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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 March 31, 2010          |
| 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) | (I.R.S. 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)          |
|                                                          |

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| STRATUS PROPERTIES INC.                                                   |   |
|---------------------------------------------------------------------------|--------|
| TABLE OF CONTENTS                                                         |   |
|                                                                      |   |
|                                                                      |   |
|                                                                      | Page   |
| Part I. Financial Information                                             | 2      |
|                                                                      |   |
| Item 1. Financial Statements:                                             |   |
|                                                                      |   |
| Consolidated Balance Sheets (Unaudited)                                   | 2      |
|                                                                      |   |
| Consolidated Statements of Operations (Unaudited)                         | 3      |
|                                                                      |   |
| Consolidated Statements of Cash Flows (Unaudited)                         | 4      |
|                                                                      |   |
| Consolidated Statements of Equity (Unaudited)                             | 5      |
|                                                                      |   |
| Notes to Consolidated Financial Statements (Unaudited)                    | 6      |
|                                                                      |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition |   |
| and Results of Operations                                                 | 12     |
|                                                                      |   |
| Item 4. Controls and Procedures                                           | 21     |
|                                                                      |   |
| Part II. Other Information                                                | 21     |
|                                                                      |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds       | 21     |
|                                                                      |   |
| Item 6. Exhibits                                                          | 21     |
|                                                                      |   |
| Signature                                                                 | 22     |
|                                                                      |   |
| Exhibit Index                                                             | E-1    |
|                                                                      |   |

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Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED BALANCE SHEETS (Unaudited)

|                                                             | March 31, |    | December 31, |   |
|------------------------------------------------------------------|-----------|---------|--------------|--------|
|                                                             | 2010      |    | 2009         |   |
| ASSETS                                                           |      |    |         |   |   |   |
| Cash and cash equivalents                                        | $         | 5,908   |         | $      | 15,398 |   |
| Real estate held for sale – developed or under development |      | 137,242 |         |   | 124,801 |   |
| Real estate held for sale – undeveloped                    |      | 57,485  |         |   | 57,201 |   |
| Real estate held for use, net                                    |      | 115,543 |         |   | 101,863 |   |
| Investment in unconsolidated affiliate                           |      | 3,315   |         |   | 3,391 |   |
| Deferred tax assets                                              |      | 9,038   |         |   | 8,296 |   |
| Other assets                                                     |      | 21,133  |         |   | 17,640 |   |
| Total assets                                                     | $         | 349,664 |         | $      | 328,590 |   |
|                                                             |      |    |         |   |   |   |
| LIABILITIES AND EQUITY                                           |      |    |         |   |   |   |
| Accounts payable and accrued liabilities                         | $         | 24,712  |         | $      | 16,247 |   |
| Accrued interest and property taxes                              |      | 1,318   |         |   | 3,401 |   |
| Deposits                                                         |      | 7,838   |         |   | 7,700 |   |
| Debt                                                             |      | 87,737  |         |   | 81,105 |   |
| Other liabilities                                                |      | 1,705   |         |   | 2,224 |   |
| Total liabilities                                                |      | 123,310 |         |   | 110,677 |   |
|                                                             |      |    |         |   |   |   |
| Commitments and contingencies                                    |      |    |         |   |   |   |
|                                                             |      |    |         |   |   |   |
| Equity:                                                          |      |    |         |   |   |   |
| Stratus stockholders’ equity:                              |      |    |         |   |   |   |
| Preferred stock                                                  |      | -       |         |   | - |   |
| Common stock                                                     |      | 83      |         |   | 83 |   |
| Capital in excess of par value of common stock                   |      | 197,277 |         |   | 197,333 |   |
| Accumulated deficit                                              |      | (37,708 | )            |   | (35,999 | ) |
| Common stock held in treasury                                    |      | (17,972 | )            |   | (17,941 | ) |
| Total Stratus stockholders’ equity                         |      | 141,680 |         |   | 143,476 |   |
| Noncontrolling interest in subsidiary                            |      | 84,674  |         |   | 74,437 |   |
| Total equity                                                     |      | 226,354 |         |   | 217,913 |   |
| Total liabilities and equity                                     | $         | 349,664 |         | $      | 328,590 |   |
|                                                             |      |    |         |   |   |   |

