Private equity fund seeks takeover of Stratus Properties

A quiet battle is going on behind the scenes between NXSTEP Opportunity Partners and Austin real estate company Stratus Properties Inc. NXSTEP, a real estate-focused private equity fund, offered to buy all of Stratus Properties’ shares for $27.18 per share in cash. The initial offer was made on Jan. 24, 2024. The board of Stratus unanimously rejected that offer, according to their statement to the press.

Stratus announced this week that it had received a second offer from NXSTEP and that a major Stratus stockholder, Oasis Management Company Ltd., had reported that it had entered into an agreement with NXSTEP supportive of its proposal. Subsequently, Stratus received an updated nonbinding proposal from NXSTEP to pay approximately $27.30 per share in cash. In its press release, Stratus said, “Stratus’ Board plans to consider these matters consistent with its fiduciary duties and respond to NXSTEP in due course. Stratus does not intend to comment on or disclose further developments regarding the proposal unless and until it deems further disclosure is appropriate or required.”

Stratus is a familiar name to longtime Austinites because of the fight between its predecessor company, FMP, and environmentalists over what development should be allowed over the Barton Springs Zone of the Edwards Aquifer and subsequent passage of the Save Our Springs Ordinance. However, in 2020, the Save Our Springs Alliance said it had reached an agreement with Stratus “that will help protect approximately 10 acres of land from commercial development and will reduce the total amount of impervious cover (i.e., pavement) that can be built in the immediate area surrounding the new apartment complex by 6.9 acres.”

SOS noted, “The development in question is the last phase of a five-phase development at the southwest corner of William Cannon and Southwest Parkway (7415 Southwest Parkway) in the area known as Lantana. In exchange for being able to convert their approved office project to multi-family housing, Stratus has agreed to reduce the overall imperious cover of their planned project to 25% net site area (from 60% NSA), by dedicating additional developable lands towards land conservation immediately to the project’s south. This would be functionally equivalent to the limits required under the SOS Ordinance.”

Shares in Stratus Properties saw a 52-week high of $29.99 and a low of $18.54. The price on Jan. 3 was $28.03, but the price on Thursday afternoon was $22.33.