STRS - Earnings call transcript Q2 2018

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Operator

Welcome to the Stratus Properties Second Quarter 2018 Earnings Conference Call. Stratus released its financial results earlier this morning, which are available on its website at stratusproperties.com.

Following management’s remarks, we will host a question-and-answer session. Please note, this call is being recorded and will be available for telephone replay through August 14, 2018. Anyone listening to a taped replay should note that all information presented is current as of today, August 9, 2018, and should be considered valid only as of this date. to call like to now would turn over the Mr. I Executive Chairman, Stratus President Armstrong, Officer and Beau Chief of Properties.

Beau Armstrong

Thank you and good morning, everyone.

is today me our Officer, Financial Joining Erin Chief Pickens.

will actual cause and reminder, release Stratus' could to that and statements, our securities. press filings sell SEC included the subsequent they solicitation everyone may by would to not press and from comments or press materially to Today's a comments do I results this a risk release release any projected to materially. in of to and As that results including and those today's an call actual Stratus' we XX-K differ of offer factors an constitute are in buy like make differ on offer us. forward-looking the on call this language Form certain certain described refer to cautionary

measures not adjusted addition, discuss as EBITDA we GAAP. such U.S. are financial which under and include In recognized

SEC project-level financial revolving and development, and capital Kingwood increase progress finish with regulations, morning we are the extension of Stratus' equity I'll This results, release. comments. then our updates, required GAAP of reconciled facility, summary mixed-use raising, which recent press Erin Grocery-anchored supplemental development cover schedules discuss, As today's in our HEB comparable most our non-GAAP our will announcement measure by the credit of to measures new financial will brief some

community under strong, credit serve, number reached and achieving in milestones employees, of providing Texas we many the flexibility. been happen to tenants, years Their more, new has confidence business. of though, terms see the Reaching and day. important us get level over bankers our our to to peak we has remains terms we and with now work markets we giving to the and activity invest dedicated thank financing revolving economic representatives some thriving loyal We've of in around serve details, we into facility led I us of want the a progress, overnight, developments in some Leasing every increased, activity Before are and provide the these context new support our of improved didn't work the markets milestones. want high I capacity hard Stratus in growth.

announced new that Our HEB project Kingwood, with Xth a example. an Texas, our anchor. development It is we is great today as development

commitment to in they new provided and projects lenders, to involvement in land Harris our planned employer and Kingwood are this facilitate November privately unit fortunate the We to downtown growing County of the be open $XX short one XX Texas. and Texas, have excited Initiating of Houston. community store tract distance the October of Kingwood projects purchase. development August community square parcel a with HEB the Kingwood, in in excellent area store plan a are Comerica to entering master in construction to HEB include of largest Kingwood, and develop we the to ground held and the support like this million. number including an scheduled XX-acre planned XXX Place. development break a multifamily We a is this we requires schools retail Kingwood its Bank XXXX, with total HEB, and is The continued of will acre of retail XXX,XXX We plan on square-foot approximately for This a space, six mixed-use that land to project development purchased X projected investment feet community. pads initiate as XX,XXX XXXX. is project several and loan is for our in

two-year term. to track our relationship As the with we borrowing record. credit revolver XX% a enhancement under and our longstanding base positive by $XX increased release, press successful This our new XXXX, Comerica to our our noted in facility million July revolving X, reflects with

our had veteran tenant in space what and including retailers, Station, providers the also early a completion. HEB within we College now remain to to has Texas, continues clubhouse have mix with this to already Lantana exactly with tenant, for, is highlights on first full the of phase for are initiated for community, entered Phase Crossing almost budget, scheduled that of a the project on the already leasing Construction ground this Jones is to growing is September. turn XXXX restaurateur. and track weeks, store development due At in next Tenants me X lease strong and of its XXXX. our quarter. retail now overall let a commence and Leasing been into success very another to of multiple XX%. more development second finished, investment Moviehouse and cosmetic X. at project the The remains leased. from quarter is Three possession the The that the budget restaurants several reservations and Eatery, a quarter Santal for Now the for momentum on we retail XXXX, schedule a open opened than hoped for begin schedule service-related the project show now accept center, on the positive office begun deliver AC to units continuation the development proceed we XXXX and under to of submarket third taken Place, it's dermatology anchor is rapidly to Phase schedule. of few new have is We finish to of space the May active, quarter. XX% & service this we first third Marriott their Construction construction a we scheduled mixed-use completed initial At in out. be very X hotel on for in and include Phase and and dental tenants leasing the and their local a

