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Limited Partnerships | 9 Months Ended
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Sep. 30, 2025
Related Party Transactions [Abstract] |
Limited Partnerships | 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-quarter 2025, the partners made the following initial capital contributions to the Holden Hills Phase 2 partnership: (i) Stratus contributed the Holden Hills Phase 2 land and related personal property at an agreed value of $95.7 million, which reflects an agreed land value of $86.9 million and Stratus’ Tecoma Circle infrastructure investment of approximately $8.8 million, and (ii) The Class B limited partner contributed $47.8 million in cash. Following the Class B limited partner’s initial capital contribution, $47.8 million of cash was distributed by the Holden Hills Phase 2 partnership to Stratus. Further, the Holden Hills Phase 2 partnership will reimburse Stratus for certain initial project costs of approximately $0.8 million. As a result of these transactions, Stratus holds, indirectly through its wholly owned subsidiaries, a 50.0 percent equity interest in the Holden Hills Phase 2 partnership, and the Class B limited partner holds the remaining 50.0 percent equity interest in the Holden Hills Phase 2 partnership. Generally, after the initial distribution described above, distributions will be made to the partners in accordance with their relative equity capital interests. Stratus consolidates the Holden Hills Phase 2 partnership; therefore, its contribution of the Holden Hills Phase 2 land and related personal property was recorded at historical cost and the contribution from the Class B limited partner was accounted for as a noncontrolling interest contribution. The initial purposes of the Holden Hills Phase 2 partnership do not include the development or construction of horizontal or vertical improvements (each, a future project) and the commencement of any future project will require the approval of all partners. In addition to each partner’s initial capital contribution, upon the call of the Phase 2 general partner from time to time, the partners are obligated to make additional capital contributions for certain Holden Hills Phase 2 partnership costs and expenses defined as “mandatory,” such as property taxes and debt service payments, within available unused reserves in the then-current approved budget or as otherwise approved by the partners. Stratus guaranteed the additional capital contribution obligations of the Phase 2 general partner and the Class A limited partner. The Phase 2 general partner has the authority to manage the day-to-day operations of the Holden Hills Phase 2 partnership, subject to approval rights given to the partners for specified “major decisions,” including but not limited to operating and future project budgets, the business plan and amendments thereto; commencement of any future project; sales, leases or transfers of any portion of the Holden Hills Phase 2 Project or any future project to any partner, affiliate of any partner, or to any unaffiliated third party other than as contemplated in the business plan; payments, transactions or agreements between the Holden Hills Phase 2 partnership and any partner or its affiliates not already approved; incurring any debt, mortgage or guaranty; capital calls in excess of the initial capital commitment; admitting a new partner; and certain transfers of direct or indirect interests in the Holden Hills Phase 2 partnership. Any partner can initiate a buy-sell at any time by written notice to the other partner, specifying the buyout price. The Holden Hills Phase 2 partnership has agreed to pay Stratus an asset management fee of $39,875 per month for the first 12 months following the formation of the partnership and thereafter subject to an adjustment as agreed by the partners, plus 4.0 percent of the hard costs of landscaping and site clearing approved in the initial operating budget. The Holden Hills Phase 2 partnership is working to establish a separate revolving credit facility for the Holden Hills Phase 2 Project, which is expected to be sized as needed for future operating costs. The Holden Hills Phase 2 partnership intends to use the facility to reimburse the Class A limited partner for approximately $1.6 million of project costs, including certain initial project costs as described above, fund the approved operating budget for 2025 and fund future partnership activities, as approved by the partners. Amendment to the Holden Hills, L.P. Partnership Agreement. In second-quarter 2025, the parties to the Holden Hills, L.P. partnership agreement, relating to Holden Hills Phase 1, entered into an amendment thereto that changed certain provisions to more closely align with the Holden Hills Phase 2 partnership agreement, primarily that any partner can initiate a buy-sell at any time by written notice to the other partner. Amendment to The Saint June, L.P. Partnership Agreement. In third-quarter 2025, the parties to The Saint June, L.P. partnership agreement entered into an amendment to allow for up to $3.0 million of distributions to the partners between September 1, 2025 through September 30, 2027 prior to the partnership’s repayment of the operating loans discussed below. Operating Loans, Advances and Capital Contributions to Partnerships; Distributions from Partnerships. Stratus has made operating loans to Stratus Block 150, L.P. to facilitate the partnership’s ability to pay ongoing costs, including debt service, of The Annie B project during the pre-construction period. The loans bear interest at one-month Term Secured Overnight Financing Rate (SOFR) plus 5.00 percent, are subordinate to The Annie B land loan and must be repaid before distributions may be made to the partners. In first-quarter 2024, Stratus made an operating loan of $2.4 million. In third-quarter 2024, Stratus made an operating loan of $1.1 million. In first-quarter 2025, Stratus made an operating loan of $1.5 million. In third-quarter 2025, Stratus made an operating loan of $1.1 million. As of September 30, 2025, Stratus’ operating loans outstanding to Stratus Block 150, L.P. totaled $8.3 million. Stratus and the Class B limited partner in The Saint June partnership have made operating loans to The Saint June, L.P. to support the partnership’s ability to pay its construction loan interest, which has exceeded the