AUSTIN, Texas--(BUSINESS WIRE)--Stratus Properties Inc. (NASDAQ: STRS) announced today that its Board of Directors has approved the initiation of an in-depth exploration of a conversion from a C-Corporation to a real estate investment trust (“REIT”).
“As part of our Board and management’s regular consideration of the optimal strategy to increase long-term value for Stratus’ shareholders, we have completed a preliminary analysis of converting Stratus to a REIT. Based on the findings of this analysis, our Board has approved the initiation of an in-depth exploration of converting to a REIT,” said William H. Armstrong III, Chairman, President and Chief Executive Officer. “While we still have much work to do, we believe converting to a REIT could provide Stratus and its shareholders with substantial benefits, including a more efficient tax structure, regular distributions of income to shareholders, and increased access to investors and analysts focused on investment in real estate assets.”
Armstrong continued, “We have operated in Austin, Texas for more than 30 years, and expect this and other fast-growing Texas markets to continue to be among the best real estate markets in the United States. We believe our expertise, combined with our high quality and diversified assets in premier locations, would provide a unique and attractive investment opportunity to REIT investors.”
Stratus has engaged financial, tax, accounting and legal advisors, and the Board will closely evaluate a potential REIT conversion and determine whether it is in the best interests of its shareholders. Stratus is considering the complex operational and technical requirements necessary to qualify as a REIT, which could require internal changes to its business and adjustments to its business and financing plans. However, the Company expects to continue to utilize its proven expertise and strategy of acquiring, developing, leasing and monetizing properties regardless of its corporate structure.
As part of this assessment, Stratus is also conducting a comprehensive review of its governance practices and Board composition to ensure the Company has access to the appropriate expertise and mix of skillsets moving forward. The Company expects to provide further information after it completes its evaluation.
At this time, the Company believes that the REIT conversion would likely require consent from the Company’s major lenders and amendments to its major loan agreements, among other third-party consents. Stratus also expects to seek shareholder approval to implement provisions in its organizational documents consistent with a public REIT structure, if the Board ultimately determines that a REIT conversion is in shareholders’ best interests.
Stratus’ current view is that if the Board determines to move forward with a conversion to a REIT, and the required consents and approvals are obtained, the conversion would likely occur in 2022.
About Stratus Properties Inc.
Stratus is a diversified real estate company engaged primarily in the acquisition, entitlement, development, management, operation and sale of commercial, multi-family and single-family residential real estate properties, and the operation of hotel and entertainment businesses located in the Austin, Texas area and other select, fast-growing markets in Texas.
