STRS - Earnings call transcript Q4 2018

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Operator

Welcome to the Stratus Properties Year-End 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 March 23, 2019. Anyone listening to a taped replay should note that all information presented is current as of today, March 18, 2019, 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, everyone. Andrea, and good morning,

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

XX-K today's Form today include filings forward-looking those Stratus' language results Stratus' and by on that and described to SEC reminder, are not and As differ us. to a like certain I nor our sell may do included into press of statements factors release to they release offer to in actual on buy subsequent call constitute solicitation make cause in any could refer actual comments that to an everyone an press materially a the securities. this comments risk projected we from press differ. will issued call certain would offer this results release and Today's of cautionary the

we under financial EBITDA, will which In adjusted a GAAP. US is discuss addition, recognized not measure

the provide for regulations, required press release our their the in financial strategy year-end I Stratus' active about the Erin SEC of As segments, progress highlights, projects. by measure schedules operational today. discuss supplemental which of will non-GAAP about our results rules some and This we our comparable financial and GAAP XXXX. will development most morning, our I end markets XXXX issued brief reconciled the comments some final including in we'll will color operate to and are operating four call with measures cover our and

depending acquiring, and preparing properties; market stabilizing full on conditions. developing second, that Properties part maintaining is refinancing you program development on these sale at these focus securing strategy entitlements; first, development active know, Stratus or for third, all As includes: cycle properties and our of our and to

have each stages. in of We projects these

New HEB lease, HEB $X for a in a the commence grocery in interest Caney, HEB's partnership XXXX. HEB-anchored mixed-use million. acquisition of store. partnership earlier with construction our in As approximately XX-acre recent plan on lease project no acquired future the we we into month, was currently last to entered mentioned We of for the HEB quarter, a tract execution Texas. this most This project land purchased than Upon for

Following properties In the develop acquisition we we development in stabilize significant our them. advancing stage, progress XXXX, and projects. made our

purchased stage in which projects Our project land, include project is Kingwood tract obtained of construction. development this and mixed-use project, financing We currently an a Place our in Kingwood, HEB-anchored XX-acre Texas. commence

properties the have pre-leasing progressing approximately anticipated signed including XX% this is we currently open grocery the for store, As of were efforts XXXX, which and to the leases of year-end retail November. space, HEB

in type allow project, offer getting live, Our focus businesses Lantana options. without with Amazon on Spa, Realty to May, excellent in which that mixed-use broadly, including fitness and Austin. other to needed offerings, and wellness specifically, Within Fitness. this this returns approach developing We retail and Westlake their and in mixed-use committed to people development Southwest ago which play to beverage terms Austin, on At years immediate Theory properties strong activity. is have XXXX, competition, services, we Dental, leasing less services a Dermatology our that Bella signed of and leasing we entertainment very Eatery, well, that opened and work cars Place Marigold that project seeing in are tenant like anchor susceptible are Orange & Moviehouse our leases Enamel mold fit and is Lantana, food tenants Market,

by We also Perry's Restaurants. new Carve have stakes American high-end owned a its for eatery known Grill

construction retail as in Hotel by anticipated AC space, XX% Marriott, is for leases ground We lease have commence of which signed an approximately the for to well as April. now

project development leasing in including Our store Jones mixed-use the last HEB for Crossing call, in Texas. the in XXXX, retail College another The XXXX. XX, of store, mentioned quarter's HEB opened grocery and as grocery Station, reached as project XX% December space, September is HEB-anchored had

Mary located Bank. and Our through in multi-family project project multi-family XXX-unit C of schedule community. development currently third-party all and a and well for We loan is financing on budget. received Circle is is under Texas construction with property obtained this project and placement with combination the a approvals private a way this capital St. Capital a on Construction

XXX-unit are units II this occupancy adjacent Phase project to by Creek our Phase the upscale, total now expected of the substantially first as the XX leased of the units XX% is have construction expected available multi-family XXXX. project July for or I Phase currently The to completion in units Santal year with X XX% located Santal of project be by end We highly we of completed January today, community. were completed Barton this XXXX. of in populated and last

and greater retail in HEB-anchored area. planning the are permitting project Magnolia We project Houston and actively our

construction begin this year to August expect store HEB opening an We of with anticipated the in grocery later XXXX.

Texas. current conditions. Our in open the HEB-anchored are retail leasing Currently, tenants West Killeen, is an space now of XXXX, in subject to for progress We sell business. and is property opportunities Market to Killeen leased XX% explore this project intend project market to and all

leased Santal of cycle now our refinancing. third program projects Phase The is stabilized. sale full of or is our development preparation XX% and I the for stage

and Once retail for such, CVS also here, and property, store Stratus community cycle. is are end strong leasing we upon or our there progress. focus is lease one comment or of shifts for plan other a market As Phase $X.X growing to we market turning before Caney the refinance to for Kingwood to refinancing to a purchases have January repeating over XXXX, we Circle fast In the New which it sale of conditions in Place in in Erin. I completed a sell of like combined we and markets Austin area. million. presence Texas, II, select evaluate our Houston as properties C but XXXX, the subject the the opportunities final XXX-unit shown add property primary subdivided by the stabilization the through of pad located the in ground to sale expected of Santal the would full a our

adequate obtaining our a a strategy. As and critical is component reminder, of financing, maintaining business

addition new projects our investors, to protect our sheet, level the our our for traditional seek capital growth. of In private to bank XXXX, loans placements and pursuing to methods of reduce parting for financing of secured in obtaining project Stratus. right while risk facilities, with support the portfolio we a through certain such opportunities larger credit third-party as and we equity balance By

