----

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|------------------------------------------------------------------------------------------|
|                                                                                     |
| **UNITED                  STATES**                                                       |
| **SECURITIES                  AND EXCHANGE COMMISSION**                                  |
| **Washington,                  D.C. 20549**                                              |
|                                                                                     |
| **FORM                  10-Q**                                                           |
|                                                                                     |
| **(Mark                  One)**                                                          |
| **[X]**                                                                                  | **                                       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF                  THE** |
| **SECURITIES                  EXCHANGE ACT OF 1934**                                     |
| **For                  the quarterly period ended June 30, 2005**                        |
| **OR**                                                                                   |
| **[                  ]**                                                                 | **                       TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
| **SECURITIES                  EXCHANGE ACT OF 1934**                                     |
| **For                  the transition period from**                                      |   | **to** |
| **Commission                  File Number: 0-19989**                                     |
|                                                                                     |
|                                                                                     |
| **Stratus                  Properties Inc.**                                             |
| (Exact                  name of registrant as specified in its                  charter) |

| **Delaware**                                                                                    | **72-1211572**                                     |
|-------------------------------------------------------------------------------------------------|----------------------------------------------------|
| (State                  or other jurisdiction ofincorporation                  or organization) | (IRS                  Employer Identification No.) |
|                                                                                            |                                               |
| **98                  San Jacinto Blvd., Suite 220**                                            |                                               |
| **Austin,                  Texas**                                                              | **78701**                                          |
| (Address                  of principal executive offices)                                       | (Zip                  Code)                        |
|                                                                                            |
|                                                                                            |
| **(512)                  478-5788**                                                             |
| (Registrant's                  telephone number, including area code)                           |
|                                                                                            |

| STRATUS                  PROPERTIES INC.                                                              |   |
|-------------------------------------------------------------------------------------------------------|--------|
| TABLE                  OF CONTENTS                                                                    |   |
|                                                                                                  |   |
|                                                                                                  |   |
|                                                                                                  | Page   |
| Part                  I. Financial Information                                                        | 3      |
|                                                                                                  |   |
| Item                  1. Financial Statements:                                                        |   |
|                                                                                                  |   |
| Consolidated                  Balance Sheets (Unaudited)                                              | 3      |
|                                                                                                  |   |
| Consolidated                  Statements of Operations                  (Unaudited)                   | 4      |
|                                                                                                  |   |
| Consolidated                  Statements of Cash Flows                  (Unaudited)                   | 5      |
|                                                                                                  |   |
| Notes                  to Consolidated Financial                  Statements                          | 6      |
|                                                                                                  |   |
| Report                  of Independent Registered Public Accounting                  Firm             | 10     |
|                                                                                                  |   |
| Item                  2. Management's Discussion and Analysis of Financial                  Condition |   |
| and                  Results of Operations                                                            | 11     |
|                                                                                                  |   |
| Item                  3. Quantitative and Qualitative Disclosures about                  Market Risk  | 16     |
|                                                                                                  |   |
| Item                  4. Controls and Procedures                                                      | 16     |
|                                                                                                  |   |
| Part                  II. Other Information                                                           | 17     |
|                                                                                                  |   |
| Item                  1. Legal Proceedings                                                            | 17     |
|                                                                                                  |   |
| Item                  2. Unregistered Sales of Equity Securities and Use of                  Proceeds | 17     |
|                                                                                                  |   |
| Item                  4. Submission of Matters to a Vote of                  Security Holders         | 17     |
|                                                                                                  |   |
| Item                  5. Other                                                                        | 17     |
|                                                                                                  |   |
| Item                  6. Exhibits                                                                     | 17     |
|                                                                                                  |   |
| Signature                                                                                             | 18     |
|                                                                                                  |   |
| Exhibit                  Index                                                                        | E-1    |
|                                                                                                  |   |

