Good day, and welcome to the Stratus Properties second quarter 2022 financial and operational conference call. Earlier this morning, Stratus released its second quarter 2022 financial results and provided business updates 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 replay on Stratus's website through August 29th, 2022. Anyone listening to the taped replay should note that all information presented is current as of today, August 15th, 2022, 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 from those anticipated, projected, or assumed in the forward-looking statements.
Please review and refer to the cautionary language included in Stratus's press release issued today and the risk factors described in Stratus's 2021 Form 10-K and second quarter 2022 Form 10-Q that could cause actual results to differ materially from those projected by Stratus. In addition, management will discuss earnings before interest, taxes, depreciation, and amortization, also referred to as EBITDA, which is a financial measure not recognized under U.S. 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's press release issued today. I would now like to turn the conference over to Mr. Beau Armstrong, Chairman, President, and Chief Executive Officer of Stratus Properties.
Thank you for joining our conference call to review our second quarter 2022 financial and operational results. Our Chief Financial Officer, Erin Pickens, is here with me today. To start off, I'd like to say how proud I am of our team's hard work and execution in delivering another quarter of excellent financial performance. From our sale of Block 21 in late May to furthering progress on our development portfolio, we believe Stratus is well-positioned to continue to maximize shareholder value. In fact, I'm proud to share that as of June 30, 2022, Stratus' stockholder's equity was $262.4 million, which is an increase of over $150 million or 165% since the end of 2020.
Stratus has generated $218.9 million of pre-tax earnings or $172 million net of income taxes from the sales of the St. Mary, the Santal, and Block 21 over the last six quarters, and approximately $166 million of after-tax cash flow, including $6.9 million of proceeds from the Block 21 sale held in escrow for a year after the sale. I'd also like to share an exciting development for our shareholders. We've mentioned before, Stratus' board of directors and management team have been evaluating opportunities for deploying the proceeds from the sale of Block 21 and other recent sales. I'm happy to report that as a result of this strategic planning process, Stratus' board has approved returning $50 million cash to shareholders, subject to obtaining required consents from Comerica Bank.
This return of capital could be in the form of share repurchases, dividends, or a combination of both. As part of these discussions, our directors have also been considering potential updates to Stratus' long-term business strategy. After streamlining Stratus' business through the sale of Block 21, the board has decided to continue Stratus' successful development program with our team focusing on pure residential and residential-focused mixed-use projects in Austin and other attractive markets in Texas. Stratus plans to continue to develop properties using project-level debt and third-party equity capital, and we expect Stratus to reduce Stratus' reliance on its revolving credit facility and retain sufficient cash to operate its business, taking into account risks associated with changing market conditions. We are pleased with the shareholder value we are creating through our proven and consistent approach.
We have refined our development program over the years and have made solid progress on our properties across our portfolio. The returns are clear, and I'm excited to see what more we can accomplish with our strong pipeline of opportunities. This momentum and progress are only possible due to our talented people. Stratus benefits from our team's knowledge, experience, and relationships in the markets where we operate, and this positions us to capitalize on the high housing demand we are currently experiencing in Austin and other Texas markets. As you likely saw from our recent announcement on July 21st, we raised a total of $33.4 million of third-party equity capital and $56.8 million of construction financing from Comerica Bank for the St. George project.
We recently began construction of this 316-unit luxury wrap-style multifamily project located in an excellent North Central Austin location within minutes of University of Texas, downtown employers, Apple's new North Austin campus, Q2 Stadium, and The Domain, which is an upscale retail office and residential center. Affirmed by our recent success with the St. George, we believe that we will be able to continue to attract project-level third-party equity and bank debt financing for our other projects in our pipeline as well. While residential demand remains strong in our markets. I also want to acknowledge that the increases in land, construction, and labor costs, supply chain constraints, and rising interest rates are challenges facing the entire real estate industry right now.