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

Erin Pickens

press Thank Today, of $X.X or in XXXX common share for $XX.X XXXX, release share compared you, in earnings as income stockholders XXXX, up XXXX. in $XX.X loss to million from stockholders were issued EBITDA attributable for $XX.X for detailed ended this million, XXXX. net to per XXXX, totaled million Total year The revenues morning. net in totaled $X Adjusted from $X.XX XXXX. million $X.XX up common reported with million Stratus our attributable Beau. million, per for or $X.X

II in $X.X operations results for this XXXX, segment Real million in XX% segment XXXX. total This Amarra and priced our Leasing unsold. XXXX in $XX.X up revenues townhomes million units, unit, segment increased Also total each the W has from segment leases in revenue Killeen of accounted under & revenue of including & Phase Amarra Now Drive Santal segments. Phases Revenue at Hotel sales condominium and million is December $X.X Villas sold in a second sold In this of of for I'll beginning higher of quarter operations $X.X for Austin Market, operating up long-term XXX% under contract for to $X.X I financial one as we three accounted income our XXXX Amarra from to million this XXXX. through walk W Phase XX% residential month from from $X.X remaining for We estate $X.X and up Villas unit remained five by primarily for and Crossing. million. Villas and $XX.X XXXX, townhome for XX% one And Residences $X million, townhomes which year. XX% as by recently condominium. revenues Operating final from our operations lease in to XXst, this last compared been reflects We sold for segment million. we the income increased the completed and a XXXX, townhome currently XX% increase condominium our $XX.X of for Austin XXXX, by XXXX, of XX% Place, one in Revenue increased million, Jones to commenced for West Amarra the III for of $X.X lots anticipate four XXXX. million; combined revenue nine for our year. in completed next million. the Amarra $X.X Villas million; operating million Residences Lantana total Amarra II townhomes properties; a construction for a Drive the lots Hotel from XXXX, leasing combined

XXXX. in leasing our XXXX. Oaks segment gain with $XX.X to $X.X a portion The increase sale The associated million further the for XXXX pay February of to XXXX, in representing from of additional occupancy take revenues this tenants included Lakeway of income million and to operations expect We was Operating million, in rent. recognition as at begin compared income $XX.X deferred the

XXXX, compete property. The and of land our a design XXXX, to property the million of segment total reduced amenities In $X.X XXXX. of tract revenue to Revenues $X.X XX% addition, primarily tenants X.X for partly million segment million large had compared Creek. by of to $X.X comparable million sale in Operating offset million and was of for foot income on hotel slight XXXX. we primarily a XXXX year group bank charge, an X,XXX-square We our adjacent in rent revenues in for decrease based business. $X.X participation profit on from a were ago. was undeveloped acre the Hotel million to accounted in XXXX, location, due $XX.X Barton XX% for gain compared $XX.X charged, in a building

increased and of Hotel availability and full per that which a In the the was to restaurant XX%. year, or price, from was XXXX, According and among Austin's the with XXXX, count attractiveness Austin consistency meeting to room of between report year central hotel X,XXX room hotel the XX,XXX, quality business For factors. compared services and by facilities available $XXX the for compete association, and motel revenue W $XXX XXXX. and by in city and opened the or industry, the to location district we of of XXXX, published rooms, RevPar other

in also to Revenue from downtown $XX.X despite million, period-to-period. how from XXXX, we increased Austin year to Austin to slightly are to has years. downtown entertainment compared by million Operating we revenue major attendance, segment the which in increased the total we comparable finished our of Overall, believe entertainment million hotel for to with area, lower primarily and event in rooms $X over performed XX% Austin expanding $XX.X XX% competition segment while pleased level decisions from from our the Our the hotel we the decreased $X.X decreased result to the due compared in million accounted ago. area, last in development varies for which segment XXXX for of year, XXXX. encouraged segment income the entertainment year are will area, facilities. a hotel with recent in attuned increased companies the to result in XXXX, demand are Revenue

We Live to very XXX,XXX hosted XXXX, XXX,XXX Hotel. synergies with have XXX with approximately great tickets property a creates W approximately events in unique ACL tickets compared XXXX, events XXX in Austin our for sold. sold, that

December attendance XXX. attendance XX, in in had through ACL booked an XXXX, XXX an estimated As with hosted of events XXth, XX,XXX, to of with XXXX XXX ACL Live estimated XXXX. compared February Live events XTEN XXXX events of

Farrey. of XXth, XXXX, events live XXXX, booked XTEN through February Diane had including Cook ACL and Vampire Weekend, December As Brian