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Table          of Contents

Part        I. FINANCIAL 

Item        1. Financial        Statements

ALANCE

|                                                                             | June                      30, |    | December                      31, |   |
|----------------------------------------------------------------------------------|-------------------------------|---------|-----------------------------------|--------|
|                                                                             | 2005                          |    | 2004                              |   |
| ASSETS                                                                           |                          |    |                              |   |   |   |
| Current                      assets:                                             |                          |    |                              |   |   |   |
| Cash                      and cash equivalents, including restricted cash of     |                          |    |                              |   |   |   |
| $121                      and $124, respectively                                 | $                             | 1,308   |                              | $      | 379 |   |
| Accounts                      receivable                                         |                          | 203     |                              |   | 345 |   |
| Prepaid                      expenses                                            |                          | 112     |                              |   | 40 |   |
| Notes                      receivable from property sales                        |                          | 47      |                              |   | 47 |   |
| Total                      current assets                                        |                          | 1,670   |                              |   | 811 |   |
| Real                      estate, commercial leasing assets and facilities, net: |                          |    |                              |   |   |   |
| Property                      held for sale - developed or under development     |                          | 122,587 |                              |   | 104,526 |   |
| Property                      held for sale - undeveloped                        |                          | 17,125  |                              |   | 20,919 |   |
| Property                      held for use, net                                  |                          | 21,060  |                              |   | 21,676 |   |
| Other                      assets                                                |                          | 3,909   |                              |   | 4,140 |   |
| Notes                      receivable from property sales                        |                          | 780     |                              |   | 789 |   |
| Total                      assets                                                | $                             | 167,131 |                              | $      | 152,861 |   |
|                                                                             |                          |    |                              |   |   |   |
| LIABILITIES                      AND STOCKHOLDERS’ EQUITY                  |                          |    |                              |   |   |   |
| Current                      liabilities:                                        |                          |    |                              |   |   |   |
| Accounts                      payable and accrued liabilities                    | $                             | 5,186   |                              | $      | 1,343 |   |
| Accrued                      interest, property taxes and other                  |                          | 4,459   |                              |   | 2,390 |   |
| Current                      portion of long-term debt                           |                          | 7,895   |                              |   | 1,531 |   |
| Total                      current liabilities                                   |                          | 17,540  |                              |   | 5,264 |   |
| Long-term                      debt                                              |                          | 56,183  |                              |   | 54,116 |   |
| Other                      liabilities                                           |                          | 5,349   |                              |   | 5,285 |   |
| Total                      liabilities                                           |                          | 79,072  |                              |   | 64,665 |   |
|                                                                             |                          |    |                              |   |   |   |
| Stockholders’                      equity:                                 |                          |    |                              |   |   |   |
| Preferred                      stock                                             |                          | -       |                              |   | - |   |
| Common                      stock                                                |                          | 73      |                              |   | 72 |   |
| Capital                      in excess of par value of common stock              |                          | 181,483 |                              |   | 181,145 |   |
| Accumulated                      deficit                                         |                          | (91,008 | )                                 |   | (91,417 | ) |
| Unamortized                      value of restricted stock units                 |                          | (705    | )                                 |   | (841 | ) |
| Common                      stock held in treasury                               |                          | (1,784  | )                                 |   | (763 | ) |
| Total                      stockholders’ equity                            |                          | 88,059  |                              |   | 88,196 |   |
| Total                      liabilities and stockholders' equity                  | $                             | 167,131 |                              | $      | 152,861 |   |
|                                                                             |                          |    |                              |   |   |   |

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Table of          Contents

STATEMENTS OF 

|                                                            | Three                    Months Ended |   | Six                    Months Ended |   |
|-----------------------------------------------------------------|---------------------------------------|--------|-------------------------------------|--------|
|                                                            | June                    30,           |   | June                    30,         |   |
|                                                            | 2005                                  |   | 2004                                |   | 2005 |   | 2004 |   |
| Revenues:                                                       |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Real                    estate                                  | $                                     | 6,625  |                                | $      | 3,202 |   | $ | 8,877 |   | $ | 4,174 |   |
| Rental                    income                                |                                  | 1,165  |                                |   | 974 |   |   | 2,385 |   |   | 1,802 |   |
| Commissions,                    management fees and other       |                                  | 252    |                                |   | 51 |   |   | 410 |   |   | 198 |   |
| Total                    revenues                               |                                  | 8,042  |                                |   | 4,227 |   |   | 11,672 |   |   | 6,174 |   |
| Cost                    of sales:                               |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Real                    estate, net                             |                                  | 4,097  |                                |   | 2,103 |   |   | 5,989 |   |   | 3,216 |   |
| Rental                                                          |                                  | 712    |                                |   | 811 |   |   | 1,320 |   |   | 1,500 |   |
| Depreciation                                                    |                                  | 419    |                                |   | 362 |   |   | 837 |   |   | 707 |   |
| Total                    cost of sales                          |                                  | 5,228  |                                |   | 3,276 |   |   | 8,146 |   |   | 5,423 |   |
| General                    and administrative expenses          |                                  | 1,220  |                                |   | 1,220 |   |   | 2,577 |   |   | 2,600 |   |
| Total                    costs and expenses                     |                                  | 6,448  |                                |   | 4,496 |   |   | 10,723 |   |   | 8,023 |   |
| Operating                    income (loss)                      |                                  | 1,594  |                                |   | (269 | ) |   | 949 |   |   | (1,849 | ) |
| Interest                    expense, net                        |                                  | (304   | )                                   |   | (231 | ) |   | (598 | ) |   | (468 | ) |
| Interest                    income                              |                                  | 30     |                                |   | 11 |   |   | 57 |   |   | 23 |   |
| Net                    income (loss) applicable to common stock | $                                     | 1,320  |                                | $      | (489 | ) | $ | 408 |   | $ | (2,294 | ) |
|                                                            |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Net                    income (loss) per share of common stock: |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Basic                                                           | $                                     | 0.18   |                                | $      | (0.07 | ) | $ | 0.06 |   | $ | (0.32 | ) |
| Diluted                                                         | $                                     | 0.17   |                                | $      | (0.07 | ) | $ | 0.05 |   | $ | (0.32 | ) |
|                                                            |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Average                    shares of common stock outstanding:  |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Basic                                                           |                                  | 7,213  |                                |   | 7,212 |   |   | 7,215 |   |   | 7,180 |   |
| Diluted                                                         |                                  | 7,680  |                                |   | 7,212 |   |   | 7,671 |   |   | 7,180 |   |
|                                                            |                                  |   |                                |   |   |   |   |   |   |   |   |   |

