Stratus Properties (STRS) Reports Q3 Loss of $1.84, Revenues Beat

Stratus Properties (NASDAQ: STRS) reported Q3 EPS of ($1.84), versus $0.00 reported last year. Revenue for the quarter came in at $12.8 million versus the consensus estimate of $2.41 million.

Highlights:

• In September 2020, Stratus announced that its Board of Directors (Board) approved the initiation of an in-depth exploration of a conversion from a C-Corporation to a real estate investment trust (REIT). As part of this assessment, Stratus is also conducting a comprehensive review of its governance practices and Board composition to ensure it has access to the appropriate expertise and mix of skillsets moving forward.
• Net losses attributable to common stockholders totaled $15.1 million, $1.84 per share, in third-quarter 2020, compared to $3.0 million, $0.36 per share, in third-quarter 2019. Third-quarter 2020 results include a $9.6 million non-cash tax charge to record a valuation allowance on Stratus' deferred tax assets.
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) totaled $(0.6) million in third-quarter 2020, compared to $2.7 million in third-quarter 2019. For a reconciliation of net loss attributable to common stockholders to EBITDA, see the supplemental schedule, "EBITDA," on page VI.
• Consolidated revenue totaled $12.8 million in third-quarter 2020, compared to $22.3 million in third-quarter 2019 as the COVID-19 pandemic continued to significantly impact Stratus' hotel and entertainment operations in third-quarter 2020. The overall decrease in consolidated revenue was partially offset by increases in revenue from real estate and leasing operations.
• Sold four Amarra Drive Phase III lots for a total of $5.0 million during third-quarter 2020. During the nine months ended September 30, 2020, Stratus sold $19.1 million of residential property. Subsequent to September 30, 2020, and through November 2, 2020, Stratus sold three Amarra Drive Phase II lots for a total of $2.0 million.
• Stratus expects to refinance or sell The Saint Mary, a 240-unit luxury garden-style apartment project in the Circle C community, prior to June 2021. Stratus is also considering selling the land for the single family residential component of Magnolia Place, a planned mixed-use project in Magnolia, Texas.
• In the first quarter of 2021, Stratus expects to commence work on The Saint June, a 182-unit multi-family project within the Amarra subdivision in Barton Creek, subject to financing and market conditions. Stratus will closely monitor the market before initiating construction and may defer the start of construction if prudent.
• The COVID-19 pandemic has continued to have a significant adverse impact on Stratus' business and operations, particularly on the hotel and entertainment sectors. Stratus is continuing to implement cost controls; close routine asset sales; closely monitor its income properties and continue to lease up certain properties; regularly communicate with its lenders and investor groups; and evaluate refinance opportunities for its larger, stabilized assets to take advantage of historic low interest rates in order to maintain liquidity during the pandemic.

William H. Armstrong III, Chairman, President and Chief Executive Officer, stated, “The COVID-19 pandemic continues to adversely impact our hotel and entertainment assets, and we believe we have taken prudent steps to manage and protect these assets through the pandemic, including controlling costs and closely monitoring liquidity. We also remain focused on other activities important to creating long term shareholder value such as advancing our land planning, engineering and permitting activities for a number of properties, as well as continuing to lease up certain properties and evaluate potential refinancing opportunities in a market where interest rates are at a historic low. Our income properties continue to perform better than we forecast at the outset of the pandemic – total rent collections for our retail properties are 84 percent of scheduled rents and 99 percent for our multi-family properties, which equates to 92 percent of our combined total scheduled rent from April through October 2020. Our strategy remains intact, we remain confident that we have sufficient liquidity to meet our financial obligations through 2021, and we believe the Company is well-positioned to create value when the business environment recovers.”

For earnings history and earnings-related data on Stratus Properties (STRS) click here.

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