Slide 1: Maximizing Value for ALL Stockholders
Maximizing Value for ALL Stockholders Investor Presentation May 2016 Exhibit 99.1
Slide 2: Executive Summary
Stratus Properties Inc. (NASDAQ: STRS) owns, develops and operates a high-quality portfolio of diversified real estate assets, primarily located in the Austin, Texas area Executive Summary Properties include: W Austin Hotel & Residences Austin City Limits Live Barton Creek HEB Grocery Company-anchor
Slide 3: Delivering Long-Term Value
Delivering Long-Term Value Founded in 1992 as part of a highly leveraged spin-off The Company started off with real estate holdings burdened by substantial obstacles to development Current Board and management team, led by Mr. Beau Armstrong, have transformed the Company Success driven by local mark
Slide 4: Situation
Carl Berg, a large stockholder, launched a proxy contest to force the prompt liquidation of the Company, foregoing the substantial potential future value we believe we are well-positioned to achieve The price of Stratus stock has more than tripled since Mr. Berg became a stockholder Mr. Berg has mad
Slide 5: Stockholders are Asked to Choose
1. Elect the proven directors nominated by the Board Complete a thorough review of strategic alternatives Continue to build value in the properties before strategically marketing them for sale Board nominees, including CEO, have deep experience, relationships and understanding of the Austin market S
Slide 6: Stratus Has Delivered Results to Stockholders
Stratus Has Delivered Results to Stockholders [1] Total returns assume dividends are reinvested. [2] Peer group used for purposes of the performance graph included in Stratus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was comprised of the following real estate rel
Slide 7: Prudently Managed Debt
Prudently Managed Debt 1Following completion of the refinancing of the W Austin Hotel & Residences in January 2016, total debt as a percentage of total asset value used in determining pre-tax net asset value (NAV) was 42% at March 31, 2016. For a discussion of NAV, see “Cautionary Statement” on slid
Slide 8: Why Exit Now? Strong Austin Economy Supports Continued Asset Value Growth
Why Exit Now? Strong Austin Economy Supports Continued Asset Value Growth Housing starts were up 17% in 2014 compared to previous year Rental and occupancy rates are on the rise across office, retail, industrial and multi-family sectors Austin US Population growth since 2000 32% 12% Unemployment 3.4
Slide 9: The Board's Five-Year Plan
The Board’s Five-Year Plan (announced in March 2015): Plan was unanimously approved by the Board, including by Mr. Berg’s Board designee at the time, William Lenehan The Early Results: Significant increase in the pre-tax net asset value (NAV) of the Company’s assets (see slide 3) NAV increased by ap
Slide 10: Strategy Has Already Yielded Accretive Transactions
Strategy Has Already Yielded Accretive Transactions Parkside Village 5700 Slaughter $20.7 Million in Pre-Tax Gains $14.3 Million in Net Cash Proceeds Net Cash Proceeds Exceeded Previously Disclosed NAV by 33% Sold: $32.5 Million Sold: $12.5 Million Sales completed July 2015
Slide 11: Strategy Has Already Yielded Accretive Transactions: W Austin Hotel
Strategy Has Already Yielded Accretive Transactions W Austin Hotel & Residences / Austin City Limits Live Transaction completed Sept. 2015 Refinancing completed Jan. 2016 Elected to purchase JV partner’s interest and secured full ownership of iconic property in 2015 Favorable pricing compared to rec
Slide 12: Plan to Develop Additional Value in Properties
Plan to Develop Additional Value in Properties Property acquired in 2013; attractive bids received and negotiating sale 87 acre infill site / 9 parcel assemblage Approximately 230,000 SF commercial development with 95,000 SF HEB grocery anchor HEB opened in October 2015; several other retail tenants
Slide 13: The Santal
The Santal Stratus has completed the planning, engineering and permitting for the regional water, wastewater, drainage and roadway infrastructure necessary for the development of Barton Creek Section N Construction of a water treatment plant, linear utility construction, drainage facilities, and Tec
Slide 14: Significant Unrecognized Value
Significant Unrecognized Value ($ in millions) $416.6 $659.8 Carrying Value and Estimated Gross Value Stratus Liabilities $295.9 Estimated Net Asset Value $363.9 Summary 357 Lots 2,352 Multi-Family Units 3.5 Million Commercial Square Feet 251 Hotel Rooms 2,750 Seat Venue
Slide 15: Board Engaged Hentschel & Company to Explore Strategic Alternatives
The Stratus Board of Directors has already addressed Mr. Berg’s requests by engaging a nationally recognized investment banking firm, Hentschel & Company, to explore all strategic alternatives Hentschel’s principals have advised on some of the largest and most complex real estate industry transactio
