----

| 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 September 30, 2009     |
| 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 itscharter) |

| 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                                                      | 16     |
|                                                                           |   |
| Item 4. Controls and Procedures                                                | 26     |
|                                                                           |   |
| Part II. Other Information                                                     | 26     |
|                                                                           |   |
| Item 2. Unregistered Sales of Equity Securities and Use      of Proceeds       | 26     |
|                                                                           |   |
| Item 6. Exhibits                                                               | 26     |
|                                                                           |   |
| Signature                                                                      | 27     |
|                                                                           |   |
| Exhibit Index                                                                  | E-1    |
|                                                                           |   |

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Ite

ST

|                                                               | September      30, |    | December      31, |   |
|--------------------------------------------------------------------|--------------------|---------|-------------------|--------|
|                                                               | 2009               |    | 2008              |   |
| ASSETS                                                             |               |    |              |   |   |   |
| Cash      and cash equivalents                                     | $                  | 24,926  |              | $      | 17,097 |   |
| Investment      in U.S. treasury securities                        |               | -       |              |   | 15,388 |   |
| Real      estate, commercial leasing assets and facilities, net:   |               |    |              |   |   |   |
| Property      held for sale – developed or under development |               | 136,473 |              |   | 115,966 |   |
| Property      held for sale – undeveloped                    |               | 31,928  |              |   | 27,514 |   |
| Property      held for use, net                                    |               | 84,709  |              |   | 56,919 |   |
| Deferred      tax asset                                            |               | 8,633   |              |   | 7,330 |   |
| Investment      in unconsolidated affiliate                        |               | 3,468   |              |   | 2,283 |   |
| Other      assets                                                  |               | 13,552  |              |   | 10,049 |   |
| Total      assets                                                  | $                  | 303,689 |              | $      | 252,546 |   |
|                                                               |               |    |              |   |   |   |
| LIABILITIES      AND EQUITY                                        |               |    |              |   |   |   |
| Accounts      payable and accrued liabilities                      | $                  | 12,278  |              | $      | 6,585 |   |
| Deposits                                                           |               | 7,396   |              |   | 1,301 |   |
| Accrued      interest and property taxes                           |               | 2,975   |              |   | 3,203 |   |
| Debt                                                               |               | 75,951  |              |   | 63,352 |   |
| Other      liabilities                                             |               | 2,079   |              |   | 3,583 |   |
| Total      liabilities                                             |               | 100,679 |              |   | 78,024 |   |
|                                                               |               |    |              |   |   |   |
| Commitments      and contingencies                                 |               |    |              |   |   |   |
|                                                               |               |    |              |   |   |   |
| Equity:                                                            |               |    |              |   |   |   |
| Stratus      stockholders’ equity:                           |               |    |              |   |   |   |
| Preferred      stock                                               |               | -       |              |   | - |   |
| Common      stock                                                  |               | 83      |              |   | 83 |   |
| Capital      in excess of par value of common stock                |               | 197,285 |              |   | 196,692 |   |
| Accumulated      deficit                                           |               | (34,829 | )                 |   | (30,095 | ) |
| Accumulated      other comprehensive loss                          |               | -       |              |   | (3 | ) |
| Common      stock held in treasury                                 |               | (17,941 | )                 |   | (17,441 | ) |
| Total      Stratus stockholders’ equity                      |               | 144,598 |              |   | 149,236 |   |
| Noncontrolling      interest in subsidiary                         |               | 58,412  |              |   | 25,286 |   |
| Total      equity                                                  |               | 203,010 |              |   | 174,522 |   |
| Total      liabilities and equity                                  | $                  | 303,689 |              | $      | 252,546 |   |
|                                                               |               |    |              |   |   |   |

