Stratus Properties Inc. is a residential and retail focused real estate company.
The company is engaged primarily in the 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.
The company generates revenues and cash flows primarily from the sale of its developed and undeveloped properties, the lease of the company’s retail, mixed-use and multi-family...
Stratus Properties Inc. is a residential and retail focused real estate company.
The company is engaged primarily in the 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.
The company generates revenues and cash flows primarily from the sale of its developed and undeveloped properties, the lease of the company’s retail, mixed-use and multi-family properties and development and asset management fees received from the company’s properties. Developed property sales can include an individual tract of land that has been developed and permitted for residential use, a developed lot with a residence built on the lot or a property that has been developed for lease. In addition to the company’s developed and leased properties, the company has a development portfolio that consists of approximately 1,500 acres of commercial and multi-family and single-family residential projects under development or undeveloped land held for future use. The company’s commercial real estate portfolio consists of stabilized retail properties or future retail and mixed-use development projects with no commercial office space. The company may sell properties under development, undeveloped properties or leased properties if opportunities arise that will maximize overall asset value as part of the company’s business strategy. The company’s leasing operations primarily involve the lease of space at retail and mixed-use properties that the company developed, and the lease of residences in multi-family properties that the company developed. Tenants in the company’s retail and mixed-use properties are diverse and include grocery stores, restaurants, healthcare services, fitness centers, a movie theater, and other retail products and services.
During 2023 and 2024, among other things, the company completed construction and lease-up of The Saint June multi-family project, continued construction of The Saint George multi-family project, advanced road and utility infrastructure construction of Holden Hills Phase 1, managed the company’s completed retail projects and advanced entitlements on other projects.
As of December 31, 2024, the company’s retail and multi-family portfolio consisted of five stabilized projects, namely The Saint June, Jones Crossing – Retail, Kingwood Place, Lantana Place – Retail and West Killeen Market. As previously disclosed, the company had been testing the market for potential sales of West Killeen Market, Magnolia Place – Retail, Lantana Place – Retail and Kingwood Place. In third-quarter 2024, the company closed on the sale of Magnolia Place – Retail.
Operations
Real Estate Operations. The company’s Real Estate Operations segment is consisted of its properties under various stages of development: developed for sale, under development and available for development. As part of the company’s real estate operations, the company entitles, develops and sells properties, focused on the Austin, Texas area and other select markets in Texas. The current focus of the company’s real estate operations is developing multi-family and single-family residential properties and residential-centric mixed-use properties. The company may sell or lease the properties the company develops, depending on market conditions. Properties that the company develops and then leases becomes part of its Leasing Operations.
The company develops properties on its own and also through joint ventures in which the company partners with third-party equity investors, serve as general partner, receive fees for development and asset management and may receive a preferred return after negotiated returns are reached. The company may develop projects on land the company has owned for many years, such as in Barton Creek in Austin, Texas, or on land that the company purchases to develop in the future, such as The Saint George project described herein. The company may enter into land purchase contracts in which the company obtains the right, but not the obligation, to buy land at an agreed-upon price within a specified period of time. These contracts generally limit the company’s financial exposure to the company’s earnest money deposited into escrow and pre-acquisition diligence and planning costs the company incurs.
The company engages and manages third-party general contractors to construct its projects typically on a fixed-price basis. The company’s employees oversee extensive work done by individuals and companies the company engages as consultants for services including site selection, obtaining entitlements, architecture, engineering, landscaping and land preservation, design, sustainability, and developing and implementing marketing and sales plans.
Real estate held for sale includes developed properties in the Real Estate Operations segment and at December 31, 2024 consisted of one residential lot in Amarra Drive Phase III and three Amarra Villas homes.
Real estate under development as of December 31, 2024 included a multi-family property under construction in Austin, Texas: The Saint George, a 316-unit luxury wrap-style project. The Saint George is expected to be reclassified into the Leasing Operations segment upon its completion, which is expected to occur in the first half of 2025.
The development potential of the company’s undeveloped acreage at December 31, 2024 also included the following: one vacant retail pad site at Kingwood Place and four vacant retail pad sites at Jones Crossing.
Leasing Operations. The company’s Leasing Operations segment primarily involves leasing of commercial space at retail and mixed-use properties and residences in multi-family properties that the company developed. The company engages third-party leasing and property management companies to manage the company’s Leasing Operations properties. Tenants in the company’s retail and mixed-use projects are diverse and include grocery stores, restaurants, healthcare services, fitness centers, a movie theater and other retail products and services.
The company’s principal properties in the company’s Leasing Operations segment at December 31, 2024 consisted of: a 154,092-square-foot retail property representing the first retail phase of Jones Crossing; a 151,877-square-foot retail property known as Kingwood Place; a 99,377-square-foot retail property representing the first phase of Lantana Place; a 44,493-square-foot retail property known as West Killeen Market; and The Saint June, a luxury garden-style multi-family project consisting of 182 units.
