Stra­tus wraps up re­view, plans no changes

No pro­posed of­fer was at or above de­vel­oper’s cur­rent stock price.

Austin American-Statesman - - BUSINESS - By Gary Dinges gdinges@states­

Austin-based Stra­tus Prop­er­ties Inc. said Wed­nes­day that it has con­cluded a strate­gic re­view of the com­pany that in­cluded ap­proach­ing more than 100 prospec­tive buy­ers.

Of the 105 firms ap­proached, 24 asked to re­view fi­nan­cial doc­u­men­ta­tion and 10 in­di­cated they would be in­ter­ested in a trans­ac­tion, Stra­tus said.

How­ever, since none of the pro­posed of­fers was at or above Stra­tus’ cur­rent stock price, the process has been ter­mi­nated.

Stra­tus, which has num­ber of projects in the works in Cen­tral Texas, said it will con­tinue with its cur­rent op­er­at­ing model.

The de­vel­oper of the W Austin Ho­tel and Res­i­dences in down­town Austin, Stra­tus is cur­rently build­ing two H-E-B-an­chored shop­ping cen­ters — one in Killeen, the other in Mag­no­lia, north of Hous­ton. Other in-the-works de­vel­op­ments in­clude two apart­ment com­plexes and Lantana, a mixed-use project in South­west Austin that will in­clude a Moviehouse & Grill lo­ca­tion.

“The board was sat­is­fied with the thor­ough na­ture of the process,” said Michael Mad­den, Stra­tus’ lead in­de­pen­dent di­rec­tor. “Is­sues aris­ing in con­nec­tion with a po­ten­tial sale of the com­pany in­cluded dif­fer­ences of opin­ion as to the value that can be cre­ated from Stra­tus’ sub­stan­tial port­fo­lio of un­de­vel­oped land, the value of the W Austin ho­tel, the im­pact on value of the cur­rent real es­tate mar­ket cy­cle, and how val­ues that can be cre­ated in the fu­ture from Stra­tus’ port-

fo­lio of devel­op­ment op­por- tu­ni­ties should be al­lo­cated

between Stra­tus and a buyer. “In ad­di­tion, the di­verse na­ture of Stra­tus’ as­sets pre­sented a chal­lenge for par­tic- ipants with nar­rower in­vest- ment in­ter­ests. Some par­tic­i­pants in­di­cated an in­ter­est in ac­quir­ing cer­tain groups of as­sets of the com­pany or sug­gested that they would be in­ter­ested in pro­vid­ing joint ven­ture fi­nanc­ing for cer­tain com­pany op­por­tuni- ties, and some of these ideas may be fur­ther ex­plored.”

Stra­tus this year sold the Oaks at Lake­way, an H-EB-an­chored shop­ping cen- ter in Lake­way, for $114 mil­lion. That sale, which net­ted the de­vel­oper about $50.8 mil­lion in cash pro­ceeds,

and the con­clu­sion of the re­view of strate­gic al­ter­na­tives have prompted Stra­tus to of­fer a spe­cial div­i­dend of $1 per share.

The spe­cial div­i­dend, payable April 18, will be given to any share­hold­ers pos­sess­ing Stra­tus stock as of March 31.

“Our board’s de­ci­sion to de­clare a spe­cial div­i­dend is

con­sis­tent with our strat­egy of de­vel­op­ing and selling our prop­er­ties prof­itably and dis­tribut­ing cash to stock- hold­ers,” Stra­tus pres­i­dent and CEO Beau Arm­strong said. “It is also a re­flec­tion of the board’s con­fi­dence in our strat­egy, the strength of which has been sup­ported by our re­cent suc­cesses.”

Arm­strong said Stra­tus will con­tinue to be “highly fo­cused on our ac­tive devel­op­ment pipe­line and en­hanc­ing and cap­tur­ing the value of our prop­er­ties in a cost-ef­fec­tive man­ner.”

“The board re­mains confi- dent in man­age­ment’s abil­ity to op­ti­mize the value of Stra­tus’ high-qual­ity as­sets go­ing for­ward,” Mad­den said. “Our man­age­ment has the ex­peri

ence and skill nec­es­sary to nav­i­gate the com­plex reg­ula- tory and po­lit­i­cal land­scape in our mar­kets, strengthen and build re­la­tion­ships with key stake­hold­ers and lenders, and de­liver value to Stra­tus’ stock­hold­ers.

“Al­though the for­mal stra- te­gic re­view process has con­cluded, our board, as al­ways, will con­tinue to re­view the strate­gic di­rec­tion of our com­pany, and re­mains open to con­sid­er­ing pro­pos­als that will pro­vide value to our stock­hold­ers.”

Beau Arm­strong is pres­i­dent and CEO of Stra­tus Prop­er­ties Inc.


Stra­tus Prop­er­ties Inc. this year sold the Oaks at Lake­way, an H-E-B-an­chored shop­ping cen­ter in Lake­way, for $114 mil­lion.

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