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|                                                                | Three      Months Ended |   | Nine      Months Ended |   |
|---------------------------------------------------------------------|-------------------------|--------|------------------------|--------|
|                                                                | September      30,      |   | September      30,     |   |
|                                                                | 2009                    |   | 2008                   |   | 2009 |   | 2008 |   |
| Revenues:                                                           |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Real      estate                                                    | $                       | 2,116  |                   | $      | 5,691 |   | $ | 4,201 |   | $ | 11,994 |   |
| Rental      income                                                  |                    | 1,163  |                   |   | 1,158 |   |   | 3,296 |   |   | 3,278 |   |
| Commissions,      management fees and other                         |                    | 65     |                   |   | 60 |   |   | 869 |   |   | 792 |   |
| Total      revenues                                                 |                    | 3,344  |                   |   | 6,909 |   |   | 8,366 |   |   | 16,064 |   |
| Cost      of sales:                                                 |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Real      estate, net                                               |                    | 2,710  |                   |   | 4,954 |   |   | 6,806 |   |   | 11,163 |   |
| Rental                                                              |                    | 788    |                   |   | 944 |   |   | 2,405 |   |   | 2,683 |   |
| Depreciation                                                        |                    | 403    |                   |   | 435 |   |   | 1,227 |   |   | 1,211 |   |
| Total      cost of sales                                            |                    | 3,901  |                   |   | 6,333 |   |   | 10,438 |   |   | 15,057 |   |
| General      and administrative expenses                            |                    | 1,818  |                   |   | 1,723 |   |   | 5,832 |   |   | 5,277 |   |
| Total      costs and expenses                                       |                    | 5,719  |                   |   | 8,056 |   |   | 16,270 |   |   | 20,334 |   |
| Operating      loss                                                 |                    | (2,375 | )                      |   | (1,147 | ) |   | (7,904 | ) |   | (4,270 | ) |
| Interest      income and other                                      |                    | 66     |                   |   | 330 |   |   | 894 |   |   | 1,432 |   |
| Loss      on extinguishment of debt                                 |                    | -      |                   |   | - |   |   | (182 | ) |   | - |   |
| Gain      (loss) on interest rate cap agreement                     |                    | (37    | )                      |   | (121 | ) |   | 33 |   |   | (121 | ) |
| Loss      from continuing operations before income taxes and        |                    |   |                   |   |   |   |   |   |   |   |   |   |
| equity      in unconsolidated affiliate’s (loss) income       |                    | (2,346 | )                      |   | (938 | ) |   | (7,159 | ) |   | (2,959 | ) |
| Equity      in unconsolidated affiliate’s (loss) income       |                    | (95    | )                      |   | 99 |   |   | (277 | ) |   | 365 |   |
| Benefit      from income taxes                                      |                    | 844    |                   |   | 268 |   |   | 2,448 |   |   | 660 |   |
| Loss      from continuing operations                                |                    | (1,597 | )                      |   | (571 | ) |   | (4,988 | ) |   | (1,934 | ) |
| Loss      from discontinued operations                              |                    | -      |                   |   | - |   |   | - |   |   | (105 | ) |
| Net      loss                                                       |                    | (1,597 | )                      |   | (571 | ) |   | (4,988 | ) |   | (2,039 | ) |
| Net      loss attributable to noncontrolling interest in subsidiary |                    | 44     |                   |   | 124 |   |   | 254 |   |   | 188 |   |
| Net      loss attributable to Stratus common stock                  | $                       | (1,553 | )                      | $      | (447 | ) | $ | (4,734 | ) | $ | (1,851 | ) |
|                                                                |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Net      loss per share attributable to Stratus common stock:       |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Continuing      operations                                          | $                       | (0.21  | )                      | $      | (0.06 | ) | $ | (0.64 | ) | $ | (0.23 | ) |
| Discontinued      operations                                        |                    | -      |                   |   | - |   |   | - |   |   | (0.01 | ) |
| Basic      and diluted net loss per share attributable to Stratus   |                    |   |                   |   |   |   |   |   |   |   |   |   |
| common      stock                                                   | $                       | (0.21  | )                      | $      | (0.06 | ) | $ | (0.64 | ) | $ | (0.24 | ) |
|                                                                |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares of common stock outstanding:           |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted                                              |                    | 7,435  |                   |   | 7,641 |   |   | 7,439 |   |   | 7,613 |   |
|                                                                |                    |   |                   |   |   |   |   |   |   |   |   |   |

