UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 2, 2008
Stratus
Properties Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-19989
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72-1211572
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification Number)
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98
San Jacinto Blvd., Suite 220
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Austin,
Texas
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78701
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (512) 478-5788
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
Effective
May 1, 2008, Stratus Properties Inc. (“Stratus”) entered into a joint venture
with Canyon-Johnson Urban Fund II, L.P. (“Canyon-Johnson”) with respect to the
development of Block 21, a 36-story mixed-use development in downtown Austin,
Texas, anchored by a W Hotel & Residences (the “Project”). Prior
to May 1, 2008, Stratus Block 21 Investments, L.P. (“Stratus Block 21”), a
subsidiary of Stratus, was the sole member of the CJUF II Stratus Block 21 LLC
(the “Company”). Stratus Block 21’s initial capital contribution to
the Company consisted of the 1.76 acre tract of land known as “Block 21” and the
related property and development agreements.
In
connection with the formation of the joint venture, Canyon-Johnson was admitted
as a member of the Company, and Stratus Block 21 received a capital contribution
credit of approximately $32.2 million. Stratus Block 21 is the
manager of the Company and has a 40 percent interest in the
Company. Canyon-Johnson has a 60 percent interest in the
Company. Canyon-Johnson contributed initial capital and will
contribute additional capital until certain capital contribution requirements
are met. In the aggregate, Canyon-Johnson will contribute 60 percent
of the Company’s required capital and Stratus Block 21 will contribute 40
percent of the Company’s required capital. The maximum capital
contributions shall not exceed $52.0 million for Stratus Block 21 and $73.7
million for Canyon-Johnson.
A Stratus
subsidiary has been designated as the developer of Block 21 and will be paid a
$6.0 million developer’s fee over the term of construction.
On May 2,
2008, the Company entered into a Construction Loan Agreement with Corus Bank,
N.A., a national banking association, (the “Loan Agreement”) to finance the
construction of the Project. Pursuant to the Loan Agreement, the
Company may borrow up to an aggregate of $165,000,000 to fund the construction,
development and marketing costs of the Project.
The Loan
Agreement contains customary financial covenants and other restrictions. Amounts
borrowed under the Loan Agreement bear interest at
an annual rate equal to the greater of (1) the sum of 3.5 percent per year plus
the three month London Interbank Offered Rate quoted in the Money Rates section
of The Wall Street Journal or (2) 6.5 percent.
Optional
prepayments during the twelve months immediately following the execution of the
Loan Agreement are not permitted. From May 2, 2009 through November
2, 2010, optional prepayments of the loan are permitted, subject to a prepayment
premium. Optional prepayments made after November 2, 2010 are not
subject to prepayment premiums. Repayments made from proceeds of the sale of
residential condominiums or other components of the Project are permitted,
beginning after the first year of the Loan, without prepayment penalty.
Repayments under the Loan Agreement may be accelerated by the lenders upon the
occurrence of customary events of default. The Loan Agreement matures
on September 2, 2011. Certain obligations of the Company under the
Loan Agreement are guaranteed by Stratus, including construction and completion
of the Project, environmental indemnification and joint and several liability
for the payment of $20,000,000 of the principal of the loan.
Item
2.03 Creation of a Direct
Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of
a Registrant.
See Item
1.01, which is incorporated herein by reference.
Item 7.01
Regulation FD
Disclosure.
Stratus’
joint venture partner, Canyon-Johnson, issued a press release on behalf of the
Company, dated May 7, 2008, announcing that the W Austin Hotel & Residences
closed financing and officially began construction. (see Exhibit
99.1).
Item
9.01 Financial Statements and
Exhibits.
(d) Exhibits.
The
Exhibit included as part of this Current Report is listed in the attached
Exhibit Index.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Stratus
Properties Inc.
By: /s/
John E. Baker
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John E.
Baker
Senior
Vice President and
Chief
Financial Officer
(authorized
signatory and
Principal
Financial Officer)
Date: May
8, 2008
Stratus
Properties Inc.
Exhibit
Index
Exhibit
Number
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Press
Release dated as of May 7, 2008, titled “W Austin Hotel & Residences
Closes Financing and Officially Begins
Construction.”
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