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

|                                                                         | Three Months Ended |   |
|------------------------------------------------------------------------------|--------------------|--------|
|                                                                         | March 31,          |   |
|                                                                         | 2010               |   | 2009 |   |
| Revenues:                                                                    |               |   |   |   |   |   |
| Real estate                                                                  | $                  | 874    |   | $ | 191 |   |
| Rental income                                                                |               | 1,297  |   |   | 1,173 |   |
| Commissions, management fees and other                                       |               | 129    |   |   | 168 |   |
| Total revenues                                                               |               | 2,300  |   |   | 1,532 |   |
| Cost of sales:                                                               |               |   |   |   |   |   |
| Real estate, net                                                             |               | 2,106  |   |   | 1,061 |   |
| Rental                                                                       |               | 745    |   |   | 831 |   |
| Depreciation                                                                 |               | 420    |   |   | 440 |   |
| Total cost of sales                                                          |               | 3,271  |   |   | 2,332 |   |
| General and administrative expenses                                          |               | 1,832  |   |   | 2,079 |   |
| Total costs and expenses                                                     |               | 5,103  |   |   | 4,411 |   |
| Operating loss                                                               |               | (2,803 | ) |   | (2,879 | ) |
| Interest income                                                              |               | 14     |   |   | 246 |   |
| Other income                                                                 |               | 228    |   |   | - |   |
| Loss on interest rate cap agreement                                          |               | (24    | ) |   | (33 | ) |
| Loss before income taxes and equity in unconsolidated affiliate’s loss |               | (2,585 | ) |   | (2,666 | ) |
| Equity in unconsolidated affiliate’s loss                              |               | (76    | ) |   | (74 | ) |
| Benefit from income taxes                                                    |               | 881    |   |   | 897 |   |
| Net loss                                                                     |               | (1,780 | ) |   | (1,843 | ) |
| Net loss attributable to noncontrolling interest in subsidiary               |               | 71     |   |   | 106 |   |
| Net loss attributable to Stratus common stock                                | $                  | (1,709 | ) | $ | (1,737 | ) |
|                                                                         |               |   |   |   |   |   |
| Net loss per share attributable to Stratus common stock:                     |               |   |   |   |   |   |
| Basic and diluted                                                            | $                  | (0.23  | ) | $ | (0.23 | ) |
|                                                                         |               |   |   |   |   |   |
| Weighted average shares of common stock outstanding:                         |               |   |   |   |   |   |
| Basic and diluted                                                            |               | 7,456  |   |   | 7,446 |   |
|                                                                         |               |   |   |   |   |   |

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

|                                                        | Three Months Ended March 31, |    |
|-------------------------------------------------------------|------------------------------|---------|
|                                                        | 2010                         |    | 2009 |   |
| Cash flow from operating activities:                        |                         |    |   |   |   |
| Net loss                                                    | $                            | (1,780  | ) | $ | (1,843 | ) |
| Adjustments to reconcile net loss to net cash               |                         |    |   |   |   |   |
| used in operating activities:                               |                         |    |   |   |   |   |
| Depreciation                                                |                         | 420     |   |   | 440 |   |
| Loss on interest rate cap agreement                         |                         | 24      |   |   | 33 |   |
| Cost of real estate sold                                    |                         | 563     |   |   | 126 |   |
| Deferred income taxes                                       |                         | (898    | ) |   | (913 | ) |
| Stock-based compensation                                    |                         | 146     |   |   | 171 |   |
| Equity in unconsolidated affiliate’s loss             |                         | 76      |   |   | 74 |   |
| Deposits                                                    |                         | (2,133  | ) |   | (22 | ) |
| Purchases and development of real estate properties         |                         | (10,394 | ) |   | (8,454 | ) |
| Municipal utility district reimbursements                   |                         | -       |   |   | 3,387 |   |
| Decrease in other assets                                    |                         | 878     |   |   | 274 |   |
| Decrease in accounts payable, accrued liabilities and other |                         | (2,788  | ) |   | (3,180 | ) |
| Net cash used in operating activities                       |                         | (15,886 | ) |   | (9,907 | ) |
|                                                        |                         |    |   |   |   |   |
| Cash flow from investing activities:                        |                         |    |   |   |   |   |
| Development of commercial leasing properties                |                         | (10,305 | ) |   | (6,153 | ) |
| Proceeds from matured U.S. treasury securities              |                         | -       |   |   | 497 |   |
| Investment in unconsolidated affiliate                      |                         | -       |   |   | (260 | ) |
| Other                                                       |                         | -       |   |   | 21 |   |
| Net cash used in investing activities                       |                         | (10,305 | ) |   | (5,895 | ) |
|                                                        |                         |    |   |   |   |   |
| Cash flow from financing activities:                        |                         |    |   |   |   |   |
| Borrowings from revolving credit facility                   |                         | 5,012   |   |   | - |   |
| Payments on revolving credit facility                       |                         | (781    | ) |   | - |   |
| Borrowings from project and term loans                      |                         | 4,500   |   |   | 4,735 |   |
| Payments on project and term loans                          |                         | (2,099  | ) |   | (68 | ) |
| Noncontrolling interest contributions                       |                         | 10,308  |   |   | 11,000 |   |
| Net payments for stock-based awards                         |                         | (76     | ) |   | (101 | ) |
| Purchases of Stratus common shares                          |                         | -       |   |   | (404 | ) |
| Financing costs                                             |                         | (163    | ) |   | - |   |
| Net cash provided by financing activities                   |                         | 16,701  |   |   | 15,162 |   |
| Net decrease in cash and cash equivalents                   |                         | (9,490  | ) |   | (640 | ) |
| Cash and cash equivalents at beginning of year              |                         | 15,398  |   |   | 17,097 |   |
| Cash and cash equivalents at end of period                  | $                            | 5,908   |   | $ | 16,457 |   |
|                                                        |                         |    |   |   |   |   |

