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 were at or above Stratus’ current stock price, the process has been terminated.
Stratus, which has a 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’ portfolio of development opportunities should be allocated between Stratus and a buyer.
“In addition, the diverse nature of Stratus’ assets presented a challenge for participants with narrower investment 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 opportunities, and some of these ideas may be further explored.”
Stratus this year sold the Oaks at Lakeway, an H-E-B-anchored shopping center 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 stockholders,” 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 confident in management’s ability to optimize the value of Stratus’ high-quality assets going forward,” Madden said. “Our management has the experience and skill necessary to navigate the complex regulatory and political landscape in our markets, strengthen and build relationships with key stakeholders and lenders, and deliver value to Stratus’ stockholders.
“Although the formal strategic 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.”