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Stratus Properties Inc. Reports Second-Quarter and Six-Month 2009 Results and Updates W Austin Hotel & Residences Development Activities
Posted by: gurufocus (IP Logged)
Date: August 10, 2009 09:33AM
Press Release: Stratus Properties Inc. Reports Second-Quarter and Six-Month 2009 Results and Updates W Austin Hotel & Residences Development Activities
AUSTIN, Texas--(BUSINESS WIRE)--
Stratus Properties Inc. (NASDAQ:STRS):
Stratus Properties Inc. (NASDAQ: STRS) reported a net loss attributable to Stratus common stock of $1.4 million, $0.19 per share, for the second quarter of 2009, compared to $1.2 million, $0.16 per share, for the second quarter of 2008. For the six months ended June 30, 2009, Stratus reported a net loss attributable to Stratus common stock of $3.2 million, $0.43 per share, compared to $1.4 million, $0.18 per share, for the six months ended June 30, 2008.
Stratus sold one courtyard home at Calera Court and 20 lots at its Meridian development in the second quarter of 2009, compared with one courtyard home at Calera Court and 22 lots at Meridian in the second quarter of 2008. For the first six months of 2009, Stratus sold one courtyard home and 23 lots at Meridian, compared with one courtyard home and 77 total lots at Meridian, Deerfield and Wimberly Lane during the first six months of 2008. Rental income from commercial leasing properties decreased to $1.0 million in the second quarter of 2009 from $1.2 million in the second quarter of 2008 primarily because of a decrease in occupancy at Stratus’ original office building at 7500 Rialto Boulevard. Stratus is actively pursuing tenants to fill the available office space at 7500 Rialto Boulevard.
W Austin Hotel & Residences. As previously announced, in May 2008, Stratus entered into a joint venture with Canyon-Johnson Urban Fund II, L.P. (Canyon-Johnson) for the development of the W Austin Hotel & Residences in downtown Austin. Stratus, the manager of the project, has an approximate 40 percent interest in the joint venture and Canyon-Johnson has an approximate 60 percent interest in the joint venture. As of June 30, 2009, capital contributions totaled $35.3 million for Stratus and $48.7 million for Canyon-Johnson. For the remaining capital contributions, Stratus will fund 40 percent and Canyon-Johnson will fund 60 percent of project costs until the required capital contributions totaling approximately $128 million are made, after which project costs originally were expected to be funded by construction financing borrowings (see below).
The joint venture originally obtained a $165 million construction loan with Corus Bank, N.A. (Corus) to finance project costs after the required capital contributions were made. On June 26, 2009, the loan agreement with Corus was assigned to a subsidiary of Stratus, which is jointly managed by Stratus and Canyon-Johnson, in exchange for a pay down of $250,000 of the outstanding principal balance of $2.1 million. As a result, Corus is no longer the lender and in the second quarter of 2009 Stratus recognized a $0.2 million loss on extinguishment of debt, which includes the write-off of unamortized deferred loan costs in the amount of $2.1 million.
The joint venture is aggressively pursuing other options for financing the future construction costs of the W Austin Hotel & Residences project after the required capital contributions are made. Such options may include additional equity contributions by Stratus and Canyon-Johnson, financing from other financial institutions, admitting new equity partners, or a combination of these alternatives. If the joint venture does not secure project financing from a third-party lender, or if Stratus or Canyon-Johnson is unable to make required additional future capital contributions to the joint venture, the joint venture may be required to delay further construction of the project until additional financing is available.
Stratus is a diversified real estate company engaged in the acquisition, development, management, operations and sale of commercial, multi-family and residential real estate properties located primarily in the Austin, Texas area.
CAUTIONARY STATEMENT. This press release contains certain forward-looking statements regarding proposed real estate sales and development activities at W Austin Hotel & Residences. Important factors that might cause future results to differ from those projections include economic and business conditions, the availability of financing, regulatory approvals, environmental regulations and other factors which are described in more detail in Stratus’ 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission.
A copy of this release is available on Stratus’ web site, www.stratusproperties.com.