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Stratus Swings to Earnings in Q1 on Leasing Segment Gains
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Shares of Stratus Properties Inc. (STRS - Free Report) have declined 0.9% since the company reported results for the quarter ended March 31, 2026, underperforming the S&P 500 index’s 0.1% growth over the same period. Over the past month, Stratus shares have declined 2.1% compared with a 4.9% gain for the broader index.
Stratus reported net income of 82 cents per share for the first quarter of 2026 against a net loss of 36 cents per share in the year-ago quarter.
Total revenue declined 24.8% year over year to $3.8 million from $5 million, reflecting lower leasing revenues following asset sales. Consolidated operating income came in at $15.4 million compared with an operating loss of $3.6 million a year earlier, while EBITDA improved to $17.1 million from a negative $2.3 million in the prior-year quarter.
Net income attributable to common stockholders came in at $6.6 million against a net loss attributable to common stockholders of $2.9 million in the year-ago quarter.
Stratus Properties Inc. Price, Consensus and EPS Surprise
A major contributor to the quarter’s earnings improvement was the sale of Kingwood Place, an H-E-B-anchored mixed-use development in Kingwood, TX, for $60.8 million. The transaction generated approximately $16.2 million in proceeds to Stratus after repayment of project debt and other adjustments, while producing a pre-tax gain of roughly $13.4 million net of noncontrolling interests.
The leasing operations segment posted an operating profit of $23.1 million, sharply higher than $2 million in the prior-year quarter, largely due to the gain on the sale of Kingwood Place. Leasing revenues, however, declined to $3.7 million from $5 million, primarily because of the sale of Lantana Place – Retail in the fourth quarter of 2025 and Kingwood Place in first-quarter 2026. The decline was partially offset by increased contributions from The Saint George multifamily project, which began lease-up in the second quarter of 2025.
The real estate operations segment generated revenues of $0.1 million compared with $0.03 million a year earlier, while segment loss widened modestly to $2.1 million from $1.5 million. Capital expenditures and development spending totaled $7.8 million during the quarter, down from $11.7 million in the prior-year period, with spending focused primarily on Holden Hills infrastructure and Lakeway road development projects.
Management Focused on Liquidation Plan Execution
Management emphasized continued progress in monetizing the company’s portfolio following the board’s decision to pursue a complete liquidation and dissolution of the company.
Chairman and chief executive officer William H. Armstrong III said the company remained focused on “disciplined execution” and maximizing shareholder value through asset sales and capital returns. During the quarter, Stratus received a $46.5 million offer for the retail component of Jones Crossing, including undeveloped commercial acreage, and entered into contracts to sell New Caney land for approximately $12.7 million and the last Amarra Villas home for $3.6 million, subject to closing conditions. One Amarra Villas home was sold in April for $3.6 million.
The company’s board approved the Plan of Liquidation on March 24, 2026, after completing a strategic review. The proposal calls for an orderly sale of substantially all company assets and distribution of net proceeds to shareholders. Stratus estimated potential liquidating distributions in the range of $29.73 to $37.69 per share, subject to shareholder approval at the company’s June 1 annual meeting.
Liquidity and Balance Sheet Position
Stratus ended the quarter with $73.5 million in cash and cash equivalents compared with $74.3 million at year-end 2025. Consolidated debt totaled $143.8 million, up slightly from $143 million at Dec. 31, 2025. The company also had $24.7 million available under its revolving credit facility at quarter-end, with no borrowings outstanding under the facility.
Cash used in operating activities totaled $15.6 million during the quarter, while the company used $13.5 million of net cash in operations in the prior-year quarter.
Other Developments
Stratus continued repurchasing shares under its $25 million share repurchase authorization. Through April 30, 2026, the company had repurchased 235,421 shares for $5.2 million at an average price of $22.14 per share, leaving $19.8 million available under the program.