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CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

|                                    | Stratus Stockholders’ Equity |   |       |   |      |   |
|-----------------------------------------|------------------------------------|--------|------------|--------|-----------|--------|
|                                    |                               |   |       |   |      |   |   |   |   |   |   |   |   |   |   |   |
|                                    |                               |   |       |   |      |   |   |   | Common Stock |   | Total |   |   |   |   |   |
|                                    | Common Stock                       |   | Capital in |   | Accum-    |   | Held in Treasury |   | Stratus |   | Noncontrolling |   |   |   |
|                                    | Number                             |   | At Par     |   | Excess of |   | ulated |   | Number |   | At |   | Stockholders’ |   | Interest in |   | Total |   |
|                                    | of Shares                          |   | Value      |   | Par Value |   | Deficit |   | of Shares |   | Cost |   | Equity |   | Subsidiary |   | Equity |   |
|                                    |                               |   |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009            |                               | 8,315  |       | $      | 83        |   | $ | 197,333 |   | $ | (35,999 | ) | 873 |   | $ | (17,941 | ) | $ | 143,476 |   | $ | 74,437 |   | $ | 217,913 |   |
| Exercised and issued stock-based awards |                               |   |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and other                               |                               | 25     |       |   | -         |   |   | (202 | ) |   | - |   | - |   |   | - |   |   | (202 | ) |   | - |   |   | (202 | ) |
| Stock-based compensation                |                               | -      |       |   | -         |   |   | 146 |   |   | - |   | - |   |   | - |   |   | 146 |   |   | - |   |   | 146 |   |
| Tender of shares for stock-based awards |                               | -      |       |   | -         |   |   | - |   |   | - |   | 4 |   |   | (31 | ) |   | (31 | ) |   | - |   |   | (31 | ) |
| Noncontrolling interest contributions   |                               | -      |       |   | -         |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | 10,308 |   |   | 10,308 |   |
| Comprehensive income (loss):            |                               |   |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                |                               | -      |       |   | -         |   |   | - |   |   | (1,709 | ) | - |   |   | - |   |   | (1,709 | ) |   | (71 | ) |   | (1,780 | ) |
| Other comprehensive income              |                               | -      |       |   | -         |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Total comprehensive income (loss)       |                               | -      |       |   | -         |   |   | - |   |   | (1,709 | ) | - |   |   | - |   |   | (1,709 | ) |   | (71 | ) |   | (1,780 | ) |
| Balance at March 31, 2010               |                               | 8,340  |       | $      | 83        |   | $ | 197,277 |   | $ | (37,708 | ) | 877 |   | $ | (17,972 | ) | $ | 141,680 |   | $ | 84,674 |   | $ | 226,354 |   |
|                                    |                               |   |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

| 2.   | EARNINGS PER SHARE |
|----------------|--------------------|

| 3.   | JOINT VENTURE WITH CANYON-JOHNSON URBAN FUND II, L.P. |
|----------------|-------------------------------------------------------|

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| 4.   | FAIR VALUE MEASUREMENTS |
|----------------|-------------------------|