----

Table of Contents

OF 

|                                                                                   | Six                    Months Ended |    |
|----------------------------------------------------------------------------------------|-------------------------------------|---------|
|                                                                                   | June                    30,         |    |
|                                                                                   | 2005                                |    | 2004 |   |
| Cash                    flow from operating activities:                                |                                |    |   |   |   |   |
| Net                    income (loss)                                                   | $                                   | 408     |   | $ | (2,294 | ) |
| Adjustments                    to reconcile net income (loss) to net cash              |                                |    |   |   |   |   |
| provided                    by operating activities:                                   |                                |    |   |   |   |   |
| Depreciation                                                                           |                                | 837     |   |   | 707 |   |
| Cost                    of real estate sold                                            |                                | 4,632   |   |   | 2,231 |   |
| Stock-based                    compensation                                            |                                | 141     |   |   | 85 |   |
| Long-term                    notes receivable and other                                |                                | 341     |   |   | (35 | ) |
| Decrease                    in working capital:                                        |                                |    |   |   |   |   |
| Accounts                    receivable and prepaid expenses                            |                                | 70      |   |   | 629 |   |
| Accounts                    payable, accrued liabilities and other                     |                                | 5,976   |   |   | 1,075 |   |
| Net                    cash provided by operating activities                           |                                | 12,405  |   |   | 2,398 |   |
|                                                                                   |                                |    |   |   |   |   |
| Cash                    flow from investing activities:                                |                                |    |   |   |   |   |
| Purchases                    and development of real estate properties                 |                                | (18,898 | ) |   | (12,569 | ) |
| Municipal                    utility district reimbursements                           |                                | -       |   |   | 136 |   |
| Development                    of commercial leasing properties and other expenditures |                                | (222    | ) |   | (1,017 | ) |
| Net                    cash used in investing activities                               |                                | (19,120 | ) |   | (13,450 | ) |
|                                                                                   |                                |    |   |   |   |   |
| Cash                    flow from financing activities:                                |                                |    |   |   |   |   |
| Borrowings                    from revolving credit facility                           |                                | 16,490  |   |   | 6,228 |   |
| Payments                    on revolving credit facility                               |                                | (11,378 | ) |   | (3,953 | ) |
| Borrowings                    from project loans                                       |                                | 5,315   |   |   | 6,317 |   |
| Payments                    on project loans                                           |                                | (1,996  | ) |   | (331 | ) |
| Net                    proceeds from exercise of stock options                         |                                | 332     |   |   | 724 |   |
| Purchases                    of Stratus common shares                                  |                                | (1,018  | ) |   | - |   |
| Bank                    credit facility fees                                           |                                | (101    | ) |   | - |   |
| Net                    cash provided by financing activities                           |                                | 7,644   |   |   | 8,985 |   |
| Net                    increase (decrease) in cash and cash equivalents                |                                | 929     |   |   | (2,067 | ) |
| Cash                    and cash equivalents at beginning of year                      |                                | 379     |   |   | 3,413 |   |
| Cash                    and cash equivalents at end of period                          |                                | 1,308   |   |   | 1,346 |   |
| Less                    cash restricted as to use                                      |                                | (121    | ) |   | (782 | ) |
| Unrestricted                    cash and cash equivalents at end of period             | $                                   | 1,187   |   | $ | 564 |   |
|                                                                                   |                                |    |   |   |   |   |

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Table of Contents

**STRATUS        PROPERTIES INC.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

| **1.                  ** | **GENERAL** |
|------------------------------------|-------------|

| **2.                  ** | **NEW                  ACCOUNTING STANDARD** |
|------------------------------------|----------------------------------------------|

| **3.                  ** | **EARNINGS                  PER SHARE** |
|------------------------------------|-----------------------------------------|

|                                                                   |   | Three                    Months Ended |   | Six                    Months Ended |   |
|------------------------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
|                                                                   |   | June                    30,           |   | June                    30,         |   |
|                                                                   |   | 2005                                  |   | 2004                                |   | 2005 |   | 2004 |   |
| Net                    income (loss) applicable to common stock        |   | $                                     | 1,320  |                                | $      | (489 | ) | $ | 408 |   | $ | (2,294 | ) |
|                                                                   |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Weighted                    average common shares outstanding          |   |                                  | 7,213  |                                |   | 7,212 |   |   | 7,215 |   |   | 7,180 |   |
| Add:                      Dilutive stock options             |   |                                  | 447    |                                |   | - |   |   | 439 |   |   | - |   |
| Restricted                    stock                                    |   |                                  | 20     |                                |   | - |   |   | 17 |   |   | - |   |
| Weighted                    average common shares outstanding for      |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| purposes                    of calculating diluted net income (loss)   |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| per                    share                                           |   |                                  | 7,680  |                                |   | 7,212 |   |   | 7,671 |   |   | 7,180 |   |
|                                                                   |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Diluted                    net income (loss) per share of common stock |   | $                                     | 0.17   |                                | $      | (0.07 | ) | $ | 0.05 |   | $ | (0.32 | ) |
|                                                                   |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |

Table of Contents

|                                                | Second                  Quarter |   | Six                  Months |
|-----------------------------------------------------|---------------------------------|--------|-----------------------------|
|                                                | 2005                            |   | 2004                        |   | 2005 |   | 2004 |
| Outstanding                  options (in thousands) | -                               |   | -                           |   | - |   | 71 |
| Average                  exercise price             | -                               |   | -                           |   | - |   | $12.38 |

