Stratus Properties

Stratus is a residential and retail-focused real estate company in Austin, Texas. Gross asset value is $693 million. Net asset value is $358 million. Net after tax asset value is $331 million. Market Cap is $214 million. Eastdil Secured is working to close the gap.

“Over the past ten years, we have secured valuable entitlements for our early-stage projects and successfully leased or sold the vast majority of our completed properties. We now have a solid cash position from recent asset sales, a streamlined portfolio and a more mature asset base. With a track record of realizing premium value through asset sales, and building on the Board’s exploration of opportunities for the use of our cash, we believe this is the right time to evaluate mechanisms for recognizing the value of our remaining portfolio and returning cash to shareholders in a tax-efficient manner.”

Said William H. Armstrong III, Chairman of the Board and Chief Executive Officer of Stratus, in a press release on December 22, 2025.

Concurrently announced was the sale of Kingwood Place for $60.8 million, which should generate pre-tax net cash proceeds of $26 million.

Four weeks prior, Stratus announced the sale of Latana Place for $57.5 million. Pre-tax net cash proceeds totaled $27 million after selling costs and payment of the project loan.

On March 28, 2025, Stratus’ investment presentation showed an after-tax net asset value of $330.5 million or $40.38 per share, a 33.9% discount to the current market cap of $214.0 million or $26.69 per share.

Lantana and Kingwood’s sales amounted to $53 million and the sale of West Kileen produced $7.8 million of pre-tax proceeds. Collectively, that’s $60.8 million, nearly two-thirds of Stratus' pre-tax net asset value for its entire completed property.

Rounding out the rest is Jones Crossing, an H-E-B-anchored mixed-use project in College Station with 154,092 square feet of fully leased retail space and 104,750 square feet of commercial development potential, and Saint June, a 182-unit luxury, garden-style multi-family project that is fully leased.

In 2024, Jones Crossing entered into a new $24 million loan. Assuming a 60% loan-to-value ratio, the property is worth about $40 million.

Saint June is currently renting units in the range of $2,425 to $3,449 and net operating income is in the area of $4.5 million. Cap that figure at 5.5% and Saint June is worth roughly $80 million. Subtract the debt of $32 million and net asset value is $48 million. Stratus gets 34% of that, so $16.3 million.

Add it all up, and net asset value is $117.1 million ($14.31 per share), a decent notch above management’s $91.7 million estimate ($11.20 per share).

As it happens the market is implying the rest of Stratus – Amarra Villas, Barton Creek, Circle C, Holden Hills and Saint George, comprising one residential unit and 275 residential units for sale, 480 residential and 316 multifamily units under construction, 2,210 multifamily units and 1.57 million square feet of mixed use undergoing active planning, 12 residential and 331 multifamily units, 5,000 square feet of retail, 228,081 square feet of mixed use and 828,270 square feet of office held for future use – is worth $100.4 million ($12.27 per share). Stratus pegs all of this at $244.3 million ($29.85 per share) and, fortunately, has Eastdil Secured to shop the assets to the largest institutions in the world.

Unlike competitors CBRE or JLL, which have tens of thousands of employees chasing down small commissions, Eastdil has hundreds of employees who are paid a salary and bonus. They’re an investment bank that works together efficiently, mostly dealing with heavy hitters on high-quality assets.

Over the past fifteen years, Eastdil has completed $3 trillion in transactions and recently served as an advisor to Rithm Capital on their $1.6 billion acquisition of Paramount Group. Eastdil hunts whales and their hit rate is high, so it appears a satisfactory outcome for shareholders is likely.

Stratus’ path to realizing net asset value also represents a hefty payday for leadership. A successful re-rating would see CEO Will Armstrong’s 8.3% stake ramp from $17 million to $25 million, explaining the Board’s historical reluctance to low-ball offers.

For instance, on January 24, 2024, Stratus received an unsolicited, non-binding proposal from NXSTEP Opportunity Partners (“NXSTEP”) to acquire the entire company for $27.18 per share in cash when the stock was trading at $24. 14.2% owner Oasis disclosed an agreement supporting NXSTEP’s bid.

Stratus “determined unanimously that the proposal substantially undervalues the Company and its future prospects and is not in the best interests of the Company and its stockholders.”

Sixteen months later, STRS was selling for around $16 but has since made a full recovery. Now management has $40 in its crosshairs. I like the discount and odds of it closing with some speed.