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|                                                                           | Nine      Months Ended September 30, |    |
|--------------------------------------------------------------------------------|--------------------------------------|---------|
|                                                                           | 2009                                 |    | 2008 |   |
| Cash      flow from operating activities:                                      |                                 |    |   |   |   |
| Net      loss                                                                  | $                                    | (4,988  | ) | $ | (2,039 | ) |
| Adjustments      to reconcile net loss to net cash                             |                                 |    |   |   |   |   |
| used      in operating activities:                                             |                                 |    |   |   |   |   |
| Loss      from discontinued operations                                         |                                 | -       |   |   | 105 |   |
| Depreciation                                                                   |                                 | 1,227   |   |   | 1,211 |   |
| (Gain)      loss on interest rate cap agreement                                |                                 | (33     | ) |   | 121 |   |
| Loss      on extinguishment of debt                                            |                                 | 182     |   |   | - |   |
| Cost      of real estate sold                                                  |                                 | 2,912   |   |   | 8,126 |   |
| Deferred      income taxes                                                     |                                 | (1,303  | ) |   | (648 | ) |
| Stock-based      compensation                                                  |                                 | 552     |   |   | 761 |   |
| Equity      in unconsolidated affiliate’s loss (income)                  |                                 | 277     |   |   | (365 | ) |
| Distribution      of unconsolidated affiliate’s income                   |                                 | -       |   |   | 1,266 |   |
| Deposits                                                                       |                                 | (802    | ) |   | (1,471 | ) |
| Purchases      and development of real estate properties                       |                                 | (32,653 | ) |   | (21,959 | ) |
| Municipal      utility district reimbursements                                 |                                 | 4,551   |   |   | 6,229 |   |
| Decrease      in other assets                                                  |                                 | 615     |   |   | 495 |   |
| Increase      (decrease) in accounts payable, accrued liabilities and    other |                                 | 3,249   |   |   | (2,554 | ) |
| Net      cash used in operating activities                                     |                                 | (26,214 | ) |   | (10,722 | ) |
|                                                                           |                                 |    |   |   |   |   |
| Cash      flow from investing activities:                                      |                                 |    |   |   |   |   |
| Development      of commercial leasing properties                              |                                 | (27,262 | ) |   | (10,337 | ) |
| (Investment      in) return of investment in unconsolidated affiliate          |                                 | (1,462  | ) |   | 2,374 |   |
| Proceeds      from matured U.S. treasury securities                            |                                 | 15,391  |   |   | - |   |
| Investment      in interest rate cap agreement                                 |                                 | -       |   |   | (673 | ) |
| Other                                                                          |                                 | 53      |   |   | 25 |   |
| Net      cash used in investing activities                                     |                                 | (13,280 | ) |   | (8,611 | ) |
|                                                                           |                                 |    |   |   |   |   |
| Cash      flow from financing activities:                                      |                                 |    |   |   |   |   |
| Borrowings      from revolving credit facility                                 |                                 | 15,000  |   |   | - |   |
| Payments      on revolving credit facility                                     |                                 | (4,769  | ) |   | - |   |
| Borrowings      from project and term loans                                    |                                 | 4,700   |   |   | 2,054 |   |
| Payments      on project and term loans                                        |                                 | (488    | ) |   | (175 | ) |
| Noncontrolling      interest contributions                                     |                                 | 33,380  |   |   | 16,678 |   |
| Net      (payments for) proceeds from stock-based awards                       |                                 | (96     | ) |   | 94 |   |
| Purchases      of Stratus common shares                                        |                                 | (404    | ) |   | (517 | ) |
| Financing      costs                                                           |                                 | -       |   |   | (2,845 | ) |
| Net      cash provided by financing activities                                 |                                 | 47,323  |   |   | 15,289 |   |
| Net      increase (decrease) in cash and cash equivalents                      |                                 | 7,829   |   |   | (4,044 | ) |
| Cash      and cash equivalents at beginning of year                            |                                 | 17,097  |   |   | 40,873 |   |
| Cash      and cash equivalents at end of period                                | $                                    | 24,926  |   | $ | 36,829 |   |
|                                                                           |                                 |    |   |   |   |   |

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|                                             | Stratus      Stockholders’ Equity |   |            |   |    |   |          |    |
|--------------------------------------------------|-----------------------------------------|--------|-----------------|--------|---------|--------|---------------|---------|
|                                             |                                    |   |            |   |    |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |                                    |   |            |   |    |   | Accumulated   |    | Common |   | Total |   |   |   |   |   |
|                                             |                                    |   | Capital      in |   | Accum-  |   | Other         |    | Stock |   | Stratus |   | Noncontrolling |   |   |   |
|                                             | Common                                  |   | Excess      of  |   | ulated  |   | Comprehensive |    | Held      In |   | Stockholders’ |   | Interest      in |   | Total |   |
|                                             | Stock                                   |   | Par      Value  |   | Deficit |   | Loss          |    | Treasury |   | Equity |   | Subsidiary |   | Equity |   |
|                                             |                                    |   |            |   |    |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008                | $                                       | 83     |            | $      | 196,692 |   | $             | (30,095 | ) | $ | (3 | ) | $ | (17,441 | ) | $ | 149,236 |   | $ | 25,286 |   | $ | 174,522 |   |
| Stock-based      compensation                    |                                    | -      |            |   | 593     |   |          | -       |   |   | - |   |   | - |   |   | 593 |   |   | - |   |   | 593 |   |
| Tender      of shares for stock-based awards     |                                    | -      |            |   | -       |   |          | -       |   |   | - |   |   | (96 | ) |   | (96 | ) |   | - |   |   | (96 | ) |
| Purchases      of Stratus common shares          |                                    | -      |            |   | -       |   |          | -       |   |   | - |   |   | (404 | ) |   | (404 | ) |   | - |   |   | (404 | ) |
| Noncontrolling      interest contributions       |                                    | -      |            |   | -       |   |          | -       |   |   | - |   |   | - |   |   | - |   |   | 33,380 |   |   | 33,380 |   |
| Comprehensive      income (loss):                |                                    |   |            |   |    |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                    |                                    | -      |            |   | -       |   |          | (4,734  | ) |   | - |   |   | - |   |   | (4,734 | ) |   | (254 | ) |   | (4,988 | ) |
| Other      comprehensive income,                 |                                    |   |            |   |    |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net      of taxes:                               |                                    |   |            |   |    |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      gain on U.S. treasury securities |                                    | -      |            |   | -       |   |          | -       |   |   | 3 |   |   | - |   |   | 3 |   |   | - |   |   | 3 |   |
| Other      comprehensive income                  |                                    | -      |            |   | -       |   |          | -       |   |   | 3 |   |   | - |   |   | 3 |   |   | - |   |   | 3 |   |
| Total      comprehensive income (loss)           |                                    | -      |            |   | -       |   |          | -       |   |   | 3 |   |   | - |   |   | (4,731 | ) |   | (254 | ) |   | (4,985 | ) |
| Balance      at September 30, 2009               | $                                       | 83     |            | $      | 197,285 |   | $             | (34,829 | ) | $ | - |   | $ | (17,941 | ) | $ | 144,598 |   | $ | 58,412 |   | $ | 203,010 |   |
|                                             |                                    |   |            |   |    |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Balance      at December 31, 2007                      | $      | 81     |   | $      | 195,898 |   | $      | (26,258 | )      | $      | -      |   | $      | (14,279 | )      | $      | 155,442 |   | $      | -      |   | $      | 155,442 |   |
|--------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|
| Exercised      and issued stock-based awards and other |   | 1      |   |   | (525    | )      |   | -       |   |   | -      |   |   | -       |   |   | (524    | )      |   | -      |   |   | (524    | )      |
| Stock-based      compensation                          |   | -      |   |   | 895     |   |   | -       |   |   | -      |   |   | -       |   |   | 895     |   |   | -      |   |   | 895     |   |
| Tender      of shares for stock-based awards           |   | -      |   |   | -       |   |   | -       |   |   | -      |   |   | (596    | )      |   | (596    | )      |   | -      |   |   | (596    | )      |
| Purchases      of Stratus common shares                |   | -      |   |   | -       |   |   | -       |   |   | -      |   |   | (517    | )      |   | (517    | )      |   | -      |   |   | (517    | )      |
| Noncontrolling      interest contributions             |   | -      |   |   | -       |   |   | -       |   |   | -      |   |   | -       |   |   | -       |   |   | 16,678 |   |   | 16,678  |   |
| Net      loss                                          |   | -      |   |   | -       |   |   | (1,851  | )      |   | -      |   |   | -       |   |   | (1,851  | )      |   | (188   | )      |   | (2,039  | )      |
| Balance      at September 30, 2008                     | $      | 82     |   | $      | 196,268 |   | $      | (28,109 | )      | $      | -      |   | $      | (15,392 | )      | $      | 152,849 |   | $      | 16,490 |   | $      | 169,339 |   |
|                                                   |   |   |   |   |    |   |   |    |   |   |   |   |   |    |   |   |    |   |   |   |   |   |    |   |