We are confident that the strength of our portfolio, the versatility of our team, and our strong financial position are key to succeeding in these uncertain market conditions. To manage these risks, we go through extensive pricing exercises, culminating with competitive bids from reputable contractors based on final plans and specifications. Further, because we engage third-party general contractors to construct our projects on a fixed price or guaranteed maximum price basis, our exposure to cost increases on projects under construction is limited. To date, these rising costs have not had a material impact on our financial results, as we have been able to realize higher rents and sales prices. In addition to rigorous cost management, Stratus' strong balance sheet after the sale of Block 21 and receiving financing for The Saint June position us to capitalize on strategic opportunities in the future. I'll now provide further updates on our pipeline.
To begin, in the second quarter, we made progress on our development plans and construction efforts on several of our residential projects. The first units of The Saint June, our 182-unit luxury garden-style multifamily product within the Amarra development, are expected to be completed in the fourth quarter of this year with a target of first quarter 2023 for full project completion. The Saint June comprises multiple buildings featuring one, two, and three-bedroom units for lease, with amenities that include a resort-style clubhouse, fitness center, pool, and extensive green space. We are excited for the completion of The Saint June in the coming months, which will also be aligned with our sustainability, wellness, and conservation goals.
We are advancing development plans for The Annie B, our luxury high-rise apartment building in downtown Austin, with unobstructed 360-degree views of the capital, downtown Austin, the University of Texas campus, and West Austin. We expect to begin construction in 2023, subject to obtaining financing and other market conditions. The Annie B will be developed as a 400-foot tower consisting of approximately 440,000 sq ft with 316 luxury multifamily units. Additionally, we are expanding and renovating the historic A.O. Watson House, which is located adjacent to the tower and will offer amenities including a restaurant, bar, pool, and garden, all while preserving the property's unique historic and architectural features.
Construction on the last 12 Amarra Villas units in Barton Creek continues to progress, and as of August 12th, 2022, three homes were under contract to sell and nine Amarra Villas homes of the 20-unit development remain available for sale. Similarly, we have also advanced development plans for the St. Julia and Holden Hills projects. The St. Julia is a 306-unit multifamily component of our Lantana Place project, south of Barton Creek in Austin. We currently expect to begin construction on the St. Julia in 2023, subject to securing an acceptable capital structure and other market conditions remaining favorable. Holden Hills is our final large residential development within the Barton Creek community, with 475 unique residences to be developed in multiple phases aligned with our sustainability, wellness, and conservation goals.
We have obtained construction permits for phase one, and subject to obtaining financing and other market conditions, we currently expect to start infrastructure construction in late 2022. We expect to be in position to start building homes and/or selling home sites in Holden Hills in late 2024. The last residential project I'll mention is Section N, our 570-acre tract located along Southwest Parkway in the southern portion of the Barton Creek community. For this project, we are capitalizing on trends in consumer demand and are using a conceptual approach similar to that used for Holden Hills. If successful, Section N will be designed as a dense mid-rise mixed-use project surrounded by an expansive green space area, which would result in a significant potential increase in development density.
I'm looking forward to seeing the exciting residential projects in our pipeline develop further, meet the demands of residents in our target markets, and contribute to future strong returns for our shareholders. Retail and commercial updates. In addition to our residential projects, I'd like to share some updates on our retail and commercial projects. Construction continues on the first phase of our H-E-B grocery shadow-anchored mixed-use project, Magnolia Place. Development plans currently consist of four retail buildings totaling approximately 35,000 sq ft, five retail pad sites to be sold or ground leased, 194 single-family lots, and approximately 500 multifamily units. The first phase consists of two retail buildings with approximately 19,000 sq ft, all five pad sites, and road utility and drainage infrastructure necessary to support the entire development.
The infrastructure construction was completed in the second quarter, and the two retail buildings were also completed this quarter and turned over to our retail tenants to begin their finish-out process. We expect H-E-B's 95,000 sq ft grocery store to open by the end of 2022. In addition, we sold one completed pad site for $2.3 million in the second quarter and recently closed on the sale of 28 acres of undeveloped residential land in Magnolia Place for $3.2 million in the third quarter. As of June 30, 2022, we had signed leases for approximately 90% of the retail space in our partially developed mixed-use project in Austin Lantana Place, including the major anchor tenant, Moviehouse & Eatery, and a ground lease for an AC Hotel by Marriott.