Properties
The company’s properties are primarily located in the Austin, Texas area, but include properties in other select markets in Texas. Substantially all of the company’s properties are encumbered pursuant to the terms of the company’s debt agreements. Refer to Note 6 for further discussion. The company’s Austin-area properties include the following:
Barton Creek
The company has several properties that are located in the Barton Creek community, which is a 4,000-acre upscale community located southwest of downtown Austin.
Amarra Drive. Amarra Drive is a subdivision featuring lots ranging from one to over five acres.
In 2015, the company completed the development of the Amarra Drive Phase III subdivision, which consists of 64 lots on 166 acres. In fourth-quarter 2024, the company sold one Amarra Drive Phase III lot. As of December 31, 2024, one developed Phase III lot remained unsold.
Amarra Multi-family and Commercial. The company also have multi-family and commercial lots in the Amarra development of Barton Creek. The Amarra Villas and The Saint June are located on two of these multi-family lots. As of December 31, 2024, the company has one undeveloped approximately 11-acre multi-family lot and one undeveloped 22-acre commercial lot.
Amarra Villas. The Villas at Amarra Drive (Amarra Villas) project is a 20-unit development within the Amarra development in Barton Creek. The homes average approximately 4,000 square feet and are being marketed as ‘lock and leave’ properties, with golf course access and cart garages. The company completed construction and sale of the first nine homes between 2017 and 2022. In first-quarter 2023, the company completed and sold one home. Construction was completed on two of the homes in fourth-quarter 2023. In first-quarter 2024, the company completed construction of two of the homes, and the company sold two of the homes. In second-quarter 2024, the company sold another Amarra Villas home. In third-quarter 2024, the company completed and sold one Amarra Villas home. In fourth-quarter 2024, the company completed the construction of three of the homes and the company sold one home, leaving three completed homes in inventory as of December 31, 2024. Construction on the last two homes continues to progress and is expected to be completed in the first half of 2025. As of March 21, 2025, five homes remain available for sale.
The Saint June. In third-quarter 2021, the company began construction on The Saint June, a 182-unit luxury garden-style multi-family project within the Amarra development. The Saint June is consisted 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 available for occupancy in July 2023, and construction was completed in fourth-quarter 2023. The company completed the lease-up of The Saint June during 2024. The company owns this project through a limited partnership with a third-party equity investor. Refer to Note 2 for further discussion.
Holden Hills Phase 1 (formerly known as Holden Hills). The company’s final large residential development within the Barton Creek community, which the company now refers to as Holden Hills Phase 1, consists of 495 acres. The community has been designed to feature unique luxury residences to be developed in multiple sections with a focus on health and wellness, sustainability and energy conservation.
The company entered into a limited partnership agreement with a third-party equity investor for Holden Hills Phase 1 (the Holden Hills Phase 1 partnership) in January 2023, and in February 2023 obtained construction financing for road and utility infrastructure of Holden Hills Phase 1. The company contributed to the Holden Hills Phase 1 partnership the Holden Hills Phase 1 land and related personal property, and the company’s 50.0 percent partner. Immediately thereafter, the Holden Hills Phase 1 partnership. The company consolidate the Holden Hills Phase 1 partnership, and the contribution from the company’s partner was accounted for as a noncontrolling interest in subsidiary.
The company anticipates being in a position to start building homes and/or selling home sites in late 2025, assuming regulators timely fulfill their permit processing obligations and there are no further changes in the regulatory environment.
The company entered into a development agreement with the Holden Hills Phase 1 partnership (Development Agreement) that provides that, as part of the road and utility infrastructure, the Holden Hills Phase 1 partnership will construct certain street, drainage, water, sidewalk, electric and gas improvements in order to extend the Tecoma Circle roadway on Holden Hills Phase 2 land owned by the company (which the company formerly referred to as Section N) from its current terminus to Southwest Parkway (the Tecoma Improvements). The Tecoma Improvements will enable access and provide utilities necessary for the development of Holden Hills Phases 1 and 2. Pursuant to the Development Agreement, the company will reimburse the Holden Hills Phase 1 partnership for 60 percent of the costs of the Tecoma Improvements. The company has posted standby letters of credit with the City of Austin or Travis County under the company’s revolving credit facility with Comerica Bank as fiscal security for the completion of certain infrastructure improvements benefiting Holden Hills Phase 1 and have agreed to leave such fiscal security in place until the improvements are completed.