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

| 2.   | REVISIONS      OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL  STATEMENTS |
|----------------|------------------------------------------------------------------------|

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|                                            | Three      Months Ended September 30, 2008 |   |
|-------------------------------------------------|--------------------------------------------|--------|
|                                            | As                                         |   | Property      Tax |   | As |   |
|                                            | Reported                                   |   | Adjustments |   | Revised |   |
| Total      cost of sales                        | $                                          | (6,184 | ) | $ | (149 | ) | $ | (6,333 | ) |
| Operating      loss                             |                                       | (998   | ) |   | (149 | ) |   | (1,147 | ) |
| Loss      from continuing operations            |                                       |   |   |   |   |   |   |   |   |
| before      income taxes and equity             |                                       |   |   |   |   |   |   |   |   |
| in      unconsolidated affiliate’s income |                                       | (789   | ) |   | (149 | ) |   | (938 | ) |
| Benefit      from income taxes                  |                                       | 216    |   |   | 52 |   |   | 268 |   |
| Net      loss                                   |                                       | (474   | ) |   | (97 | ) |   | (571 | ) |
| Net      loss attributable to Stratus           |                                       |   |   |   |   |   |   |   |   |
| common      stock                               |                                       | (350   | ) |   | (97 | ) |   | (447 | ) |
|                                            |                                       |   |   |   |   |   |   |   |   |
| Basic      and diluted net loss per             |                                       |   |   |   |   |   |   |   |   |
| share      of common stock                      | $                                          | (0.05  | ) | $ | (0.01 | ) | $ | (0.06 | ) |
|                                            |                                       |   |   |   |   |   |   |   |   |

|                                            | Nine      Months Ended September 30, 2008 |    |
|-------------------------------------------------|-------------------------------------------|---------|
|                                            | As                                        |    | Property      Tax |   | As |   |
|                                            | Reported                                  |    | Adjustments |   | Revised |   |
| Total      cost of sales                        | $                                         | (14,519 | ) | $ | (538 | ) | $ | (15,057 | ) |
| Operating      loss                             |                                      | (3,732  | ) |   | (538 | ) |   | (4,270 | ) |
| Loss      from continuing operations            |                                      |    |   |   |   |   |   |   |   |
| before      income taxes and equity             |                                      |    |   |   |   |   |   |   |   |
| in      unconsolidated affiliate’s income |                                      | (2,421  | ) |   | (538 | ) |   | (2,959 | ) |
| Benefit      from income taxes                  |                                      | 469     |   |   | 191 |   |   | 660 |   |
| Loss      from continuing operations            |                                      | (1,587  | ) |   | (347 | ) |   | (1,934 | ) |
| Net      loss                                   |                                      | (1,692  | ) |   | (347 | ) |   | (2,039 | ) |
| Net      loss attributable to Stratus           |                                      |    |   |   |   |   |   |   |   |
| common      stock                               |                                      | (1,504  | ) |   | (347 | ) |   | (1,851 | ) |
|                                            |                                      |    |   |   |   |   |   |   |   |
| Basic      and diluted net loss per             |                                      |    |   |   |   |   |   |   |   |
| share      of common stock:                     |                                      |    |   |   |   |   |   |   |   |
| Continuing      operations                      | $                                         | (0.19   | ) | $ | (0.04 | ) | $ | (0.23 | ) |
| Discontinued      operations                    |                                      | (0.01   | ) |   | - |   |   | (0.01 | ) |
| Basic      and diluted net loss per             |                                      |    |   |   |   |   |   |   |   |
| share      of common stock                      | $                                         | (0.20   | ) | $ | (0.04 | ) | $ | (0.24 | ) |
|                                            |                                      |    |   |   |   |   |   |   |   |