|                                                                         | Three                    Months Ended |   | Six                    Months Ended |   |
|------------------------------------------------------------------------------|---------------------------------------|--------|-------------------------------------|--------|
|                                                                         | June                    30,           |   | June                    30,         |   |
|                                                                         | 2005                                  |   | 2004                                |   | 2005 |   | 2004 |   |
| Net                    income (loss) applicable to common stock, as reported | $                                     | 1,320  |                                | $      | (489 | ) | $ | 408 |   | $ | (2,294 | ) |
| Add:                    Stock-based employee compensation expense            |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| included                    in reported net income (loss) applicable to      |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| common                    stock for restricted stock units                   |                                  | 69     |                                |   | 37 |   |   | 137 |   |   | 74 |   |
| Deduct:                    Total stock-based employee compensation           |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| expense                    determined under fair value-based method          |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| for                    all awards                                            |                                  | (233   | )                                   |   | (184 | ) |   | (466 | ) |   | (384 | ) |
| Pro                    forma net income (loss) applicable to common stock    | $                                     | 1,156  |                                | $      | (636 | ) | $ | 79 |   | $ | (2,604 | ) |
|                                                                         |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Earnings                    (loss) per share:                                |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Basic                    - as reported                                       | $                                     | 0.18   |                                | $      | (0.07 | ) | $ | 0.06 |   | $ | (0.32 | ) |
| Basic                    - pro forma                                         | $                                     | 0.16   |                                | $      | (0.09 | ) | $ | 0.01 |   | $ | (0.36 | ) |
|                                                                         |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Diluted                    - as reported                                     | $                                     | 0.17   |                                | $      | (0.07 | ) | $ | 0.05 |   | $ | (0.32 | ) |
| Diluted                    - pro forma                                       | $                                     | 0.15   |                                | $      | (0.09 | ) | $ | 0.01 |   | $ | (0.36 | ) |
|                                                                         |                                  |   |                                |   |   |   |   |   |   |   |   |   |

| **4.                  ** | **DEBT                  OUTSTANDING** |
|------------------------------------|---------------------------------------|

| ·   | $25.5                  million of net borrowings under the $30.0 million Comerica credit                  facility, which was amended effective May 30, 2005 to extend the                  maturity                  to May 30, 2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $10.0                  million of borrowings outstanding under two unsecured $5.0 million                  term                  loans, one of which will mature in January 2008 and the other in                  July                  2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $6.5                  million of net borrowings under the 7500 Rialto Boulevard project                  loan,                  which matures in January 2006. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $11.9                  million of net borrowings under the Teachers Insurance and Annuity                  Association of America (TIAA) 7000 West project loan, which will                  mature in                  January 2015. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1                  million of net borrowings under the $3.0 million Calera Court project                  loan, secured by three courtyard homes at Calera Court. This project                  loan                  will mature in September 2005. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| ·   | $4.2                  million of net borrowings under the $9.8 million Deerfield loan,                  for which                  the Deerfield property and any future improvements are serving                  as                  collateral. This project loan will mature in February                  2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.8                  million of net borrowings under the $18.5 million Escarpment Village                  project loan, which will mature in June                  2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5.                  ** | **RESTRICTED                  CASH AND INTEREST COST** |
|------------------------------------|--------------------------------------------------------|

| **6.                  ** | **BUSINESS                  SEGMENTS** |
|------------------------------------|----------------------------------------|

|                                                   | Real                  Estate Operationsa |    | Commercial                  Leasing |   |   | Other  |   |   | Total  |   |
|--------------------------------------------------------|------------------------------------------|---------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Three                  Months Ended June 30, 2005:     |                                     |    |                                |   |   |   |   |   |   |   |   |   |
| Revenues                                               | $                                        | 6,877   |                                | $      | 1,165  |   | $      | -      |   | $      | 8,042 |   |
| Cost                  of sales, excluding depreciation |                                     | (4,097  | )                                   |   | (712   | )      |   | -      |   |   | (4,809 | ) |
| Depreciation                                           |                                     | (37     | )                                   |   | (382   | )      |   | -      |   |   | (419 | ) |
| General                  and administrative expenses   |                                     | (992    | )                                   |   | (228   | )      |   | -      |   |   | (1,220 | ) |
| Operating                  income (loss)               | $                                        | 1,751   |                                | $      | (157   | )      | $      | -      |   | $      | 1,594 |   |
| Capital                  expenditures                  | $                                        | 12,440  |                                | $      | 124    |   | $      | -      |   | $      | 12,564 |   |
| Total                  assets                          | $                                        | 139,712 |                                | $      | 21,060 |   | $      | 6,359  | b      | $      | 167,131 |   |
|                                                   |                                     |    |                                |   |   |   |   |   |   |   |   |   |
| Three                  Months Ended June 30, 2004:     |                                     |    |                                |   |   |   |   |   |   |   |   |   |
| Revenues                                               | $                                        | 3,253   |                                | $      | 974    |   | $      | -      |   | $      | 4,227 |   |
| Cost                  of sales, excluding depreciation |                                     | (2,103  | )                                   |   | (811   | )      |   | -      |   |   | (2,914 | ) |
| Depreciation                                           |                                     | (27     | )                                   |   | (335   | )      |   | -      |   |   | (362 | ) |
| General                  and administrative expenses   |                                     | (997    | )                                   |   | (223   | )      |   | -      |   |   | (1,220 | ) |
| Operating                  income (loss)               | $                                        | 126     |                                | $      | (395   | )      | $      | -      |   | $      | (269 | ) |
| Capital                  expenditures                  | $                                        | 2,945   |                                | $      | 694    |   | $      | -      |   | $      | 3,639 |   |
| Total                  assets                          | $                                        | 124,418 |                                | $      | 21,986 |   | $      | 3,877  | b      | $      | 150,281 |   |
|                                                   |                                     |    |                                |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                                                   | Real                  Estate Operationsa |   | Commercial                  Leasing |   |   | Other  |   |   | Total  |   |
|--------------------------------------------------------|------------------------------------------|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Six                  Months Ended June 30, 2005:       |                                     |   |                                |   |   |   |   |   |   |   |   |   |
| Revenues                                               | $                                        | 9,287  |                                | $      | 2,385  |   | $      | -      |   | $      | 11,672 |   |
| Cost                  of sales, excluding depreciation |                                     | (5,989 | )                                   |   | (1,320 | )      |   | -      |   |   | (7,309 | ) |
| Depreciation                                           |                                     | (75    | )                                   |   | (762   | )      |   | -      |   |   | (837 | ) |
| General                  and administrative expenses   |                                     | (2,104 | )                                   |   | (473   | )      |   | -      |   |   | (2,577 | ) |
| Operating                  income (loss)               | $                                        | 1,119  |                                | $      | (170   | )      | $      | -      |   | $      | 949 |   |
| Capital                  expenditures                  | $                                        | 18,898 |                                | $      | 222    |   | $      | -      |   | $      | 19,120 |   |
|                                                   |                                     |   |                                |   |   |   |   |   |   |   |   |   |
| Six                  Months Ended June 30, 2004:       |                                     |   |                                |   |   |   |   |   |   |   |   |   |
| Revenues                                               | $                                        | 4,372  |                                | $      | 1,802  |   | $      | -      |   | $      | 6,174 |   |
| Cost                  of sales, excluding depreciation |                                     | (3,216 | )                                   |   | (1,500 | )      |   | -      |   |   | (4,716 | ) |
| Depreciation                                           |                                     | (52    | )                                   |   | (655   | )      |   | -      |   |   | (707 | ) |
| General                  and administrative expenses   |                                     | (2,124 | )                                   |   | (476   | )      |   | -      |   |   | (2,600 | ) |
| Operating                  loss                        | $                                        | (1,020 | )                                   | $      | (829   | )      | $      | -      |   | $      | (1,849 | ) |
| Capital                  expenditures                  | $                                        | 12,433 |                                | $      | 1,017  |   | $      | -      |   | $      | 13,450 |   |
|                                                   |                                     |   |                                |   |   |   |   |   |   |   |   |   |