We are also exploring potential sale or refinancing of our stabilized mixed-use developments at Kingwood Place, Jones Crossing, and West Killeen Market, as previously disclosed, and are also pursuing other projects which may produce additional cash to return to shareholders, subject to market conditions and obtaining any required consents. These projects are performing well and generating revenue, and we plan to take action when we believe the market is right to maximize value. Furthermore, we have undeveloped properties currently undergoing active planning, including our two large projects, Holden Hills and Section N. I will now turn the call over to Erin for a review of our second quarter 2022 financial results. Erin?
Thank you Beau. Today, we issued our press release announcing our second quarter 2022 results. Before I begin, I'd like to acknowledge the unparalleled execution of the Stratus team, which is enabling us to create value for our shareholders. As Beau mentioned, Stratus' total stockholder equity increased to $262.4 million at June 30th, 2022, which is a 165% increase from $98.9 million at December 31st, 2020, primarily as a result of gains realized on the sales of Block 21, The Santal, and the St. Mary. Revenues totaled $11.1 million in the second quarter of 2022, compared with $5.6 million in the second quarter of 2021.
The significant increase in revenues in the second quarter of 2022 is primarily a result of the opportunistic sales of undeveloped real estate properties, as well as a completed Amarra Villas home in our real estate operations segment, partially offset by a decrease in leasing revenue resulting from the sale of The Santal in late 2021. Net income attributable to common stockholders totaled $96.6 million, or $11.53 per diluted share in the second quarter of 2022, compared to a net loss of $10.2 million, or $1.23 per diluted share in the same quarter last year.
The second quarter 2022 results included net income from discontinued operations associated with Block 21 of $95.9 million, including a $119.7 million pre-tax gain on the sale, or $94.1 million net of taxes, compared to a net loss from discontinued operations of $5.9 million in the second quarter of last year. EBITDA totaled $1.5 million in the second quarter of 2022, compared to -$4.5 million in the second quarter of 2021. I'll now provide brief commentary on our reporting segments. Following our sale of Block 21 in May, Stratus is reporting segments now include only real estate and leasing operations, as we no longer have entertainment and hotel operations.
Revenue from our real estate operations segment in the second quarter of 2022 totaled $7.9 million, compared to $773,000 in the second quarter of 2021. Operating income totaled $2.5 million in the second quarter of this year, compared to an operating loss of $807,000 last year.
The increase in revenue and operating income from the real estate operations segment in the second quarter of 2022 compared to the same quarter in 2021 reflects the second quarter 2022 sales of an Amarra Villas home for $2.4 million and several undeveloped properties, including a 6-acre multifamily tract of land in Amarra Drive for $2.5 million, a completed pad site at Magnolia Place for $2.3 million, and a tract of land in Austin for $0.6 million. Revenue from our leasing operations segment in the second quarter of 2022 totals $3.2 million, compared with $4.9 million in the second quarter of last year.
The decrease in revenue from the leasing operations segment in the second quarter of 2022 when compared to the second quarter of last year primarily reflects the December 2021 sale of The Santal, which had rental revenue of $2.3 million in the second quarter of 2021, partly offset by increased revenue at Lantana Place. Operating income for the segment in the second quarter of 2022 totaled $1.5 million, compared to $1.1 million in the second quarter of last year. Operating income in the segment increased due to the lower rental cost of sales and depreciation, primarily as a result of the sale of The Santal.
On May 31st, 2022, we closed the sale of Block 21 to Ryman Hospitality Properties Inc. for $260 million, subject to certain purchase price adjustments and including Ryman's assumption of $136 million of existing mortgage debt with the balance of the sale price paid in cash. Stratus' net proceeds of cash and restricted cash totaled $112.3 million, including $6.9 million of the purchase price escrowed and to be held for 12 months, subject to a longer retention period with respect to any required reserve for pending claims. Stratus recorded a pre-tax gain on the sale of $119.7 million in the second quarter of 2022, which is included in net income from discontinued operations. Turning now to capital management.
