefit from) provision for income taxes | (305 | ) | 13,904 | ||||||||
| Profit participation in sale of The Oaks at Lakeway | — | 2,538 | |||||||||
| Gain on sales of assets | — | (25,463 | ) | ||||||||
| Equity in unconsolidated affiliates’ (income) loss | (1,150 | ) | 49 | ||||||||
| Gain on interest rate derivative instruments | (187 | ) | (293 | ) | |||||||
| Loss on early extinguishment of debt | — | 532 | |||||||||
| Adjusted EBITDA | $ | 10,803 | $ | 9,741 | |||||||
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