| a.   | Includes                  sales commissions, management fees and other revenues together                  with                  related expenses. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Represents                  all other assets except for property held for sale and property                  held for                  use comprising the Real Estate Operations and Commercial Leasing                  segments. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7.                  ** | **COMMITMENTS** |
|------------------------------------|-----------------|

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GISTERED 

**/s/        PricewaterhouseCoopers LLP**

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Table of Contents

of Financial 

**OVERVIEW**

*Management’s        discussion and analysis presented below should be read in conjunction with        our        discussion and analysis of financial results contained in our 2004 Annual        Report        on Form 10-K (2004 Form 10-K). The operating results summarized in this report        are not necessarily indicative of our future operating        results.*

**DEVELOPMENT        AND OTHER ACTIVITIES**

*Lantana.*

*Downtown        Austin Project.*

*Wimberly        Lane Phase II.*

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*Deerfield.*

*Circle        C Community. *

*Calera.*

*Office        Buildings.*

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Table of          Contents

**RESULTS        OF OPERATIONS**

|                                     | Second                  Quarter |   | Six                  Months |   |
|------------------------------------------|---------------------------------|--------|-----------------------------|--------|
|                                     | 2005                            |   | 2004                        |   | 2005 |   | 2004 |   |
| Revenues:                                |                            |   |                        |   |   |   |   |   |   |   |   |   |
| Real                  estate operations  | $                               | 6,877  |                        | $      | 3,253 |   | $ | 9,287 |   | $ | 4,372 |   |
| Commercial                  leasing      |                            | 1,165  |                        |   | 974 |   |   | 2,385 |   |   | 1,802 |   |
| Total                  revenues          | $                               | 8,042  |                        | $      | 4,227 |   | $ | 11,672 |   | $ | 6,174 |   |
|                                     |                            |   |                        |   |   |   |   |   |   |   |   |   |
| Operating                  income (loss) | $                               | 1,594  |                        | $      | (269 | ) | $ | 949 |   | $ | (1,849 | ) |
|                                     |                            |   |                        |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)       | $                               | 1,320  |                        | $      | (489 | ) | $ | 408 |   | $ | (2,294 | ) |
|                                     |                            |   |                        |   |   |   |   |   |   |   |   |   |

**Real        Estate Operations**

|                                                    | Second                  Quarter |   | Six                  Months |   |
|---------------------------------------------------------|---------------------------------|--------|-----------------------------|--------|
|                                                    | 2005                            |   | 2004                        |   | 2005 |   | 2004 |   |
| Revenues:                                               |                            |   |                        |   |   |   |   |   |   |   |   |   |
| Developed                  property sales               | $                               | 6,625  |                        | $      | 1,812 |   | $ | 8,877 |   | $ | 2,784 |   |
| Undeveloped                  property sales             |                            | -      |                        |   | 1,390 |   |   | - |   |   | 1,390 |   |
| Commissions,                  management fees and other |                            | 252    |                        |   | 51 |   |   | 410 |   |   | 198 |   |
| Total                  revenues                         |                            | 6,877  |                        |   | 3,253 |   |   | 9,287 |   |   | 4,372 |   |
|                                                    |                            |   |                        |   |   |   |   |   |   |   |   |   |
| Cost                  of sales                          |                            | (4,134 | )                           |   | (2,130 | ) |   | (6,064 | ) |   | (3,268 | ) |
| General                  and administrative expenses    |                            | (992   | )                           |   | (997 | ) |   | (2,104 | ) |   | (2,124 | ) |
|                                                    |                            |   |                        |   |   |   |   |   |   |   |   |   |
| Operating                  income (loss)                | $                               | 1,751  |                        | $      | 126 |   | $ | 1,119 |   | $ | (1,020 | ) |
|                                                    |                            |   |                        |   |   |   |   |   |   |   |   |   |