Limits space to a public We are quality and larger music KLRU, ACL outlook local of with Austin our higher We by our experience television pleased XX we KLRU and the venues extended station. the City with live by Limits, agreement years. Live broadcast providing XXXX, segment. City of another with a compete promoting favorably Austin of for entertainment In entertainment our

$XXX.X $XXX.X million consolidated and Turning $XX.X with million we $X.X management. with now and consolidated equivalents to credit cash at of $XX totaled million cash XXXX, under December our facility, capital available December debt million our had XXst, XXXX. cash and of compared debt XXst, At million of

meet debt million in We up Place financing real have The in with property increase and Lantana our have costs flows significant the operations from cash to cash marketing operating of of development capital in overhead, taxes, that two Crossing the of and XXXX. and II, the more purchase investing in the and properties recurring cash and Kingwood from expenditures including Phase requirements. increased share included I maintenance primarily $XXX.X have to $XX.X of sources flows Mary. XXXX, cash million Santal we sufficient and Place, and believe estate included will Jones you. reflects development land items to Purchases St.

net working we're First, are asset presentation will and be in our on to later share presentation. we updated value ready process Appraisals this month. the

real at returns and stockholder XX% XX% over to comparable XXXX, was the stock loss. issued years Jones found the all common had the of Index XXX list cumulative press XX% comparison The of at which and the ended morning. dividends Stratus' peers this Real of Index estate-related at reinvested. Second, the with December peer companies on return December XXst, the invested This can significantly the of exceeded be a XX% assumes Dow $XXX release five Estate returns XXst, US XXXX, a group of S&P in

historical future but of with performance, indicative Our is this not pleased necessarily are result. performance price stock we

Now Beau. it turn to back I'll

Beau Armstrong

We to lease and continuing Erin. to while able were develop existing add new portfolio portfolio. year, opportunities high last development two you, Thank quality to our our

schedule as to on entered our as projects and in we this and Our markets plan strategy full are cycle in maintain budget on newly year. this well Austin,

competitive conditions, subject we market sell community opportunities the principles. the for to reputation current value conditions full uniqueness, sustainability attempt order to developer locations location, our and it cycle highly new on increasingly to market quality, to markets difficult is of explore to properties in find design, for prime In addition, basis our We refinance developments. close depending or and differentiate primarily maximize market, to shareholders. leasing and we In intend in in properties operate and amenities, Austin the

as growth attractive successfully Demand expanding at the continues method Since XX% because competition, a sector population Austin's expand family diversifying office to particularly have such of can growing to us. and we for residential XXXX, has the multiple least has mixed-use XX%. We HEB-anchored commercial our continues our continue ensuring to great Despite the space increased a city's be portfolio the in grown opportunity other for to markets properties. projects of approximately and as Austin that housing, retail tech interest opportunities, median job in income in risen services increase. develop

this square recently and more other our office Google walking of addition, more people of In feet in signed Oracle a We lease expansions for as realize Hotel and and believe Facebook, more will including Apple, to Indeed. high tech and XXX,XXX space happening there advantages be companies Austin, W distance profile and city's opportunities. within are come

Now the we up will for questions. open call

Operator

from question-and-answer question We Burtner will comes go session. ahead. Fred first And now Burtner the begin our of Investments. Please Instructions]. [Operator

Fred Burtner

Beau, I questions. two Thank you. had

getting about the you what of health spite the retail mixed said centers. shopping of about shopping in is, signals First centers, I'm

Stratus you to will So one of hears indicators that be some those able think overcome negative what about? do

Beau Armstrong

a the Well, which even as question. malls, and retail you more know, is Fred, good the all, we complicated focus neighborhood big but on kind dead And box, space is the as picture. which of opposed a in to my then view, that's more

need is view anchor, couple a and we of XX,XXX what to kind of proof, things and and somewhere of cellphone Amazon to fitness, we food, neighborhood -- kind in store. say it's entertainment HEB it, wellness, with feet like know, which is, beverage uses want course and XXX,XXX of that try the at entertainment, immediate strong retail, is other look but to you square -- our a such it between evolved how So don't grocery that's I that

We very and just bit can't from that that little different, get is to of Amazon space. just little simply it's think go going the putting things we're a cognizant pressure a Amazon. smaller away. is you So the into evolve retail We something on bit don't to think going

Fred Burtner

intrinsic Okay. share, doing low piece per if for do a And price the about so offer with you value have company's shares? any the relative you. what the other of to tender is, Thank my possibly question the stock thoughts

Beau Armstrong

-- something can It's something that a appreciate. that it's as decision, considered have Board number you that's the Board evaluating. Well, and one, we are

arbitrage to consider exactly think it premature say me that. do, we something do what for be price. I but like stock for it's to the And watch going good we're we a that would to do us think

weeks me coming way certainly in one to let say sooner. to just that So, another on hope And able something the or radar. or it's our say be I

Operator

concludes now Thank attending This today's our has conference concluded. session. for [Operator presentation. question-and-answer Instructions]. you The also

You may now disconnect.

Stratus Properties (STRS) 18 Mar 192018 Q4 Earnings call transcript