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SP

STRATUS PROPERTIES INC (STRS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was weak as lumpy real estate sales drove a sharp YoY revenue decline and a net loss, while Leasing Operations improved on The Saint June lease-up; management executed financing actions and advanced key Austin-area projects .
  • Revenues fell to $5.0M and diluted EPS was $(0.36); EBITDA was $(2.3)M, reflecting no land/home sales in the quarter versus significant Magnolia and Amarra Villas sales in Q1 2024 .
  • Liquidity remained adequate with $12.0M cash and $34.5M revolver availability at quarter-end; debt rose to $207.8M as projects progressed; maturities extended and rates lowered on several facilities .
  • Near-term catalysts: completion of The Saint George and remaining Amarra Villas, Holden Hills Phase 1 infrastructure in Q2 2025, and monetization of West Killeen Market (closed May 27, 2025) with ~$7.8M pre-tax net cash proceeds; continued share repurchases authorized up to $5.0M in Q1 (later expanded to $25.0M in Q2) .

What Went Well and What Went Wrong

  • What Went Well

    • Leasing Operations strengthened: segment revenue rose to $5.0M (+15% YoY) and segment profit reached $1.96M, driven by The Saint June moving toward stabilization .
    • Strategic execution: refinanced Lantana Place and Jones Crossing at lower rates, extended maturities, and amended the revolver (maturity to Mar 27, 2027) to lower interest—a prudent liquidity and cost-of-capital move .
    • CEO tone emphasized pipeline readiness and opportunistic transactions: “We have continued to execute on opportunistic transactions... Our three other stabilized retail projects continue to perform well... projects... ready to go, subject to market conditions and financing.” .

  • What Went Wrong

    • Absent property sales crushed consolidated revenue: Real Estate Operations revenue was just $25K versus $22.1M in Q1 2024, producing a consolidated operating loss of $(3.6)M .
    • Net loss to common $(2.9)M and EBITDA $(2.3)M underscored earnings sensitivity to transaction timing; G&A remained sizable at $(4.1)M .
    • Cash from operations was deeply negative at $(13.5)M amid development spending and lack of sales, increasing dependence on project loans and asset-level financing .

Financial Results

MetricQ1 2024Q3 2024Q1 2025
Revenue ($USD Millions)$26.507 $8.891 $5.043
Net Income (Loss) Attributable to Common ($USD Millions)$4.552 $(0.364) $(2.875)
Diluted EPS ($USD)$0.56 $(0.05) $(0.36)
EBITDA ($USD Millions)$5.200 $0.009 $(2.333)

Segment breakdown (Q1 2025 vs. Q1 2024):

Segment (Revenue/Segment Profit)Q1 2024 Revenue ($USD Millions)Q1 2024 Segment Profit ($USD Millions)Q1 2025 Revenue ($USD Millions)Q1 2025 Segment (Loss)/Profit ($USD Millions)
Real Estate Operations$22.123 $6.801 $0.025 $(1.502)
Leasing Operations$4.384 $1.349 $5.018 $1.958
Total Operating Loss/Income—$3.685 —$(3.595)

Key KPIs and balance sheet:

KPISep 30, 2024Dec 31, 2024Mar 31, 2025
Cash and Equivalents ($USD Millions)$19.638 $20.178 $12.006
Debt ($USD Millions)$181.540 $194.853 $207.838
Capex + Purchases & Development ($USD Millions, period)$13.428 (Q3’24) $58.661 (FY’24) $11.739 (Q1’25)
Cash from Operations ($USD Millions, period)$(2.402) (9M’24) $(5.840) (FY’24) $(13.495) (Q1’25)

Estimate comparison (S&P Global):