*Developed        Property Sales. *

*Undeveloped        Property Sales.*

*Commissions,        Management Fees and Other.*

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Table of Contents

*Cost        of Sales.*

**Commercial        Leasing**

|                                                 | Second                  Quarter |   | Six                  Months |   |
|------------------------------------------------------|---------------------------------|--------|-----------------------------|--------|
|                                                 | 2005                            |   | 2004                        |   | 2005 |   | 2004 |   |
| Rental                  income                       | $                               | 1,165  |                        | $      | 974 |   | $ | 2,385 |   | $ | 1,802 |   |
| Rental                  property costs               |                            | (712   | )                           |   | (811 | ) |   | (1,320 | ) |   | (1,500 | ) |
| Depreciation                                         |                            | (382   | )                           |   | (335 | ) |   | (762 | ) |   | (655 | ) |
| General                  and administrative expenses |                            | (228   | )                           |   | (223 | ) |   | (473 | ) |   | (476 | ) |
| Operating                  loss                      | $                               | (157   | )                           | $      | (395 | ) | $ | (170 | ) | $ | (829 | ) |
|                                                 |                            |   |                        |   |   |   |   |   |   |   |   |   |

*Rental        Income.*

**CAPITAL        RESOURCES AND LIQUIDITY**

**Six-Months        2005 Compared with Six-Months 2004**

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**Credit        Facility and Other Financing Arrangements**

| ·   | $25.5                  million of net borrowings under the $30.0 million Comerica credit                  facility, which was amended effective May 30, 2005 to extend the                  maturity                  to May 30, 2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $10.0                  million of borrowings outstanding under two unsecured $5.0 million                  term                  loans, one of which will mature in January 2008 and the other in                  July                  2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $6.5                  million of net borrowings under the 7500 Rialto Boulevard project                  loan,                  which matures in January 2006 (see                  below). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $11.9                  million of net borrowings under the TIAA 7000 West project loan,                  which                  will mature in January 2015. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1                  million of net borrowings under the $3.0 million Calera Court project                  loan, secured by three courtyard homes at Calera Court. This project                  loan                  will mature in September 2005. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.2                  million of net borrowings under the $9.8 million Deerfield loan,                  for which                  the Deerfield property and any future improvements are serving                  as                  collateral. This project loan will mature in February                  2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.8                  million of net borrowings under the $18.5 million Escarpment Village                  project loan, which will mature in June                  2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*7500        Rialto Boulevard Project Loan Amendment.*

**Outlook**

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**NEW        ACCOUNTING STANDARD**

**CAUTIONARY        STATEMENT**

itativ

Controls        and Procedures

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Table of          Contents

**PART        II. - OTHER INFORMATION**

Legal        Pro

egistered

|                                 |   |                                                     |   |                                                                            |   |                              | Current                  Programa |
|--------------------------------------|--------|----------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|-----------------------------------|-----------------------------------|
| Period                               |   | Total                  Shares                  Purchased |   | Average                  Price                  Paid Per                  Share |   | Shares                  Purchased |                              | Shares                  Available                  for                  Purchase |
|                                 |   |                                                     |   |                                                                            |   |                              |                              |   |   |
| April                  1 to 30, 2005 |   | 17,730                                                   |   |                                                                            | $16.35 |                              | 17,730                            |   | 643,576 |
| May                  1 to 31, 2005   |   | 1,020                                                    |   |                                                                            | 18.80  |                              | 1,020                             |   | 642,556 |
| June                  1 to 30, 2005  |   | 21,940                                                   |   |                                                                            | 17.08  |                              | 21,940                            |   | 620,616 |
| Total                                |   | 40,690                                                   |   |                                                                            | 16.81  |                              | 40,690                            |   |   |

| a.   | In                  February 2001, our Board of Directors approved an open market share                  purchase program for up to 0.7 million shares of our common stock.                  The                  program does not have an expiration                  date. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Submission        of 

|                                        | Votes                  Cast For |   | Authority                  Withheld |
|---------------------------------------------|---------------------------------|--------|-------------------------------------|
| 1.                  Election of Directors*: |                            |   |                                |
| Michael                  D. Madden          | 6,490,181                       |   | 518,736                             |

| * | There                  were no abstentions with respect to the election of directors.                  In addition                  to the director elected at the Annual Meeting, the terms of the                  following                  directors continued after the Annual Meeting: William H. Armstrong                  III,                  Bruce G. Garrison and James C.                  Leslie. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             | For       |   | Against |   | Abstentions |   | BrokerNon-Votes |
|--------------------------------------------------|-----------|--------|---------|--------|-------------|--------|-----------------|
| 2.                  Ratification of              |      |   |    |   |        |   |            |
| PricewaterhouseCoopers                  LLP      |      |   |    |   |        |   |            |
| as                  independent auditor          | 6,970,416 |   | 35,629  |   | 2,872       |   | -               |
| 3.                  Proposal to adopt 2005 Stock |      |   |    |   |        |   |            |
| Incentive                  Plan**                | 1,676,747 |   | 819,613 |   | 1,436,512   |   | 3,076,045       |

Other

6.
Exhibits

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**SIGNATURE**

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Table of Contents
**STRATUS        PROPERTIES INC.**