At June 30th, 2022, consolidated debt totaled $114.6 million, and consolidated cash totaled $102.4 million. Compared with consolidated debt of $106.6 million and consolidated cash of $24.2 million at December 31st, 2021. Note that consolidated debt at December 31, 2021 excluded the Block 21 loan of approximately $137 million, which was presented in liabilities held for sale, discontinued operations. Using the proceeds from the sale of Block 21, Stratus repaid the outstanding amount under its $60 million Comerica Bank credit facility prior to the end of the quarter. At June 30, 2022, Stratus had $49 million available under the credit facility.
Letters of credit totaling $11 million have been issued under the credit facility to secure Stratus' obligation to build certain roads and utilities facilities benefiting our Holden Hills and Section N projects. As Beau mentioned, in July a Stratus subsidiary entered into a $56.8 million loan with Comerica Bank to finance the construction of the St. George multifamily project. In connection with the closing of the construction loan, we also received the final funding commitment from our equity partner, which provided an additional $15 million of capital. Our partner's contributions now total $33.4 million for this project. Stratus also made additional capital contributions of $1.7 million, bringing our total capital contributions to $3.7 million for this project.
Purchases and development of real estate properties included in operating cash flows and capital expenditures included in investing cash flows totaled $39.7 million for the first six months of 2022, which primarily related to the development of Barton Creek properties, including The Saint June and Amarra Villas and Magnolia Place. This compares to $7.3 million for the first six months of 2021, primarily related to the development of Barton Creek properties, including Amarra Villas, Lantana Place and Magnolia Place. Thank you. I will now turn the call back to Beau for his closing remarks.
Thank you Erin. As always, we are focused on Stratus' disciplined development program and are working to further build a high quality pipeline of projects. Our talented team continues to capitalize on opportunities and execute our development strategy as we expand our presence in attractive Texas markets and actively manage and monitor costs to best position Stratus for strong returns. Our business strategy, diversified portfolio, experienced team, and development pipeline all help us navigate various market conditions and position Stratus for long-term success. It's with our determination that we have been able to provide such strong returns for our shareholders, as evidenced by the board's decision to return $50 million of cash to shareholders, and by the total 165% increase of Stratus' stockholders' equity at June 30th, 2022 since the end of 2020.
We have some exciting projects in our pipeline, and we're looking forward to seeing them come to fruition as we continue looking for opportunities to maximize shareholder value. At this time, I'll ask the operator to open the line for questions. Thank you all very much for participating today.
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our rosters. Again, if you have a question, please press star then one. Our first question is from Chris Mooney with Wedbush Securities. Please go ahead.
Good morning. Can you hear me?
Yes sir, I can hear you. It's Chris, it's Beau.
Okay. Yeah hi Beau. Walk us through your sense of timing of when you're going to be able to tell your shareholders what you're going to do in the $50 million capital that you intend to return to shareholders.
Sure. Good question. As we said here in our materials, we have to get a consent from Comerica Bank, which we don't expect to be problematic at all. We're working on that right now. I think the board is interested in having some discussions with some of our larger shareholders to again, just get a full understanding of expectations. I think we're gonna start there. I would think this would be more or less a matter of weeks. I realize it's been a while since we've kind of sold Block 21 and there's been some expectation that we would have done this a little quicker. I've heard from some shareholders on that.
We have been, I think, very diligent in our kind of our analysis of the options and the situation. I think we're in a good place. I think we're poised to move quickly. We're gonna get this Comerica consent. We're already working on it. We're gonna have some discussions with our larger shareholders or really anybody that has an interest is certainly willing to, you know. We're willing to listen to them. Now that this has been disclosed, it just gives us a lot more latitude to kind of discuss the specifics. Again, to answer your question, I think this is hopefully something that can be accomplished in a matter of weeks.
Okay, great. As you know, my view is, having thought about it for a while, you need to do something.
Absolutely.
Yeah.
Well I think, I mean, this is a big slug of money for us.
Yes.
We wanted to be mindful of, you know, we have some existing commitments. We've got a, you know, pipeline of opportunities that we're advancing. We've also obviously, we all read the paper and know that we're in a bit of uncertain times. Taking all that into account, we think this is a, you know, a big commitment on behalf of the company to return capital, and we just wanna be sure that when we do it, we have listened to everybody and we're gonna make the right decision.