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|              |             |   | Quoted Prices in   |   |   |              |   |   | Significant  |   |
|-------------------|------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------|--------|
|              | Total Fair Value |   | Active Markets for |   |   | Significant Other |   |   | Unobservable |   |
|              | Measurement      |   | Identical Assets   |   |   | Observable Inputs |   |   | Inputs       |   |
|              | March 31, 2010   |   | (Level 1)          |   |   | (Level 2)         |   |   | (Level 3)    |   |
|              |             |   |               |   |   |              |   |   |         |   |   |   |
| Cash equivalents  | $                | 175    |               | $      | 175    |              | $      | -      |         | $      | - |   |
| Interest rate cap |             |   |               |   |   |              |   |   |         |   |   |   |
| agreement         |             | 1      |               |   | -      |              |   | 1      |         |   | - |   |
|              | $                | 176    |               | $      | 175    |              | $      | 1      |         | $      | - |   |
|              |             |   |               |   |   |              |   |   |         |   |   |   |

|                              | March 31, 2010 |   |   | December 31, 2009 |   |
|-----------------------------------|----------------|--------|--------|-------------------|--------|
|                              | Carrying       |   | Fair   |              |   | Carrying |   |   | Fair |   |
|                              | Value          |   | Value  |              |   | Value |   |   | Value |   |
|                              |           |   |   |              |   |   |   |   |   |   |   |   |
| Cash and cash equivalentsa        | $              | 5,908  |   | $                 | 5,908  |   | $ | 15,398 |   | $ | 15,398 |   |
| Accounts and notes receivablea    |           | 706    |   |              | 706    |   |   | 1,734 |   |   | 1,734 |   |
| Interest rate cap agreementb      |           | 1      |   |              | 1      |   |   | 25 |   |   | 25 |   |
| Accounts payable, accrued         |           |   |   |              |   |   |   |   |   |   |   |   |
| liabilities, accrued interest and |           |   |   |              |   |   |   |   |   |   |   |   |
| property taxesa                   |           | 26,030 |   |              | 26,030 |   |   | 19,648 |   |   | 19,648 |   |
| Debtc                             |           | 87,737 |   |              | 86,789 |   |   | 81,105 |   |   | 78,571 |   |
|                              |           |   |   |              |   |   |   |   |   |   |   |   |

| a.   | Fair value approximates the carrying amounts because of the short-term nature of these instruments. |
|----------------|-----------------------------------------------------------------------------------------------------|

| b.   | Recorded at fair value. Observable inputs, such as LIBOR, are used to determine fair value (see above). |
|----------------|---------------------------------------------------------------------------------------------------------|

| c.   | Generally recorded at cost. Fair value of substantially all of Stratus’ debt is estimated based on discounted future expected cash flows at estimated current interest rates. The fair value of debt does not represent the amounts that will ultimately be paid upon the maturities of the loans. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | INTEREST CAPITALIZATION |
|----------------|-------------------------|

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| 6.   | INCOME TAXES |
|----------------|--------------|

| 7.   | BUSINESS SEGMENTS |
|----------------|-------------------|

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|                                  | Real Estate Operationsa |    | Commercial Leasing |   | Other   |   | Total  |   |
|---------------------------------------|-------------------------|---------|--------------------|--------|---------|--------|--------|--------|
|                                  | (In Thousands)          |    |
| Three Months Ended March 31, 2010     |                    |    |               |   |    |   |   |   |   |   |   |   |
| Revenues                              | $                       | 1,003   |               | $      | 1,297   |   | $      | -      |   | $ | 2,300 |   |
| Cost of sales, excluding depreciation |                    | (2,106  | )                  |   | (745    | )      |   | -      |   |   | (2,851 | ) |
| Depreciation                          |                    | (55     | )                  |   | (365    | )      |   | -      |   |   | (420 | ) |
| General and administrative expenses   |                    | (1,040  | )                  |   | (792    | )      |   | -      |   |   | (1,832 | ) |
| Operating loss                        | $                       | (2,198  | )                  | $      | (605    | )      | $      | -      |   | $ | (2,803 | ) |
|                                  |                    |    |               |   |    |   |   |   |   |   |   |   |
| Capital expenditures                  | $                       | 10,394  |               | $      | 10,305  |   | $      | -      |   | $ | 20,669 |   |
| Total assets at March 31, 2010        | $                       | 209,701 |               | $      | 130,925 |   | $      | 9,038  | b | $ | 349,664 |   |
|                                  |                    |    |               |   |    |   |   |   |   |   |   |   |

