AUSTIN, Texas--(BUSINESS WIRE)--Stratus Properties Inc. (NASDAQ: STRS) announced today that on January 11, 2021, its subsidiary The Saint Mary, L.P. completed the sale of The Saint Mary, a 240-unit luxury, garden-style apartment project in the Circle C community in Austin, Texas, for $60 million, or $250,000 per unit.
William H. Armstrong III, Chairman of the Board, President and Chief Executive Officer of Stratus, stated, “The sale of The Saint Mary is another example of the substantial value we create for our shareholders with our proven approach to developing and owning well-located properties in strong Texas markets. In fact, we believe that the per unit sales price for The Saint Mary is the highest ever recorded in the Austin MSA for traditional garden-style surface-parked apartment product.”
Mr. Armstrong continued, “I am proud of our team for navigating the highly complex entitlement, design and leasing processes that maximized this development opportunity to meet market demand. Our team’s knowledge of and deep relationships in the market have enabled Stratus to raise third-party equity capital, arrange bank financing, oversee construction, expedite lease-up and manage and close the sale during a pandemic – all in less than three years. We look forward to reinvesting the proceeds of the sale in our robust pipeline of opportunities.”
After closing costs and payment of the outstanding construction loan, the sale generated net proceeds of approximately $34 million. Stratus anticipates receiving approximately $21.3 million from the subsidiary in connection with the sale. Stratus expects to recognize a pre-tax gain on the sale, net of gain allocated to noncontrolling interests, of approximately $14 million.
The sale generated an IRR to Stratus of approximately 62% calculated based on the company’s carrying value of the property contributed to the project, resulting in an equity multiple of 3.55x. The sale price reflects a 28% premium to the gross value for The Saint Mary used in the calculation of Stratus’ estimated net asset value as of December 31, 2019 as shown in Stratus’ Investor Presentation dated March 25, 2020 available on Stratus’ website.
The Saint Mary, a one and two-bedroom apartment property, features a contemporary design targeted to appeal to the technology-based workforce in Southwest Austin. Amenities include a fitness center, resort-style infinity-edge pool, and nearby dining, retail, entertainment and recreational options, including popular hiking spots The Barton Creek Green Belt and Slaughter Creek Trail. The project was approved for the Austin Energy Green Building Program. Construction commenced in June 2018 and was completed in December 2019. The first tenants took occupancy in July 2019, and the project was approximately 85% leased on the date of sale.
About Stratus Properties Inc.
Stratus is a diversified real estate company engaged primarily in the acquisition, entitlement, development, management, operation and sale of commercial and 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.