**EXHIBIT        INDEX**

| 3.1    | Amended                  and Restated Certificate of Incorporation of Stratus. Incorporated                  by                  reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of                  Stratus                  for the quarter ended March 31, 2004 (Stratus’ 2004 First Quarter Form                  10-Q).                                                                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3.2    | Certificate                  of Amendment to the Amended and Restated Certificate of Incorporation                  of                  Stratus, dated May 14, 1998. Incorporated by reference to Exhibit                  3.2 to                  Stratus’ 2004 First Quarter Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3.3    | Certificate                  of Amendment to the Amended and Restated Certificate of Incorporation                  of                  Stratus, dated May 25, 2001. Incorporated by reference to Exhibit                  3.2 to                  the Annual Report on Form 10-K of Stratus for the fiscal year ended                  December 31, 2001 (Stratus’ 2001 Form 10-K).                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3.4    | By-laws                  of Stratus, as amended as of February 11, 1999. Incorporated by                  reference                  to Exhibit 3.4 to Stratus’ 2004 First Quarter Form                  10-Q.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.1    | Rights                  Agreement dated as of May 16, 2002, between Stratus and Mellon                  Investor                  Services LLP, as Rights Agent, which includes the Certificates                  of                  Designation of Series C Participating Preferred Stock; the Forms                  of Rights                  Certificate Assignment, and Election to Purchase; and the Summary                  of                  Rights to Purchase Preferred Shares. Incorporated by reference                  to Exhibit                  4.1 to Stratus’ Registration Statement on Form 8-A dated May 22,                  2002.         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.2    | Amendment                  No. 1 to Rights Agreement between Stratus Properties Inc. and Mellon                  Investor Services LLC, as Rights Agent, dated as of November 7,                  2003.                  Incorporated by reference to Exhibit 4.1 to the Current Report                  on Form 8-K                  of Stratus dated November 7, 2003.                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.1   | The                  loan agreement by and between Comerica Bank-Texas and Stratus Properties                  Inc., Stratus Properties Operating Co., L.P., Circle C Land Corp.                  and                  Austin 290 Properties Inc. dated December 21, 1999. Incorporated                  by                  reference to Exhibit 4.4 to the Annual Report on Form 10-K of Stratus                  for                  the fiscal year ended December 31, 1999.                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.2   | Guaranty                  Agreement dated December 31, 1999, by and between Stratus Properties                  Inc.                  and Comerica Bank-Texas. Incorporated by reference to Exhibit 10.18                  to the                  Quarterly Report on Form 10-Q of Stratus for the quarter ended                  March 31,                  2000 (Stratus’ 2000 First Quarter Form 10-Q).                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.3   | Guaranty                  Agreement dated February 24, 2000, by and between Stratus Properties                  Inc.                  and Comerica Bank-Texas. Incorporated by reference to Exhibit 10.19                  to                  Stratus’ 2000 First Quarter Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.4   | Amended                  Loan Agreement dated December 27, 2000, by and between Stratus                  Properties                  Inc. and Comerica-Bank Texas. Incorporated by reference to Exhibit                  10.19                  to the Annual Report on Form 10-K of Stratus for the fiscal year                  ended                  December 31, 2000 (Stratus’ 2000 Form 10-K).                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.5   | Second                  Amendment to Loan Agreement dated December 18, 2001, by and among                  Stratus                  Properties Inc., Stratus Properties Operating Co., L.P., Circle                  C Land                  Corp. and Austin 290 Properties Inc. collectively as borrower and                  Comerica                  Bank-Texas, as lender. Incorporated by Reference to Exhibit 10.23                  to                  Stratus’ 2001 Form 10-K.                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.6   | Third                  Modification and Extension Agreement dated June 30, 2003, by and                  between                  Comerica Bank, as lender, and Stratus Properties Inc., Stratus                  Properties                  Operating Co., L.P., Circle C Land Corp. and Austin 290 Properties                  Inc.,                  individually and collectively as borrower. Incorporated by reference                  to                  Exhibit 10.25 to the Quarterly Report on Form 10-Q of Stratus for                  the                  quarter ended September 30, 2003 (Stratus’ 2003 Third Quarter Form                  10-Q). |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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| 10.7   | Third                    Modification Agreement dated June 23, 2004, by and between Comerica                    Bank,                    as lender, and Stratus Properties Inc., Stratus Properties Operating                    Co.,                    L.P., Circle C Land, L.P. and Austin 290 Properties, Inc., individually                    and collectively as borrower. Incorporated by reference to Exhibit                    10.16                    to the Quarterly Report on Form 10-Q of Stratus for the quarter                    ended June                    30, 2004 (Stratus’ 2004 Second Quarter Form 10-Q). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.8   | Third                    Amendment to Promissory Note dated June 23, 2004, by and among                    Stratus                    Properties Inc., Stratus Properties Operating Co., L.P., Circle                    C Land,                    L.P. and Austin 290 Properties, Inc., individually and collectively                    as                    borrower, and Comerica Bank, as lender. Incorporated by reference                    to                    Exhibit 10.17 to Stratus’ 2004 Second Quarter Form                    10-Q.                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.9   | Third                    Amendment to Revolving Credit Note dated June 23, 2004, by and                    among                    Stratus Properties Inc., Stratus Properties Operating Co., L.P.,                    Circle C                    Land, L.P. and Austin 290 Properties, Inc., individually and                    collectively                    as borrower, and Comerica Bank, as lender. Incorporated by reference                    to                    Exhibit 10.18 to Stratus’ 2004 Second Quarter Form                    10-Q.                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.10  | Third                    Amendment to Loan Agreement dated June 23, 2004, by and among                    Stratus                    Properties Inc., Stratus Properties Operating Co., L.P., Circle                    C Land,                    L.P. and Austin 290 Properties, Inc., individually and collectively                    as                    borrower, and Comerica Bank, as bank. Incorporated by reference                    to Exhibit                    10.19 to Stratus’ 2004 Second Quarter Form 10-Q.                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.11  | Fourth                    Modification and Extension Agreement dated                    May 30, 2005, by and between Comerica Bank, lender, and Stratus                    Properties                    Inc., Stratus Properties Operating Co., L.P., Circle C Land,                    L.P. and                    Austin 290 Properties, Inc., individually and collectively as                    borrower.                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.12  | Loan                    Agreement dated December 28, 2000, by and between Stratus Properties                    Inc.                    and Holliday Fenoliglio Fowler, L.P., subsequently assigned to                    an                    affiliate of First American Asset Management. Incorporated by                    reference to                    Exhibit 10.20 to Stratus’ 2000 Form 10-K.                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.13  | Loan                    Agreement dated June 14, 2001, by and between Stratus Properties                    Inc. and                    Holliday Fenoliglio Fowler, L.P., subsequently assigned to an                    affiliate of                    First American Asset Management. Incorporated by reference to                    Exhibit                    10.20 to the Quarterly Report on Form 10-Q of Stratus for the                    quarter                    ended September 30, 2001.                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.14  | Construction                    Loan Agreement dated June 11, 2001, between 7500 Rialto Boulevard,                    L.P.                    and Comerica Bank-Texas. Incorporated by Reference to Exhibit                    10.26 to                    Stratus’ 2001 Form 10-K.                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.15  | Modification                    Agreement dated January 31, 2003, by and between Lantana Office                    Properties                    I, L.P., formerly 7500 Rialto Boulevard, L.P., and Comerica Bank-Texas.                    Incorporated by reference to Exhibit 10.19 to Stratus’ 2003 First Quarter                    Form 10-Q.                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.16  | Second                    Modification Agreement dated as of December 29, 2003, to be effective                    as                    of January 31, 2004, by and between Lantana Office Properties                    I, L.P., a                    Texas limited partnership (formerly known as 7500 Rialto Boulevard,                    L.P.),                    as borrower, and Comerica Bank, as lender. Incorporated by reference                    to                    Exhibit 10.20 to Stratus’ 2003 Form 10-K.                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.17  | Guaranty                    Agreement dated June 11, 2001, by Stratus Properties Inc. in                    favor of                    Comerica Bank-Texas. Incorporated by Reference to Exhibit 10.27                    to                    Stratus’ 2001 Form 10-K.                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.18  | Loan                    Agreement dated September 22, 2003, by and between Calera Court,                    L.P., as                    borrower, and Comerica Bank, as lender. Incorporated by reference                    to                    Exhibit 10.26 to Stratus’ 2003 Third Quarter Form 10-Q.                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.19  | Development                    Agreement dated August 15, 2002, between Circle C Land Corp.                    and City of                    Austin. Incorporated by reference to Exhibit 10.18 to the Quarterly                    Report                    on Form 10-Q of Stratus for the quarter ended September 30,                    2002.                                                                                                                                                                                                                                                                                          |