| Three Months Ended March 31, 2009     |   |    |   |   |   |   |   |   |   |   |    |   |
|---------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Revenues                              | $      | 359     |   | $      | 1,173  |   | $      | -      |   | $      | 1,532   |   |
| Cost of sales, excluding depreciation |   | (1,061  | )      |   | (831   | )      |   | -      |   |   | (1,892  | )      |
| Depreciation                          |   | (67     | )      |   | (373   | )      |   | -      |   |   | (440    | )      |
| General and administrative expenses   |   | (1,296  | )      |   | (783   | )      |   | -      |   |   | (2,079  | )      |
| Operating loss                        | $      | (2,065  | )      | $      | (814   | )      | $      | -      |   | $      | (2,879  | )      |
|                                  |   |    |   |   |   |   |   |   |   |   |    |   |
| Capital expenditures                  | $      | 8,454   |   | $      | 6,153  |   | $      | -      |   | $      | 14,607  |   |
| Total assets at March 31, 2009        | $      | 175,301 |   | $      | 79,635 |   | $      | 8,634  | b      | $      | 263,570 |   |
|                                  |   |    |   |   |   |   |   |   |   |   |    |   |

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

| b.   | Primarily includes deferred tax assets. |
|----------------|-----------------------------------------|

| 8.   | NEW ACCOUNTING STANDARD |
|----------------|-------------------------|

| 9.   | SUBSEQUENT EVENTS |
|----------------|-------------------|

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

|             |      |   | Acreage                        |   |        |
|------------------|-----------|--------|--------------------------------|--------|-------------|
|             |      |   | Developed or Under Development |   | Undeveloped |   |   |
|             | Developed |   | Single                         |   | Multi-      |   |   |   |   |   | Single |   |   |   |   |   | Total |
|             | Lots      |   | Family                         |   | Family      |   | Commercial |   | Total |   | Family |   | Commercial |   | Total |   | Acreage |
| Austin           |      |   |                           |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Barton Creek     | 122       |   | 119                            |   | 249         |   | 368 |   | 736 |   | 749 |   | 28 |   | 777 |   | 1,513 |
| Lantana          | -         |   | -                              |   | -           |   | - |   | - |   | - |   | 223 |   | 223 |   | 223 |
| Circle C         | 29        |   | -                              |   | -           |   | 35 |   | 35 |   | 148 |   | 352 |   | 500 |   | 535 |
| W Austin Hotel   |      |   |                           |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| & Residences | -         |   | -                              |   | -           |   | 2 | a | 2 |   | - |   | - |   | - |   | 2 |
| San Antonio      |      |   |                           |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Camino Real      | -         |   | -                              |   | -           |   | - |   | - |   | - |   | 2 |   | 2 |   | 2 |
| Total            | 151       |   | 119                            |   | 249         |   | 405 |   | 773 |   | 897 |   | 605 |   | 1,502 |   | 2,275 |
|             |      |   |                           |   |        |   |   |   |   |   |   |   |   |   |   |   |   |

| a.   | Represents a city block in downtown Austin planned for a mixture of hotel, residential, retail, office and entertainment uses. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------|

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|                         | Residential Lots |
|------------------------------|------------------|
|                         | Developed        |   | Under Development |   | Potential Development a |   | Total |
| Barton Creek:                |             |   |   |   |   |   |   |
| Calera:                      |             |   |   |   |   |   |   |
| Calera Court Courtyard Homes | 2                |   | - |   | - |   | 2 |
| Calera Drive                 | 8                |   | - |   | - |   | 8 |
| Verano Drive                 | 67               |   | - |   | - |   | 67 |
| Amarra Drive:                |             |   |   |   |   |   |   |
| Phase I Lots                 | 7                |   | - |   | - |   | 7 |
| Phase II Lots                | 35               |   | - |   | - |   | 35 |
| Townhomes                    | -                |   | - |   | 221 |   | 221 |
| Phase III                    | -                |   | 89 |   | - |   | 89 |
| Mirador Estate               | 2                |   | - |   | - |   | 2 |
| Wimberly Lane Phase II       | 1                |   | - |   | - |   | 1 |
| Section N Multi-family       | -                |   | - |   | 1,860 |   | 1,860 |
| Other Barton Creek Sections  | -                |   | - |   | 154 |   | 154 |
|                         |             |   |   |   |   |   |   |
| Circle C:                    |             |   |   |   |   |   |   |
| Meridian                     | 29               |   | - |   | 57 |   | 86 |
| Total Residential Lots       | 151              |   | 89 |   | 2,292 |   | 2,532 |
|                         |             |   |   |   |   |   |   |