a multifamily XXX-unit project from the regard new Killeen apartment a St. West number earlier Circle announced space not is secured to feet is competitors due new the community. XX% multifamily as the we strong year, but Mary, new of track development last and garden-style limited the to With we a store, financing approximately submarket, ground is of our we starts square in XX,XXX to benefit adjacent broke from foot only luxury C area. this quarter. leased. XX,XXX also securing site Construction HEB on complexities of the in scheduled inline a permits during the For square Market, and This

including million property sold explore of part Phase sell strategy, second the sales of market release, year this leasing we full-cycle as opportunities and for in to another conditions. later to this one As W Amarra Drive quarter, noted Villas two in totaled Hotel press our $XXX,XXX. lots. and our development property quarter, positive townhomes, Amarra plan Developed three $X.X the Residence, Drive we've Phase second X Amarra the end Since X lot assuming

more XXXX. XX and X lot Amarra Amarra X one March lots scheduled townhomes, contract close Villas Additionally, Drive are through Amarra to and Phase two under Drive Phase

to to Before it items. touch I more two want Erin, I over on turn

a from noted in recently earnings release, funding benefited our we as source. new have we First,

partners. capital Given record, raised our project-level limited third-party equity have from track we

Kingwood this for for development Place have We new source funding the Mary project. St. and accessed the more recently

an and compensation recently long-term company announced a to development the motivating those program most by in projects. the ownership success employees instills we rewarding who the of culture that Second, long-term our new contribute

Now review for Pickens, I'll of the financial over to a Financial our highlights. the Chief turn call Officer, Erin

Erin Pickens

loss second for earnings to reported Stratus was the XXXX of XXXX, issued in both Today second to in up $X.XX the attributable release $X.X press our Beau. or second XXXX. and quarter year. The you, net Adjusted $X.X detailed in morning. share million million quarter per Thank from the stockholders $X.X quarter in quarter XXXX common second as this last increased EBITDA of XX% million

operating $X.X each X. factors tickets income sales entertainment quarter and a Real increases Hotel $X.X bands and million was through I'll year. million to operations Live in to $X.X sold tickets Killeen XXXX. million This of million the ago, to million sold second hosted from million. million $X $X.X relate approximately unchanged days can down approximately for rose income Operating last Operating as revenues ago. such mentioned for hosted was events from estate to entertainment as to million $X.X influence Beau year to XX Now the segment operations XXXX. walk a from events quarter XXXX increased second XX% tickets last XXXX. second decreased from West of Leasing from from income at $X which segment year. These $X.X increase second million, currently XXXX, revenues segments. property million developed of to XX,XXX the second Revenue while sold. a quarter quarter our earlier. million fluctuate declined can revenues up segment declined ACL $X.X from and segment in with Phase which in on in XX,XXX and by XX segment year operating and Market holidays was in which the operating $X.X fall million. number events quarter up income increased XXXX $X million, touring, $X.X Revenue Operating $X.X $X.X the both are Santal million driven slightly of result

at for debt development the of to XXXX. was purchases second compared $XXX.X Creek of months the Lantana end expenditures with of cash six XXXX. Santal totaled at first management, and million including operating the and million in This Barton expenditures, investments capital $XX.X million $XX.X million XXXX Capital to Crossing. compared development properties, was of projects. the the Jones This now Turning in for Phase $XXX.X consolidated Place, X, six months the flows, development coincides increase end included new with of increase first including quarter, with due

million a Comerica mentioned, of facility. into and million, credit our XX, from Proceeds to may be loan needs. agreement the for revolving with June Beau sublimit existing an to the $XX credit in for Bank revolving increase Stratus' of XX, credit loan agreement date facility and extend the letters revolving credit As on working fund a extension to $X.X maturity used June XX% million entered The increase to facility capital provides XXXX. Stratus from XXXX, modified $XX a

XXXX. our extension have maturity the facility, debt our improves, maturities significant schedule of until with we credit as now Importantly, no debt revolving

back it to turn Beau. I'll Now

Beau Armstrong

is these to stabilize, as you, program properties with to our our To monetize place we development strong is Thank facilitate Erin. very development is opportunities will leasing strategy. robust, consistent further have financing investments, assets recap, development and in full-cycle

and to positive and communities these Serving rest service in tourists, places has providing the multiple markets Our to where them Austin look to to presenting and access residents Stratus we new for are booming for our what all of Stratus. momentum prominent other conceiving from goods places and live, the with forward opportunities providers, continued is year. individuals socialize ways, is developing families retail can greater to they about. and major

for capitalize shareholders. strategic to to continue our position on will We maximize our value

Now call we will open up for the questions.