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

| 4.   | JOINT      VENTURE WITH CANYON-JOHNSON URBAN FUND II,L.P. |
|----------------|-----------------------------------------------------------|

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| 5.   | FAIR      VALUE MEASUREMENTS |
|----------------|------------------------------|

|                   |                    |   | Quoted      Prices in   |   |   |                   |   |   | Significant    |   |
|------------------------|-------------------------|--------|-------------------------|--------|--------|------------------------|--------|--------|----------------|--------|
|                   | Total      Fair Value   |   | Active      Markets for |   |   | Significant      Other |   |   | Unobservable   |   |
|                   | Measurement             |   | Identical      Assets   |   |   | Observable      Inputs |   |   | Inputs         |   |
|                   | September      30, 2009 |   | (Level      1)          |   |   | (Level      2)         |   |   | (Level      3) |   |
|                   |                    |   |                    |   |   |                   |   |   |           |   |   |   |
| Cash      equivalents  | $                       | 17,353 |                    | $      | 17,353 |                   | $      | -      |           | $      | - |   |
| Interest      rate cap |                    |   |                    |   |   |                   |   |   |           |   |   |   |
| agreement              |                    | 96     |                    |   | -      |                   |   | 96     |           |   | - |   |
|                   | $                       | 17,449 |                    | $      | 17,353 |                   | $      | 96     |           | $      | - |   |
|                   |                    |   |                    |   |   |                   |   |   |           |   |   |   |

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|                                    | September      30, 2009 |   |   | December      31, 2008 |   |
|-----------------------------------------|-------------------------|--------|--------|------------------------|--------|
|                                    | Carrying                |   | Fair   |                   |   | Carrying |   |   | Fair |   |
|                                    | Value                   |   | Value  |                   |   | Value |   |   | Value |   |
|                                    |                    |   |   |                   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalentsa         | $                       | 24,926 |   | $                      | 24,926 |   | $ | 17,097 |   | $ | 17,097 |   |
| Restricted      casha                   |                    | -      |   |                   | -      |   |   | 6 |   |   | 6 |   |
| Investment      in U.S. treasury        |                    |   |   |                   |   |   |   |   |   |   |   |   |
| securitiesa                             |                    | -      |   |                   | -      |   |   | 15,388 |   |   | 15,388 |   |
| Accounts      and notes receivablea     |                    | 616    |   |                   | 616    |   |   | 1,245 |   |   | 1,245 |   |
| Interest      rate cap agreementb       |                    | 96     |   |                   | 96     |   |   | 63 |   |   | 63 |   |
| Accounts      payable, accrued          |                    |   |   |                   |   |   |   |   |   |   |   |   |
| liabilities,      accrued interest, and |                    |   |   |                   |   |   |   |   |   |   |   |   |
| property      taxesa                    |                    | 15,253 |   |                   | 15,253 |   |   | 9,788 |   |   | 9,788 |   |
| Debtc                                   |                    | 75,951 |   |                   | 72,146 |   |   | 63,352 |   |   | 55,809 |   |
|                                    |                    |   |   |                   |   |   |   |   |   |   |   |   |

| 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. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | INVESTMENT      IN UNCONSOLIDATED AFFILIATE |
|----------------|---------------------------------------------|

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|                     | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|--------------------------|-------------------------------------------|--------|------------------------------------------|--------|
|                     | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
| Revenues                 | $                                         | -      |                                     | $      | 1,054 |   | $ | - |   | $ | 3,895 |   |
| Gross      profit (loss) |                                      | 9      |                                     |   | 198 |   |   | (13 | ) |   | 694 |   |
| Net      (loss) income   |                                      | (190   | )                                        |   | 198 |   |   | (554 | ) |   | 730 |   |
|                     |                                      |   |                                     |   |   |   |   |   |   |   |   |   |

| 7.   | INTEREST      CAPITALIZATION |
|----------------|------------------------------|

| 8.   | INCOME      TAXES |
|----------------|-------------------|

| Balance      at January 1, 2009              | $      | 2,664  |   |   |
|----------------------------------------------|--------|--------|--------|--------|
| Reductions      for prior year tax positions |   | (2,664 | )      |   |
| Balance      at September 30, 2009           | $      | -      |   |   |

