Stratus Properties Inc. Reports the W Austin Hotel & Residences Project in Downtown Austin, Texas, is On Schedule and Within Budgeted Cost of Approximately $300 million

AUSTIN, Texas-- August 16, 2010 --Stratus Properties Inc. (NASDAQ: STRS):

HIGHLIGHTS

• During the second quarter of 2010, Stratus completed several financing transactions, including the final $30 million in project financing for the W Austin Hotel & Residences project and extensions and modifications of its revolving credit facility and seven unsecured term loans.
• W Austin Hotel & Residences project in downtown Austin, Texas, continues to be on schedule and within budgeted cost of approximately $300 million, with targeted opening of the hotel and delivery of the first condominium residences in December 2010 and opening of the music venue in early 2011.
• At June 30, 2010, Stratus had $13.2 million of cash and cash equivalents and $15.9 million in available borrowing capacity under its credit facility.

SUMMARY FINANCIAL RESULTS

Stratus Properties Inc. (NASDAQ: STRS) reported a net loss attributable to common stock of $11.5 million, $1.55 per share, for the second quarter of 2010, compared with a net loss of $1.4 million, $0.19 per share, for the second quarter of 2009. For the first six months of 2010, Stratus reported a net loss attributable to common stock of $13.2 million, $1.78 per share, compared with a net loss of $3.2 million, $0.43 per share, for the first six months of 2009. The losses in the 2010 periods reflect a charge of $9.8 million to establish a valuation allowance against net deferred tax assets of $10.0 million.

William H. Armstrong III, President, Chairman and Chief Executive Officer of Stratus stated, “The W Austin Hotel & Residences project is moving forward aggressively to becoming the premier hotel and condominium property in downtown Austin, with its live music venue creating a valuable addition to the vibrant 2nd Street District. This project complements Stratus’ existing real estate portfolio and expertise as a leading developer of high-quality residential and commercial real estate in the Austin market.”

W Austin Hotel & Residences Project Status. Stratus’ development of the W Austin Hotel & Residences in downtown Austin, conducted through a joint venture with Canyon-Johnson Urban Fund II, L.P. (Canyon-Johnson), is proceeding on schedule and within budget of approximately $300 million. Construction of the 36-story project commenced in the second quarter of 2008, with the exterior of the building substantially complete and interior electrical and finishing work progressing as scheduled. The 251-room hotel, which we believe will set the standard for contemporary luxury in downtown Austin, will be managed by Starwood Hotels & Resorts Worldwide Inc. and is expected to open in December 2010. Condominium residences will be completed on a floor-by-floor basis with expected completion beginning in December of 2010 and continuing through mid-2011. Currently, 81 of the 159 condominium residences are under contract. The sales contracts are generally secured with buyer deposits of 10 percent of the purchase price. The project also includes a live music venue and production studio with a maximum capacity of approximately 3,000 people. In addition to hosting concerts and private events, the venue will be the new home of Austin City Limits. The venue is expected to begin operating in early 2011.

During the second quarter of 2010, Stratus and Canyon-Johnson completed the final steps in securing the required financing for the project, including completing their equity commitment. As of June 30, 2010, capital contributions totaled $65.3 million for Stratus and $87.3 million for Canyon-Johnson. On April 6, 2010, the joint venture entered into an agreement with Hunter’s Glen/Ford Investments I LLC (the Ford loan agreement), effective as of March 31, 2010, to finance $30 million of the remaining construction costs of the W Austin Hotel & Residences project. Full funding under the Ford loan agreement was made as of June 30. Stratus and Canyon-Johnson also contributed an additional $2.7 million each during the second quarter of 2010.

Pursuant to a construction loan agreement entered into on October 21, 2009, with Beal Bank Nevada (the Beal Bank loan agreement), the joint venture may borrow up to an aggregate of $120 million to fund the construction, development and marketing costs of the W Austin Hotel & Residences project. Total borrowings under the Beal Bank loan agreement through July 30, 2010, totaled $20.2 million, with additional advances expected to be made monthly until the loan is fully funded.

In April 2010, Stratus modified its revolving credit facility with Comerica Bank to extend the maturity, adjust the interest rate and replace the existing $45 million revolving loan with a $35 million revolving loan and a $10 million term loan. In addition, Stratus modified its seven unsecured term loans with First American Asset Management (FAAM), extending the maturity dates for $27 million of the principal amount and modifying the applicable interest rates. Stratus repaid $2.0 million of the related amounts outstanding upon modification in March 2010 and repaid an additional $2.0 million in June 2010, leaving an aggregate outstanding balance as of June 30, 2010, of $36 million.

Financial Results. Stratus continues to market its high-priority development activities and to maximize long-term property values, despite current real estate market conditions. Stratus’ property sales totaled $0.6 million for the second quarter of 2010, which included one Calera Court Courtyard home, compared with $1.9 million for the second quarter of 2009, which included one Calera Court Courtyard home and 20 lots in the Meridian development in the Circle C community. Stratus’ property sales totaled $1.5 million for the first six months of 2010, which included one Calera Court Courtyard home and 13 lots in the Meridian development, compared with $2.1 million for the first six months of 2009, which included one Calera Court Courtyard home and 23 lots in the Meridian development. The decrease in developed property sales revenues resulted from a lower number of lots sold at Meridian primarily related to the completion of sales under homebuilder contracts in the first quarter of 2010. Stratus currently has no outstanding homebuilder contracts.

Rental income from commercial leasing properties increased to $1.1 million in the second quarter of 2010 from $1.0 million in the second quarter of 2009, and increased to $2.4 million for the first six months of 2010, compared with $2.1 million for the first six months of 2009, primarily because of an increase in rental income at 5700 Slaughter in the Circle C community, which was in the initial leasing stage during 2009.

Stratus is a diversified real estate company engaged in the acquisition, development, management, operations and sale of commercial, multi-family and residential real estate properties, including the W Austin Hotel & Residences project, located primarily in the Austin, Texas area.

CAUTIONARY STATEMENT. This press release contains forward-looking statements in which we discuss our expectations regarding future performance. Forward-looking statements are all statements other than statements of historical facts, such as those statements regarding anticipated real estate sales, commercial leasing activities, and development and financing activities at the W Austin Hotel & Residences project. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,” “will,” “should,” “to be” and any similar expressions and/or statements that are not historical facts, in each case as they relate to us or our management, are intended to identify those assertions as forward-looking statements. Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments. We caution investors that we assume no obligation to update the forward-looking statements in this discussion and analysis and we do not intend to update the forward-looking statements more frequently than quarterly.

In making any forward-looking statements, the person making them believes that the expectations are based on reasonable assumptions. We caution readers that those statements are not guarantees of future performance, and our actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include changes in economic and business conditions, business opportunities that may be presented to and/or pursued by us, the availability of financing, changes in laws, regulations or the regulatory environment affecting the development of real estate and other factors described in more detail under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2009.