On April 28, 2017, Lantana Place, L.L.C. (“Lantana”), a wholly owned subsidiary of Stratus Properties Inc. (“Stratus”), and Southside Bank, as lender, entered into a construction loan agreement, promissory note and other related loan documents providing for a $26,310,482 senior secured first lien construction loan (the “Loan”). The proceeds from the Loan will be used to finance the construction of the initial phase of Lantana Place, a mixed-use project. The initial phase will be comprised of 99,663 square feet of leasable space and will be anchored by a Moviehouse Theater & Eatery – a 12-screen high-quality dine-in movie theater – and a hotel.

Interest on the Loan is variable at one-month LIBOR plus 2.75 percent, subject to a minimum interest rate of 3.0 percent. Payments of interest only will be due and payable monthly beginning on June 1, 2017 and regularly thereafter through November 1, 2020. The principal balance of the Loan outstanding after November 1, 2020 will be payable in equal monthly installments of principal and interest based on a 30-year amortization. The Loan must be repaid in full on or before April 28, 2023. Lantana may prepay all or any portion of the Loan without penalty at any time prior to the final maturity date. Repayments under the Loan can be accelerated by the lender upon the occurrence of certain customary events of default.

As a condition to funding, Lantana is required to provide evidence of payment and contribution of at least $6,425,463 in project costs out of funds from sources other than Loan proceeds.

The Loan is secured by a deed of trust and security agreement that includes as collateral the Lantana Place project and all subsequent improvements, all leases and rents associated with the Lantana Place development, and any personal property owned by Lantana, including but not limited to all plans, specifications, permits, licenses, certificates and other entitlements related to Lantana Place.

The Loan contains affirmative and negative covenants usual and customary for loan agreements of this nature, including, but not limited to, a financial covenant to maintain a debt service coverage ratio of at least 1.35 to 1.00 at all times beginning on December 31, 2019.

The payment of the Loan has been fully guaranteed by Stratus. Stratus’ obligations as a guarantor will end when Lantana completes the initial phase of the Lantana Place development and demonstrates the ability to maintain a debt service coverage ratio of 1.50 to 1.00 for a period of six consecutive months.

The foregoing summary of the Loan does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the construction loan agreement and promissory note, which are filed as Exhibits 10.1 and 10.2 hereto and incorporated by reference into this Item 1.01.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosures set forth in Item 1.01 above are incorporated by reference into this Item 2.03.

Item 8.01. Other Events.

Stratus issued a press release dated May 3, 2017, titled “Stratus Properties Inc. Obtains Financing For Lantana Place Development Project.” A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 8.01.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The Exhibits included as part of this Current Report are listed in the attached Exhibit Index.

About Stratus Properties Inc. (NASDAQ:STRS)

Stratus Properties Inc. (Stratus) is a diversified real estate company. The Company is engaged primarily in the acquisition, entitlement, development, management, operation and sale of commercial, hotel, entertainment, and multi- and single-family residential real estate properties, primarily located in the Austin, Texas area, but including projects in certain other select markets in Texas. It operates in four segments: Hotel, Entertainment, Real Estate Operations and Commercial Leasing. Its properties include Barton Creek that includes Calera, Amarra Drive, Mirador Estate and Barton Creek Village; Circle C Community; Lantana; The Oaks at Lakeway and Magnolia. The Hotel segment includes the W Austin Hotel, which has over 251 luxury rooms and suites, a full service spa, gym, rooftop pool and over 9,750 square feet of meeting space. The Commercial Leasing segment includes the office and retail space at the W Austin Hotel & Residences project and a retail building at The Oaks at Lakeway.

Stratus Properties Inc. (NASDAQ:STRS) Recent Trading Information

Stratus Properties Inc. (NASDAQ:STRS) closed its last trading session 00.00 at 29.30 with 3,897 shares trading hands.