| a.   | Our development of the properties identified under the heading “Potential Development” is dependent upon the approval of our development plans and permits by governmental agencies, including the City. Those governmental agencies may either not approve one or more development plans and permit applications related to such properties or require us to modify our development plans. Accordingly, our development strategy with respect to those properties may change in the future. While we may be proceeding with approved infrastructure projects on some of these properties, they are not considered to be “under development” for disclosure in this table unless other development activities necessary to fully realize the properties’ intended final use are in progress or scheduled to commence in the near term. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                          | Commercial Property |
|-------------------------------|---------------------|
|                          | Developed           |   | Under Development |   | Potential Development a |   | Total |
| Barton Creek:                 |                |   |   |   |   |   |   |
| Barton Creek Village Phase I  | 22,000              |   | - |   | - |   | 22,000 |
| Barton Creek Village Phase II | -                   |   | - |   | 18,000 |   | 18,000 |
| Entry Corner                  | -                   |   | - |   | 5,000 |   | 5,000 |
| Amarra Retail/Office          | -                   |   | - |   | 90,000 |   | 90,000 |
| Section N                     | -                   |   | - |   | 1,500,000 |   | 1,500,000 |
|                          |                |   |   |   |   |   |   |
| Circle C:                     |                |   |   |   |   |   |   |
| Chase Ground Lease            | 4,000               |   | - |   | - |   | 4,000 |
| 5700 Slaughter                | 21,000              |   | - |   | - |   | 21,000 |
| Parkside Village              | -                   |   | 80,000 |   | - |   | 80,000 |
| Tract 110                     | -                   |   | - |   | 760,000 |   | 760,000 |
| Tract 101                     | -                   |   | - |   | 90,000 |   | 90,000 |
| Tract 102                     | -                   |   | - |   | 25,000 |   | 25,000 |
| Tract 114                     | -                   |   | - |   | 5,000 |   | 5,000 |
|                          |                |   |   |   |   |   |   |
| Lantana:                      |                |   |   |   |   |   |   |
| 7500 Rialto                   | 150,000             |   | - |   | - |   | 150,000 |
| Advanced Micro Devices        |                |   |   |   |   |   |   |
| Option Tract                  | -                   |   | - |   | 100,000 |   | 100,000 |
| Tract G06                     | -                   |   | - |   | 400,000 |   | 400,000 |
| Tract GR1                     | -                   |   | - |   | 325,000 |   | 325,000 |
| Tract G05                     | -                   |   | - |   | 260,000 |   | 260,000 |
| Tract G07                     | -                   |   | - |   | 210,000 |   | 210,000 |
| Tract CS5                     | -                   |   | - |   | 175,000 |   | 175,000 |
| Tract CS1-CS3                 | -                   |   | - |   | 150,000 |   | 150,000 |
| Tract LR1                     | -                   |   | - |   | 75,000 |   | 75,000 |
| Tract L04                     | -                   |   | - |   | 70,000 |   | 70,000 |
|                          |                |   |   |   |   |   |   |
| Austin 290 Tract              | -                   |   | - |   | 20,000 |   | 20,000 |
| Total Square Feet             | 197,000             |   | 80,000 |   | 4,278,000 |   | 4,555,000 |
|                          |                |   |   |   |   |   |   |

| a.   | Our development of the properties identified under the heading “Potential Development” is dependent upon the approval of our development plans and permits by governmental agencies, including the City. Those governmental agencies may either not approve one or more development plans and permit applications related to such properties or require us to modify our development plans. Accordingly, our development strategy with respect to those properties may change in the future. While we may be proceeding with approved infrastructure projects on some of these properties, they are not considered to be “under development” for disclosure in this table unless other development activities necessary to fully realize the properties’ intended final use are in progress or scheduled to commence in the near term. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                          | First Quarter |   |
|-----------------------------------------------|---------------|--------|
|                                          | 2010          |   | 2009 |   |
| Revenues:                                     |          |   |   |   |
| Real estate operations                        | $             | 1,003  |   | $ | 359 |   |
| Commercial leasing                            |          | 1,297  |   |   | 1,173 |   |
| Total revenues                                | $             | 2,300  |   | $ | 1,532 |   |
|                                          |          |   |   |   |   |   |
| Operating loss                                | $             | (2,803 | ) | $ | (2,879 | ) |
|                                          |          |   |   |   |   |   |
| Benefit from income taxes                     | $             | 881    |   | $ | 897 |   |
|                                          |          |   |   |   |   |   |
| Net loss attributable to Stratus common stock | $             | (1,709 | ) | $ | (1,737 | ) |
|                                          |          |   |   |   |   |   |

|                                   | First Quarter |   |
|----------------------------------------|---------------|--------|
|                                   | 2010          |   | 2009 |   |
| Revenues:                              |          |   |   |   |
| Developed property sales               | $             | 874    |   | $ | 191 |   |
| Commissions, management fees and other |          | 129    |   |   | 168 |   |
| Total revenues                         |          | 1,003  |   |   | 359 |   |
|                                   |          |   |   |   |   |   |
| Cost of sales, including depreciation  |          | (2,161 | ) |   | (1,128 | ) |
| General and administrative expenses    |          | (1,040 | ) |   | (1,296 | ) |
|                                   |          |   |   |   |   |   |
| Operating loss                         | $             | (2,198 | ) | $ | (2,065 | ) |
|                                   |          |   |   |   |   |   |

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|                                | First Quarter |   |
|-------------------------------------|---------------|--------|
|                                | 2010          |   | 2009 |   |
| Rental income                       | $             | 1,297  |   | $ | 1,173 |   |
| Rental property costs               |          | (745   | ) |   | (831 | ) |
| Depreciation                        |          | (365   | ) |   | (373 | ) |
| General and administrative expenses |          | (792   | ) |   | (783 | ) |
| Operating loss                      | $             | (605   | ) | $ | (814 | ) |
|                                |          |   |   |   |   |   |

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| ·   | $16.3 million of borrowings outstanding and $2.9 million of letters of credit issued under our $45.0 million revolving credit facility with Comerica, resulting in availability of approximately $25.7 million. We used the proceeds from these borrowings for general corporate purposes, including overhead and development costs. The revolving credit facility is secured by assets at Barton Creek, Lantana and Circle C. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | $38.0 million of borrowings outstanding under seven unsecured term loans, which include two $5.0 million loans, an $8.0 million loan, a $7.0 million loan, a $6.0 million loan and two $3.5 million loans. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $20.9 million of borrowings outstanding under the Lantana promissory note, which matures in January 2018 and is secured by our buildings at 7500 Rialto Boulevard. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.6 million of borrowings outstanding under a term loan, which matures in April 2014 and is secured by Barton Creek Village. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.4 million of borrowings outstanding under the Beal Bank loan, which matures in October 2014 and is secured by the assets in the W Austin Hotel & Residences project. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $4.5 million of borrowings under a $5.4 million term loan, which matures in January 2015 and is secured by 5700 Slaughter. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 6, 2010, we and Canyon-Johnson entered into the $30 million Ford loan agreement secured by a second lien on the W Austin Hotel & Residences project assets. The Ford loan agreement matures in March 2012 and the applicable interest rate is 17.5 percent. Additionally, the Ford loan agreement provides for a profits interest in our joint venture with Canyon-Johnson (see Note 9). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 7, 2010, we extended and modified our credit facility with Comerica such that the existing $45 million facility was replaced with a $35 million revolving loan and a $10 million term loan. The applicable interest rate for the revolving loan is the London Interbank Offered Rate (LIBOR) plus 4 percent, with a minimum rate of 6 percent, and the applicable interest rate for the term loan is LIBOR plus 5 percent, with a minimum rate of 7 percent. Both loans mature in May 2012. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On April 7, we extended and modified our seven unsecured term loans. We repaid $2.0 million on March 19, 2010, and the remaining maturities are $2.0 million in June 2010, $9.0 million in December 2011, $3.5 million in December 2012, $15.0 million in December 2013 and $8.5 million in December 2014. The applicable interest rate for all seven unsecured term loans is 8.75 percent. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 4. Controls and Procedures.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

|                   |   | (a) Total |   |        |   | (c) Total Number of      |   | (d) Maximum Number     |
|------------------------|--------|-----------|--------|-------------|--------|--------------------------|--------|------------------------|
|                   |   | Number    |   | (b) Average |   | Shares Purchased as Part |   | of Shares That May     |
|                   |   | of Shares |   | Price Paid  |   | of Publicly Announced    |   | Yet Be Purchased Under |
| Period                 |   | Purchased |   | Per Share   |   | Plans or Programsa       |   | the Plans or Programsa |
| January 1 to 31, 2010  |   | -         |   | -           |   | -                        |   | 161,145                |
| February 1 to 28, 2010 |   | -         |   | -           |   | -                        |   | 161,145                |
| March 1 to 31, 2010    |   | -         |   | -           |   | -                        |   | 161,145                |
| Total                  |   | -         |   | -           |   | -                        |   |                   |
|                   |   |      |   |        |   |                     |   |                   |

| 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. Our modified unsecured term loans prohibit common stock purchases while any of the loans are outstanding. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 6. Exhibits.

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SIGNATURE

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EXHIBIT INDEX

|          |   |                                                                                                                                                                                                                                               |   |                      |   | Incorporated by Reference |
|---------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|---------------------------|
| ExhibitNumber |   | Exhibit Title                                                                                                                                                                                                                                      |   | Filed with this Form 10-Q |   | Form                      |   | File No. |   | Date Filed |
| 3.1           |   | Amended and Restated Certificate of Incorporation of Stratus.                                                                                                                                                                                      |   |                      |   | 10-Q                      |   | 000-19989 |   | 05/17/2004 |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 3.2           |   | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Stratus, dated May 14, 1998.                                                                                                                                  |   |                      |   | 10-Q                      |   | 000-19989 |   | 05/17/2004 |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 3.3           |   | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Stratus, dated May 25, 2001.                                                                                                                                  |   |                      |   | 10-K                      |   | 000-19989 |   | 03/22/2002 |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 3.4           |   | By-laws of Stratus, as amended as of November 6, 2007.                                                                                                                                                                                             |   |                      |   | 10-Q                      |   | 000-19989 |   | 08/11/2008 |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.1          |   | Loan Agreement by and between CJUF II Stratus Block 21 LLC and Hunter’s Glen/Ford Investments I LLC effective as of March 31, 2010.                                                                                                          |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.2          |   | Promissory Note by and between CJUF II Stratus Block 21 LLC and Hunter’s Glen/Ford Investments I LLC effective as of March 31, 2010.                                                                                                         |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.3          |   | Profits Interest Agreement by and between CJUF II Stratus Block 21 LLC and Hunter’s Glen/Ford Investments I LLC effective as of March 31, 2010.                                                                                              |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.4          |   | Fourth Modification and Extension Agreement by and between Stratus Properties Inc., Stratus Properties Operating Co., L.P., Circle C Land, L.P., Austin 290 Properties, Inc., Calera Court, L.P. and Comerica Bank effective as of March 31, 2010. |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.5          |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Strategic Income Portfolio Inc. effective as of March 31, 2010.                                                                                                    |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.6          |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Strategic Income Portfolio Inc.-II effective as of March 31, 2010.                                                                                                 |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.7          |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Strategic Income Portfolio Inc.-II effective as of March 31, 2010.                                                                                                 |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.8          |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Strategic Income Portfolio Inc.-III effective as of March 31, 2010.                                                                                                |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.9          |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Strategic Income Portfolio Inc.-III effective as of March 31, 2010.                                                                                                |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |
| 10.10         |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Select Portfolio Inc. effective as of March 31, 2010.                                                                                                              |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                                                                                                                               |   |                      |   |                      |   |   |   |   |

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|          |   |                                                                                                                                  |   |                      |   | Incorporated by Reference |
|---------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|---------------------------|
| ExhibitNumber |   | Exhibit Title                                                                                                                         |   | Filed with this Form 10-Q |   | Form                      |   | File No. |   | Date Filed |
| 10.11         |   | Loan Modification Agreement by and between Stratus Properties Inc. and American Select Portfolio Inc. effective as of March 31, 2010. |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                  |   |                      |   |                      |   |   |   |   |
| 10.12*        |   | Change of Control Agreement between Stratus Properties Inc. and William H. Armstrong III, effective as of March 9, 2010.              |   |                      |   | 8-K                       |   | 000-19989 |   | 03/12/2010 |
|          |   |                                                                                                                                  |   |                      |   |                      |   |   |   |   |
| 10.13*        |   | Change of Control Agreement between Stratus Properties Inc. and Erin D. Pickens, effective as of March 9, 2010.                       |   |                      |   | 8-K                       |   | 000-19989 |   | 03/12/2010 |
|          |   |                                                                                                                                  |   |                      |   |                      |   |   |   |   |
| 31.1          |   | Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                    |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                  |   |                      |   |                      |   |   |   |   |
| 31.2          |   | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                    |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                  |   |                      |   |                      |   |   |   |   |
| 32.1          |   | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.                                                      |   | X                         |   |                      |   |   |   |   |
|          |   |                                                                                                                                  |   |                      |   |                      |   |   |   |   |
| 32.2          |   | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.                                                      |   | X                         |   |                      |   |   |   |   |

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