• Real Estate Development and Sales: Stratus Properties develops and sells commercial, multi-family, and single-family residential properties.
• Real Estate Leasing: The company leases space in its retail, mixed-use, and multi-family properties to tenants.

Stratus Properties Inc. (STRS) serves the following categories of customers:

1. Individual Homebuyers: Individuals and families purchasing single-family homes, townhomes, or residential lots developed by Stratus Properties.
2. Residential Renters: Individuals and families leasing apartment units within the multi-family residential properties managed or developed by Stratus Properties.
3. Commercial Tenants and Property Buyers: A variety of businesses, including retailers, restaurants, and office users, that lease commercial space within Stratus's retail, mixed-use, or office developments. This category also includes businesses or real estate investors that purchase commercial properties from Stratus.

William H. Armstrong III has been a key executive with Stratus Properties since its inception in 1992. He has served as President since August 1996, Chief Executive Officer since May 1998, and Chairman of the Board since August 1998. Before joining Stratus in 1992, he was a vice-president of a nationally known real estate investment banking and advisory firm. Stratus Properties was formed as an offshoot of Freeport-McMoRan. In 1998, Stratus entered into joint ventures with Olympus Real Estate Corp., an affiliate of Hicks, Muse, Tate & Furst, which was an investment firm. He holds a Bachelor of Arts in Economics from the University of Colorado.

Erin D. Pickens has served as Senior Vice President since May 2009 and Chief Financial Officer since June 2009. Prior to her current roles at Stratus Properties, Ms. Pickens was the Executive Vice President and Chief Financial Officer of Tarragon Corporation from November 1998 to April 2009. She also held positions as Vice President and Chief Accounting Officer from September 1996 to November 1998, and Accounting Manager from June 1995 to August 1996, for Tarragon and its predecessors. Ms. Pickens is a licensed Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants.

1. Execution Risk of Liquidation and Asset Sales: The most significant risk stems from the company's announced plan to sell all or substantially all of its assets and distribute net proceeds to shareholders, ultimately leading to dissolution. This plan is subject to several uncertainties, including the company's ability to execute the sales at favorable prices and within anticipated timeframes, secure necessary consents from third parties (such as lenders and partners), navigate potential litigation, manage tax implications, and obtain final shareholder approval. There is also the risk that the plan could be abandoned or modified, and the stock price may be adversely affected by the announcement or implementation of the liquidation.
2. Real Estate Market and Economic Downturns: As a real estate company primarily operating in the Austin, Texas area and other select Texas markets, Stratus Properties is highly susceptible to fluctuations in local and regional real estate demand and prices. High inflation and elevated interest rates further exacerbate these market risks, potentially making it more challenging to sell properties at attractive valuations or to secure favorable leasing terms. These conditions directly impact the success and profitability of asset sales under the liquidation plan.
3. Financial Leverage and Operational Costs: Stratus Properties carries a high level of debt, indicated by its debt-to-equity ratio, which could pose risks in a volatile market and impact the net proceeds from asset sales. The company's financial performance has shown concerning profitability metrics, including negative operating and net margins. Until the liquidation is complete, the company remains exposed to operational risks such as potential delays and cost overruns in development projects, labor shortages, increased construction costs, and regulatory uncertainties, all of which can strain cash flow and reduce distributable value to shareholders.

The persistent and evolving structural shift in demand for commercial office and traditional retail spaces, primarily driven by the widespread adoption of remote/hybrid work models and the acceleration of e-commerce, presents a clear emerging threat to Stratus Properties.

As a company engaged in the acquisition, entitlement, development, management, and sale of commercial, and multi-and single-family residential properties, with significant exposure to leasing operations for retail and mixed-use properties, Stratus Properties is directly susceptible to these trends. A sustained reduction in the need for physical office footprints and a continued decline in traditional brick-and-mortar retail traffic could lead to increased vacancy rates, downward pressure on lease rates, and diminished property values for its commercial and retail assets.

Stratus Properties Inc. operates primarily within the Texas real estate market, focusing on commercial, multi-family residential, and single-family residential properties. The addressable markets for their main products and services in Texas are substantial, as detailed below.