Operator

begin Fred ahead. We Burtner Our question-and-answer Instructions] first will now session. [Operator Burtner Partners. question with comes go from Please the

Fred Burtner

on for first are when My stabilized? Erin. you've the it's and and and X your Beau question one Hi, X Santal is Santal. second plans What completed

Beau Armstrong

Mr. morning, Good Burtner.

Fred Burtner

morning. Good

Beau Armstrong

we Our about as as better in gets. occupied, general X, plan is and full. as – which It's basically filings, XX% Phase our than is first all, leased of good it noted

we're that. we'll course, delivered probably but done, for or month phase, will later The this of the clubhouse be So next for first deliver occupancy on early in is the month second building track first. but

I assets. perhaps think I would generally, like those keep to

for given and – we I think We the for the refinancing it term. intermediate significant longer decision is that's consider a have of that additional decision considering keeping amount and holding been but haven't of it one to But an that them thing I where really properties there's worthy would do – acreage Again, around those yet. yet, on that of no made sense time. period it around make think is a

Fred Burtner

you Okay, quarter? there fewer spoke this this were the entertainment fluke a thank you. about sold just that events Erin, segment. Is

Erin Pickens

Fred. know if don't fluke. a call hi would Yes, I it I

lays calendar artists which the out are affect certain think then it's again, year-to-year the that timing events given year will will the affect in shows, and just a from I the that touring we way of host.

amount of to certain So expected. think a just just be is fluctuation I

Beau Armstrong

of on Wednesday, Fred, impact… just I the fell, that as an just and X Yes, – – example, we've guess, had can a we're July

Erin Pickens

week. whole The

Beau Armstrong

Where week. can things. affect sometimes whole The Easter falls

of lot So overall, out and all. bands then different the a venue – about concerned are or entertainment on which the the just business we're But factors. at road, not

In strong. fact, quarters the the looking third – rest through very is and fourth year are of certainly, the

expect we to to So we're by pretty be be I'm the year's going the comfortable up. where time

Fred Burtner

losing share So you're market not your competitors? to

Beau Armstrong

No.

read and of been I clubs opposite, about what fact, what They've know all In our just lot time that from gone of have Austin, we – is In developments. we these away. other a just business the these competing some Fred. replaced the by it's – think and

the superior, For example, ours X,XXX-seat was a but biggest competitor there's were Austin was a always former had and that place. they a was up Music knocked we – about now Hall, against was was little there's far lot. in – building competed our more we who – facility which a XX-storey office bit been capacity, That's its going down, a that and

been understand, that a So I the of so we've which business gone other lot really way. as hotel think there's music that has seen town, all we around more competition, the

hotel but music has – But the I overall, venue has done. have we reflect think hotel benefited itself the competition. additional rooms, will to more the when to from respects, in financial many uniqueness the performance in the continue all of year's So subject been venue

Fred Burtner

my And whereas longer-term were developer? an before thanks. question you into Austin-based primarily is, Okay, move are to last Houston, your there implications any

Beau Armstrong

or we you other not Austin, to as have understand and felt going We'd markets. rather Phoenix in Orlando or privately, do more just other we're never or really in we markets. Chicago Well, told things I've market experts a comfortable

Houston well. friends like been participating comfortable HEB-anchored our to and the April However, last closely, Houston with following growth and our and watch we something them April at activity of we it this new year-over-year really understand program, Dallas them their so because year. Bank behind – employment limited to we in this watched projects, very just According are has in or second with ranks we XX,XXX America, jobs growth, of of between year

I've sites. – We trends. So of execute the that's positive is And process feel before, population their are very homework so with very comfortable does view our as HEB they strategy. driver most how and growth, in new said really important business business perhaps my their those then their on

go alongside try like think wouldn't Houston develop we relationship going to I like to as to or So Houston to grow but and we continue with – buildings we multifamily office really – to market. HEB our not want in be we're the them become – a and they to

Fred Burtner

Okay, thank you very much.

Beau Armstrong

Thank you, Fred.

Operator

Thank our question-and-answer no as today's presentation. this further questions, this so [Operator you today's time well Instructions] seeing At as I'm session concludes conference. for attending

You disconnect. may now

Stratus Properties (STRS) 11 Aug 182018 Q2 Earnings call transcript