Stratus Properties Inc. has agreed to sell Block 21, a mixed-use entertainment, lodging, office and retail complex located in downtown Austin, Texas, to Ryman Hospitality Properties, Inc. for $260 million.
Stratus previously announced an agreement to sell Block 21 to Ryman for $275 million in December 2019, which was terminated in May 2020 by Ryman due to the intervening COVID-19 pandemic.
”As a result of the termination, Ryman forfeited $15 million of earnest money to Stratus,” said Stratus in a statement.
William H. Armstrong III, Chairman of the Board and Chief Executive Officer of Stratus, said, “I am proud of the Stratus team for continuing to position this iconic property for success from early development plans through permitting, construction, leasing and management. I am also grateful for the community’s, our partners’, and our patrons’ continuous support, particularly during the pandemic. We were pleased to reach an agreement with Ryman in 2019 and again this year. We remain confident that their experience with entertainment and hospitality properties makes Ryman the right partner for Austin and Block 21.”
Block 21 is Stratus’ wholly owned mixed-use real estate development and entertainment business comprising the 251-room W Austin Hotel and Austin City Limits Live at the Moody Theater, a 2,750-seat entertainment venue that serves as the location for the filming of Austin City Limits, the longest running music series in American television history.
Block 21 also includes Class A office space, retail space, and the 3TEN ACL Live entertainment venue and business, which has a capacity of approximately 350 people. Stratus completed the development of Block 21 in 2010.
“The Block 21 team’s knowledge of the Austin market has yielded significant value for shareholders over the years, and this transaction is no exception. This sale will provide Stratus with significant financial flexibility to drive additional shareholder returns. The Board will carefully consider several compelling opportunities for use of the proceeds, including reinvesting in our robust project pipeline, further deleveraging, and returning cash to shareholders. I am confident that Block 21 will continue to thrive as an Austin icon within the Ryman portfolio,” added Armstrong.
Colin Reed, Chairman and Chief Executive Officer of Ryman Hospitality Properties, said, “We look forward to building on Block 21’s remarkable legacy and joining this incredible community of employees, customers, tenants and guests. We have a track record of investing in our portfolio of entertainment, hospitality and media assets and are thrilled to be a part of the high-growth Austin market.”
Stratus said the transaction is targeted to close near year end, subject to the timely satisfaction or waiver of various closing conditions, including the consent of the loan servicer to the purchaser’s assumption of the existing mortgage loan, the consent of the hotel operator, an affiliate of Marriott, to the purchaser’s assumption of the hotel operating agreement, the absence of a material adverse effect, and other customary closing conditions.
”The Block 21 purchase agreement will terminate if all closing conditions are not satisfied or waived by the parties. Ryman will deposit $5 million in earnest money to secure its performance under the agreements governing the sale,” said in the statement.