Financial Analysis

DEBT AND EQUITY Debt The components of Stratus debt follow (in thousands): September 30, 2025 December 31, 2024 Comerica Bank revolving credit facility a $ $ Kingwood Place loan 32,550 32,408 Lantana Place loan b 29,451 25,509 Jones Crossing loan c 23,624 22,428 The Annie B land loan d 11,876 12,568 Construction loans: The Saint George 52,239 47,741 The Saint June e 33,178 32,109 Holden Hills Phase 1 20,980 15,265 West Killeen Market f 5,194 Amarra Villas credit facility g 1,631 Total debt h $ 203,898 $ 194,853 a. In January, March and October 2025, the Comerica Bank revolving credit facility was amended, and in June 2025, the borrowing base was reduced pursuant to the terms of the loan agreement. See discussion below. b. In January 2025, the Lantana Place construction loan was refinanced with a four-year term loan. c. In March 2025, the Jones Crossing loan was refinanced with a three-year term loan. d. In July 2025, The Annie B land loan was amended and the maturity date was extended to September 1, 2027. e. In September 2025, The Saint June construction loan was amended and the maturity date was extended to October 2, 2027. f. In May 2025, Stratus repaid this loan in connection with the sale of the project. g. In June 2025, Stratus repaid this credit facility and the credit facility was terminated. h. Includes net reductions for unamortized debt issuance costs of $1.8 million at September 30, 2025, and $1.8 million at December 31, 2024. Comerica Bank revolving credit facili …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

FAIR VALUE MEASUREMENTS Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). The carrying value for certain Stratus financial instruments (i.e., cash and cash equivalents, restricted cash, accounts payable and accrued liabilities) approximates fair value because of their short-term nature and generally negligible credit losses. A summary of the carrying amount and fair value of Stratus interest rate caps follows (in thousands): September 30, 2025 December 31, 2024 Carrying Value Fair Value Carrying Value Fair Value Assets Interest rate caps $ $ $ 19 $ 19 Interest Rate Cap Agreements. In November 2024, Stratus Kingwood Place, L.P. paid $27,400 to enter into an interest rate cap agreement, with a Term SOFR strike rate equal to 6.00 percent, a notional amount of $33.0 million (the principal amount of the Kingwood Place loan) and an expiration date of December 1, 2026. In March 2025, College Station 1892 Properties, L.L.C. paid $4,800 to enter into an interest rate cap agreement, with a Term SOFR strike rate equal to 5.00 percent, a notional amount of $24.0 million (the principal amount of the Jones Crossing loan) and an expiration date of April 1, 2026. The interest rate caps are derivative instrumen …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

INCOME TAXES Stratus accounting policy for and other information regarding its income taxes are further described in Notes 1 and 7 in the Stratus 2024 Form 10-K. Stratus has a full valuation allowance against its U.S. Federal net deferred tax assets as of both September 30, 2025 and December 31, 2024. Stratus has recorded a deferred tax asset totaling $153 thousand at both September 30, 2025 and December 31, 2024 related to state income taxes. In evaluating the recoverability of the remaining deferred tax assets, management considered available positive and negative evidence, giving greater weight to the uncertainty regarding projected future financial results. Upon a change in facts and circumstances, management may conclude that sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance in the future, which would favorably impact Stratus results of operations. Stratus future results of operations may be negatively impacted by an inability to realize a tax benefit for future tax losses or for items that will generate additional deferred tax assets that are not more likely than not to be realized. During 2025, Stratus expects to incur current state income taxes primarily associated with taxable income generated from cash received in the Holden Hills Phase 2 transaction, as discussed in Note 3. The difference between Stratus consolidated effective income tax rate of (1) percent for the first nine months of 2025 and the U.S. Federal st …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LIMITED PARTNERSHIPS Stratus has entered into strategic partnerships for certain development projects. Stratus, through its subsidiaries, is a partner in the following limited partnerships: Partnership a Indirect Equity Interest Holden Hills, L.P. 50.00 % Holden Hills Phase 2, L.P. 50.00 % Stratus Block 150, L.P. 31.00 % Stratus Kingwood Place, L.P. 60.00 % The Saint George Apartments, L.P. 10.00 % The Saint June, L.P. 34.13 % a. Holden Hills Phase 2, L.P. was formed in second-quarter 2025 see discussion below. For additional information regarding Stratus' other partnerships, refer to Note 2 in the Stratus 2024 Form 10-K. Holden Hills Phase 2, L.P. In second-quarter 2025, Holden Hills Phase 2, L.P. (the Holden Hills Phase 2 partnership), a Texas limited partnership and subsidiary of Stratus, was formed for the development of Holden Hills Phase 2 (Holden Hills Phase 2 Project). The Holden Hills Phase 2 Project is Stratus approximately 570-acre mixed-use development located along Southwest Parkway in the southern portion of the Barton Creek community in Austin, Texas adjacent to Holden Hills Phase 1, Stratus 495-acre residential development. The Holden Hills Phase 2 partnership is governed by a limited partnership agreement between a wholly owned subsidiary of Stratus as Class A limited partner and an unaffiliated equity investor as Class B limited partner, and another wholly owned subsidiary of Stratus which serves as general partner (the Phase 2 general partner). In second-qu …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

BUSINESS SEGMENTS Stratus is engaged primarily in the entitlement, development, management, leasing and sale of multi-family and single-family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. Stratus generates revenues primarily from the sale of developed lots or homes and undeveloped land and the lease of developed retail, mixed-use and multi-family properties. Stratus has two operating segments, which are also its two reportable segments: Real Estate Operations and Leasing Operations. The Real Estate Operations segment includes properties under various stages of development: developed for sale, under development and available for development. In this segment, Stratus entitles, develops and sells properties. Properties that Stratus develops and then holds for investment become part of the Leasing Operations segment. Decisions about whether to continue to hold a property for investment or to sell it depend on various factors, including conditions in the real estate markets in which Stratus operates and the estimated fair value of the property, and are primarily driven by the objective of maximizing overall asset value. The Real Estate Operations segment is comprised of Stratus real estate assets, which consists of its properties in Austin, Texas (including the Barton Creek Community, which includes Holden Hills Phases 1 and 2, Amarra multi-family and commercial land, Amarra Villas homes, an Amarra Drive lot and oth …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

SUBSEQUENT EVENTS Subsequent to September 30, 2025, Stratus entered into an agreement, as amended, to sell Lantana Place Retail for approximately $57.4 million. Subject to satisfaction of closing conditions, the sale is expected to close in fourth-quarter 2025. Using the proceeds from the sale, Stratus expects to repay the project loan with an approximately $29.8 million principal balance as of September 30, 2025. As a result of this transaction, Stratus estimates an income tax liability of approximately $6.7 million, which would be recognized after the sale has closed. Following the sale, Stratus will retain The Saint Julia, the approximately 210-unit multi-family development project that is part of Lantana Place. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing