STRS 8-K
Stratus Properties Inc (STRS)
8-K
2025-01-27
For: 2025-01-22
View Original
Added on
April 12, 2026
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): January 22, 2025
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Effective January 22, 2025, Lantana Place, L.L.C., a Texas limited liability company (the Company) and a wholly-owned subsidiary of Stratus Properties Inc. (Stratus), as borrower, and Broadway National Bank, as lender, entered into a commercial loan agreement, promissory note, limited guaranty and other related loan documents (collectively, the Loan Documents) to refinance the construction loan for the retail property at Lantana Place, a 99,377-square-foot retail property within Stratus’ mixed-use development project located south of Barton Creek in Austin (the Lantana Retail Project). The Loan Documents provide for a first priority commercial mortgage loan in the aggregate principal amount of $29.8 million (the Loan).
The Loan has a maturity date of February 1, 2029, with an option to extend the maturity for an additional 12 months, subject to satisfying specified conditions, including the applicable debt service coverage ratio. The Loan bears interest at 6.83 percent until February 1, 2025 and thereafter at the one-month Term Secured Overnight Financing Rate (SOFR) plus 2.35 percent, with a floor of 0.00 percent. Payments of interest only on the Loan are due monthly through January 31 2026. Thereafter, principal and interest payments are due monthly based on a 30-year amortization with the remaining unpaid principal and interest due at maturity. The Company may prepay all or any portion of the Loan without premium or penalty. Amounts repaid under the Loan may not be reborrowed.
The Loan is secured by first priority liens on the Lantana Retail Project. Stratus has provided a guaranty limited to certain non-recourse carve-out obligations. The Loan Documents contain affirmative and negative covenants customary for loan agreements of this nature. The Loan Documents contain a financial covenant that the Lantana Retail Project maintain a debt service coverage ratio of at least 1.30 to 1.00 measured by reference to a trailing 12-month period for each fiscal year. The Loan Documents prohibit distributions from the Company to Stratus in an event of default.
Approximately $25.7 million of the proceeds of the Loan were used to repay, in full, all outstanding indebtedness under the Existing Lantana Construction Loan Agreement (as defined in Item 1.02 of this Current Report on Form 8-K). Of the remaining approximately $4.1 million of proceeds of the Loan, approximately $350 thousand were used for the payment of transaction costs, approximately $750 thousand were used to pay 2024 property taxes and approximately $3.0 million were distributed to Stratus.
The foregoing description of the Loan and the Loan Documents is not intended to be complete and is qualified in its entirety by reference to the full text of the commercial loan agreement, promissory note and limited guaranty, which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, and incorporated by reference into this Item 1.01.
Item 1.02. Termination of a Material Definitive Agreement.
On January 23, 2025, in connection with entering into the Loan Documents as described in Item 1.01 above, the Company satisfied in full its obligations under the existing Construction Loan Agreement, as amended, by and between the Company, as borrower, and Southside Bank, as lender, effective April 28, 2017 (as amended, the Existing Lantana Construction Loan Agreement), and such agreement was terminated.
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 January 27, 2025, titled “Stratus Properties Inc. Completes Refinancing of Lantana Place - Retail.” 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.
| Exhibit Number | Exhibit Title | ||||
| Commercial Loan Agreement by and among Lantana Place, L.L.C., as borrower, Broadway National Bank, as lender, and Stratus Properties Inc., as guarantor, effective January 22, 2025. | |||||
| Promissory Note by and between Lantana Place, L.L.C. and Broadway National Bank dated January 22, 2025. | |||||
| Limited Guaranty by Stratus Properties Inc. for the benefit of Broadway National Bank, as lender, dated January 22, 2025 with respect to the Commercial Loan Agreement by and among Lantana Place, L.L.C., as borrower, Broadway National Bank, as lender, and Stratus Properties Inc., as guarantor, effective January 22, 2025. | |||||
Press Release dated January 27, 2025, titled “Stratus Properties Inc. Completes Refinancing of Lantana Place - Retail.” | |||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. | ||||
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/ Erin D. Pickens | |||||||
| Erin D. Pickens | ||||||||
Senior Vice President and Chief Financial Officer (authorized signatory and Principal Financial Officer and Principal Accounting Officer) | ||||||||
Date: January 27, 2025
COMMERCIAL LOAN AGREEMENT
THIS COMMERCIAL LOAN AGREEMENT (this “Agreement”) is made by Broadway National Bank (“Lender”), LANTANA PLACE, L.L.C., a Texas limited liability company (“Borrower”), and STRATUS PROPERTIES INC., a Delaware corporation (“Guarantors”, whether one or more), to be effective as of January 22, 2025.
ARTICLE 1
The Loan
1.1 Term Loan. Subject to and upon the terms and conditions contained in this Agreement, Lender agrees to make a term loan (the “Loan”) to Borrower in the original face amount of $29,800,000.00 (the “Loan Amount”). The Loan will be evidenced by and payable in accordance with a promissory note (the “Note”). The Note will not evidence a revolving credit facility in that Borrower’s repayment of principal will not enable Borrower to reborrow any principal amount repaid.
ARTICLE 2
Loan Terms
2.1 Loan Terms.
(a) Rate and Payment. The Loan will bear interest and be payable in accordance with the terms of the Note.
(b) Guaranty. Guarantors will guaranty certain non-recourse carve outs of the Loan pursuant to a Limited Guaranty (the “Guaranty”) dated the same date as this Agreement.
(c) Collateral. The Loan will be secured, among other things, by the following:
(i) a valid first lien Deed of Trust, Security Agreement, and Financing Statement (the “Deed of Trust”) on the real property described therein (the “Property”).
(ii) a valid first lien security interest in all equipment, fixtures, furnishings, inventory, and other personal property, both tangible and intangible, that is owned by Borrower and either located upon or used in connection with the operation of the Property (none of which may be leased or acquired by lease/purchase), including without limitation, all contracts for the operation and maintenance of the Property.
(iii) an assignment of all rents from the Property (the “Assignment of Rents”).
(d) Loan Documents. The Loan will be evidenced by all instruments (the “Loan Documents”) requested by Lender, in Lender’s sole and absolute discretion, including without limitation, the following: (i) this Agreement, (ii) the Note, (iii) the Deed of Trust, (iv) the Assignment of Rents, (v) any Hedge Agreements, and (vi) all other documents executed at any time by Borrower in connection with, as evidence of, or as security for, the Loan. All of the terms and conditions of the Loan Documents must be satisfactory to Lender, in Lender’s sole and absolute discretion.
(e) Origination Fee. Borrower will pay Lender an Origination Fee of 0.50% of the Loan Amount at the time the Loan closes.
ARTICLE 3
Definitions
3.1 Definitions. In addition to the other capitalized terms that are defined throughout this Agreement, the following terms have the following meanings when used in this Agreement:
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“Collateral” means all property, both real and personal, tangible and intangible described in the Loan Documents as being given as collateral for the Loan.
“Debt” means all indebtedness and liabilities, whether matured or unmatured, due or to become due, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, including all items that should be classified as liabilities according to generally accepted accounting principles.
“Hedge Agreement” means any agreement between Borrower and Lender or any affiliate of Lender, including but not limited to an ISDA Master Agreement, whether now existing or hereafter entered into, that provides for an interest rate, currency, equity, credit, or commodity swap, cap, floor, or collar, spot or foreign currency exchange transaction, cross currency rate swap, currency option, any combination of, or option with respect to, any of the foregoing or similar transactions for the purpose of hedging Borrower’s exposure to fluctuations in interest rates, exchange rates, currency, stock, portfolio or loan valuations or commodity prices, along with all now existing or hereafter executed schedules attached thereto, and all confirmations issued in connection therewith.
“Indebtedness” means all of the following:
(i) All indebtedness owed by Borrower to Lender that is evidenced by, secured by, or created in connection with the Loan Documents; including without limitation the aggregate of all principal and interest owing from time to time under the Note, together with all fees, expenses, charges, premiums (if any), and other amounts from time to time owing under the Loan Documents.
(ii) All renewals, modifications, rearrangements, reinstatements, enlargements, or extensions of the Note and any promissory note or notes given in renewal, substitution, or replacement for the Note.
(iii) All indebtedness, liabilities, and obligations of Borrower, whether actual or contingent, due or to become due and existing or arising from time to time, under or in connection with any Hedge Agreement.
“Liens” means all liens, rights, security interests, and assignments (whether absolute or as collateral) created, granted, or made by the Loan Documents.
“Subordinated Debt” means all Debt of Borrower, whether now existing or hereafter incurred, that is subordinate in right of payment to the Indebtedness, pursuant to a written agreement executed by such parties required by, and in form and content, satisfactory to Lender.
3.2 Rules of Interpretation. All definitions of terms contained in this Agreement apply equally to the singular and plural forms of the terms defined. Whenever the context requires, any pronoun includes the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” are deemed to be followed by the phrase “without limitation”. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the word “to” means “to but excluding”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument, or other document refers to such agreement, instrument, or other document as it was originally executed or as it may from time to time be amended, supplemented, renewed, extended, increased, or otherwise modified (subject to any restrictions on such amendments, supplements, or modifications set forth in this Agreement), (ii) any reference in this Agreement to any party includes such party’s successors and permitted assigns, (iii) the words “hereof”, “herein”, and “hereunder” and words of similar import shall be construed to refer to this Agreement as a whole and not to any particular provision of it, (iv) all references to Articles, Sections, Exhibits, and Schedules refer to Articles, Sections, Exhibits, and Schedules to this Agreement, (v) all documents, instruments, exhibits, and other writings referred to in this Agreement are made a part of it by reference for all purposes with the same effect as if attached to it, and (vi) all references to a specific time (or to any time generally) refer to the time in San Antonio, Texas, unless otherwise indicated. Any reference to any law shall include all statutory and regulatory provision consolidating, amending, replacing, or interpreting such law and any reference to any law or regulation refers to such law or regulation as amended, modified, or supplemented from time to time.
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ARTICLE 4
Representations and Warranties
So long as any portion of the Indebtedness remains unpaid, Borrower unconditionally warrants and represents to Lender as follows:
4.1 Organization and Existence. If Borrower is an entity, Borrower is duly organized, validly existing, and in good standing under the laws of the State of its formation or existence, and has complied with all conditions prerequisite to its doing business in the state where the Collateral is located.
4.2 Authorization and Enforceability. The execution, delivery, and performance by Borrower, and each Guarantor, respectively, of the Loan Documents does not and will not (i) violate any provision of any agreement, law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award presently in effect which adversely affects or could adversely affect the financial condition, business, or prospects of Borrower, or any Guarantor; or (ii) result in a breach of or constitute a default under Borrower’s or any Guarantor’s Governing Documents or any indenture, loan or credit agreement, or any other agreement or instrument, to which Borrower or any Guarantor is a party or by which Borrower or the Guarantors, or any of their respective properties is bound or affected, and will not result in the creation or imposition of any lien, charge, or encumbrance on, or security interest in, any of their respective properties pursuant to the provisions of any such agreement or instrument; and (iii) the Loan Documents, when duly executed and delivered, will constitute legal, valid, and binding obligations of Borrower and Guarantors, respectively, enforceable against them in accordance with their respective terms, except to the extent that they may be limited by bankruptcy or insolvency or other laws affecting creditors rights generally.
4.3 Representations True. All statements contained in this Agreement and the other Loan Documents are true and correct in all material respects and all writings previously delivered to Lender by Borrower concerning the Loan are genuine and in all respects what they purport to be.
4.4 Litigation. There is no litigation, proceeding, or investigation pending or, to Borrower’s knowledge, threatened against or affecting Borrower, any Guarantor, or the Collateral in any court or before any tribunal or arbitration board.
4.5 Consents. No consent, approval, or authorization of any governmental authority is required in connection with the execution and delivery of Loan Documents.
4.6 Lien Priority. None of the Collateral will be encumbered by any pledge, lien, security interest, assignment, or other charge or encumbrance of any nature whatsoever except those in favor of Lender. Lender’s Liens shall be first prior Liens superior to the interests of all other parties.
4.7 Financial Statements. All financial statements delivered to Lender by or on behalf of Borrower or any Guarantor fairly represent the financial condition of Borrower and such Guarantor as of the date of each such financial statement (subject to reasonable year-end adjustments for interim financial statements). There are no material liabilities, direct or indirect, fixed or contingent, as of the date of each such financial statement, that are not reflected therein or in the notes thereto. Except for transactions directly related to, or specifically contemplated by, this Agreement, there has been no material adverse change in the financial condition of Borrower or any Guarantor as shown by the most recent financial statements delivered to Lender since the date thereof, and neither Borrower nor any Guarantor has incurred any material liability, direct or indirect, fixed, or contingent since such date, except as otherwise disclosed to and approved in writing by Lender.
4.8 Convictions. Neither Borrower nor any of its principals has been convicted of (or pleaded nolo contendere or no contest to) a crime involving bank fraud, embezzlement, sex offences against a minor, mail fraud, or money laundering. For purposes of the immediately preceding sentence, “principals” means (i) for a partnership, each general partner and any other partner who is a natural person and holds twenty percent (20%) or more ownership interest in the partnership, or (ii) for a corporation, limited liability company, association, or
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other entity, each director, each of the five (5) most highly-compensated executives or officers of the entity, and each natural person who is a direct or indirect holder of twenty percent (20%) or more of the capital stock or other equity or ownership interest of the entity.
ARTICLE 5
Covenants
So long as any portion of the Indebtedness remains unpaid, Borrower covenants and agrees as follows:
5.1 Attorney’s Fees. Borrower shall pay or reimburse Lender for all reasonable fees and expenses of outside counsel for Lender in connection with (a) the negotiation, preparation, filing and recording of the Loan Documents, and any renewals, extensions and modifications to them; (b) the administration, servicing, and collection of the Loan; (c) the protection of the Collateral; and (d) the exercise by Lender of any of its rights and remedies under the Loan Documents.
5.2 Insurance. Borrower shall obtain and maintain all insurance policies required by Lender pursuant to the Loan Documents.
5.3 Loan Calculations. The unpaid principal balance of the Loan, the amount of interest accrued on the unpaid principal balance of the Loan, the amounts and dates of advances, the amounts and dates of payments, and the amount of any charges outstanding in connection with the Loan, shall be determined in accordance with Lender’s records. Borrower agrees to accept Lender’s records, as maintained by Lender, subsequent to this date as correct, complete, and conclusive of the aggregate unpaid amount of principal, interest, and other charges due and owing to Lender absent manifest error. Lender may provide, but shall not be required to provide, a statement of transactions pursuant to this Agreement to Borrower at such intervals as Lender may deem appropriate. Borrower waives any objection as to the accuracy of Lender’s records absent manifest error and any such statement in any action or proceeding to enforce the obligations of Borrower to Lender under this Agreement or the other Loan Documents in any court of competent jurisdiction.
5.4 Collateral Held in Trust. All Collateral not required to be delivered to and remain in the possession of Lender, will be held by Borrower in trust for Lender.
5.5 Debt. Borrower shall not, directly or indirectly, incur, create, assume, permit to exist, any Debt, except: (i) Debt owed to Lender, (ii) Debt that exists on the date of the closing of the Loan that has been disclosed to Lender in writing prior to such date, (iii) trade Debt incurred in the ordinary course of Borrower’s business, (iv) Debt owed to Lender or an affiliate of Lender under a Hedge Agreement, and (v) Subordinated Debt.
5.6 Contingent Liabilities. Borrower shall not, directly or indirectly, assume, guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person or entity except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower’s business.
5.7 Judgments. Borrower shall not allow any judgment for the payment of money in excess of $10,000.00 rendered against it to remain undischarged or unsuperseded for a period of sixty (60) days during which execution shall not be effectively stayed.
5.8 Nature of Business. Borrower shall not engage in any business other than the business in which it is engaged as of the date of the closing of the Loan.
5.9 Distributions. Borrower shall not be permitted to declare or pay dividends on, or make any other distribution (whether by reduction of capital or otherwise) regarding any shares of its capital stock or other ownership interests, or otherwise remove or withdraw any capital generated by the Property or contributed to any project located on the Property (i) at any time there is an Event of Default or an Uncured Event of Default under
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the Loan or (ii) to the extent permitting such dividend, distribution, or removal of capital would cause the Loan to be categorized as a high volatility commercial real estate (HVCRE) exposure. As used in this Section, the term “high volatility commercial real estate (HVCRE) exposure” means an “HVCRE ADC Loan” as defined in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act: P.L. 111-203, 124 Stat 1376) Section 214, as may be further promulgated in the Code of Federal Regulations.
5.10 Financial Reporting.
(a) Annual Statements. Within 45 days after the end of each calendar year during which any portion of the Note remains unpaid, Borrower shall furnish internally-prepared financial statements to Lender that correctly reflect the financial condition of Borrower as of and for the period ending on the last day of such calendar year and are certified by Borrower as being true and correct. The financial statements shall be in a form and contain such information as Lender reasonably requests and shall include, at a minimum, a balance sheet, and income statement.
(b) Quarterly Statements. Within 45 days after the end of each calendar quarter during which any portion of the Note remains unpaid, Borrower shall furnish internally-prepared financial statements to Lender that correctly reflect the financial condition of Borrower as of and for the period ending on the last day of such calendar quarter and are certified by Borrower as being true and correct. The financial statements shall be in a form and contain such information as Lender reasonably requests and shall include, at a minimum, a balance sheet, and income statement.
(c) Rent Rolls. Within 30 days after the end of each calendar quarter during which any portion of the Note remains unpaid, or at any other time or times requested by Lender, in its sole and absolute discretion, Borrower shall furnish Lender a rent roll describing all leases on the Property during the previous three (3) month period. The rent roll shall be in form and substance reasonably satisfactory to Lender, shall be certified by Borrower as being true and correct and shall contain, at a minimum, the names, addresses and phone numbers of each tenant, the amount of all rent and other sums to be paid by tenant under the lease, the lease term, the part of the Property occupied by tenant, the amount of any security deposit, and the amount of any rent abatements and tenant finish allowance.
5.12 Financial Covenants.
(a) Financial Definitions. All accounting terms used in this Agreement that are not defined in it have the meanings ascribed to them in accordance with generally accepted accounting principles. As used in this Agreement, the following terms have the meanings set forth below.
“Amortizing Period” means the period during the term of the Loan in which Borrower is required to make amortizing principal and interest payments under the Note.
“Debt Service Coverage Ratio” means the ratio of Net Income to Debt Service Payments.
“Debt Service Payments” means all scheduled principal and interest payments due and owing under the Loan during the Test Period. During the Interest-only Period, Debt Service Payments shall mean all scheduled principal and interest payments during the first 12 months of the Amortizing Period.
“Interest-only Period” means the period during the term of the Loan in which Borrower is required to make only payments of accrued interest under the Note.
“Moviehouse Lease” means that certain Lease Agreement dated as of July 9, 2020 between, Borrower, as landlord, and TEXAS CINEMA INVESTMENTS LLC, a Delaware limited liability company, as tenant, as amended by that certain First Amendment to Lease Agreement dated December 31, 2020 and that certain Second Amendment to Lease Agreement dated June 12, 2021, as the same may be further amended from time to time in compliance with the terms of this Agreement.
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“Moviehouse Termination” means that the Moviehouse Lease has terminated, Borrower has terminated the tenant’s right of possession of the leased premises under the Moviehouse Lease, or the tenant under the Moviehouse Lease has vacated or ceased operating in the premises.
“Net Income” means the sum of the gross operating income from the Project for the Test Period less the operating expenses of the Project for the Test Period. In determining gross operating income for the Project, in addition to base rental payments and reimbursements, percentage rent and other income associated with normal operations will be included and straight line rents will be excluded. In determining operating expenses for the Project, depreciation, amortization, interest expenses, and extraordinary capital expenditures will be disregarded.
“Project” means the mixed-use development located on the Property.
“Test Period” means each calendar year during the term of the Loan.
(b) Debt Service Coverage Ratio. For each Test Period, the Project must maintain a Debt Service Coverage Ratio of at least 1.30 to 1.00. The Debt Service Coverage Ratio will be tested as of the end of each Test Period on a trailing 12-month basis, beginning with the Test Period ending December 31, 2025. If the Project fails the Debt Service Coverage Ratio requirement set forth above for any Test Period, Borrower may cure such default by, within 45 days after the end of the Test Period, making a principal prepayment on the Note in an amount sufficient for the Project to satisfy the Debt Service Coverage Ratio requirement.
(c) Operating Accounts. Borrower shall maintain its operating accounts for the Project with Lender at all times during the term of the Loan.
(d) Moviehouse Lease. It shall be a default under this Agreement if a Moviehouse Termination occurs at any time during the term of the Loan, unless, (i) no other “Event of Default” has occurred under any of the Loan Documents and is continuing, (ii) within 30 days after the occurrence of a Moviehouse Termination, Borrower delivers to Lender a master lease of the premises leased under the Moviehouse Lease, executed by Stratus Properties Inc., as tenant, with rental provisions that fully cover the rent and reimbursements under the Moviehouse Lease, and is otherwise in form and content reasonably acceptable to Lender, and (iii) the Moviehouse Termination does not adversely affect any of the other leases for the Project in effect at such time, by reason of ‘co-tenancy’ or ‘go-dark’ provisions, or similar provisions, as reasonably determined by Lender.
5.13 Leases. During the term of the Loan, Borrower shall (i) submit any and all new leases for the Project that exceed 5,000 square feet of leased space (“Major Leases”) to Lender for approval prior to the execution thereof, which approval will not be unreasonably withheld, conditioned, or delayed, (ii) duly and punctually perform and comply with, in all material respects, any all representations, warranties, covenants, and agreements expressed as binding upon the lessor under any lease for the Project, (iii) maintain each of the leases for the Project in full force and effect during the term thereof (subject to Section 5.12(d) above) except in the event of a material default thereunder by such tenant, (iv) deliver to Lender true, correct, and complete copies of all leases for the Project, and (v) deliver to Lender such further information, and execute and deliver to Lender such further assurances and assignments, with respect to the leases for the Project, as Lender may from time to time reasonably request. Without Lender’s prior written consent, Borrower shall not (A) do or knowingly permit to be done anything to impair the value of any leases on the Project in any material respect, (B) except for security or similar deposits, collect any rent more than one month in advance of the time when the rent becomes due under the terms of the lease, (C) discount any future accruing rents, (D) rescind, conceal, terminate or surrender any lease for the Project, except in the event of a material default by such tenant, (E) enter into a Material Modification of a lease for the Project. As used in this Section, the term “Material Modification” means an amendment or modification of a Major Lease for the Project that contains any of the following: (1) a waiver of any tenant default, (2) a reduction in rent (including base rent, minimum rent, percentage rent, or additional rent), (3) a reduction of the lease term, or (4) an obligation for the landlord to provide new construction or leasehold improvements (or the payment by landlord of same by allowance or rent credits).
ARTICLE 6.
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Extension of Term
6.01 Election to Extend Term. Provided each of the conditions set forth in this Article 6 are met, Borrower shall have the option to extend the term of the Loan for a period of one (1) year (the “Extended Term”). Borrower must exercise this option by delivering written notice to Lender no later than thirty (30) days before the expiration of the then-current term of the Loan.
6.02. Conditions. In order to extend the term of the Loan for an Extended Term, the following conditions must have occurred and be continuing:
(i) No “default” or “Event of Default” has occurred under any of the Loan Documents and is continuing.
(ii) The Project meets the Debt Service Coverage Ratio requirement as set forth in Section 6.03 below.
6.03 Debt Service Coverage Ratio Requirement. In order to extend the term of the Loan for the Extended Term, Borrower must furnish Lender with evidence satisfactory to Lender that the Project’s Debt Service Coverage Ratio for the Extended Term is at least 1.30 to 1.00. As used in this Section 6.03, the following terms have the following meanings:
“Debt Service Coverage Ratio” means the ratio of Net Income to P&I Payments.
“Estimated Loan Balance” means the unpaid principal balance of the Loan as of the start of the Extended Term.
“Net Income” means the sum of the anticipated gross operating income from the Project for the Extended Term (based on leases in place with terms that continue beyond the end of the Extended Term including leases that have a rent commencement date scheduled to occur during the Extended Term) less the anticipated operating expenses of the Project for the Extended Term. In determining gross operating income for the Project, in addition to base rental payments and reimbursements, anticipated percentage rent and other income associated with normal operations will be included and straight line rents will be excluded. In determining operating expenses for the Project, depreciation, amortization, interest expenses, and extraordinary capital expenditures will be disregarded.
“P&I Payments” means the scheduled principal and interest payments due under the Loan during the Extended Term.
ARTICLE 7
Events of Default
7.1 Events of Default. Each one of the events described in this Section is an “Event of Default” under this Agreement. As used in this Agreement, the term “Uncured Event of Default” means the occurrence of any event which, but for the giving of notice or the passage of time, would become an Event of Default.
(a) Payment. Borrower or any Guarantor fails to make any payment on the Indebtedness as and when it becomes due and payable, whether at the due date thereof, by acceleration, or otherwise.
(b) Performance. Borrower or any Guarantor fails, refuses, or neglects to fully and timely perform, observe, and discharge any covenant or provision contained in any of the Loan Documents.
(c) Loan Documents. Borrower or any Guarantor defaults or commits an event of default under any of the Loan Documents which is not cured within any applicable grace or cure period.
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(d) Warranties or Representations. Any warranty, representation, or other statement by or on behalf of Borrower or any Guarantor in the Loan Documents, or in any instrument furnished in compliance with or in reference to the Loan Documents, is false, misleading, or incorrect in any material respect as of the date made.
(e) Other Indebtedness. If Borrower fails to make payment of any other indebtedness to Lender or fails, refuses, or neglects to fully and timely perform and discharge any other obligation to Lender, whether made before or after the date of this Agreement which is not cured within any applicable grace or cure period.
(f) Enforceability of Liens. Any lien or security interest granted to Lender pursuant to this Agreement becomes invalid, unenforceable, or ceases to be a first priority lien and security interest against the Collateral to which it is intended to attach subject to express permitted exceptions set forth in the Loan Documents.
(g) Change in Financial Condition. A change occurs in the financial condition of Borrower or any Guarantor since the date of this Agreement that could reasonably be expected to have a material adverse effect on the ability of Borrower or any Guarantor to perform its obligations under the Loan Documents.
(h) Insurance. Borrower fails to pay the premiums on any insurance policies required by Lender in connection with, or as security for, the Indebtedness when they become due and payable.
(i) Failure to Furnish Information. Borrower or any Guarantor fails to furnish or deliver any information, statements, or instruments, including without limitation, any required reports, insurance policies, and financial statements, that are required to be furnished to Lender by the Loan Documents, at the times required by the Loan Documents, and such failure is not cured within thirty (30) days of notice of such failure from Lender to Borrower.
(j) Other Liens. All or any part of the Collateral (or an interest in it) is mortgaged, pledged, hypothecated, or otherwise encumbered without Lender’s prior written consent, which consent may be withheld at Lender’s sole and absolute discretion, except as otherwise expressly permitted in the Loan Documents including provisions that allow Borrower to contest an involuntary lien.
(k) Voluntary Debtor Relief. If Borrower or any Guarantor (i) commences any case, proceeding, or other action seeking an order for relief as a debtor, reorganization, arrangement, adjustment, liquidation, dissolution, or composition of it or its debts under any state or federal law relating to bankruptcy, insolvency, reorganization, or relief of debtors; (ii) seeks, consents to, or not contest the appointment of a receiver or trustee for itself or for all or any part of its property; (iii) makes a general assignment for the benefit of its creditors; or (iv) admits in writing its inability to pay its debts as they mature.
(l) Involuntary Debtor Relief. If (i) a petition is filed against Borrower or any Guarantor seeking relief under the bankruptcy, arrangement, reorganization, or other debtor relief laws of the United States or any state or other competent jurisdiction or (ii) a court of competent jurisdiction enters an order, judgment, or decree appointing, without the consent of Borrower or any Guarantor, a receiver or trustee for it or for all or any part of its property, and such petition, order, judgment, or decree shall not be and remain discharged or stayed within a period of ninety (90) days after its entry.
(m) Dissolution or Death. Borrower, any Guarantor, or any general partner of Borrower or any Guarantor does any of the following without obtaining Lender’s prior written consent (i) changes the state of its organization or domicile, (ii) changes or converts from one type of legal entity to another, (iii) merges or consolidates with any other legal entity, or (iv) dissolves, terminates or liquidates. If any Borrower is a natural person, the death of such Borrower.
(n) Disposition of Collateral or Beneficial Interest in Borrower. Borrower or any owner of all or part of the Collateral makes a Disposition (as defined below), without the prior written consent of Lender. “Disposition” means any sale, lease (except as permitted under this Agreement), exchange, assignment,
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conveyance, transfer, trade, or other disposition of all or any portion of the Collateral (or any interest therein) or all or any part of the beneficial ownership interest in Borrower (if Borrower is a corporation, limited liability company, partnership, joint venture, trust, or other type of business association or legal entity). The foregoing notwithstanding, the trading or sale of the publicly traded stock of Stratus Properties Inc. will not be a Disposition hereunder.
7.2 Notice and Opportunity to Cure. For purposes of this Agreement, the term “Monetary Default” means a failure by Borrower or any other person or entity to perform any obligation contained in any of the Loan Documents for the payment of money. For purposes of this Agreement, the term “Non-Monetary Default” means a failure by Borrower or any other person or entity to perform any obligation contained in any of the Loan Documents other than the obligation to make payments of money. Notwithstanding anything contained in any of the Loan Documents to the contrary, Lender shall not accelerate the payment of the Note because of a Monetary Default by Borrower unless Borrower fails to cure the Monetary Default within 10 days after the date on which Lender gives written notice of the default to Borrower. Notwithstanding anything contained in any of the Loan Documents to the contrary, Lender shall not accelerate the payment of the Note because of a Non-Monetary Default by Borrower unless Borrower fails to cure the Non-Monetary Default within 30 days after the date on which Lender gives written notice of the default to Borrower. No notice of default and no opportunity to cure shall be required if during any twelve month period Lender has already sent a notice to Borrower concerning default in the performance of the same obligation. Nothing contained in this Agreement shall be construed to obligate Lender to forebear in any other manner from exercising its remedies and Lender may pursue any other rights or remedies which Lender may have because of the default.
ARTICLE 8
Remedies
8.1 Remedies Upon Default. Subject to any notice and cure provisions set forth in the Loan Documents, during the continuance of an Event of Default Lender may, at Lender’s option, do any one or more of the following:
(a) Perform for Borrower. Perform or attempt to perform any covenant contained in the Loan Documents that Borrower has failed to keep or perform and any payment made or expense incurred in the performance or attempted performance of any such covenant shall be and become a part of the Indebtedness and Borrower shall, upon demand, pay Lender all sums so paid by Lender together with interest from the date paid or incurred by Lender at the Maximum Rate described in the Note.
(b) Acceleration. LENDER MAY, WITHOUT NOTICE, DEMAND, PRESENTMENT, NOTICE OF NONPAYMENT OR NONPERFORMANCE, PROTEST, NOTICE OF PROTEST, NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION, OR ANY OTHER NOTICE OR ANY OTHER ACTION, ALL OF WHICH ARE HEREBY WAIVED BY BORROWER, EACH GUARANTOR, AND ALL OTHER PARTIES OBLIGATED IN ANY MANNER WHATSOEVER ON THE INDEBTEDNESS, DECLARE THE ENTIRE UNPAID BALANCE OF THE INDEBTEDNESS IMMEDIATELY DUE AND PAYABLE, AND UPON SUCH DECLARATION, THE ENTIRE UNPAID BALANCE OF THE INDEBTEDNESS SHALL BE IMMEDIATELY DUE AND PAYABLE. The failure to exercise any remedy available to Lender shall not be deemed to be a waiver of any rights or remedies of Lender under the Loan Documents, at law, or in equity.
(c) Termination. Terminate any commitment of Lender to lend under this Agreement in its entirety or as to any portion thereof, to the extent Lender shall deem appropriate.
(d) Setoff. Setoff any amounts due and owing to Lender by Borrower or any Guarantor, whether principal, interest, or fees, including any amounts accelerated pursuant to the terms hereof against any of Borrower’s funds in Lender’s possession or subject to Lender’s control.
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(e) Exercise of Rights. Exercise any and all rights afforded by the Loan Documents or by any applicable laws, whether at law, in equity, or otherwise, as Lender shall deem appropriate, including, but not limited to, all rights of a secured party under the Texas Uniform Commercial Code, the rights to bring suit or other proceeding before any court or any governmental department, agency, or instrumentality of any sort whatsoever, either for specific performance of any covenant or condition contained in the Loan Documents or in aid of the exercise of any right granted to Lender in the Loan Documents. All rights available to Lender under the Loan Documents shall be cumulative of, and in addition to, all other rights granted to Lender, at law or in equity, whether or not Lender shall have instituted any suit for collection or other action in connection with the Loan Documents.
(f) Collect Collateral. Take over the exclusive right to collect any Collateral at the sole expense of Borrower and Guarantors. For any acts done, or not done, incident to such collection or liquidation, Lender shall not be liable in any manner. Lender shall have the right to settle, compromise, or adjust Collateral and the claims or rights of Borrower. Lender may employ agents and attorneys to collect or liquidate any Collateral and Lender shall not be liable for such Collateral or defaults of any such agents and attorneys.
(g) Act on Borrower’s Behalf. Open any mail addressed to Borrower in connection with any Collateral and as attorney-in-fact for Borrower, sign Borrower’s name to any receipts, checks, notes, agreements, or other instruments or letters in order to collect or liquidate the Collateral.
(h) Possession of Records. Enter the office of Borrower and take possession of any records that pertain to the Collateral.
8.2 Waiver. BORROWER AND ANY GUARANTOR WAIVE DEMAND FOR PAYMENT, ANY AND ALL PRESENTMENTS FOR PAYMENT, NOTICES OF INTENTION TO ACCELERATE MATURITY, NOTICES OF ACCELERATION OF MATURITY, PROTESTS, AND NOTICES OF PROTESTS REGARDING THE LOAN. Notwithstanding anything contained in this subparagraph to the contrary, Lender may not terminate this Agreement without giving Borrower written notice of termination.
8.3 Lender Not in Control. None of the covenants or other provisions contained in this Agreement shall give Lender the right or power to exercise control over the affairs and/or management of the Borrower or any Guarantor.
ARTICLE 9
Miscellaneous
9.1 Usury Savings Clause. It is the intention of Lender, Borrower, and Guarantors to conform strictly with applicable usury laws now in force. No provision of this Agreement or any other document executed in connection with, as evidence of, or as security for the Indebtedness shall require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If at any time the interest received or contracted for exceeds the maximum lawful rate, the Lender shall refund the amount of the excess or shall credit the amount of the excess against amounts owing under the loan and such excess shall not be considered the payment of interest. Determination of the rate of interest shall be made by amortizing, prorating, allocating, and spreading in equal parts during the full contracted period of the life of the loan all interest at any time contracted for, charged, or received from Borrower and Guarantors in connection with the loan. Borrower agrees that as a condition precedent to any claim seeking usury penalties against Lender, Borrower shall provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have 60 days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against the Note and/or any other indebtedness then owing by Borrower to Lender.
9.2 No Third Party Beneficiary. This Agreement is for the sole benefit of Borrower, Guarantors, and Lender and is not for the benefit of any third party.
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9.3 Number and Gender. Whenever used and where the context requires, the singular member shall include the plural, and the plural shall include the singular, and the use of any gender shall be applicable to all genders.
9.4 Notices. All notices or other communications required or permitted to be given pursuant to this Agreement must be in writing and will be deemed properly given if (i) mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested, (ii) by delivering same in person to the intended addressee, or (iii) by delivery to an independent third party commercial delivery service for same day or next day delivery and providing for evidence of receipt at the office of the intended addressee. Notice so mailed is effective upon its deposit with the United States Postal Service or any successor to it; notice sent by a commercial delivery service is effective upon delivery to such commercial delivery service; notice given by personal delivery is effective only if and when received by the addressee; and, except as otherwise provided in this Agreement, notice given by other means is effective only if and when received at the designated address of the intended addressee. For purposes of such notices, the addresses of the parties are as follows:
Lender: BROADWAY NATIONAL BANK
1177 N.E. Loop 410
San Antonio, Texas 78209
With Copy To:
ROBINS & GARDNER, PLLC
Attn: Eric Gardner
1635 NE Loop 410, Suite 502
San Antonio, Texas 78209
Borrower: LANTANA PLACE, L.L.C.
Attn: Erin D. Pickens
212 Lavaca Street, Suite 300
Austin, Texas 78701
With Copy To:
ARMBRUST & BROWN PLLC
Attn: Kenneth Jones
100 Congress Avenue, Suite 1300
Austin, Texas 78701
Notices to Borrower may also be sent by electronic mail to [email protected] with required copy to [email protected]. Borrower agrees to maintain such email address during the term of this Agreement. Notices sent by electronic mail to Borrower are effective on the date of successful transmission, provided if such date is not a business day, or if the notice is sent after 5:00 p.m. (San Antonio, Texas time) on a business day, the notice is effective as of the next business day. For purposes of this paragraph, a “business day” is any day other than a Saturday, Sunday, or any other day on which commercial banks in San Antonio, Texas are authorized or required by law to close.
9.5 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas and the laws of the United States of America applicable to transactions in the State of Texas. Borrower and Lender agree that the sole and exclusive place of jurisdiction for resolution of any dispute arising out of or relating to this Agreement shall be Bexar County, Texas.
9.6 Invalid Provisions. If any provision in this Agreement or the other Loan Documents is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable, the document affected shall be construed and enforced as if such illegal,
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invalid, or unenforceable provision had never comprised a part of it, and the remaining provisions shall remain in full force and effect and shall not be affected by the severance. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable.
9.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Borrower, Lender, and their respective successors and assigns; provided, however, Borrower may not transfer or assign any of its rights or obligations under this Agreement without the express written consent of Lender.
9.8 Amendment. Except as provided by its terms, this Agreement may not be amended or modified except by written instrument signed by Lender and Borrower.
9.9 Expenses. Whether or not any advance is made pursuant to this Agreement, Borrower agrees to pay the reasonable expenses of Lender in connection with the preparation of this Agreement or the other Loan Documents, the administration and servicing of the Loan and all costs involved in enforcement and collection pursuant to the terms of the Loan Documents, which expenses shall be due and payable on demand, including without limitation all legal fees, appraisal fees, survey fees, accounting fees, all filing and recording fees, costs of credit reports, costs of inspections, and cost of environmental studies.
9.10 Entire Agreement. This Agreement and the other Loan Documents constitute the entire understanding and agreement between the Borrower and Lender with respect to the transactions contemplated by it and supersede all prior written or oral understandings and agreements between the Borrower and Lender with respect to it. The Borrower acknowledges that, except as incorporated in writing in this Agreement and in the other Loan Documents, there are not, and were not, and no persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements, or promises, whether oral or written.
9.11 Captions and Article Headings. Captions and Article headings are used for convenience only and shall not be used in construing this Agreement.
9.12 Survival of Agreements. All covenants, agreements, representations, and warranties made in this Agreement shall survive the termination of this Agreement as to all Collateral pledged prior to the termination. All statements contained in any certificate or other instrument delivered by Borrower under this Agreement shall be deemed to constitute representations and warranties made by the Borrower.
9.13 TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE NOTICE. (A) BORROWER IS REQUIRED TO: (i) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT LENDER SPECIFIES; (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (iii) NAME LENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS; (B) BORROWER MUST, IF REQUIRED BY LENDER, DELIVER TO LENDER A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS; AND (C) IF BORROWER FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPH (A) OR (B), LENDER MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF BORROWER AT BORROWER’S EXPENSE.
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9.14 Waiver by Lender.
(a) No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power, or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. The rights, remedies, powers, and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers, and privileges provided by law. No waiver of any provision of any Loan Document by Lender shall in any event be effective unless the same shall comply with paragraph (b) of this Section, and then such waiver will be effective only in the specific instance and for the purpose for which given.
(b) To be effective, a waiver by Lender of any right, remedy, power, privilege, or condition arising from this Agreement or any other Loan Document must be in writing, identified as a waiver of a term or provision of this Agreement or other Loan Document, and executed by Lender.
9.15 Counterparts. To facilitate execution, this Agreement and any amendments, waivers, consents, or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic format (e.g., "pdf", "tif" or any other electronic means that reproduces an image of the actual executed signature page) shall be effective as delivery of a manually executed counterpart of this Agreement.
9.16 Jury Waiver. LENDER, BORROWER, AND EACH GUARANTOR HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER, BORROWER, OR ANY GUARANTOR AGAINST THE OTHER RELATED TO THE LOAN.
[Signature page follows]
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THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Executed to be effective as of the date first set forth above.
BORROWER:
LANTANA PLACE, L.L.C.,
a Texas limited liability company
By: STRS L.L.C.,
a Delaware limited liability company,
its sole manager
By: Stratus Properties Inc.,
a Delaware corporation,
its sole member
By: /s/ Erin D. Pickens
Erin D. Pickens, Senior Vice President
Erin D. Pickens, Senior Vice President
LENDER:
BROADWAY NATIONAL BANK
By: /s/ Angela Portwood
Name: Angela Portwood
Title: Vice President
GUARANTORS:
STRATUS PROPERTIES INC.,
a Delaware corporation
By: /s/ Erin D. Pickens
Erin D. Pickens, Senior Vice President
[Signature Page to Commercial Loan Agreement]
PROMISSORY NOTE
January 22, 2025
$29,800,000.00
1. Promise to Pay. LANTANA PLACE, L.L.C., a Texas limited liability company (“Borrower”) promise(s) to pay to the order of Broadway National Bank (“Lender”), at its offices in the City of San Antonio, Bexar County, Texas the principal sum of Twenty-Nine Million Eight Hundred Thousand and No/100 Dollars ($29,800,000.00), with interest on the principal balance from time to time remaining unpaid from date hereof until maturity at the “Applicable Rate” as defined in this Note. All matured, unpaid principal and interest shall bear interest from date of maturity until paid at the “Maximum Rate” defined in this Note. As used in this Note, the term “Loan Documents” means this Note, a loan agreement of even date herewith (the “Loan Agreement”) and all other documents executed in connection with, as evidence of, or as security for this Note.
2. Interest Rate.
(a) Maximum Rate. The term “Maximum Rate” as used in this Note means, at the particular time in question, the maximum rate of non-usurious interest (taking into account all amounts paid or required to be paid which may be deemed, held, or classified as interest under applicable law) which, under applicable law, may then be charged on this Note or, if no maximum rate exists, eighteen percent (18.00%) per annum. If the maximum rate of non-usurious interest changes after the date of this Note, the Maximum Rate shall automatically be increased or decreased, as the case may be, without notice to Borrower from time to time as of the effective time of each change in the maximum non-usurious rate. If Chapter 303 of the Texas Finance Code is applicable to this Note, the interest rate ceiling applicable to this Note is the “weekly ceiling” as defined in Chapter 303 of the Texas Finance Code.
(b) Index Rate. The term “Index Rate” as used in this Note means, at the particular time in question, the 1-month USD-SOFR CME Term Rate, as quoted and published by the CME Group. If (i) the Index Rate ceases to be published, or (ii) Lender reasonably determines that the Index Rate is no longer widely being used by commercial banks as a loan index in the United States for new commercial loans similar to the loan evidenced by this Note, Lender may select another index to determine the Applicable Rate by providing written notice to Borrower of the change (and, if applicable, the adjustment of the interest rate margin under this Note so that the Applicable Rate after the change approximates the Applicable Rate under this Note in effect immediately prior to the replacement of the Index Rate). Following such notice, this alternative index and margin shall be used to calculate the rate of interest that will be charged on this Note.
(c) Applicable Rate. The “Applicable Rate” from the date of this Note until the first “Change Date” (as defined below) shall be 6.83252% per annum. Thereafter, the Applicable Rate of interest shall be a rate of interest equal to the lesser of (i) the Maximum Rate or (ii) the sum of the Index Rate plus 2.35%. The Applicable Rate may change on February 1, 2025, and on that day every calendar month thereafter. Each date on which the Applicable Rate could change is called a “Change Date”. On each Change Date, Lender will calculate the new Applicable Rate by adding 2.35% to the Index Rate published on that date or, if no Index Rate is published on that date, the most recently-published Index Rate available on that date. The result of this calculation will be the Applicable Rate from that date until the next Change Date.
(d) Interest Computation. As used in this Note, the term “Interest-only Period” means the period beginning on the date of this Note and ending on January 31, 2026, and the term “P&I Period” means the period beginning on February 1, 2026 and ending on the Maturity Date (defined below). During the Interest-only Period, interest shall be computed on the basis of a year of 360 days and for the actual number of days elapsed (including the first day but excluding the last day). Interest during the Interest-only Period shall be calculated on the unpaid principal to the date of each installment paid and the payment shall be credited first to accrued but unpaid interest and the balance to the reduction of the principal. During the P&I Period, for purposes of allocation of any monthly installment payment as between principal and interest, interest shall be calculated by
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multiplying the outstanding principal balance on this Note immediately prior to allocation of the monthly installment payment, times the annual interest rate in effect at that time divided by twelve. All other interest calculations on this Note during the P&I Period shall be made on a daily interest basis, calculated on the basis of actual days elapsed in a 365-day year.
(e) Floor. Notwithstanding anything contained in this Note to the contrary, the Applicable Rate shall never be less than 0.00% per annum.
3. Payment. This Note is due and payable as follows:
(a) Scheduled Payments. Interest only shall be due and payable monthly as it accrues, on the 1st day of each month beginning March 1, 2025, and continuing regularly thereafter until and including February 1, 2026. Commencing March 1, 2026 and continuing regularly and monthly on the 1st day of each calendar month thereafter, installments of principal and interest shall be due and payable in an amount or amounts sufficient to repay the entire unpaid principal balance of this Note plus interest on or before February 1, 2056. During the P&I Period, Lender may, at its option and without any obligation to do so, change the amount of the monthly installments due under this Note to assure such payments would fully amortize the unpaid principal balance of this Note plus interest by February 1, 2056. A balloon payment equal to all unpaid principal and all accrued but unpaid interest shall be fully and finally due and payable on February 1, 2029 (the “Maturity Date”).
(b) Prepayments. This Note may be prepaid, in whole or in part, at any time without penalty of any kind. Any partial prepayment shall be applied first against the accrued but unpaid interest and then to the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments. Partial prepayments will reduce the amount of the monthly payments only after the first Change Date following the partial prepayment. However, any reduction to the monthly payment amount due to a partial prepayment may be offset by an interest rate increase.
(c) Late Payment Penalty. If any installment or payment provided for in this Note shall become overdue for a period of fifteen (15) days, Lender may charge and collect a late charge in an amount equal to five percent (5.00%) of any such overdue installment or payment, in order to cover the extra expense involved in handling delinquent payments.
4. Extended Term. As used in this Note, the term “Extended Term” means the period beginning on February 1, 2029 and continuing until February 1, 2030. If the term of the Note is extended for the Extended Term pursuant to Article 6 of the Loan Agreement, the “Maturity Date” of the Note shall be extended until the end of the Extended Term, and the terms and conditions in Sections 5 and 6 below will apply to the Extended Term. All terms and conditions of this Note not superseded by such Section shall continue to apply during the Extended Term.
5. Extended Term Interest Rate. During the Extended Term, the Applicable Rate will continue to be determined as provided in Section 2, above.
6. Extended Term Payments. Commencing February 1, 2029, and continuing regularly and monthly on the on the 1st day of each month thereafter, principal and interest shall be due and payable in an amount or amounts sufficient to repay the entire unpaid principal balance of this Note plus interest on or before February 1, 2056. Lender may, at its option and without any obligation to do so, change the amount of the monthly installments due under this Note to assure such payments would fully amortize the unpaid principal balance of this Note plus interest by February 1, 2056. A balloon payment equal to the entire amount of unpaid principal and all accrued and unpaid interest shall be due and payable on February 1, 2030.
7. Balloon Notice. THIS LOAN IS PAYABLE IN FULL ON THE MATURITY DATE. AT MATURITY, BORROWER MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE THIS LOAN AT THAT TIME. BORROWER WILL, THEREFORE, BE REQUIRED TO MAKE
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PAYMENT OUT OF OTHER ASSETS THAT BORROWER OWNS, OR BORROWER WILL HAVE TO FIND ANOTHER LENDER WILLING TO LEND BORROWER THE MONEY. IF BORROWER REFINANCES THIS LOAN AT MATURITY, BORROWER MAY HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF BORROWER OBTAINS FINANCING FROM THE SAME LENDER.
8. Default. Subject to any notice and cure provisions set forth in the Loan Documents, during the continuance of an Event of Default (as defined in the Loan Agreement), at the option of Lender, the entire unpaid principal balance of this Note, together with accrued but unpaid interest thereon, shall at once become due and payable, without notice, and without presentment or demand for payment, and the liens given to secure the payment of this Note may be foreclosed immediately. Failure to exercise this option shall not constitute a waiver of the right to exercise such option at any other time in the future during the continuance of an Event of Default.
9. Notice and Opportunity to Cure. For purposes of this instrument, the term “Monetary Default” means a failure by Borrower or any other person or entity to perform any obligation contained in the Loan Documents for the payment of money. For purposes of this instrument, the term “Non-Monetary Default” means a failure by Borrower or any other person or entity to perform any obligation contained in the Loan Documents other than the obligation to make payments of money. Notwithstanding anything contained in this instrument to the contrary, Lender shall not accelerate the payment of the Note because of a Monetary Default unless Borrower fails to cure the Monetary Default within 10 days after the date on which Lender gives written notice of the default to Borrower. Notwithstanding anything contained in this instrument to the contrary, Lender shall not accelerate the payment of the Note because of a Non-Monetary Default unless Borrower fails to cure the Non-Monetary Default within 30 days after the date on which Lender gives written notice of the default to Borrower. No notice of default and no opportunity to cure shall be required if during any twelve month period Lender has already sent a notice to Borrower concerning default in the performance of the same obligation. Nothing contained in this paragraph shall be construed to obligate Lender to forebear in any other manner from exercising its remedies and Lender may pursue any other rights or remedies which Lender may have because of the default.
10. Collection Costs. Borrower shall pay on demand all reasonable attorney’s fees and all other out-of-pocket costs and expenses incurred by Lender in the enforcement of or preservation of Lender’s rights under this Note and the Loan Documents, including, without limitation, all attorney’s fees and expenses, investigation costs, and all court costs, whether or not suit is filed hereon, or whether (i) at maturity or by acceleration, or (ii) before or after maturity, or (iii) in connection with a probate proceeding, bankruptcy, reorganization, insolvency or appeal, or (iv) in connection with the collection or enforcement of this Note or any of the other Loan Documents against Borrower. Borrower agrees to pay interest on any expenses or other sums due to Lender under this paragraph that are not paid when due, at a rate per annum equal to the Maximum Rate.
11. Waivers. THE UNDERSIGNED, ALL ENDORSERS, AND ALL PERSONS LIABLE OR TO BECOME LIABLE ON THIS NOTE, EXPRESSLY WAIVE DEMAND FOR PAYMENT, PRESENTATION FOR PAYMENT, NOTICE OF INTENTION TO ACCELERATE MATURITY, NOTICE OF ACCELERATION, PROTEST, NOTICE OF PROTEST, AND NONPAYMENT AS TO THIS NOTE AND AS TO EACH INSTALLMENT DUE ON THIS NOTE. The acceptance by Lender, at any time and from time to time, of part payment of this Note shall not be deemed to be a waiver of any default then existing. No waiver by Lender of any default shall be deemed to be a waiver of any other then existing or subsequent default, nor shall any such waiver by Lender be deemed to be a continuing waiver. No delay or omission by Lender in exercising any right, power, or option granted to Lender in this Note shall impair any such right, power, or option or be construed as a waiver of it or an acquiescence to it, nor shall any single or partial exercise of any such right, power, or option preclude other or further exercise of it or the exercise of any other right, power, or option of Lender under the terms of this Note. To be effective, a waiver by Lender of any right, remedy, power, privilege, or condition arising from this instrument must be in writing, identified as a waiver of this instrument, and executed by Lender.
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12. Usury Savings Clause. It is the intention of Lender and Borrower to conform strictly with applicable usury laws now in force. No provision of this Note or any other document executed in connection with, as evidence of, or as security for the indebtedness evidenced by this Note shall require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If at any time the interest received or contracted for exceeds the maximum lawful rate, Lender shall refund the amount of the excess or shall credit the amount of the excess against amounts owing under the loan and such excess shall not be considered the payment of interest. Determination of the rate of interest shall be made by amortizing, prorating, allocating, and spreading in equal parts during the full contracted period of the life of the loan all interest at any time contracted for, charged, or received from Borrower in connection with the loan. Borrower agrees that as a condition precedent to any claim seeking usury penalties against Lender, Borrower shall provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have 60 days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against this Note and/or any other indebtedness then owing by Borrower to Lender.
13. Governing Law. This Note shall be governed by and construed under the applicable laws of the State of Texas and the laws of the United States of America, except that Chapter 346 of the Texas Finance Code and its successor statutes, as amended (which regulates certain revolving credit loan accounts and revolving tri-party accounts), shall not apply.
14. Notices. All notices provided for or permitted to be given pursuant to this instrument must be in writing and may be given or served by depositing the same in the United States mail, addressed to the person to be notified, postage prepaid, and registered or certified with return receipt requested, or by federal express, or other overnight delivery, or by delivering such notice by courier or by hand to such person. Except as otherwise provided in this instrument, notices are effective on the earlier to occur of (i) receipt by the party to be notified or (ii) three days after deposit in the mail in accordance with this paragraph. For purposes of this instrument, Lender’s address is 1177 N.E. Loop 410, San Antonio, Texas 78209, and Borrowers’ address is 212 Lavaca Street, Suite 300, Austin, Texas 78701 (Attn: Erin D. Pickens) with required copy to Armbrust & Brown PLLC, Attn: Ken Jones, 100 Congress Avenue, Suite 1300, Austin, Texas 78701. Notices to Borrower may also be sent by electronic mail to both [email protected] and [email protected]. Borrower agrees to maintain such email address during the term of this Note. Notices sent by electronic mail to Borrower are effective on the date of successful transmission, provided if such date is not a business day, or if the notice is sent after 5:00 p.m. (San Antonio, Texas time) on a business day, the notice is effective as of the next business day. For purposes of this paragraph, a “business day” is any day other than a Saturday, Sunday, or any other day on which commercial banks in San Antonio, Texas are authorized or required by law to close.
15. Miscellaneous. All payments on this Note must be paid in lawful money of the United States of America immediately available funds. Borrower agrees to perform and comply with the covenants, conditions, provisions, and agreements contained in this Note and in every other instrument evidencing or securing payment of the indebtedness evidenced by this Note.
16. Joint and Several Liability. If this Note is executed by more than one party, each surety party is jointly and severally liable for the obligations of Borrower under this Note. If Borrower is a partnership or joint venture, each general or joint venture partner of Borrower shall be jointly and severally liable for the obligations of Borrower under this Note AND EACH SUCH GENERAL OR JOINT VENTURE PARTNER WAIVES ANY REQUIREMENT OF LAW THAT LENDER EXHAUST ANY ASSETS OF BORROWER BEFORE PROCEEDING AGAINST SUCH GENERAL OR JOINT VENTURE PARTNER’S ASSETS.
17. Security. This Note is secured, among other things, by a Deed of Trust dated the same date as this Note.
18. Counterparts. To facilitate execution, this Note and any amendments, waivers, consents, or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each
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of which shall constitute an original, but all taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Note by facsimile or in electronic format (e.g., "pdf", "tif" or any other electronic means that reproduces an image of the actual executed signature page) shall be effective as delivery of a manually executed counterpart of this Note.
19. Jury Waiver. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER.
20. Commercial Purpose. Borrower represents and warrants to Lender that the Loan will be used by Borrower for business, commercial, or agricultural purposes, and not for personal, family, or household use.
[Signature page follows]
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BORROWER:
LANTANA PLACE, L.L.C.,
a Texas limited liability company
By: STRS L.L.C.,
a Delaware limited liability company,
its manager
By: Stratus Properties Inc.,
a Delaware corporation,
its sole member
By: /s/ Erin D. Pickens
Erin D. Pickens, Senior Vice President
Erin D. Pickens, Senior Vice President
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LIMITED GUARANTY
This Limited Guaranty (“Guaranty”), executed as of January 22, 2025, is given by STRATUS PROPERTIES INC., a Delaware corporation (“Guarantor”) to induce Broadway National Bank (“Lender”) to make a loan (the “Loan”) to LANTANA PLACE, L.L.C., a Texas limited liability company (“Borrower”) in the sum of $29,800,000.00. The following documents (among others) have been executed and delivered to Lender in connection with, as evidence of, or as security for the Loan:
Promissory Note (the “Note”) of even date herewith in the original principal sum of $29,800,000.00 executed by Borrower payable to Lender.
Deed of Trust, Security Agreement and Financing Statement (the “Deed of Trust”) of even date herewith executed by Borrower in favor of Lender and recorded in the Real Property Records of Travis County, Texas, covering the real and personal property described therein.
Commercial Loan Agreement of even date herewith (the “Loan Agreement”) executed by Borrower, Lender, and Guarantor.
Assignment of Rents (the “Assignment Rents”) of even date herewith executed by Borrower.
The documents described above and all other documents signed in connection with, as evidence of, or as security for the Loan (collectively, the “Loan Documents”) are incorporated into this Guaranty by reference for all purposes.
1. Recourse Obligations. Guarantor hereby assumes liability for, hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless from and against, and hereby indemnifies Lender from and against any and all liabilities, obligations, losses, damages, costs and expenses (including, without limitation, attorneys’ fees), causes of action, suits, claims, demands and judgments of any nature or description whatsoever which may at any time be imposed upon, incurred by or awarded against Lender as a result of any of the following (the “Obligations”):
(a) Proceeds paid under any insurance policies (or paid as a result of any other claim or cause of action against any person or entity) by reason of damage, loss or destruction to all of any portion of the Property, to the full extent of such proceeds not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender.
(b) Proceeds or awards resulting from the condemnation or other taking in lieu of condemnation of all or any portion of the Property, or any of them, to the full extent of such proceeds or awards not previously delivered to Lender but which, under the terms of the Loan Documents, should have been delivered to Lender.
(c) All tenant security deposits or other refundable deposits paid to or held by or on behalf of Borrower to any other person or entity in connection with leases of all or any portion of the Property which are not applied in accordance with the terms of the applicable lease or other agreement.
(d) Rent and other payments received from tenants under leases of all or any portion of the Property paid more than one (1) month in advance.
(e) Rents, issues, profits and revenues of all or any portion of the Property received or applicable to a period after any Event of Default (as defined in the Loan Agreement), in the event of any default thereunder, which are not either applied to the ordinary and necessary expenses of owning and operating the Property or paid to Lender.
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(f) Damage or waste to the Property as a result of the intentional misconduct or gross negligence of Borrower or any of its principals, officers, managers, members or general partners, Guarantor, any other guarantor, any indemnitor, or any agent or employee of any such persons (each, a “Borrower Party”), or any removal of all or any portion of the Property in violation of the terms of the Loan Documents, to the full extent of the losses or damages incurred by Lender on account of such damage or removal.
(g) Failure by Borrower to pay any valid taxes, assessments, claims of mechanics or materialmen or other claims which could create liens on any portion of the Property which would be superior to the lien or security interest created under the Deed of Trust or the other Loan Documents, to the full extent of the amount claimed by any such lien claimant.
(h) All obligations and indemnities of Borrower under the Loan Documents relating to hazardous or toxic substances or compliance with environmental laws and regulations to the full extent of any losses or damages (including those resulting from diminution on value of any Property) incurred by Lender as a result of the existence of such hazardous or toxic substances or failure to comply with environmental laws or regulations.
(i) Fraud or material misrepresentation by Borrower or any Borrower Party.
(j) All losses, liabilities, and costs of Lender under any agreement or arrangement entered into by Lender in connection with the Loan that provides for an interest rate, currency, equity, credit, or commodity swap, cap, floor, or collar, spot or foreign currency exchange transaction, cross currency rate swap, currency option, any combination of, or option with respect to any of the foregoing or similar transactions for the purpose of hedging exposure to fluctuations in interest rates, exchange rates, currency, stock, portfolio or loan valuations or commodity prices arising from a prepayment of the Note in whole or in part by Borrower or by reason of the acceleration of the Note following a default under the Loan.
Notwithstanding anything to the contrary in this Guaranty or any of the other Loan Documents, Guarantor shall be directly and primarily liable, on a joint and several basis, for all indebtedness evidenced by the Note and for all obligations of Borrower under the Loan Documents if: (i) Borrower or any Borrower Party should raise any defense, counterclaim or allegation in any foreclosure action by Lender relative to the Property or any part thereof, (ii) Borrower fails to obtain Lender’s prior written consent to any subordinate financing or other voluntary lien encumbering the Property; (iii) Borrower fails to obtain Lender’s prior written consent to any assignment, transfer, or conveyance of the Property or any interest therein as required by the Loan Documents; or (iv) a receiver, liquidator or trustee of Borrower or of Guarantor or any guarantor shall be appointed, or if Borrower or Guarantor or any guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to the Federal Bankruptcy Code or other bankruptcy laws shall be filed, consented to, or acquiesced in, by Borrower or Guarantor or any guarantor, or if any action or proceeding for the dissolution or liquidation of Borrower or Guarantor or any guarantor shall be instituted or commenced by or against Borrower or Guarantor or any guarantor under the Federal Bankruptcy Code or other bankruptcy laws. Furthermore, all amounts for which Guarantor are fully and personally liable and subject to legal action hereunder shall include all liabilities, obligations, losses, damages, costs and expenses (including, without limitation, attorneys’ fees), causes of action, suits, claims, demands and judgments of any nature or description whatsoever which may at any time be imposed upon, incurred by or awarded against Lender in connection with this Section. Nothing contained in this Section shall (1) be deemed to be a release or impairment of the indebtedness evidenced by the Note or the obligations of Borrower under the Note or the other Loan Documents or the lien of the Loan Documents upon the Property, or (2) preclude Lender from foreclosing under the Loan Documents in case of any default or from enforcing any of the other rights or remedies of Lender, or (3) release, limit or impair in any way whatsoever any other obligations of Guarantor under this Guaranty (except to the extent specifically provided in this Guaranty) or under any other Loan Document to which Guarantor is a party.
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2. Nature of Guaranty. Guarantor agrees that this Guaranty is an absolute, complete, continuing, unconditional, and irrevocable guaranty of payment and performance of the Obligations and that it is not a guaranty of collection.
3. Benefits to Guarantor. Guarantor acknowledges, warrants, and represents to Lender that Guarantor expects to benefit, financially or otherwise, directly or indirectly, from the Loan, this Guaranty, and from every increase, reduction, renewal, extension, rearrangement, reinstatement, refinancing, or modification of the Loan or the Loan Documents; every substitution, replacement, alteration, modification, or release of collateral, or other relinquishment of legal rights made or granted by Lender to Borrower.
4. Payment and Performance by Guarantor. If Borrower does not pay or perform the Obligations on or before the times they are required to be paid or performed pursuant to the Loan Documents, whether by maturity or otherwise, Guarantor shall pay or perform the Obligations for the benefit of Lender. Any failure by Guarantor to pay or perform the Obligations when they are required to be paid or performed pursuant to the Loan Documents shall be a default under this Guaranty.