Slide 16: We Believe Stratus Has the Right Team to Execute the Company's Plan
We Believe Stratus Has the Right Team to Execute the Company’s Plan Team’s experience, relationships and regulatory knowledge are vital to successful development of properties in Austin Your Board has nominated two highly qualified directors Mr. Beau Armstrong: Deep industry and market expertise cri
Slide 17: Board Has the Right Mix of Qualifications and Professional Experience
We Believe Stratus’ Board has the Right Mix of Qualifications and Professional Experience Director Biography Joined BOD Other Public BOD Exp. Public Co. Mgmt. Finance & Deal Exp. Real Estate Develop’t Real Estate Finance William H. “Beau” Armstrong III (Chairman) Chairman of the Board, President and
Slide 18: Stratus' Board has Stockholder Representation
Stratus’ Board has Stockholder Representation Stratus’ Board of Directors is committed to ensuring stockholders’ points of view are represented on our Board Mr. Charles Porter serves as the designee for one of Stratus’ largest stockholders, LCHM Holdings In addition to the valuable experience in hos
Slide 19: 2012 Governance Enhancements
2012 Governance Enhancements Stratus’ Board believes that Stratus’ corporate governance practices are in the best interests of Stratus and its stockholders In 2012, our Board implemented the following: Appointment of a lead independent director by the independent directors of the board Adoption of c
Slide 20: Strong Governance Practices
Strong Governance Practices Stratus’ Board believes that Stratus’ corporate governance practices are in the best interests of Stratus and its stockholders Independent board 2015: 75% 2016: 83% Lead independent director 50% of the Board refreshed in the last four years Director stock ownership guidel
Slide 21: 2015 Governance Review
In 2015, the Board conducted an extensive review of governance using Green Street Advisors, a nationally recognized firm recommended by Mr. Berg’s designee, Mr. Lenehan Green Street considered Stratus’ position as a small-cap issuer with concentrated share ownership and real estate assets with long-
Slide 22: Governance Enhancements Since 2015 Annual Meeting
Governance Enhancements Since 2015 Annual Meeting Appointed 2 new independent directors to the Board (Messrs. Joseph and Schweitzer) Amended stockholder rights plan to make it more effective, and to accelerate the expiration date by more than one year, from May 29, 2018 to March 9, 2017 Responded to
Slide 23: We Believe Mr. Berg's Demands are Self-Serving
We Believe Mr. Berg’s Demands are Self-Serving Mr. Berg’s Hasty Demands Your Board’s Thoughtful Strategy Mr. Berg demands a “fire sale” The Board’s five-year plan clearly outlines a path to develop and sell properties over a five year period Mr. Berg demands independent review of alternatives and hi
Slide 24: Berg's Hand-Picked Board Slate is Unsuitable
We Believe Mr. Berg’s Hand-Picked Board Slate is Unsuitable to Serve on Stratus’ Board Contractual arrangements and relationships that encourage Messrs. Dean and Knapp to act in the interests of Mr. Berg, NOT in the interests of all stockholders Little or no experience as directors of public compani
Slide 25: Berg's Nominees are Incentivized to Protect HIS Interests
Mr. Berg’s Nominees are Incentivized to Protect HIS Interests Neither Mr. Knapp nor Mr. Dean is independent of Mr. Berg Mr. Knapp has been a full-time employee of Mr. Berg’s companies for more than 20 years Mr. Dean has financial ties to Mr. Berg In his proxy materials, Mr. Berg discloses a “golden
Slide 26: Can You Trust Mr. Berg to Create Value? See His Track Record
Can You Trust Mr. Berg to Create Value? See His Track Record Valence Technology Mr. Berg joined Valence’s Board in the 1990s. He poured money into the company, amassing a substantial equity stake, while overseeing at least five CEO/leadership changes over the course of approximately a decade. Effort
Slide 27: Support the Current Board on the WHITE Proxy Card
Strong history of performance Strategic plan showing early results Experienced Board with critical Austin experience Board open to all opportunities, conducting strategic review Protecting long-term interests of ALL stockholders Support the Current Board on the WHITE Proxy Card to Deliver on Long-Te
Slide 28: Thank You
Thank You STRATUS
Slide 29: Forward-Looking Statements
This presentation contains forward-looking statements in which Stratus discusses factors it believes may affect its future performance. Forward-looking statements are all statements other than statements of historical facts, such as statements regarding the implementation and potential results of St
Slide 30: Additional Information on Proxy Solicitation
Stratus Properties Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from Stratus stockholders in connection with the matters to be considered at Stratus’ 2016 Annual Meeting. Stratus has filed its definitive proxy statement and form of WHITE p