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| 9.   | DISCONTINUED      OPERATIONS |
|----------------|------------------------------|

| 10.   | BUSINESS      SEGMENTS |
|-----------------|------------------------|

|                                       | Real      Estate Operationsa |    | Commercial      Leasing |   | Other   |   | Total  |   |
|--------------------------------------------|------------------------------|---------|-------------------------|--------|---------|--------|--------|--------|
|                                       | (In      Thousands)          |    |
| Three Months Ended September 30,      2009 |                         |    |                    |   |    |   |   |   |   |   |   |   |
| Revenues                                   | $                            | 2,181   |                    | $      | 1,163   |   | $      | -      |   | $ | 3,344 |   |
| Cost      of sales, excluding depreciation |                         | (2,710  | )                       |   | (788    | )      |   | -      |   |   | (3,498 | ) |
| Depreciation                               |                         | (50     | )                       |   | (353    | )      |   | -      |   |   | (403 | ) |
| General      and administrative expenses   |                         | (1,134  | )                       |   | (684    | )      |   | -      |   |   | (1,818 | ) |
| Operating      loss                        | $                            | (1,713  | )                       | $      | (662    | )      | $      | -      |   | $ | (2,375 | ) |
|                                       |                         |    |                    |   |    |   |   |   |   |   |   |   |
| Capital      expenditures                  | $                            | 12,079  |                    | $      | 12,024  |   | $      | -      |   | $ | 24,103 |   |
| Total      assets at September 30, 2009    | $                            | 191,703 |                    | $      | 102,961 |   | $      | 9,025  | b | $ | 303,689 |   |
|                                       |                         |    |                    |   |    |   |   |   |   |   |   |   |

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|                                       | Real      Estate Operationsa |    | Commercial      Leasing |   | Other  |   | Total  |   |
|--------------------------------------------|------------------------------|---------|-------------------------|--------|--------|--------|--------|--------|
|                                       | (In      Thousands)          |    |
| Three Months Ended September 30,      2008 |                         |    |                    |   |   |   |   |   |   |   |   |   |
| Revenues                                   | $                            | 5,751   |                    | $      | 1,158  |   | $      | -      |   | $ | 6,909 |   |
| Cost      of sales, excluding depreciation |                         | (4,954  | )                       |   | (944   | )      |   | -      |   |   | (5,898 | ) |
| Depreciation                               |                         | (53     | )                       |   | (382   | )      |   | -      |   |   | (435 | ) |
| General      and administrative expenses   |                         | (1,482  | )                       |   | (241   | )      |   | -      |   |   | (1,723 | ) |
| Operating      loss                        | $                            | (738    | )                       | $      | (409   | )      | $      | -      |   | $ | (1,147 | ) |
|                                       |                         |    |                    |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                  | $                            | 4,503   |                    | $      | 2,166  |   | $      | -      |   | $ | 6,669 |   |
| Total      assets at September 30, 2008    | $                            | 172,976 |                    | $      | 65,018 |   | $      | 6,420  | b | $ | 244,414 |   |
|                                       |                         |    |                    |   |   |   |   |   |   |   |   |   |

| Nine Months Ended September 30,      2009  |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Revenues                                   | $      | 5,070  |   | $      | 3,296  |   | $      | -      |   | $      | 8,366  |   |
| Cost      of sales, excluding depreciation |   | (6,806 | )      |   | (2,405 | )      |   | -      |   |   | (9,211 | )      |
| Depreciation                               |   | (176   | )      |   | (1,051 | )      |   | -      |   |   | (1,227 | )      |
| General      and administrative expenses   |   | (3,636 | )      |   | (2,196 | )      |   | -      |   |   | (5,832 | )      |
| Operating      loss                        | $      | (5,548 | )      | $      | (2,356 | )      | $      | -      |   | $      | (7,904 | )      |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                  | $      | 32,653 |   | $      | 27,262 |   | $      | -      |   | $      | 59,915 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |

| Nine Months Ended September 30,      2008  |   |    |   |   |   |   |   |   |   |   |    |   |
|--------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Revenues                                   | $      | 12,786  |   | $      | 3,278  |   | $      | -      |   | $      | 16,064  |   |
| Cost      of sales, excluding depreciation |   | (11,163 | )      |   | (2,683 | )      |   | -      |   |   | (13,846 | )      |
| Depreciation                               |   | (147    | )      |   | (1,064 | )      |   | -      |   |   | (1,211  | )      |
| General      and administrative expenses   |   | (4,538  | )      |   | (739   | )      |   | -      |   |   | (5,277  | )      |
| Operating      loss                        | $      | (3,062  | )      | $      | (1,208 | )      | $      | -      |   | $      | (4,270  | )      |
|                                       |   |    |   |   |   |   |   |   |   |   |    |   |
| Loss      from discontinued operations     | $      | -       |   | $      | (105   | )      | $      | -      |   | $      | (105    | )      |
| Capital      expenditures                  | $      | 21,959  |   | $      | 10,337 |   | $      | -      |   | $      | 32,296  |   |
|                                       |   |    |   |   |   |   |   |   |   |   |    |   |

