Limited Partnerships

3 Months Ended

Mar. 31, 2026

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	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. a	60.00	%
The Saint George Apartments, L.P.	10.00	%
The Saint June, L.P.	34.13	%

a.Kingwood Place was sold in January 2026. Refer to Note 4 for further discussion.

Stratus Kingwood Place, L.P. As discussed further in Note 4, the Stratus Kingwood Place, L.P. (Kingwood L.P.) sold Kingwood Place in January 2026. In connection with the sale, Stratus received $16.2 million from Kingwood L.P. and $10.6 million of the net proceeds were distributed to the noncontrolling interest holders, including $1.8 million to each of LCHM Holdings, LLC and JBM Trust, which are related parties. Refer to Notes 1 and 2 in the Stratus 2025 Form 10-K.

Operating Loans and Advances; 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 2026, Stratus made an operating loan of $550 thousand, and one of the Class B limited partners made an operating loan of $250 thousand. In first-quarter 2025, Stratus made an operating loan of $1.5 million. As of March 31, 2026, Stratus’ and one of the Class B limited partners’ operating loans outstanding to Stratus Block 150, L.P. totaled $8.9 million and $250 thousand, respectively.

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. As of March 31, 2026, Stratus’ and the Class B limited partner’s operating loans outstanding to The Saint June, L.P. totaled $962 thousand and $493 thousand, respectively.

As of March 31, 2026, Stratus had advanced $1.6 million to Holden Hills, L.P. to fund costs not included in the original project budget. In first-quarter 2026, Stratus modified the Holden Hills Phase 1 construction loan to provide a short-term extension of the maturity date to June 8, 2026, while a longer-term extension is negotiated with the lender. As of March 31, 2026, Stratus had advanced approximately $3.0 million to the Holden Hills Phase 2, L.P. (the Holden Hills Phase 2 partnership) to fund certain project costs. The Holden Hills Phase 2 partnership is working to establish an approximately $10.0 million revolving credit facility for the development of Holden Hills Phase 2 and expects to use these funds to reimburse Stratus, as approved by the partners.

In first-quarter 2026, Stratus advanced $2.1 million 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. The Saint George Apartments, L.P. will pay $1.0 million of the costs of remediation and repairs, and the remainder will be covered by insurance and the general contractor.

In first-quarter 2026, The Saint June, L.P. made distributions of approximately $118 thousand and $61 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 March 31, 2026, cash and cash equivalents totaling $1.7 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 (in thousands) except those related to Kingwood Place that are presented as held for sale in Stratus’ consolidated balance sheet as of December 31, 2025. All intercompany balances are eliminated. Refer to Note 4 for further details of the Kingwood Place sale and assets and liabilities held for sale.


	March 31, 2026		December 31, 2025
Assets: a
Cash and cash equivalents	$	3,254	$	4,627
Restricted cash	278		123
Real estate under development	150,545		144,828
Land available for development	35,013		34,971
Real estate held for investment	147,354		148,494
Other assets	770		779
Total assets	337,214		333,822
Liabilities: b
Accounts payable	6,245		5,752
Accrued liabilities, including taxes	1,869		2,696
Debt	120,062		119,296
Other liabilities	179		313
Total liabilities	128,355		128,057
Net assets	$	208,859	$	205,765

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, and The Saint George construction loan, for which Stratus has a 25 percent repayment guaranty obligation. The creditors for the remaining liabilities do not have recourse to the general credit of Stratus. See Note 6 of the Stratus 2025 Form 10-K for additional information.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

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+ Details

STRATUS PROPERTIES INC 10-Q