Okay. That should leave me with a little over $50 million in cash, just deducting the $50 million from the cash balance at the end of June, I guess.
Yeah.
You're going to get more?
We do have a tax liability associated with Block 21. Again, I want, I don't wanna get into the details necessarily, but we probably have, you know, I think it's Erin can correct me if I think we're somewhere approaching a $20 million tax liability that needs to be taken into account. It's not quite $50 million. We also clearly have our revolver, but we are the company's really is trying not to use that revolver going forward. If we can avoid it. That's really more of a kind of a you know, emergency, if you will. We're really trying to run this on a cash basis if we can. Yes, sure.
Still, even that $30 million, even given some of the other things we're working on, we feel that gives us enough financial flexibility to comfortably run our business.
Can you walk us through the other debt that's outstanding? I think it's project-level debt on the 3 H-E-B centers. Is that?
That's correct.
Is that right?
We have a revolver in there. There are some letters of credit outstanding, so that does reduce our availability of the revolver. Those letters of credit are really meant to just, you know, there's fiscal deposits with municipalities or the county to ensure that we complete whatever infrastructure is just being built. Those come and go, and I don't really view that as a, you know. It's not like we're using that cash for investment purposes or anything. It's just really meant to kind of stand behind our commitment to complete utility infrastructure. That aside, everything else is project debt. We have project debt on virtually all of our operating properties. The three H-E-B centers.
We've got a project, the Lantana Place in Austin. We've got two construction loans, three construction loans rather. We've got St. George, St. June, and Magnolia. Erin, I might be missing something, but generally, all of our projects have, I would say, I would characterize as low-level project debt, but they all do have project debt, all of which has different, you know, different conditions for the recourse burning off. But generally speaking, construction debt is full recourse to the company until completion, and then there can be further reductions in the liability as you meet certain leasing goals.
Okay. Also, and/or refinance, as you said, on the three retail centers.
That's correct. Many of you know we are-
Do we have timing on those, by the way?
Sure. As many of you know, we've engaged CBRE to market the three H-E-B properties. We are just in the midst of that effort. I don't really have much of an update other than we've had some interest. They're strong, good properties, they're performing. We will know more and be able to share more with our shareholders, and it'll probably be several weeks, I think, trying to get through summer. It's a little bit of a slower time. Our expectation is that sometime after Labor Day, we will kind of be able to announce what our plans are with those three assets.
Okay. I've got more questions, unless there's somebody else in the queue. Okay.
No, go ahead.
Great. Looking at an ongoing operational basis, how much revenues do you expect to be recognizing on a quarterly basis to offset your corporate overhead?
I would have to let Erin answer that. I think generally speaking, though, we do not currently generate enough kind of after debt service cash flow to fully offset our G&A. That's been the case for quite some time. As you can see, our revenues tend to be lumpy and we'd like to say event-driven. Over the long haul, we certainly more than cover our costs, but you know, we are, as I said, because it is lumpy, there are periods where we are having to cover our overhead outside of our kind of cash flow from the projects. But I don't have those specifics. Perhaps Erin may shed a little more light on it.
Chris, we can certainly follow up offline and give you a little more detail.
Okay. It works for me.
Okay.
I have more questions.
Sure sure. [uncertain] .
The Saint June, when does it go into pre-lease?
We expect to deliver the, you know, our first units in December, and that may slide a little bit, but certainly by year-end, we expect to be in the leasing business out there.
Okay. Is the clubhouse nearing completion? That's, I think, where my understanding was you'd be doing the leasing from that building.
Yes. The clubhouse is all. They're all. Everything is kind of really gonna be hitting towards the end of the year. Clubhouse, first units. We had expected to deliver the clubhouse a little early. We had, you know, like everybody these days, construction delays. We couldn't get, you know, crews. It was electric meters were the problem out there, so we've been delayed, but we do expect to be open or at least begin the leasing in December as always planned. We just don't have the luxury of having the clubhouse available in advance like we had hoped.