Holden Hills Phase 2 (formerly known as Section N). Holden Hills Phase 2 is adjacent to Holden Hills Phase 1. Due to their proximity in the Barton Creek community and common infrastructure facilities, the company is now planning both Holden Hills Phase 1 and Holden Hills Phase 2 as one interconnected development, which will be branded as Holden Hills, comprising Holden Hills Phase 1 (the 495-acre residential development) and Holden Hills Phase 2 (the 570-acre mixed-use commercial development located south of Holden Hills Phase 1 along Southwest Parkway). Using an entitlement strategy similar to that used for Holden Hills Phase 1, the company continues to progress the development plans for Holden Hills Phase 2. The company has removed the majority of Holden Hills Phase 2 from Austin’s ETJ pursuant to the ETJ Law, as described below, and are adjusting the company’s development plans to benefit from the new regulatory scheme. Holden Hills Phase 2 is being designed as a mixed-use project, with extensive residential uses, coupled with limited entertainment and hospitality uses, surrounded by extensive outdoor recreational and greenspace amenities. The new regulatory scheme is expected to result in a significant increase in development density as compared to the company’s prior plans.
ETJ Process. Texas Senate Bill 2038 (the ETJ Law) became effective September 1, 2023. The company has completed the statutory process to remove all of the company’s relevant land subject to development, including primarily Holden Hills Phases 1 and 2 from the extraterritorial jurisdiction (ETJ) of the City of Austin, as permitted by the ETJ Law. The company has also made filings with Travis County to grandfather Holden Hills Phases 1 and 2 under most laws in effect in Travis County at the time of the filings. A number of cities in Texas have brought lawsuits challenging the ETJ Law. If the ETJ Law is upheld, the company expects that the removal of the company’s properties from the ETJ of the City of Austin will streamline the development permitting process, allow greater flexibility in the design of projects, potentially decrease certain development costs, and potentially permit meaningful increases in development density. In light of the ETJ Law, the company’s development plans for portions of Holden Hills Phases 1 and 2 are being adjusted.
Circle C Community
The Circle C community is a master-planned community located in Austin, Texas. In 2002, the City of Austin granted final approval of a development agreement (the Circle C settlement), which firmly established all essential municipal development regulations applicable to the company’s Circle C properties until 2032. Refer to Note 9 for a summary of incentives the company received in connection with the Circle C settlement.
The Circle C settlement, as amended in 2004, permits development of 1.16 million square feet of commercial space, 504 multi-family units and 830 single-family residential lots. As of December 31, 2024, the company’s Circle C community had remaining entitlements for 660,985 square feet of commercial space and 56 residential units. The company is pursuing rezoning that would change the permitted land use from commercial to multi-family.
Lantana
Lantana is a community south of Barton Creek in Austin. Regional utility and road infrastructure is in place with capacity to serve Lantana at full build-out as permitted under the company’s existing entitlements. Lantana Place is a partially developed, mixed-use project within the Lantana community. In addition to Lantana Place, the company has remaining entitlements for 160,000 square feet of commercial use on five acres (which the company refer to as Tract G07) in the Lantana community.
Lantana Place – Retail. The company completed construction of the 99,377-square-foot first phase of Lantana Place in 2018. As of December 31, 2024, the company had signed leases for substantially all of the retail space, including the anchor tenant, Moviehouse & Eatery, and a ground lease for an AC Hotel by Marriott, which opened in November 2021.
Lantana Place – The Saint Julia. The company has advanced development plans for The Saint Julia, an approximately 210-unit multi-family project that is part of Lantana Place. The company’s goal is to commence construction as soon as financing and other market conditions warrant. Refer to Note 6 for additional discussion.
The Annie B
In September 2021, the company announced plans for The Annie B, a proposed luxury high-rise rental project in downtown Austin. Based on preliminary plans, The Annie B would be developed as a 400-foot tower, consisting of approximately 420,000 square feet with 316 luxury multi-family units for lease. The project includes the historic AO Watson house, which will be renovated and expanded to offer amenities that may include a restaurant, pool and garden, while preserving the property’s historic and architectural features. The company closed the land purchase in September 2021. The company continues to work to finalize its development plans and to evaluate whether the project is most profitable as a for rent or for sale product. The company’s intention is to commence construction as soon as financing and other market conditions warrant. The company owns this project through a limited partnership with third-party equity investors.
The Saint George
In third-quarter 2022, the company began construction on The Saint George, a 316-unit luxury wrap-style multi-family project in north central Austin. The Saint George is being built on approximately four acres and is consisted of studio, one- and two-bedroom units for lease and an attached parking garage. The company purchased the land and entered into third-party equity financing for the project in December 2021. The company entered into a construction loan for the project in July 2022 and began construction in third-quarter 2022. The company expects to achieve substantial completion in the first half of 2025. The company owns this project through a limited partnership with a third-party equity investor. Refer to Notes 2 and 6 for further discussion.