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

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

|                                            | Three      Months Ended |   | Nine      Months Ended |   |
|-------------------------------------------------|-------------------------|--------|------------------------|--------|
|                                            | September      30,      |   | September      30,     |   |
|                                            | 2009                    |   | 2008                   |   | 2009 |   | 2008 |   |
| Operating      loss                             | $                       | (2,375 | )                      | $      | (1,147 | ) | $ | (7,904 | ) | $ | (4,270 | ) |
| Interest      income and other                  |                    | 66     |                   |   | 330 |   |   | 894 |   |   | 1,432 |   |
| Loss      on extinguishment of debt             |                    | -      |                   |   | - |   |   | (182 | ) |   | - |   |
| Gain      (loss) on interest rate cap agreement |                    | (37    | )                      |   | (121 | ) |   | 33 |   |   | (121 | ) |
| Loss      from continuing operations before     |                    |   |                   |   |   |   |   |   |   |   |   |   |
| income      taxes and equity in unconsolidated  |                    |   |                   |   |   |   |   |   |   |   |   |   |
| affiliate’s      (loss) income            | $                       | (2,346 | )                      | $      | (938 | ) | $ | (7,159 | ) | $ | (2,959 | ) |
|                                            |                    |   |                   |   |   |   |   |   |   |   |   |   |

| 11.   | NEW      ACCOUNTING STANDARDS |
|-----------------|-------------------------------|

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| 12.   | SUBSEQUENT      EVENTS |
|-----------------|------------------------|

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Ite

|                  |      |   | Acreage                             |   |        |
|-----------------------|-----------|--------|-------------------------------------|--------|-------------|
|                  |      |   | Developed      or Under Development |   | Undeveloped |   |   |
|                  | Developed |   | Single                              |   | Multi-      |   |   |   |   |   | Single |   |   |   |   |   | Total |
|                  | Lots      |   | Family                              |   | family      |   | Commercial |   | Total |   | Family |   | Commercial |   | Total |   | Acreage |
| Austin                |      |   |                                |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Barton      Creek     | 122       |   | 358                                 |   | 249         |   | 368 |   | 975 |   | 510 |   | 28 |   | 538 |   | 1,513 |
| Lantana               | -         |   | -                                   |   | -           |   | - |   | - |   | - |   | 223 |   | 223 |   | 223 |
| Circle      C         | 59        | a      | -                                   |   | -           |   | 265 |   | 265 |   | 148 | a | 122 |   | 270 |   | 535 |
| W      Austin Hotel   |      |   |                                |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| &      Residences | -         |   | -                                   |   | -           |   | 2 | b | 2 |   | - |   | - |   | - |   | 2 |
| San Antonio           |      |   |                                |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Camino      Real      | -         |   | -                                   |   | -           |   | - |   | - |   | - |   | 2 |   | 2 |   | 2 |
| Total                 | 181       |   | 358                                 |   | 249         |   | 635 |   | 1,242 |   | 658 |   | 375 |   | 1,033 |   | 2,275 |
|                  |      |   |                                |   |        |   |   |   |   |   |   |   |   |   |   |   |   |

| a.   | Relates      to Meridian, an 800-lot residentialdevelopment. |
|----------------|--------------------------------------------------------------|

| b.   | 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 |
| Phase      II and III Townhomes   | -                     |   | - |   | 221 |   | 221 |
| Phase      III                    | -                     |   | 89 |   | - |   | 89 |
| Mirador      Estate               | 2                     |   | - |   | - |   | 2 |
| Wimberly      Lane Phase II       | 1                     |   | - |   | - |   | 1 |
| Section      N Multi-familyb      | -                     |   | - |   | 1,860 |   | 1,860 |
| Other      Barton Creek Sections  | -                     |   | - |   | 154 |   | 154 |
|                              |                  |   |   |   |   |   |   |
| Circle      C:                    |                  |   |   |   |   |   |   |
| Meridian                          | 59                    |   | - |   | 57 |   | 116 |
| Total      Residential Lots       | 181                   |   | 89 |   | 2,292 |   | 2,562 |
|                              |                  |   |   |   |   |   |   |

| 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. The timing for development of      these properties has not been determined. 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 nearterm. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Represents      1,860 potential units on 174 acres. |
|----------------|-----------------------------------------------------|

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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 |
| Tract      106                     | 21,000                   |   | - |   | - |   | 21,000 |
| Tract      107                     | -                        |   | 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      Tracts                 | -                        |   | - |   | 760,000 |   | 760,000 |
| Tract      GR1                     | -                        |   | - |   | 325,000 |   | 325,000 |
| 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. The timing for development of      these properties has not been determined. 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 nearterm. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                               | Third      Quarter |   | Nine      Months |   |
|----------------------------------------------------|--------------------|--------|------------------|--------|
|                                               | 2009               |   | 2008             |   | 2009 |   | 2008 |   |
| Revenues:                                          |               |   |             |   |   |   |   |   |
| Real      estate operations                        | $                  | 2,181  |             | $      | 5,751 |   | $ | 5,070 |   | $ | 12,786 |   |
| Commercial      leasing                            |               | 1,163  |             |   | 1,158 |   |   | 3,296 |   |   | 3,278 |   |
| Total      revenues                                | $                  | 3,344  |             | $      | 6,909 |   | $ | 8,366 |   | $ | 16,064 |   |
|                                               |               |   |             |   |   |   |   |   |   |   |   |   |
| Operating      loss                                | $                  | (2,375 | )                | $      | (1,147 | ) | $ | (7,904 | ) | $ | (4,270 | ) |
|                                               |               |   |             |   |   |   |   |   |   |   |   |   |
| Benefit      from income taxes                     | $                  | 844    |             | $      | 268 |   | $ | 2,448 |   | $ | 660 |   |
|                                               |               |   |             |   |   |   |   |   |   |   |   |   |
| Net      loss attributable to Stratus common stock | $                  | (1,553 | )                | $      | (447 | ) | $ | (4,734 | ) | $ | (1,851 | ) |
|                                               |               |   |             |   |   |   |   |   |   |   |   |   |

