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SP

STRATUS PROPERTIES INC (STRS)·Q3 2025 Earnings Summary

Executive Summary

  • Soft quarter driven by absence of real estate sales and a $2.8M project write-off; revenue fell to $5.0M and diluted EPS was $(0.62), down from $0.03 in Q2 and $(0.05) in Q3’24 . Leasing remained stable while Real Estate Operations posted losses given no home/land sales .
  • Liquidity and balance sheet flexibility improved: $55.0M cash, no revolver borrowings, $17.5M of availability, and pending sale of Lantana Place – Retail (~$57.4M) expected to close in Q4 to repay ~$29.8M project loan principal .
  • Capital return optionality expanding: Board exploring use of cash (deleveraging, reinvestment, share repurchases); $3.9M repurchased through Nov 7 and $21.1M authorization remaining under the $25M program .
  • No formal guidance; near‑term stock catalysts include closing of Lantana Place – Retail and subsequent capital allocation update; sell-side estimate coverage appears limited to none for the quarter (no EPS/Revenue consensus from S&P Global) [Values retrieved from S&P Global]*.

What Went Well and What Went Wrong

What Went Well

  • Leasing Operations resilient: segment revenue held essentially flat YoY at $4.924M ($4.920M in Q3’24); segment delivered positive profit of $0.317M despite macro headwinds .
  • Balance sheet optionality: $55.0M cash, no revolver borrowings, $17.5M available, and a signed agreement to sell Lantana Place – Retail for ~$57.4M (expected Q4 close) to repay ~$29.8M in project debt principal .
  • Development progress and leasing pipeline: “Lease-up of The Saint George is progressing… [and] we have substantially completed the initial road and utility infrastructure [at Holden Hills Phase 1] … positioning us to begin homebuilding and selling home sites in 2026.” — CEO William H. Armstrong III .

What Went Wrong

  • No Real Estate Operations sales in Q3 (vs. one Amarra Villas home in Q3’24), driving consolidated revenue decline and negative operating leverage .
  • $2.8M write-off of previously capitalized architectural/engineering/consulting fees for a terminated potential development project, pressuring segment and consolidated results .
  • Consolidated operating loss widened to $(8.1)M, with diluted EPS $(0.62) vs. $0.03 in Q2; Real Estate Operations segment loss of $(4.544)M in Q3 vs. $(1.421)M in Q3’24 reflects both the absence of sales and the project write-off .

Financial Results

Consolidated P&L vs. Prior Periods and YoY

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$8.891 $11.605 $4.969
Net (Loss) Income Attributable to Common ($USD Millions)$(0.364) $0.260 $(4.978)
Diluted EPS ($)$(0.05) $0.03 $(0.62)
EBIT (Operating Income/Loss, $USD Millions)$(1.519) $(0.759) $(8.093)
EBIT Margin %(17.1%) (6.5%) (162.9%)

Notes: EBIT Margin % calculated from reported revenues and operating income figures in each cited period .

Segment Breakdown

MetricQ3 2024Q2 2025Q3 2025
Real Estate Operations Revenue ($M)$3.971 $6.798 $0.045
Leasing Operations Revenue ($M)$4.920 $4.807 $4.924
Real Estate Operations Segment (Loss) Profit ($M)$(1.421) $(3.536) $(4.544)
Leasing Operations Segment (Loss) Profit ($M)$3.265 $6.334 $0.317

Drivers/notes:

  • Q3’25 Real Estate Operations had no sales; Q3’24 included one Amarra Villas home; Q2’25 included two Amarra Villas homes .
  • Q3’25 included ~$2.8M write-off of capitalized costs for a terminated potential project, primarily in Real Estate Operations .

Balance Sheet & Liquidity (Quarter-End)

MetricQ3 2024Q2 2025Q3 2025
Cash & Cash Equivalents ($USD Millions)$19.6 $59.4 $55.0
Consolidated Debt ($USD Millions)$197.1 $199.4 $203.9
Revolver Availability ($USD Millions)n/a$17.7 $17.5

Operating/Investment Activity

KPIQ3 2024Q2 2025Q3 2025
Capex + Purchases/Development of Real Estate ($USD Millions)$13.428 $9.819 $7.060
Share Repurchases (cumulative through date)—135,620 shares; $3.0M; avg $22.13 (through Aug 8) 180,899 shares; $3.9M; avg $21.59 (through Nov 7); $21.1M auth. remaining

Guidance Changes

Stratus did not provide formal quantitative guidance (revenue, EPS, margin, tax rate, etc.) for Q4’25 or FY’25. Management disclosed pending transactions and capital allocation priorities.

Metric/ItemPeriodPrevious GuidanceCurrent UpdateChange
Lantana Place – Retail saleQ4 2025n/aUnder contract at ~$57.4M; expected Q4 close; proceeds to repay ~$29.8M project loan principal (9/30 balance) New disclosure
Share repurchase authorizationOngoingIncreased to $25M in Q2’25 $21.1M remaining as of Nov 7; continued discretionary repurchases Maintained
Capital allocationOngoingExploring options Board evaluating mix of buybacks, deleveraging, reinvestment, and/or other returns, based on market conditions Maintained (updated context)

Earnings Call Themes & Trends

No earnings call transcript was available for Q3’25; themes below reflect management’s disclosures and press releases.

