STRATUS PROPERTIES INC Q4 FY2020 earnings call

• Impact of COVID-19: Shifted to focus on liquidity, offered rent deferrals; tenant delinquency lower than forecast. - Leasing and real estate: Record annual revenue from leasing (due to leases at The Saint Mary, Kingwood Place, The Santal); increased real estate revenue from single-family residential trends. - Sales: Sold The Saint Mary; gained ~$14 million gain, subject to C Corp taxation. - Development: Advancing projects; teams resilient during pandemic; Austin market growing with tech companies (Apple, Alphabet, Amazon, etc.). - Board: Refreshment with new directors Neville and Kate, expected to be invaluable.

Stratus consolidated revenues totaled $61 million in 2020 compared with $92.2 million in 2019. Net loss attributable to common stockholders totaled $22.8 million, or $2.78 per share in 2020, compared to $2.5 million, or $0.30 per share in 2019. EBITDA totaled $9.5 million for 2020, compared with $21.1 million for 2019. Stratus reported an estimated after tax NAV per share of $14.65 as of December 31, 2020, compared to $45.55 as of December 31, 2019, primarily due to reduced valuation of Block 21 from COVID-19 impacts.

• Optimistic about market recovery as COVID-19 impacts subside. - Continued evaluation of REIT conversion, though still in early stages with accounting complexities.

• COVID-19 impact on hotel and entertainment segments, affecting NAV. - Potential tax implications from sale gains (C Corp taxation on ~$14 million gain from The Saint Mary sale). - Complexities and uncertainties surrounding REIT conversion evaluation.

Q: Is the structure of The Saint Mary that you recently sold a good example of future ownership structures and future developments?

A: The sale of The Saint Mary involved raising third-party equity, had a ~3.9 equity multiple and mid-60s IRR, seen as a potential template.

Q: How is the Austin market strengthening with tech companies moving in impacting Stratus' operations and future development opportunities?

A: Austin's growth with tech companies is positive for the market, but 2020 was challenging for segments; residential market hot, commercial slowly recovering.

Q: Are you seeing evidence of advanced bookings at the hotel with airline talk of better bookings?

A: Yes, events deferred last year are rebooking, private events and on-site tours picking up, impacting third/fourth quarter finances.

Q: Could you elaborate beyond what you've already said about why the REIT conversion is good for Stratus?

A: C Corp tax rate at 21% (with talk of raising to 28%) puts C Corps at a disadvantage vs REITs (no such taxation); REIT conversion could eliminate second layer of taxation for shareholders, though still in evaluation.

Q: Is adding diverse directors a priority for the company?

A: Yes, company believes in strength and diversity for good decision making; new directors Neville and Kate are seasoned real estate investors/operators and valued.