Lakeway Multi-Family
After extensive negotiation with the City of Lakeway, utility suppliers and neighboring property owners, during 2023 the company secured the right to develop a multi-family project on approximately 35 acres of undeveloped property in Lakeway, Texas located in the greater Austin area. The multi-family project is expected to utilize the road, drainage and utility infrastructure the company is required to build, subject to certain conditions, which is secured by a $2.3 million letter of credit under the company’s revolving credit facility. The company’s intention is to commence construction on the multi-family project or to sell the site, as soon as infrastructure construction, which has not yet started, is complete and market conditions warrant.
The company’s other Texas properties include:
Magnolia Place
In August 2021, the company began construction on the first phase of development of Magnolia Place, the company’s H-E-B, L.P (H-E-B) grocery shadow-anchored, mixed-use project in Magnolia, Texas (in the greater Houston area). The first phase of development consisted 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. In first-quarter 2024, the company completed the sale of approximately 47 acres of undeveloped land planned for a second phase of retail development, all remaining pad sites and up to 600 multi-family units. In third-quarter 2024, the company sold Magnolia Place – Retail, the first phase of the development. Following the sales, the company retained potential development of approximately 11 acres planned for 275 multi-family units and approximately $12 million of potential future reimbursements from the municipal utility district (MUD), with no project debt.
Jones Crossing
In 2017, the company entered into a 99-year ground lease pursuant to which the company leased a 72-acre tract of land in College Station, Texas, the location of Texas A&M University, for Jones Crossing, an H-E-B-anchored, mixed-use project. Construction of the first phase of the retail component of the Jones Crossing project was completed in 2018, consisting of 154,092 square feet. The H-E-B grocery store opened in September 2018, and, as of December 31, 2024, the company had signed leases for substantially all of the retail space, including the H-E-B grocery store. As of December 31, 2024, the company had approximately 22 undeveloped commercial acres with estimated development potential of approximately 104,750 square feet of commercial space and four retail pad sites. The company continues to evaluate options for a 21-acre multi-family component of this project. During 2023, the company separated the ground lease for the multi-family parcel from the primary ground lease.
Kingwood Place
In 2018, the company purchased a 54-acre tract of land in Kingwood, Texas (in the greater Houston area) to be developed as Kingwood Place, an H-E-B-anchored, mixed-use development project. The Kingwood Place project includes 151,877 square feet of retail lease space, anchored by a 103,000-square-foot H-E-B grocery store, and five pad sites. Construction of two retail buildings, totaling approximately 41,000 square feet, was completed in August 2019, and the H-E-B grocery store opened in November 2019. An 8,000-square-foot retail building was completed in June 2020. The company has signed ground leases on four retail pad sites and one retail pad site remains available for lease. As of December 31, 2024, the company had signed leases for substantially all of the retail space, including the H-E-B grocery store. The company owns this project through a limited partnership with third-party equity investors.
West Killeen Market
In 2015, the company acquired approximately 21 acres in Killeen, Texas, near Fort Cavazos, to develop the West Killeen Market project, an H-E-B shadow-anchored retail project and sold 11 acres to H-E-B. The project encompasses 44,493 square feet of commercial space and three pad sites adjacent to a 90,000 square-foot H-E-B grocery store. Construction at West Killeen Market was completed and the H-E-B grocery store opened in 2017. The three pad sites were sold between 2020 and 2022. As of December 31, 2024, the company had signed leases for approximately 74 percent of the retail space at West Killeen Market.
New Caney
In 2018, the company purchased a 38-acre tract of land, in partnership with H-E-B, in New Caney, Texas (in the greater Houston area), originally planned for the future development of an H-E-B-anchored, mixed-use project. Subject to completion of development plans, the company anticipate that the New Caney project will include restaurants and retail services, totaling approximately 145,000 square feet, five pad sites and a 10-acre multi-family parcel planned for approximately 275 multi-family units. The company is working on options for a retail anchor and do not plan to commence construction of the New Caney project prior to 2027.
Additional Development
The company’s development plans for The Annie B, Holden Hills Phase 2 and The Saint Julia will require significant additional capital, which the company intends to pursue through project-level debt and third-party equity capital arrangements through joint ventures in which the company receives development management fees and asset management fees and with the company’s potential returns increasing above the company’s relative equity interest in each project as negotiated return hurdles are achieved. The company anticipates seeking additional debt to finance the future development in Holden Hills Phase 1. The company is also pursuing other development projects. These potential development projects and projects in the company’s portfolio could require extensive additional permitting and will be dependent on market conditions and financing. Because of the nature and cost of the approval and development process and uncertainty regarding market demand for a particular use, there is uncertainty regarding the nature of the final development plans and whether the company will be able to successfully execute the plans.
History
Stratus Properties Inc. was founded in 1992. The company was incorporated under the laws of Delaware in 1992.
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