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Capital allocation/asset recyclingRefinanced Lantana & Jones Crossing; contracted sale of West Killeen Market; exploring alternatives; Q2: JV formed for Holden Hills Phase 2; $47.8M cash distribution Under contract to sell Lantana Place – Retail for ~$57.4M; intent to repay ~$29.8M loan; Board evaluating uses of cash Ongoing monetization; deleveraging optionality increasing
Development milestonesQ1: The Saint George near completion; Holden Hills Phase 1 infra advancing Q2: Saint George completed and moved to Leasing; significant progress at Holden Hills Q3: Saint George lease‑up progressing; Holden Hills Phase 1 infra substantially complete; homebuilding/home site sales targeted 2026
Leasing portfolio performanceQ1: Saint June ramping; Magnolia Place Retail sold in 3Q’24 Q2: Leasing revenue broadly flat YoY; $5.0M gain from sale of West Killeen Market Q3: Leasing revenues stable YoY; positive segment profit
Macro/interest rates/liquidityQ1: Revolver amended (maturity to 2027; lower rate) Q2: High cash post Holden Hills Phase 2 distribution; ample revolver availability Q3: $55M cash; no revolver borrowings; $17.5M availability
Regulatory/legal (ETJ Law) & risksForward‑looking risk factors noted –Same disclosures –Continued risks cited (ETJ Law litigation, construction/insurance) –

Management Commentary

  • “We… entered into an agreement to sell Lantana Place – Retail for approximately $57.4 million, a favorable outcome that will allow us to repay the associated project loan and further strengthen our balance sheet… our Board is exploring opportunities for the use of cash… which may include a combination of further share repurchases, deleveraging, reinvesting in our project pipeline and/or other cash returns to stockholders.” — William H. Armstrong III, Chairman & CEO .
  • “Lease-up of The Saint George is progressing… [and] we have substantially completed the initial road and utility infrastructure [at Holden Hills Phase 1]… to begin homebuilding and selling home sites in 2026.” — William H. Armstrong III .

Q&A Highlights

  • No earnings call transcript was available for Q3’25; therefore, no Q&A disclosures or clarifications beyond the press release could be reviewed [ListDocuments (no results)].

Estimates Context

  • S&P Global consensus: No published EPS or revenue consensus for Q3’25; tools returned actuals only and no estimate counts for EPS or revenue, indicating insufficient coverage for a consensus print [Values retrieved from S&P Global]*.
  • Implication: With no formal street consensus, shares may trade more on company-specific catalysts (asset sales, capital allocation) and disclosed project milestones than on “beat/miss” optics this quarter.

Key Takeaways for Investors

  • Results volatility remains tied to timing of Real Estate Operations sales; Q3’25 had no sales and included a $2.8M development cost write‑off, driving losses despite steady Leasing Operations .
  • Liquidity strong ($55M cash; no revolver borrowings) and set to improve if Lantana Place – Retail closes in Q4, enabling ~$29.8M project debt repayment; deleveraging can reduce interest drag and risk .
  • Capital return optionality: $21.1M authorization remaining and explicit Board consideration of buybacks/deleveraging/reinvestment; execution timing will be a stock catalyst .
  • Development pipeline advancing: Holden Hills Phase 1 positioned for home building/home site sales in 2026; The Saint George lease‑up should further stabilize Leasing cash flows .
  • With limited/no analyst coverage, narrative and valuation may hinge on tangible execution (closing of asset sale, announced capital allocation, leasing progress) rather than consensus-driven quarterly comparisons [Values retrieved from S&P Global]*.
  • Watch risks flagged by management: construction costs, ETJ Law litigation, insurance recoveries (e.g., Saint George water leak responsibility), and macro interest-rate trajectory – –.

Appendix: Additional Detail

YoY and Sequential Drivers

  • YoY: Revenue down to $5.0M from $8.9M on lack of home/land sales; Leasing Operations revenue flat; Real Estate Operations loss wider given $2.8M write-off .
  • Seq: Revenue fell from $11.6M in Q2 (two Amarra Villas sales plus $5.0M gain on West Killeen Market) to $5.0M in Q3 (no sales; no gains), driving operating loss .

Non‑GAAP and Non‑recurring Items

  • Q3’25: ~$2.8M write‑off of capitalized costs for terminated potential development (Real Estate Operations) .
  • Q2’25: ~$5.0M pre‑tax gain on sale of West Killeen Market; $1.0M charge to write off receivables in Real Estate Operations .
  • Q3’24: $1.6M pre‑tax gain on sale of Magnolia Place – Retail .

Disclaimers:

  • No earnings call transcript located for Q3’25 via the documents search during the analysis window (0 results) [ListDocuments].
  • *Values retrieved from S&P Global where noted (estimates coverage).