  • Consensus EPS and revenue for Q1 2025 were unavailable; no estimate counts returned. Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Project completion timing (The Saint George; Amarra Villas; Holden Hills Phase 1 infrastructure)Q2 2025Not previously specified in Q4 materialsExpected completion in Q2 2025 New timing detail
West Killeen Market monetizationQ2 2025Under contract at $13.3M Closed May 27, 2025; ~$7.8M pre-tax net cash proceeds Executed transaction
Revolving Credit FacilityOngoingMaturity earlier; higher rateExtended to Mar 27, 2027; lowered rate Improved terms
Share Repurchase AuthorizationQ1 2025Up to $5.0M program Maintained in Q1; later increased to $25.0M (Q2 2025) Raised (subsequent quarter)
Dividend policy (constraints)OngoingSubject to Comerica consentRequires Comerica consent; no change Maintained

Note: No formal quantitative guidance (revenue, margins, OpEx, OI&E, tax rate) was provided for Q2+ in Q1 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and FY 2024)Current Period (Q1 2025)Trend
Asset sales monetizationMagnolia Place – Retail sold for $8.9M with $1.6M pre-tax gain; strong Amarra Villas sales in 2024 Under contract to sell West Killeen Market for $13.3M (later closed in May) Continuing monetization; positive
Leasing stabilizationThe Saint June ~97% occupancy by Nov 2024; leasing revenue up Leasing revenue increased YoY; segment profit $1.96M Improving stabilization
Development pipeline (Austin focus)Advancing The Saint George, Amarra Villas, Holden Hills; residential-centric, no office exposure The Saint George units available April; completions targeted Q2; Holden Hills Phase 1 infrastructure advancing Execution milestones
Financing/refinancing strategyExtended/modified loans (Saint June; Kingwood Place) at lower rates Refinanced Lantana Place, Jones Crossing; revolver maturity extended and rate lowered Cost-of-capital improvement
Regulatory/legal (ETJ Law)Risk disclosures in FY 2024 materials Continued cautionary statements referencing ETJ Law litigation Ongoing risk
Project-specific issues—Potential costs to remediate water leak at The Saint George flagged in cautionary disclosures Risk identified

Management Commentary

  • Strategic focus and pipeline readiness: “We made significant progress executing our proven strategy... focusing intently on the development of our Holden Hills Phase 1... and... Holden Hills Phase 2... We have continued to execute on opportunistic transactions...” .
  • Liquidity actions: “Refinancing project loans to extend maturities at lower rates and contracting to sell our stabilized West Killeen Market retail project” .
  • Second-quarter progress and capital return (subsequent): “We formed a joint venture... Holden Hills Phase 2, resulting in a $47.8 million cash distribution... We sold... West Killeen Market... Our strengthened cash position provides our Board with flexibility to explore... alternatives.” .

Q&A Highlights

  • No earnings call transcript was available within the company’s document set for Q1 2025; therefore, no Q&A themes can be extracted [ListDocuments result: earnings-call-transcript returned 0 for May 2025].

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable; no estimate counts returned. Values retrieved from S&P Global.*
  • Implication: With absent sell-side consensus, post-print revisions are unlikely to be a catalyst; investor focus should center on transaction cadence, leasing stabilization, and financing actions .

Key Takeaways for Investors

  • Earnings volatility persists due to timing of property sales; leasing growth is an offset but not yet sufficient to cover G&A and development-driven costs .
  • Liquidity is managed proactively via refinancing and revolver amendments; watch debt trajectory against monetization pace and JV proceeds utilization .
  • Near-term catalysts: Q2 completions (The Saint George, Amarra Villas, Holden Hills Phase 1 infrastructure) and asset sale cash inflows (West Killeen Market) .
  • Shareholder returns: active repurchases ($0.4M in Q1; later authorization increased to $25M in Q2) signal confidence and potential capital return optionality .
  • Risks: ETJ Law litigation and The Saint George water leak remediation could add cost/timing uncertainty; monitor disclosures and insurance/general contractor outcomes .
  • Medium-term thesis: Residential-centric Austin/Texas pipeline, stabilized retail assets, and lower rates may improve NOI and monetization outcomes as projects complete and lease-up matures .

Footnote: *Values retrieved from S&P Global.