Benzinga | Sep 21, 2021 04:09PM EDT

Stratus Properties Announces Agreement To Sell The Santal For $152M

Stratus Properties Inc. (NASDAQ:STRS) ("Stratus" or the "Company") today announced an agreement to sell The Santal for $152 million, or approximately $339 thousand per unit, in cash. The Santal is Stratus' wholly owned 448-unit garden-style, multi-family luxury apartment complex located in Section N of Austin's upscale Barton Creek community.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210921006070/en/

The Santal (Photo: Business Wire)

The sales price represents a premium of approximately 96% to Stratus' estimated net asset value of The Santal (after tax and net of loan prepayment fee and other costs) as of December 31, 2020 as reflected in Stratus' Investor Presentation dated March 15, 2021, available on Stratus' website. The agreement to sell The Santal contains a 30-day diligence period during which the buyer may terminate the transaction for any reason. The transaction is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions.

William H. Armstrong III, Chairman of the Board and Chief Executive Officer of Stratus, stated, "This is another clear example of our strategy to optimize value for our shareholders by developing high-quality properties and holding or monetizing them depending on market conditions. We had opportunities to sell The Santal in 2019 but elected to hold and refinance it at the time. The refinancing enabled us to reduce both our investment in The Santal and our recourse debt exposure while increasing the rate of return on invested equity. Since then, we have engaged in a process that generated multiple high-quality, competitive offers. We are confident that this sale represents a tremendous opportunity for our shareholders."

Mr. Armstrong continued, "The Stratus team designed and developed this project to meet the continuing strong demand for high-quality residential property located close to downtown Austin. We believe our success with The Santal further supports our plan for the adjacent environmentally sustainable Holden Hills residential development and Section N mixed-use development projects planned for Barton Creek."

Mr. Armstrong concluded, "We estimate that the sale of The Santal will produce pre-tax cash proceeds of approximately $72 million after payment of project debt. In connection with the anticipated closing of the sale, our Board is evaluating options including returning cash to shareholders, paying down additional debt and reinvesting in our pipeline of opportunities. Our robust pipeline of projects includes other multi-family projects such as the recently announced luxury high-rise tower The Annie B as part of Block 150 in downtown Austin, and The Saint June in the Amarra section of Barton Creek, which is currently under construction. We also have plans for multi-family components at several of our mixed-use projects, including at Lantana Place which is expected to begin construction next year."

Construction on the first phase of The Santal commenced in January 2015 and was completed in August 2016. Stratus completed construction of the second phase of The Santal during first-quarter 2019. The Santal is fully leased and stabilized.

Following the company's refinancing of the original construction loans for The Santal in the third-quarter 2019, in second-quarter 2021, Stratus entered into an amendment to the Santal loan that reduced the Company's annual interest costs.

In connection with entering into the agreement to sell The Santal, Stratus amended the loan agreement with the project lender to enable prepayment of the loan, subject to a prepayment fee.