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|   | Executive                    Compensation Plans and Arrangements (Exhibits 10.20 through                    10.29)                                                                                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                 |
| 10.20  | Stratus’                    Performance Incentive Awards Program, as amended, effective February                    11,                    1999. Incorporated by reference to Exhibit 10.24 to Stratus’ 2004 First                    Quarter Form 10-Q. |
|   |                                                                                                                                                                                                                                                                 |
| 10.21  | Stratus                    Stock Option Plan. Incorporated by reference to Exhibit 10.25                    to Stratus’                    2003 Form 10-K.                                                                                                     |
|   |                                                                                                                                                                                                                                                                 |
| 10.22  | Stratus                    1996 Stock Option Plan for Non-Employee                    Directors.                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                 |
| 10.23  | Stratus                    Properties Inc. 1998 Stock Option                    Plan.                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                 |
| 10.24  | Form                    of Notice of Grant of Nonqualified Stock                    Options and Limited Rights under the 1998 Stock Option                    Plan.                                                                                                  |
|   |                                                                                                                                                                                                                                                                 |
| 10.25  | Form                    of Restricted Stock Unit Agreement under the                    1998 Stock Option Plan.                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                 |
| 10.26  | Stratus                    Properties Inc. 2002 Stock Incentive                    Plan.                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                 |
| 10.27  | Form                    of Notice of Grant of Nonqualified Stock                    Options and Limited Rights under the 2002 Stock Incentive                    Plan.                                                                                               |
|   |                                                                                                                                                                                                                                                                 |
| 10.28  | Form                    of Restricted Stock Unit Agreement under the                    2002 Stock Incentive Plan.                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                 |
| 10.29  | Stratus                    Director Compensation. Incorporated by reference to Exhibit 10.28                    to the                    Annual Report on Form 10-K of Stratus for the fiscal year ended                    December                    31, 2004.   |

| 15.1   | Letter                  from PricewaterhouseCoopers LLP regarding                  the unaudited interim financial statements.      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                |
| 31.1   | Certification                  of Principal Executive Officer                  pursuant to Rule 13a-14(a)/15d-14(a).                |
|   |                                                                                                                                |
| 31.2   | Certification                  of Principal Financial Officer                  pursuant to Rule 13a-14(a)/15d-14(a).                |
|   |                                                                                                                                |
| 32.1   | Certification                  of Principal Executive Officer                  pursuant to 18 U.S.C. Section 1350.                  |
|   |                                                                                                                                |
| 32.2   | Certification                  of Principal Financial Officer                  pursuant to 18 U.S.C. Section                  1350. |