5. WAIVERS BY GUARANTOR. GUARANTOR WAIVES ANY NOTICE OF ACCEPTANCE OF THIS GUARANTY BY LENDER, ACCEPTANCE BY LENDER BEING CONCLUSIVELY PRESUMED BY ITS REQUEST FOR THIS GUARANTY AND ITS DELIVERY TO LENDER. GUARANTOR WAIVES ANY NOTICE OF THE CREATION, ADVANCEMENT, INCREASE, REDUCTION, EXISTENCE, RENEWAL, EXTENSION, MODIFICATION, REINSTATEMENT, REFINANCING, OR REARRANGEMENT OF THE OBLIGATIONS. GUARANTOR WAIVES GRACE, NOTICE OF DEFAULT, DEMAND, PRESENTMENT, NOTICE OF NON-PAYMENT, PROTEST, NOTICE OF PROTEST, DISHONOR, NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION, AND ANY OTHER NOTICE WHATSOEVER ON THE OBLIGATIONS. GUARANTOR WAIVES ALL RIGHTS GRANTED TO GUARANTOR BY (I) SECTIONS 43.001-005 OF THE TEXAS CIVIL PRACTICE AND REMEDIES CODE, (II) SECTION 17.001 OF THE TEXAS CIVIL PRACTICE AND REMEDIES CODE, (III) RULE 31 OF THE TEXAS RULES OF CIVIL PROCEDURE, AND (IV) SECTIONS 51.003, 51.004, AND 51.005 OF THE TEXAS PROPERTY CODE, AND ANY SUCCESSOR STATUTES AND AMENDMENTS TO ANY OF SAME. GUARANTOR WAIVES ALL DEFENSES OR RIGHTS GUARANTOR MAY HAVE BECAUSE OF ANY DISABILITY, LACK OF CORPORATE AUTHORITY OR POWER, IMPAIRMENT OF RECOURSE OR COLLATERAL, OR OTHER DEFENSE OF BORROWER OR ANY OTHER PERSON LIABLE FOR THE PAYMENT AND PERFORMANCE OF THE OBLIGATIONS, AND SHALL REMAIN LIABLE ON THIS GUARANTY REGARDLESS OF WHETHER BORROWER OR ANY OTHER PERSON IS FOUND NOT LIABLE FOR THE OBLIGATIONS FOR ANY REASON.
6. Guarantor’s Direct Liability. Guarantor’s liability for payment and performance of the Obligations is primary and not secondary. Guarantor may be required to pay and perform the Obligations in full without the assistance of any other party, or any collateral or security for the Obligations. Lender is not required to mitigate damages, file suit, or take any action to enforce, reduce, or collect the Obligations, in order to enforce this Guaranty. Lender is not required to do any of the following things before enforcing this Guaranty:
(a) Give any notice to Borrower or any other person liable for the payment or performance of the Obligations.
(b) Make any demand for payment or performance on Borrower or any other person liable for payment or performance of the Obligations
(c) Make any effort to collect the Obligations from Borrower or any other person liable for the payment or performance of the Obligations.
(d) Foreclose, proceed against, or exhaust any Collateral.
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(e) Join Borrower or any other person liable for the payment or performance of the Obligations with Guarantor in any suit arising out of this Guaranty or the Obligations.
(f) Enforce its rights against any other person liable for the payment or performance of the Obligations.
(g) Pursue any other remedies Lender may have in connection with the Obligations.
7. Events and Circumstances Not Reducing or Discharging Guarantor’s Obligations. Guarantor’s obligations under this Guaranty will not be released, diminished, impaired, reduced, or adversely affected by, and Guarantor waives any common law, equitable, statutory, or other rights that Guarantor might otherwise have, as a result of any of the following:
(a) Any partial or full release of Borrower or any other person who is primarily or secondarily liable for the Obligations.
(b) The voluntary or involuntary liquidation, sale, or other disposition of all or substantially all of the assets of Borrower, or any receivership, insolvency, bankruptcy, reorganization, or other similar proceedings affecting Borrower or any of its assets.
(c) Any impairment, modification, release or limitation of liability of Borrower, or stay of foreclosure or other lien enforcement proceedings against Borrower, or Borrower’s property, or Borrower’s estate in bankruptcy, or any modification, discharge, or extension of the Obligations resulting from the operation of any present or future provision of the Federal Bankruptcy Code or other bankruptcy laws, or from the decision of any court.
(d) Any release, subordination, substitution, change, or alteration of any collateral or security for the Loan, or any other guaranty of the Obligations, now or hereafter held by Lender.
(e) Lender’s failure to use diligence or care in preserving the liability of any person for the payment and performance of the Obligations, or in bringing suit to enforce collection of the Obligations.
(f) The addition of another guarantor or guarantors of the Obligations.
(g) Any increase, reduction, renewal, extension, modification, alteration, refinancing, or rearrangement of the Obligations or any other adjustment, indulgence, forbearance, or compromise with respect to them.
(h) The exercise, failure to exercise, delay, omission, or lack of diligence or care by Lender in exercising any right or power conferred upon Lender in this Guaranty or the other Loan Documents, or at law, in equity, or by agreement.
(i) Any payment by Borrower to Lender if the payment is held to constitute a preference under the Federal Bankruptcy Code or other bankruptcy laws, or if for any other reason Lender is required to refund the payment to Borrower or any other party.
(j) The invalidity or unenforceability of all or any part of the Obligations, or the Loan Documents, for any reason whatsoever, including without limitation the fact that: Borrower has any legal disability to incur this indebtedness; the act of creating the Obligations is ultra vires; the officers or representatives executing the Loan Documents acted in excess of their authority; the Loan or Loan Documents violate applicable usury laws; Borrower has valid defenses, claims, or offsets (whether at law, in equity, or by agreement) which render the Obligations wholly or partially uncollectible from Borrower; the creation, performance, or repayment of the Obligations (or the execution, delivery, and performance of any of the Loan Documents) is illegal, uncollectible,
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legally impossible, or unenforceable; or any of the Loan Documents have been forged or otherwise are irregular or not genuine or authentic.
(k) Lender’s failure to enforce or observe anything contained in the Loan Documents (including no personal liability provisions), or any act or omission of Lender in connection with the Loan Documents.
(l) Any act or omission of Lender in connection with any collateral for the Obligations.
8. Suit on Guaranty. Suit may be brought by Lender against any Guarantor alone, or jointly and severally against some or all of any other guarantors, without impairing the rights of Lender against Borrower or any guarantors not joined in the suit. If there are any other guarantors of the Obligations, the liability of Guarantor and the other guarantors is joint and several.
9. Costs of Collection. Guarantor agrees to pay all costs of collection, including reasonable attorney’s fees and expenses, if this Guaranty is placed in the hands of an attorney for collection or is collected through any court.
10. Subordination. Guarantor subordinates all present and future indebtedness owed by Borrower to Guarantor to the Obligations. Guarantor further subordinates any lien or security interest Guarantor may have in the Collateral to the liens and security interests securing the Obligations. Guarantor agrees not to accept any payments of any kind for any indebtedness of Borrower to Guarantor if at that time Guarantor is in default hereunder or Borrower is in default in the payment or performance of the Obligations. If Guarantor receives any payment in violation of this Section, Guarantor agrees to deliver the payment to Lender, and until delivered, Guarantor agrees to hold it in trust for Lender.
11. Usury Disclaimer. It is the intention of Lender and Guarantor to conform strictly with applicable usury laws now in force. No provision of this Guaranty or the Loan Documents requires the payment, or permits the collection of interest in excess of the maximum amount permitted by applicable law. If at any time the interest received or contracted for exceeds the maximum lawful rate, the Lender must refund the amount of the excess, or must credit the amount of the excess against amounts owing under the Loan and the excess will not be considered the payment of interest. Determination of the rate of interest must be made by amortizing, prorating, allocating, and spreading in equal parts during the full contracted period of the life of the Loan all interest at any time contracted for, charged, or received from Borrower in connection with the Loan.
12. Modification or Consent. No modification, consent, or waiver of any provision of this Guaranty is effective unless the modification, consent, or waiver is in writing and signed by Lender, and then only in the specific instance and for the purpose for which given. No notice to or demand on Guarantor entitles Guarantor to any other or further notice or demand in similar or other circumstances. No delay or omission by Lender in exercising any power or right under this Guaranty will impair any such right or power or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any such power preclude other or further exercise thereof, or the exercise of any other right or power under this Guaranty. All rights and remedies of Lender under this Guaranty are cumulative of each other and of every other right or remedy which Lender may otherwise have at law or in equity or under any other contract or document, and the exercise of one or more rights or remedies does not prejudice or impair the concurrent or subsequent exercise of other rights or remedies.
13. No Duty or Special Relationship. Guarantor agrees that Lender has no duty of good faith to Borrower or Guarantor, and that no special relationship, such as a fiduciary or trust relationship exists, between Lender and Borrower or Guarantor. Guarantor agrees that no duty of good faith will arise, and no special relationship will exist, unless created by a written agreement signed by Lender that expressly creates a duty of good faith or a special relationship.
14. Transferability. This Guaranty may be enforced by Lender and any subsequent holder and shall not be discharged by the assignment or negotiation of all or part of the Obligations. Every reference in this Guaranty to “Lender” includes and refers to all subsequent holders of all or part of the Obligations. Guarantor
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waives notice of assignment or negotiation of all or part of the Obligations. Guarantor authorizes Lender to give any information it has pertaining to the Obligations, including, without limitation, financial, tax, credit, or other information about Guarantor, to any transferee of all or any part of the Obligations.
15. No Revocation. This Guaranty may not be revoked by Guarantor and shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by Lender because of the insolvency, bankruptcy, reorganization, receivership, or other debtor relief proceeding involving Borrower, or after any attempted revocation by Guarantor, all as if such payment had not been made.
16. Successors or Assigns. This Guaranty inures to the benefit of the successors and assigns of Lender, and is fully binding upon Guarantor’s heirs, executors, personal representatives, successors, and assigns.
17. Death of Guarantor. Upon the death of Guarantor, the obligation of the deceased shall continue against Guarantor’s estate as to all Obligations which have been incurred by Borrower prior to the actual receipt by an officer of Lender of written notice of such death, plus any renewals, extensions, substitutions, or replacements thereof, regardless of when occurring plus all loans and advances made to or for the account of Borrower after the date notice of Guarantor’s death is received by Lender pursuant to an obligation of Lender under a commitment made to Borrower prior to the receipt of such notice. The failure of Lender to file or enforce a claim against Borrower’s or Guarantor’s estate shall not affect the liability of Guarantor hereunder. If Guarantor dies and his or her estate or a substantial part of such estate is distributed to his or her heirs prior to Guarantor’s heirs executing an instrument approved in form and substance by Lender, either (i) jointly and severally assuming all of such deceased Guarantor’s Obligations under this Guaranty or (ii) securing the payment of the Obligations and effectively pledging, mortgaging, or otherwise creating a first lien on a portion of the assets of such estate valued by a qualified appraiser approved by Lender at not less than the amount of the Obligations then outstanding, then an event of default under this Guaranty has occurred and Lender may, at its option and without any required advance notice or opportunity to cure, declare the unpaid balance of the Obligations to be immediately due and payable. The rights of Lender under this paragraph are in addition to all other rights and remedies which Lender has hereunder or under any applicable law. All of Lender’s remedies and recourse under this Guaranty are separate and cumulative and may be pursued separately, successively, or concurrently, and are non-exclusive and the exercise of any one or more of them shall not limit or prejudice any other legal or equitable right, remedy or recourse to which Lender may be entitled.
