Welcome to the Stratus Properties' Third Quarter 2019 Financial and Operational Conference Call. Earlier this morning, Stratus released its financial results, 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 on Stratus' website through November 17, 2019. Anyone listening to the taped replay should note that all information presented is current as of today, November 12, 2019 and should be considered valid only as of this date. As a reminder, today's press release and certain comments that will be made on this call include forward-looking statements and actual results may differ materially. Please review and refer to the cautionary language included in Stratus' press release issued today and the risk factors described in Stratus' 2018 Form 10-K that could cause actual results to differ materially from those projected by Stratus. In addition, management will discuss adjusted earnings before interest, taxes, depreciation and amortization also referred to as adjusted EBITDA, which is a financial measure not recognized under US generally accepted accounting principles also referred to as GAAP. As required by SEC rules and regulations, this non-GAAP financial measure is reconciled to its most comparable GAAP financial measure in a supplemental schedule of Stratus' press release issued today. I would now like to turn the call over to Mr. Beau Armstrong, Chairman, President and Chief Executive Officer of Stratus Properties.

Thank you, everyone for joining our third quarter 2019 financial and operational conference call. Our Chief Financial Officer, Erin Pickens is here with me today. As we have previously stated, our goal as a diversified real estate company in the fast growing Texas markets is to follow a development process that creates value for our stockholders. This process includes the following stages. First, we identify attractive properties and then negotiate an acquisition. Second, we prepare development plans and secure entitlements and permits for the project. Third, we construct and lease project. And lastly, we position the project for a capital event which may include a sale or refinancing depending on market conditions. Our pipeline is full of opportunities and our projects are progressing as planned. On today's call, although I will not cover all of our current projects. I would like to focus on three of them, namely Magnolia Place, The Santal and Block 21. Afterwards, Erin will discuss our third quarter financial results. Last quarter, I shared that we were in the process of securing construction loan to finance the first phase of Magnolia Place, a new mixed-use project in Magnolia, Texas which is northwest of Houston. All state of Texas Highway Department Roadway work and City of Magnolia utility work is now complete. We are fine tuning our development budget and continuing our pre-leasing and development financing efforts. We currently expect to begin site clearing within the next eight weeks to 10 weeks. The first phase of this project consists of retail and multifamily development. The retail component will have a shadow-anchored HEB and 41,100 square feet of retail space. Three pads for lease and three pads to be held for sale. We are currently evaluating the initial phase of multifamily development as well. The full development is…

Thank you, Beau. We reported our financial results for the third quarter of 2019 in our press release issued this morning. In the third quarter of this year compared to last year's quarter, Stratus reported revenues totaling $22.3 million up from $17.9 million last year. The increase in our revenues is primarily due to the commencement of leases at our recently completed properties and an increase in the number of events and higher event attendance at ACL Live and net loss attributable to common stockholders of $3 million versus $2.4 million last year, which is primarily the result of higher interest expense related to higher average debt and adjusted EBITDA totaling $2.9 million in the third quarter of 2019, up from $1.4 million last year. Stratus reports financial results for four operating segments, including our Real Estate Operations, Leasing Operations, Hotel and Entertainment segment. In the third quarter, all four operating segments earned increased revenues and operating income on a year-over-year basis. Our Real Estate Operations segment revenues and operating income increased this quarter compared with the same quarter last year, the $2.6 million and $0.2 million respectively, primarily due to higher sales of developed properties. In the recent quarter, we sold four Amarra Drive Phase III lots for a total of $2.6 million compared with sales of one Amarra Drive Phase II lot and two Amarra Drive Phase III lots for a total of $2 million in the third quarter of last year. Since quarter-end, we have closed on the sale of one Amarra Drive Phase II lot and two Amarra Drive Phase III lots for a total of $2.2 million and as of November 8, eight Amarra Drive Phase III lots were under contract. Our Leasing Operations segment revenues and operating income increased this quarter compared with the…

Thank you, Erin. The execution of our development process in select fast growing Texas markets including Austin and Houston continues to provide value to us and our shareholders. Our multi-use properties continue to be strong assets for Stratus and we are proud to work with native Texas companies such as HEB. As we have discussed in our previous calls and as we continue to witness, the Austin and Houston markets offer strong job opportunities, which allows for continued population growth. There may be additional competition regarding our Hotel and Entertainment segments but we welcome the increased activity. We continue to see value and invest in these areas as we follow our full development process and focus on generating strong returns for both the Company and its shareholders. Thank you for listening. Erin and I are happy to answer any questions you may have.