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Stratus Swings to Earnings in Q1 on Leasing Segment Gains
Shares of Stratus Properties Inc. (STRS - Free Report) have declined 0.9% since the company reported results for the quarter ended March 31, 2026, underperforming the S&P 500 index’s 0.1% growth over the same period. Over the past month, Stratus shares have declined 2.1% compared with a 4.9% gain for the broader index.
Stratus reported net income of 82 cents per share for the first quarter of 2026 against a net loss of 36 cents per share in the year-ago quarter.
Total revenue declined 24.8% year over year to $3.8 million from $5 million, reflecting lower leasing revenues following asset sales. Consolidated operating income came in at $15.4 million compared with an operating loss of $3.6 million a year earlier, while EBITDA improved to $17.1 million from a negative $2.3 million in the prior-year quarter.
Net income attributable to common stockholders came in at $6.6 million against a net loss attributable to common stockholders of $2.9 million in the year-ago quarter.
Stratus Properties Inc. Price, Consensus and EPS Surprise
Stratus Properties Inc. price-consensus-eps-surprise-chart | Stratus Properties Inc. Quote
Portfolio Monetization Drives Results
A major contributor to the quarter’s earnings improvement was the sale of Kingwood Place, an H-E-B-anchored mixed-use development in Kingwood, TX, for $60.8 million. The transaction generated approximately $16.2 million in proceeds to Stratus after repayment of project debt and other adjustments, while producing a pre-tax gain of roughly $13.4 million net of noncontrolling interests.
The leasing operations segment posted an operating profit of $23.1 million, sharply higher than $2 million in the prior-year quarter, largely due to the gain on the sale of Kingwood Place. Leasing revenues, however, declined to $3.7 million from $5 million, primarily because of the sale of Lantana Place – Retail in the fourth quarter of 2025 and Kingwood Place in first-quarter 2026. The decline was partially offset by increased contributions from The Saint George multifamily project, which began lease-up in the second quarter of 2025.
The real estate operations segment generated revenues of $0.1 million compared with $0.03 million a year earlier, while segment loss widened modestly to $2.1 million from $1.5 million. Capital expenditures and development spending totaled $7.8 million during the quarter, down from $11.7 million in the prior-year period, with spending focused primarily on Holden Hills infrastructure and Lakeway road development projects.
Management Focused on Liquidation Plan Execution
Management emphasized continued progress in monetizing the company’s portfolio following the board’s decision to pursue a complete liquidation and dissolution of the company.
Chairman and chief executive officer William H. Armstrong III said the company remained focused on “disciplined execution” and maximizing shareholder value through asset sales and capital returns. During the quarter, Stratus received a $46.5 million offer for the retail component of Jones Crossing, including undeveloped commercial acreage, and entered into contracts to sell New Caney land for approximately $12.7 million and the last Amarra Villas home for $3.6 million, subject to closing conditions. One Amarra Villas home was sold in April for $3.6 million.
The company’s board approved the Plan of Liquidation on March 24, 2026, after completing a strategic review. The proposal calls for an orderly sale of substantially all company assets and distribution of net proceeds to shareholders. Stratus estimated potential liquidating distributions in the range of $29.73 to $37.69 per share, subject to shareholder approval at the company’s June 1 annual meeting.
Liquidity and Balance Sheet Position
Stratus ended the quarter with $73.5 million in cash and cash equivalents compared with $74.3 million at year-end 2025. Consolidated debt totaled $143.8 million, up slightly from $143 million at Dec. 31, 2025. The company also had $24.7 million available under its revolving credit facility at quarter-end, with no borrowings outstanding under the facility.
Cash used in operating activities totaled $15.6 million during the quarter, while the company used $13.5 million of net cash in operations in the prior-year quarter.
Other Developments
Stratus continued repurchasing shares under its $25 million share repurchase authorization. Through April 30, 2026, the company had repurchased 235,421 shares for $5.2 million at an average price of $22.14 per share, leaving $19.8 million available under the program.