Welcome to the Stratus Properties Year-End 2018 Earnings Conference Call. Stratus released its financial results earlier this morning, which are available on its website at stratusproperties.com. Following management's remarks, we will host a question-and-answer session. Please note this call is being recorded and will be available for telephone replay through March 23, 2019. Anyone listening to a taped replay should note that all information presented is current as of today, March 18, 2019, and should be considered valid only as of this date. I would now like to turn the call over to Mr. Beau Armstrong, Chairman, President and Chief Executive Officer of Stratus Properties.

Thank you, Andrea, and good morning, everyone. Joining me today is our Chief Financial Officer, Erin Pickens. As a reminder, today's press release and certain comments that we will make on this call include forward-looking statements and actual results may differ. I would like to refer everyone to the cautionary language included in Stratus' press release issued today into the risk factors described in Stratus' Form 10-K and subsequent SEC filings that could cause actual results to differ materially from those projected by us. Today's press release and certain of our comments on this call do not constitute an offer to sell nor are they a solicitation of an offer to buy any securities. In addition, we will discuss adjusted EBITDA, which is a financial measure not recognized under US GAAP. As required by SEC rules and regulations, non-GAAP financial measures are reconciled to their most comparable GAAP measure in the supplemental schedules of Stratus' press release issued today. This morning, I will cover our operational highlights, including the progress of our active development projects. Erin will discuss our year-end 2018 financial results and we'll provide some color about our four operating segments, and I will end the call with some brief final comments about the markets in which we operate and our strategy for 2019. As you all know, part of our strategy at Stratus Properties is to focus on our full cycle active development program that includes: first, acquiring, securing and maintaining development entitlements; second, developing and stabilizing these properties; and third, preparing these properties for sale or refinancing depending on market conditions. We have projects in each of these stages. As mentioned last quarter, our most recent acquisition was a 38-acre tract of land purchased in partnership with HEB for a future HEB-anchored mixed-use project in New…

Thank you, Beau. Today, Stratus reported earnings for year ended 2018 as detailed in our press release issued this morning. The net loss attributable to common stockholders totaled $4 million, or $0.49 per share for 2018, compared with net income attributable to common stockholders of $3.9 million, or $0.47 per share in 2017. Total revenues were $87.6 million in 2018, up from $80.3 million in 2017. Adjusted EBITDA totaled $10.8 million for 2018, up from $9.7 million for 2017. Now I'll walk through the financial results for each of our operating segments. Real estate operations segment revenues increased by 51% to $16.8 million in 2018 from $11.1 million in 2017. Revenue from this segment accounted for 19% of our total revenue in 2018, compared to 14% for 2017. Operating income for this segment increased by 150% to $1.3 million, up from $0.5 million last year. This increase in revenue and operating income primarily reflects the sales of higher priced residential units, including Amarra Villas townhomes and the W Austin Hotel & Residences condominium. In 2018, we sold three Amarra Drive Phase II lots for a total of $2 million; nine Amarra Drive Phase III lots for a combined $5.9 million; and four Amarra Villas townhomes for a combined $7.5 million. We sold one Amarra Villas townhome this month for $1.7 million, and the final remaining completed townhome is currently under contract for $1.7 million. We anticipate beginning construction of the next five Amarra Villas townhomes in the second quarter of this year. Also in 2018, we sold one W Austin Hotel & Residences condominium unit for $1.1 million. And as of December 31st, 2018, one condominium unit, which has been under a long-term lease remained unsold. Leasing operations segment revenues increased by 28% to $11.3 million in 2018, up from…

Thank you, Erin. We were able to add two new high quality development opportunities to our portfolio last year, while continuing to develop and lease our existing portfolio. Our projects are on schedule and on budget and we plan to maintain this full cycle strategy in Austin, as well as in our newly entered markets this year. In addition, depending on market and leasing conditions, we intend to explore opportunities to sell or refinance properties subject to market conditions in order to close the full cycle and maximize value for our shareholders. In the current Austin market, it is difficult to find prime locations for new developments. We operate in highly competitive markets and we attempt to differentiate our properties primarily in the basis of community design, quality, uniqueness, amenities, location, developer reputation and increasingly sustainability principles. We have successfully expand to other attractive growth markets as a method of diversifying our portfolio in ensuring that we can continue to develop projects such as our multiple HEB-anchored mixed-use properties. Despite the increased competition, Austin continues to be a great opportunity for us. Since 2009, the city's population has grown at least 29% because of growing interest in Austin's expanding job opportunities, particularly in the tech sector and the median family income has risen approximately 22%. Demand for residential housing, commercial office space and retail services continues to increase. In addition, Google recently signed a lease for 800,000 square feet of office space within walking distance of our W Hotel and other high profile tech expansions are happening in Austin, including Apple, Facebook, Oracle and Indeed. We believe there will be more to come as more and more companies and people realize this city's advantages and opportunities. Now we will open up the call for questions.

We will now begin the question-and-answer session. [Operator Instructions]. And our first question comes from Fred Burtner of Burtner Investments. Please go ahead.

Thank you. Beau, I had two questions. First is, in spite of what you said about the retail shopping centers, I'm getting mixed signals about the health of shopping centers. So what do you think that Stratus will be able to overcome some of those negative indicators one hears about?

Well, Fred, that's a good question. And as you know, we focus more on the neighborhood retail space as opposed to the big box, which is all, but kind of dead in my view, and then the malls, which is even a more complicated picture. So the neighborhood retail, what it is evolved to in our view is a strong grocery anchor, which of course HEB is, and we couple that with somewhere between 50,000 and 100,000 square feet of -- kind of -- I don't want to say Amazon proof, but that's kind of how we try to look at it, such that it's entertainment, wellness, fitness, food, beverage and you know, other entertainment uses and immediate need things like a cellphone store. So we're very cognizant of the pressure that Amazon is putting on the space. We don't think retail is going to go away. We just think it's going to evolve into something a little bit different, a little bit smaller and things that you just simply can't get from Amazon.

Okay. Thank you. And my other question is, with the stock price so low relative to the company's intrinsic value per share, what if any thoughts do you have about possibly doing the tender offer for a piece of the shares?

Well, that's something that the Board -- it's a Board decision, number one, as you can appreciate. It's something that we have considered and are evaluating. I think it's premature for me to say exactly what we're going to do, but we do watch the stock price. And we do think that it would be a good arbitrage for us to consider something like that. So, let me just say that it's certainly on our radar. And I hope to be able to say something one way or another in the coming weeks or sooner.

[Operator Instructions]. This concludes our question-and-answer session. The conference has now also concluded. Thank you for attending today's presentation. You may now disconnect.