We will now begin the question-and-answer session [Operator Instructions] Our first question comes from Sam Kidston with North & Webster. Please go ahead.

Hey. Hey guys, how are you today? Just a couple of quick questions, one is could you just comment a little bit further on the process around Block 21 and maybe when you think that that process, you might have something to announce one way or another?

Good morning, Sam. As you can appreciate that process is ongoing and I'm reluctant to get into any details, but I'll tell you that what I can say is that we've had very strong interest. But it is again preliminary to discuss specifics, but my -- the process will be, we will conclude this process that Savills has been running. I will kind of lay out the opportunities for the Board and they'll direct me on a path forward. But I think again, I don't want to get into too much detail, but I would think, it's probably in the next 30 days, we will at least be able to bring something to closure for our Board to consider.

Great, great. And then just any -- anything you could talk about on the activity around the deferred gain burning that down?

I'll let Erin answer that, if that's OK, Sam.

Great.

Hi, Sam. The deferred gain is -- there hasn't really been much movement in that in some time, and that's because there is -- it's related to additional buildings that could be built couple of build-to-suits and one building on a pad site. So it's probably -- probably be until, unless and until, we build those properties that we would recognize any more gain.

Right. And then any comment on the marketing on those -- marketing process on those?

We're very active, I mean, nothing really to I guess disclose at this point, but those are very active projects and we are constantly assessing opportunities out there. So it's nothing that we feel that there is any trouble there at all. It's just kind of finding the right -- the right match with the tenant for the property.

Sure, sure. All right, well thank you, guys.

The rest of the center -- and the rest of the center -- I'll just add, the rest of center is performing very well. So just, I think, it's just kind of a matter of time before we can -- begin the way we deal there.

Sure, all right, thank you guys for the time.

Thanks, Sam.

The next question is from Fred Burtner a Private Investor. Please go ahead.

Thank you. Beau, I have two questions. The hotel was -- I was pleasantly surprised on its growth in the quarter. And the press release spoke about what caused the upturn. Is the upturn expected to continue in the near term?

Well, Fred, I -- that's always, it's difficult to predict the future, but I would tell you that there has been a lot of new supply in Austin. I know that that has had people worried but we continue to also expand our visitor base. So it's all good. So I think that those out there that thought that we were approaching overbuild situation. I don't think that has materialized. And I can tell you that there still is considerable demand from hotel investors to either buy existing or to consider development opportunities. So I am optimistic that we will continue on this favorable trend. I think, we've had, I can tell you that with respect to our property, we did have a little bit of, there was a transition from Starwood to Marriott and an accounting system, and a reservation system issues and that I don't have the particular details about. It's not that there were some issues there that did impact our first half of the year results, but I feel as though those have been addressed, and we're back where we want to be. So perhaps a long answer to your question, but I do think that Austin in general is performing very well. I think, our hotel is extraordinary and its complement of -- of different uses. So I feel that we're in a good -- in good shape to continue to compete well in the Austin market.

Thank you. And my other question is, what are your thoughts on cash distributions to common shareholders?

Well that ultimately is a Board decision, Fred and I don't think, right now, we're in a position to do that right this minute, but we, we've done one in the past when we've had a big capital event. So I think that to the extent that we -- we have the resources to do that. I think the Board has demonstrated a willingness in the past to do that. But first things first, we would like to at least have a capital event that would enable us to do that.

Okay, thank you very much.

Thank you, Fred.

This concludes our question and answer session. And the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.