Commercial Real Estate Market (Texas)

The overall commercial real estate (CRE) market in Texas is a significant economic driver. In 2023, CRE contributed an estimated $185 billion to the state's economy. Direct spending on specific CRE sectors in Texas exceeded $71.7 billion, broken down as follows:

• Industrial: The industrial sector saw over $34.7 billion in direct spending in 2023. Texas' industrial space inventory grew by 83 million square feet (3%) in 2024. Approximately 50 million square feet of new industrial space is projected for delivery in Texas in 2025. The Dallas-Fort Worth (DFW) area alone has an industrial market exceeding 1 billion square feet.
• Office: Direct spending in the office sector was $16.7 billion in 2023. Major Texas cities represent vast office inventories, with Dallas having a total market size of 230 million square feet, Houston approximately 190 million square feet, and Plano (within DFW) about 43 million square feet.
• Retail: The retail sector accounted for $5.9 billion in direct spending in 2023. As of 2025, the DFW retail market comprised roughly 202 million square feet of inventory, with approximately 2.4 million square feet delivered during that year. Austin's retail inventory was about 53.9 million square feet, with 1.1 million square feet delivered in 2025. Houston's retail market had around 167.5 million square feet of inventory, with about 1.1 million square feet delivered in 2025. The total retail construction pipeline for Texas's major metropolitan areas was just under 10.5 million square feet at the end of Summer 2024.
• Warehouse: The warehouse sector saw $14.3 billion in direct spending in 2023.

Multi-Family Residential Real Estate Market (Texas)

The multi-family housing market in Texas is a significant and active sector. The state's apartment market encompasses over 2.5 million units. In 2025, statewide apartment deliveries are projected to be around 55,000 units. Major metropolitan areas in Texas show substantial investment volumes:

• Dallas-Fort Worth: This market leads the state with over $27.8 billion in multi-family investment volume. Approximately 38,640 units were delivered year-to-date as of mid-November 2024, with about 22,000 units scheduled for delivery in 2025.
• Houston: The Houston market recorded $17.2 billion in multi-family investment volume.
• Austin: Austin's multi-family investment volume reached $9.2 billion.
• San Antonio: San Antonio saw $6.5 billion in multi-family investment volume.

Single-Family Residential Real Estate Market (Texas)

Texas is home to approximately 8.2 million single-family homes. The statewide median home price was $328,000 in January 2025. In January 2025, statewide home sales of new and existing homes were at a seasonally adjusted annual rate of 343,240. For 2025, single-family permits are expected to total around 165,000 units, and total units sold are projected to be near 340,000. In February 2026, there were 156,691 homes for sale across Texas.

For Stratus Properties (NASDAQ: STRS), the expected drivers of future revenue generation over the next 2-3 years are primarily linked to its recently announced plan of liquidation and dissolution.

Here are 3-5 expected drivers:

• Execution of Strategic Asset Sales at Favorable Valuations: The paramount driver of future revenue will be the successful sale of all or substantially all of Stratus Properties' commercial, multi-family, and single-family residential real estate assets. The company's board believes this is an opportune time to realize portfolio value, citing recent property sales at premium valuations. This strategy aims to optimize and maximize the value of its remaining portfolio by selling assets at the right times and prices.
• Completion and Monetization of In-Progress Development Projects: Revenue will also be driven by the completion and subsequent sale of existing development projects. For instance, in early 2025, Stratus was advancing construction on the last two Amarra Villas homes and the road and utility infrastructure of Holden Hills Phase 1, with expected completion in the second quarter of 2025. The sale of such completed projects will contribute to the proceeds generated during the liquidation.
• Continued Revenue Generation from Leasing Operations Prior to Asset Disposition: While the company proceeds with asset sales, its leasing operations for retail, mixed-use, and multi-family properties will continue to generate revenue. For example, increased revenue from properties like The Saint June was noted in the first quarter of 2025. This ongoing income stream will contribute to the company's financial position until the respective leased assets are sold.
• Optimal Timing of Asset Sales: The company emphasizes its intention to "opportunistically pursue sales at the right times and right prices" to maximize stockholder value. This strategic approach to timing asset dispositions, taking into account market conditions, will directly impact the total revenue realized from the liquidation process by aiming to secure the highest possible sale prices for its properties.

Share Repurchases

• Stratus Properties completed a $10.0 million share repurchase program in October 2023, acquiring 389,378 shares at an average price of $25.68 per share in 2023.
• The Board approved a new $5.0 million share repurchase program in November 2023.
• As of November 12, 2025, $21.1 million remained available for repurchases under Stratus' $25.0 million share repurchase program.

Inbound Investments

• In 2023, the formation of a joint venture to develop the 495-acre Holden Hills Phase 1 residential project resulted in a $35.8 million cash distribution to Stratus.
• In the second quarter of 2025, the formation of a joint venture for Holden Hills Phase 2 development yielded a $47.8 million cash distribution to Stratus.

Capital Expenditures

• Purchases and development of real estate properties and capital expenditures totaled $58.7 million in 2024, primarily focused on Barton Creek properties (including Amarra Villas and Holden Hills Phase 1), The Saint George, and tenant improvements at Lantana Place – Retail.
• For the first nine months of 2025, purchases and development of real estate properties and capital expenditures totaled $28.6 million, primarily related to the development of Holden Hills Phase 1 and The Saint George.
• Projected capital expenditures for 2025 are approximately $30 million.