amount anticipated because of prior interest rate increases. The loans bear interest at one-month Term SOFR plus 5.00 percent, are subordinate to The Saint June construction loan and, unless approved by all partners, no distributions may be made to the partners until the operating loans are repaid. In third-quarter 2025, The Saint June partnership was amended to allow for up to $3.0 million of distributions to the partners prior to the repayment of the operating loans. In first-quarter 2024, Stratus made an operating loan of $339 thousand, and the Class B limited partner made an operating loan of $339 thousand to The Saint June, L.P. In second-quarter 2024, Stratus made an operating loan of $85 thousand, and the Class B limited partner made an operating loan of $165 thousand to The Saint June, L.P. No loans were made in third-quarter 2024 or the first nine months of 2025. As of September 30, 2025, Stratus’ and the Class B limited partner’s operating loans outstanding to The Saint June, L.P. totaled $962 thousand and $493 thousand, respectively. In third-quarter 2025, Stratus contributed additional capital of $323 thousand in cash to The Saint George Apartments, L.P., representing its 10 percent equity share, and the Class B Limited Partner contributed additional capital of $2.9 million in cash to The Saint George Apartments, L.P. to support the partnership’s ability to pay debt service and project costs, including costs related to damage remediation and repairs for a water leak that occurred in April 2025. In third-quarter 2024, Stratus contributed additional capital of $400 thousand in cash to The Saint George Apartments, L.P., representing its 10 percent equity share, and the Class B Limited Partner contributed additional capital of $3.6 million in cash to The Saint George Apartments, L.P. to support the partnership’s ability to pay its construction loan interest. As of September 30, 2025, Stratus has advanced $1.3 million to Holden Hills, L.P. to fund costs not included in the original project budget. The partnership is in discussions to modify the construction loan to increase the loan commitment amount and then expects to use these funds to reimburse Stratus, as approved by the partners. As described above, as of September 30, 2025, Stratus has advanced approximately $1.6 million to the Holden Hills Phase 2 partnership to fund certain project costs. In October 2025, The Saint June, L.P. made distributions of approximately $435 thousand and $225 thousand to the Class B limited partner in The Saint June partnership and Stratus, respectively. Potential Returns. The following table presents the distribution percentages for the limited partnerships in which Stratus’ potential returns may increase above its relative equity interest if certain hurdles are achieved.
| Distribution Percentages
| Holden Hills, L.P. |  | Stratus Kingwood Place, L.P. |  | The Saint George Apartments, L.P. |  | The Saint June, L.P.
| Stratus | Third-party Class B Limited Partner |  | Stratus | Third-party Class B Limited Partners |  | Stratus | Third-party Class B Limited Partner |  | Stratus | Third-party Class B Limited Partner
Until all partners have received a return of their capital contributions and a 9.00 percent cumulative return; | 50.00 | % | 50.00 | % |  | 60.00 | % | 40.00 | % |  | 10.00 | % | 90.00 | % |  | 34.13 | % | 65.87 | %
Until all partners have received an 11.00 percent cumulative return; | — |  | — |  |  | 68.00 |  | 32.00 |  |  | — |  | — |  |  | — |  | — |
Until the Class B limited partner has received a 12.00 percent cumulative return; | 55.00 |  | 45.00 |  |  | — |  | — |  |  | 20.00 |  | 80.00 |  |  | 44.13 |  | 55.87 |
Until the Class B limited partner has received an 18.00 percent cumulative return; | — |  | — |  |  | — |  | — |  |  | 30.00 |  | 70.00 |  |  | — |  | — |
Thereafter | 65.00 |  | 35.00 |  |  | 76.00 |  | 24.00 |  |  | 50.00 |  | 50.00 |  |  | 54.13 |  | 45.87 |
Accounting for Limited Partnerships. Stratus has performed evaluations and concluded that all of these limited partnerships are variable interest entities (VIEs) and that Stratus is the primary beneficiary of each VIE. Accordingly, the partnerships’ financial statements are consolidated in Stratus’ financial statements. Stratus will continue to re-evaluate which entity is the primary beneficiary of these partnerships in accordance with applicable accounting guidance. As of September 30, 2025, cash and cash equivalents totaling $3.8 million held at certain of these limited partnerships are subject to restrictions on distribution to Stratus pursuant to the individual partnership loan agreements. Stratus’ consolidated balance sheets include the following assets and liabilities of the partnerships, net of intercompany balances (including the operating loans made by Stratus), which are eliminated (in thousands):
| September 30, 2025 |  | December 31, 2024
Assets: a |  |  |
Cash and cash equivalents | $ | 8,468 |  |  | $ | 11,096 |
Restricted cash | 307 |  |  | 572 |
Real estate under development | 142,566 |  |  | 143,743 |
Land available for development | 36,820 |  |  | 36,509 |
Real estate held for investment | 181,463 |  |  | 81,477 |
Lease right-of-use assets | — |  |  | 148 |
Other assets | 2,941 |  |  | 3,211 |
Total assets | 372,565 |  |  | 276,756 |
Liabilities: b |  |  |
Accounts payable | 6,313 |  |  | 7,399 |
Accrued liabilities, including taxes | 3,916 |  |  | 3,327 |
Debt | 150,823 |  |  | 140,090 |
Lease liabilities | — |  |  | 148 |
Other liabilities | 452 |  |  | 469 |
Total liabilities | 161,504 |  |  | 151,433 |
Net assets | $ | 211,061 |  |  | $ | 125,323 |
a.Substantially all of the assets are available to settle obligations of the partnerships only. b.All of the debt is guaranteed by Stratus until certain conditions are met as provided in the applicable partnership loan agreements except for The Saint June construction loan, for which Stratus has a 50 percent repayment guaranty obligation, The Saint George construction loan, for which Stratus has a 25 percent repayment guaranty obligation, and the Kingwood Place loan, for which Stratus has customary non-recourse carve-out obligations and an environmental indemnification. The creditors for the remaining liabilities do not have recourse to the general credit of Stratus. See Note 6 of the Stratus 2024 Form 10-K for additional information.

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