Okay. Kind of across the street, what's the status on available lease space at Lantana?
I'm going from memory here, but I think we've got, you know, actually approximately 10,000 sq ft of space or less, maybe 8,000 sq ft. We've got people that are looking at those. I wouldn't want to suggest that they are just sitting there with no interest. I think we're given the things we're working on, we really hope to have that kind of fully leased up, you know, sometime by the end of the year. The activity's been really strong. We've got a couple restaurant candidates that we've been working with for quite some time. I think we're, you know, pretty much zeroing in on getting that fully leased.
We also have a multifamily site there as well, that you're aware of. We have continued to advance our plans on that. As we mentioned in our comments, that we hope to be able to begin construction on that sometime next year.
That would be the St. Julia? Is that gonna be the name of it?
Yes, that's correct. That's correct.
In Lantana, how many sq ft total encompasses the Lantana Cliffs? Just under 100.
I'm sorry?
It's just under 100,000. 99,000 sq ft. Okay. You're basically 90% leased? Yes. Okay. Great. I guess the couple of things that were not mentioned, Circle C and Lakeway, any updates with those?
Circle C, you know, we have, I'd say the majority of our retained land there is a site that is currently zoned for office use along South MoPac, and we are evaluating you know, alternate uses for that particular office tract. It's a very well located office tract with suburban offices. You know, I think it just depends where you are, and it's a great site. Don't get me wrong. I just think it could be more valuable as perhaps some mixed-use component to it. We're looking at that. Lakeway, we have a residential zone tract as part of our PUD agreement, and we have been going through a rezoning process with the City of Lakeway.
We have gone through the zoning and planning or ZAPCO. That part of the process is done, and now we actually have our first city council hearing. I think it's tonight, actually. There's no guarantee. That's a very... You know, Lakeway is. I wouldn't wanna say they're development restricted. They're just very particular about what goes on out there. We think that what we're proposing in terms of giving them land for a park in exchange for multifamily zoning makes a lot of sense, but there are certainly no guarantees that we'll accomplish that.
If we don't, you know, we still have, you know, we've got, the ground is zoned for single-family residential, and I think we'll be, you know, is a very viable project, just if it were developed under that, under those, guidelines.
Okay. Section N, you know, the dreamer in me looks at that and says it's 500 acres and, The Domain is 302 acres, and it looks like you have an opportunity if you get this density increased to build out, in effect, a third or second non-downtown downtown for Austin. Am I just-
Well no, that's. I think that's consistent with our thinking. Just a couple of, you know, kind of high-level comments on that. As everyone knows who's followed Stratus for a time, the Barton Creek Watershed, where Section N is a highly regulated, very environmentally sensitive part of town. Unlike The Domain, which, you know, just doesn't have those constraints, we operate in just a very different world out there. We're very just very sensitive to the, you know, neighborhood environmental group pressure on us. Of course, we know what we're doing. We've done this a long time, but that's something I always feel compelled to mention, that it is not without some just additional scrutiny. That said, we have.
Our plans are to develop that kind of under current code, which would be, you know, roughly, you know, call it 20% of that 500 acres could be developed. You know, kind of at very high level, that leaves 400 acres of open space, which in and of itself is an incredible amenity. We also are not in the city, and so we do not have. We are not subject to city zoning. We have tremendous flexibility with respect to uses and also height and size of buildings. That is a benefit to being in the county and out of the city, although, you know, like everything, there's a counter to that is that the county process is very cumbersome, so we've got to work county and city.
All that said, we have been working on this for you know, advancing Section N for five years now, at a very granular level. We're making progress and hope that if this progress continues, that we could really have something, you know, kind of definitive to get out there, you know, maybe as early as the middle or towards the end of next year. As an example, Holden Hills, which we are essentially in position to begin our first phase of infrastructure, we're permitted and ready to go, and that will begin sometime, we think, around, you know, the end of August or the first of September, somewhere in that timeframe. That too was about a five or six year effort to get that done.
