STRATUS PROPERTIES INC Q3 FY2021 earnings call

• Recently announced transactions: Sale of The Santal expected to generate pretax net proceeds of approx. $70 million with a pretax gain of ~$80 million in Q4 2021; sale of Block 21 expected to generate pretax net proceeds of approx. $115 million with a pretax gain of ~$110 million. Potential uses of proceeds include deleveraging, returning cash to shareholders, and reinvesting in the project pipeline.
• Projects: The Annie B, a proposed luxury high-rise rental project in downtown Austin with sustainability focus; construction started on The Saint June multifamily project; Holden Hills residential development with environmental focus; Lantana Place rezoned for multifamily development; Magnolia Place construction loan entered for first phase; Kingwood Place mixed-use project with H-E-B anchor; Section N mixed-use project redesign in progress.

Real Estate Operations: In the third quarter of 2021, revenue totaled $1 million compared to $5 million in the third quarter of 2020. The segment's operating loss was $1.7 million in Q3 2021 versus operating income of $1.4 million in Q3 2020. The decrease in revenue and operating loss reflects a drop in lots sold as available inventory decreased.

Leasing Operations: Revenue in Q3 2021 was just under $6 million, relatively in line with Q3 2020. Operating income was $1.8 million in Q3 2021, up from $1.2 million in Q3 2020. The increase is due to the absence of costs and depreciation related to The Saint Mary after its sale in Q1 2021.

Hotel: Hotel revenues grew to $5.2 million in Q3 2021 from $1.6 million in Q3 2020. Operating income was $46,000 in Q3 2021 compared to an operating loss of $2.6 million in Q3 2020. This improvement is from higher room reservations and food and beverage sales as COVID-19 impacts lessened.

Entertainment: Entertainment revenues increased to $3.7 million in Q3 2021 from $367,000 in Q3 2020. Operating income was $409,000 in Q3 2021 compared to an operating loss of $1.3 million in Q3 2020. The increase is from increased attendance and events hosted at ACL Live and 3TEN ACL Live.

• Potential uses of proceeds from Santal and Block 21 sales include a combination of further deleveraging, returning cash to shareholders, and reinvesting in the project pipeline. - Confidence in Austin and Texas markets due to population growth, corporate relocations, and new development. - Expectations of continued growth from current and upcoming projects in residential, retail, and mixed-use segments.

• Forward-looking statements may differ materially from actual results. - Market uncertainties that could impact project timelines and financial outcomes. - Continued potential impacts from COVID-19 pandemic on hospitality and entertainment segments, though mostly mitigated.

Q: A: Q: A: No questions were queued for the session