18. Notices. All notices provided for or permitted to be given pursuant to this instrument must be in writing or may be given or served by depositing the same in the United States mail, addressed to the person to be notified, postage prepaid, and registered or certified with return receipt requested, or by federal express, or other overnight delivery, or by delivering such notice by courier or by hand to such person. Except as otherwise provided in this instrument, notices are effective on the earlier to occur of (i) receipt by the party to be notified or (ii) three days after deposit in the mail in accordance with this paragraph. For purposes of this instrument, Lender’s address is 1177 N.E. Loop 410, San Antonio, Texas 78209 and Guarantor’s address is 212 Lavaca Street, Suite 300, Austin, Texas 78701 (Attn: Erin D. Pickens) with copy to Armbrust & Brown PLLC, Attn: Ken Jones, 100 Congress Avenue, Suite 1300, Austin, Texas 78701. Notices to Guarantor may also be sent by electronic mail to [email protected]. Guarantor agrees to maintain such email address during the term of this Guaranty. Notices sent by electronic mail to Guarantor are effective on the date of successful transmission, provided if such date is not a business day, or if the notice is sent after 5:00 p.m. (San Antonio, Texas time) on a business day, the notice is effective as of the next business day. For purposes of this paragraph, a “business day” is any day other than a Saturday, Sunday, or any other day on which commercial banks in San Antonio, Texas are authorized or required by law to close.
19. Governing Law and Place of Performance. This Guaranty is to be performed in Bexar County, Texas and is a contract made under and must be construed in accordance with and governed by the laws of the State of Texas.
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20. Application of Proceeds. Without limiting any other provisions of this Guaranty, Guarantor agrees that to the extent Lender realizes any proceeds under any of the Loan Documents (including without limitation payments made by any other Guarantor and proceeds arising from the sale at foreclosure of any Collateral), such proceeds shall first be applied to that portion, if any, of the Loan for which Guarantor has no personal liability under this Guaranty, and shall then (and only after payment in full of the portion of the Loan for which Guarantor has no personal liability under this Guaranty) be applied to the portion of Loan for which Guarantor is liable.
21. No Subrogation. Guarantor has no right of subrogation until such time as all of the Obligations have been paid and performed in full.
22. Performance. Guarantor agrees that this Guaranty is in effect and binding upon Guarantor without reference to the performance or lack of performance of any other Guarantor. Further, Lender may effect a compromise with Borrower or any other guarantor (if more than one) for such sum as it deems proper, and release Borrower or any other guarantor from all further liability to Lender for any indebtedness under this Guaranty without impairing the right of Lender to demand and collect the balance of the indebtedness from Guarantor; however, it is agreed by Guarantor that such compromise and release shall not impair the rights of Guarantor against Borrower or any other guarantors.
23. Legal Counsel. Guarantor acknowledges that Guarantor has had the benefit of the advice of legal counsel of Guarantor’s own choice in connection with the preparation and negotiation of this Guaranty, and have had an opportunity to review this Guaranty with such legal counsel, and that Guarantor fully understands the implications and ramifications of this Guaranty.
24. Borrower’s Status. Should the status, composition, structure or name of Borrower change for any reason, including, but not limited to, a merger, dissolution, consolidation, or reorganization, this Guaranty will continue and also cover the indebtedness and obligations of Borrower under the new status, composition, structure, or name. If Borrower is a general or limited partnership, no termination of the partnership, or withdrawal from it by, or termination of any ownership interest in it owned by, any general or limited partner shall alter, limit, or modify Guarantor’s obligations in this Guaranty or otherwise affect this Guaranty in any manner whatsoever, all of which obligations of Guarantor will remain in effect.
25. Right of Set-Off. The Lender may, without demand or notice of any kind, at any time when any amount that has not been paid by Borrower is due and payable by Guarantor, appropriate and apply toward the payment of such amount, and in such order of application as the Lender may from time to time elect, any property, balances, credits, deposits, accounts, or monies of Guarantor in the possession or control of the Lender for any purposes.
26. Discharge. Any reduction of Guarantor’s obligations under this Guaranty due to Borrower’s payments on the Note is subject to the condition that if Lender, refunds or is required to turn over any amount to Borrower, its successors or assigns as a result of the application of federal bankruptcy or state insolvency law to such payments, Guarantor’s obligations under this Guaranty shall be and remain in full force and effect, as if the payment had never been made.
27. Lost and Incorrect Documents. Upon notice from Lender that one or more of the documents executed in connection with, as evidence of, or as security for the Note (“Loan Documents”) have been lost, damaged or destroyed (the “Lost Documents”), Guarantor will execute, acknowledge and deliver any instrument or document which Lender may request as replacements for the Lost Documents (the “Replacement Documents”). Upon notice from Lender, Guarantor will promptly execute, acknowledge and deliver any instrument or document which Lender may reasonably request (the “Correction Documents”) to correct any error, omission, inaccuracy or other defect which may be discovered in the text, execution or acknowledgment of this Guaranty or any of the other Loan Documents, including, without limitation, (1) conflicts between the terms of any Commitment Letter, issued by Lender to Borrower in connection with the loan evidenced by the Note and the terms of any of the Loan Documents, (2) errors in the description of any of the Collateral, (3) misidentification
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of any of the parties to any of the Loan Documents, and (4) verification of the authority of the person executing the Loan Documents on behalf of the Guarantor. Guarantor will return to Lender any Replacement Documents and any Correction Documents, fully executed and acknowledged, within fifteen (15) days of Lender’s delivery of those documents to Guarantor and Guarantor hereby constitutes and appoints Lender as the Guarantor’s attorney-in-fact, for the sole and limited purpose of executing as a ministerial act for and on behalf of Guarantor, any such Replacement Document or Correction Document which is not so returned to Lender, fully executed and acknowledged within fifteen (15) days of Lender’s delivery of those documents to Guarantor; however, Lender shall have no duty to do so. This appointment shall be deemed an appointment coupled with an interest and shall be irrevocable. Guarantor’s failure to return to Lender any Replacement Documents and any Correction Documents, fully executed and acknowledged within fifteen (15) days of Lender’s delivery of those documents to Guarantor shall be a default under this Guaranty.
28. Entire Agreement. Guarantor acknowledges and agrees that this Guaranty accurately represents and contains the entire agreement between Guarantor and Lender with respect to the subject matter hereof, that Guarantor is not relying, in the execution of this Guaranty, on any representations (whether written or oral) made by or on behalf of Lender except as expressly set forth in this Guaranty, and that any and all prior statements and/or representations made by or on behalf of Lender to Guarantor (whether written or oral) in connection with the subject matter hereof are merged herein.
29. Headings. Section headings of this Guaranty are inserted for convenience of reference only, and shall not alter, define or be used in construing the text of such sections.
30. Pronouns. As used in this Guaranty and when required by the context, each number (singular and plural) shall include all numbers, and each gender shall include all genders, and unless the context otherwise requires the word “person” or “party” shall include “person, corporation, firm, partnership or association”.
31. Counterparts. To facilitate execution, this Guaranty and any amendments, waivers, consents, or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Guaranty by facsimile or in electronic format (e.g., "pdf", "tif" or any other electronic means that reproduces an image of the actual executed signature page) shall be effective as delivery of a manually executed counterpart of this Guaranty.
32. Jury Waiver. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR GUARANTOR AGAINST THE OTHER.
[Signature page follows]
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Executed to be effective as of the date first set forth above.
GUARANTOR:
STRATUS PROPERTIES INC.,
a Delaware corporation
By: /s/ Erin D. Pickens
Erin D. Pickens, Senior Vice President
STATE OF TEXAS §
COUNTY OF TRAVIS §
This instrument was acknowledged before me on the 20th day of January, 2025 by Erin D. Pickens, the Senior Vice President of STRATUS PROPERTIES INC., a Delaware corporation, on behalf of such corporation.
[SEAL] Gregg Krumme
Notary Public in and for the State of Texas
Printed Name: Gregg Krumme
My Commission Expires: 04-16-2026
Notary Public, State of Texas
[Signature page to Limited Guaranty]
| NEWS RELEASE | |||||
| NASDAQ Symbol: “STRS” | |||||
| Stratus Properties Inc. | Financial and Media Contact: | ||||
| 212 Lavaca St., Suite 300 | William H. Armstrong III | ||||
| Austin, Texas 78701 | (512) 478-5788 | ||||
STRATUS PROPERTIES INC. COMPLETES
REFINANCING OF LANTANA PLACE - RETAIL
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AUSTIN, TX, January 27, 2025 - Stratus Properties Inc. (NASDAQ: STRS) (“Stratus” or the “Company”) today announced the closing of a $29.8 million loan to refinance the construction loan for the retail property at Lantana Place, a 99,377-square-foot retail property within Stratus’ mixed-use development project located south of Barton Creek in Austin. Stratus wholly owns Lantana Place.
The new loan matures February 1, 2029, has a lower interest rate than the refinanced loan, is interest only for the first year and resulted in distributions to Stratus of approximately $3.0 million.
William H. Armstrong III, Chairman of the Board and Chief Executive Officer of Stratus, stated, “We are pleased to have completed this refinancing which, like our recent Kingwood Place refinancing, reflects our approach of taking advantage of lower interest rates and extending our debt maturities during this market cycle. We believe that retaining this cash-flowing property while real estate market conditions improve will benefit Stratus and its shareholders.”
About Stratus
Stratus Properties Inc. is engaged primarily in the entitlement, development, management, leasing and sale of multi-family and single-family residential and commercial real estate properties in the Austin, Texas area and other select markets in Texas. In addition to our developed properties, we have a development portfolio that consists of approximately 1,600 acres of commercial and residential projects under development or undeveloped land held for future use. Our commercial real estate portfolio consists of stabilized retail properties or future retail and mixed-use development projects with no commercial office space. We generate revenues from the sale of our developed and undeveloped properties, the lease of our retail, mixed-use and multi-family properties and development and asset management fees received from our properties.
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CAUTIONARY STATEMENT
This press release 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 fact, such as plans, projections or expectations related to Stratus’ investment strategy for Lantana Place and expectations regarding the Austin and Texas real estate markets. The words “anticipate,” “may,” “can,” “plan,” “believe,” “potential,” “estimate,” “expect,” “project,” “target,” “intend,” “likely,” “will,” “should,” “to be” and any similar expressions and/or statements are intended to identify those assertions as forward-looking statements.
Stratus cautions readers that forward-looking statements are not guarantees of future performance, and its actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Important factors that can cause Stratus’ actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, Stratus’ ability to implement its business strategy successfully, including its ability to develop, construct and sell or lease properties on terms its Board considers acceptable, increases in operating and construction costs, the availability and terms of financing for development projects and other corporate purposes, Stratus’ ability to enter into and maintain joint ventures, partnerships, or other strategic relationships, including risks associated with such joint ventures, real estate market conditions in the Austin and Texas real estate markets, and other factors described in more detail under the heading “Risk Factors” in Stratus’ Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission.
Investors are cautioned that many of the assumptions upon which Stratus’ forward-looking statements are based are likely to change after the date the forward-looking statements are made. Further, Stratus may make changes to its business plans that could affect its results. Stratus cautions investors that it undertakes no obligation to update any forward-looking statements, which speak only as of the date made, notwithstanding any changes in its assumptions, business plans, actual experience or other changes.
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A copy of this release is available on Stratus’ website, stratusproperties.com.
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