That's one of the, you know, I guess, problems about real estate development is that it just takes a very long time. The gestation period is so long, but we're hiding behind getting Section N going. That is the biggest asset the company has. We think that in terms of value creation, it's very important for us to have an identified plan for Section N that can be modeled and I think appropriately valued. That's our big focus now that Holden Hills is done, is to get Section N in that same position. You're right, it's that we control the utility infrastructure out there, so that is a positive.
Now we're really kind of dealing with some very technical engineering issues that are dealing with the City of Austin Land Development Code and just trying to get through that and get our plans together. It's been a good effort. We're making good progress. It's just slower than everybody likes. I think at the end of the day, it's a real opportunity for the company.
Yes, I agree. Those are my questions for now. Thank you very much.
Okay. Thank you, Chris. We'll follow up with you on the G&A question.
Okay.
The next question is from Richard Diamond with Castlewood Capital. Please go ahead.
Yeah. Hey Beau. Good morning. You spoke to a number of shareholders as part of your buyback dividend process. If you could provide some color or some highlights after your conversations, if there's commitment to the business long term, you know, especially given negative headlines generally speaking about housing today. Thank you.
Sure. Thank you Richard. If I think I understood the questions right, so let me take a stab at it, and you can correct me. As many of you know, when we, you know, had these big sales and knew that we were zeroing in on a having substantial cash in Stratus, we wanted to get some feedback, organized feedback from some of our large shareholders about ideas about what to do with the money. I think universally, you know. Well, I say universally. That's not true. I think there were a variety of opinions, everything from a buyback to a dividend to reinvesting in the pipeline and not returning any capital at all. You know, that's not unexpected.
I mean, there's a variety of opinions, and there are a variety of options. I think generally speaking, I think that the view is that if we were able to buy back stock on an attractive basis, that is, I think in a textbook fashion, that is perhaps the most accretive, you know, avenue for the company. First of all, buy back stock at a low basis or at some discount, and that would be accretive. I think generally people agree with that. Absent that, I think it would be a dividend. I you know, again, I can't speak to people's individual tax consequences, but we would expect that to be a qualified dividend.
The third thing is just making sure that there is enough money in the company to, as an example, to make sure that you can get Section N positioned for the next cycle or for its next phase, which would be, you know, full on development. Of course, Section N, as envisioned, is a multi-billion-dollar endeavor, so it's a big effort. I think those are the three things. You know, buy back stock, that's accretive, perhaps, you know, failing that, a dividend, and then beyond that, just making sure you have enough resources to comfortably move these various projects along. As far as housing, you know, I read the same, we all read the same information. I think that macro housing information is a bit misleading.
I think Austin, and our view, and this is something that I've spoken to many of you about this in the past, but our view is that Austin will continue to have a critical shortage of housing for, you know, perhaps forever. Our goal at Stratus is to try to focus more on that housing space. We think we're good at it, we understand the market, and we also believe we understand the opportunity. There have been several markets I think that have looked to be overbuilt, I just don't see that in Austin and certainly not in the areas of Austin where we operate.
In fact, you know, we still see incredible demand for housing such that it's almost getting to the point where it's, you know, it may ultimately slow down Austin because it's becoming a very unaffordable town relative to where it was five, 10, 15 years ago. It is. We see it as an opportunity. Obviously, if its demand continues and we're unable to meet the supply side, that in and of itself creates problems. We feel that at least as far as our portfolio, we're very well positioned to continue to deliver much needed housing in the Austin market. I would extend that perhaps to, you know, some parts of Houston, but for the most part, I think our interest really is and our portfolio is really set up more for Austin.
We do think that, many of you know, we have a relationship with H-E-B, and we think that these retail projects are just they're great assets. H-E-B is a best-in-class operator, and if we can couple quality housing with an H-E-B, we think that is a good formula as well. But I think that is would be you know 10%-20% of what we do. I think just standalone housing, mostly rental housing, would be the other, call it you know 80%. Richard, I hope I got the question correct. If not, correct me.
No, you got it. That's perfect. You know, I wanna thank you and the team for all the work you did and in multiple years in accomplishing the sale of our hotel in Austin. Thank you very much, and have a great day.
Thank you, sir. I appreciate the comments. Thank you.
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