|                                        | Third      Quarter |   | Nine      Months |   |
|---------------------------------------------|--------------------|--------|------------------|--------|
|                                        | 2009               |   | 2008             |   | 2009 |   | 2008 |   |
| Revenues:                                   |               |   |             |   |   |   |   |   |
| Developed      property sales               | $                  | 2,116  |             | $      | 5,691 |   | $ | 4,201 |   | $ | 11,953 |   |
| Undeveloped      property sales             |               | -      |             |   | - |   |   | - |   |   | 41 |   |
| Commissions,      management fees and other |               | 65     |             |   | 60 |   |   | 869 |   |   | 792 |   |
| Total      revenues                         |               | 2,181  |             |   | 5,751 |   |   | 5,070 |   |   | 12,786 |   |
|                                        |               |   |             |   |   |   |   |   |   |   |   |   |
| Cost      of sales, including depreciation  |               | (2,760 | )                |   | (5,007 | ) |   | (6,982 | ) |   | (11,310 | ) |
| General      and administrative expenses    |               | (1,134 | )                |   | (1,482 | ) |   | (3,636 | ) |   | (4,538 | ) |
|                                        |               |   |             |   |   |   |   |   |   |   |   |   |
| Operating      loss                         | $                  | (1,713 | )                | $      | (738 | ) | $ | (5,548 | ) | $ | (3,062 | ) |
|                                        |               |   |             |   |   |   |   |   |   |   |   |   |

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|                              | Third      Quarter |   |
|-----------------------------------|--------------------|--------|
|                              | 2009               |   | 2008 |   |
|                              | Lots               |   | Revenues |   | Lots |   | Revenues |   |
| Barton      Creek                 |               |   |   |   |   |   |   |   |
| Calera      Court Courtyard Homes | 1                  |   | $                                      549 |   | 1 |   | $                                      643 |   |
| Verano      Drive                 | 1                  |   | 450 |   | 3 |   | 1,875 |   |
|                              |               |   |   |   |   |   |   |   |
| Circle      C                     |               |   |   |   |   |   |   |   |
| Meridian                          | 16                 |   | 1,117 |   | 48 |   | 3,173 |   |
| Total      Residential            | 18                 |   | $                                   2,116 |   | 52 |   | $                                   5,691 |   |
|                              |               |   |   |   |   |   |   |   |

|                              | Nine      Months |   |
|-----------------------------------|------------------|--------|
|                              | 2009             |   | 2008 |   |
|                              | Lots             |   | Revenues |   | Lots |   | Revenues |   |
| Barton      Creek                 |             |   |   |   |   |   |   |   |
| Calera      Court Courtyard Homes | 2                |   | $                                   1,149 |   | 2 |   | $                              1,278 |   |
| Wimberly      Lane Phase II       |             |   |   |   |   |   |   |   |
| Standard      Homebuilder         | -                |   | - |   | 1 |   | 265 | a |
| Verano      Drive                 | 1                |   | 450 |   | 3 |   | 1,875 |   |
|                              |             |   |   |   |   |   |   |   |
| Circle      C                     |             |   |   |   |   |   |   |   |
| Meridian                          | 39               |   | 2,602 |   | 103 |   | 7,125 |   |
|                              |             |   |   |   |   |   |   |   |
| Deerfieldb                        | -                |   | - |   | 21 |   | 1,410 |   |
| Total      Residential            | 42               |   | $                                   4,201 |   | 130 |   | $                                11,953 |   |
|                              |             |   |   |   |   |   |   |   |

| a.   | Includes      $0.1 million for homebuilder contract termination  fee. |
|----------------|-----------------------------------------------------------------------|

| b.   | In      2004, we acquired the Deerfield property in Plano, Texas, for $7.0      million. We executed agreements with a national homebuilder, whereby the      homebuilder paid us $1.4 million for an option to purchase all 234 lots      over 36 monthly take-downs. In 2005, we executed a revised agreement with      the homebuilder, increasing the lot sizes and average purchase price to      $67,150 based on a new total of 224 lots. In January 2008, we sold the      final 21 lots for $1.4 million. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                     | Third      Quarter |   | Nine      Months |   |
|------------------------------------------|--------------------|--------|------------------|--------|
|                                     | 2009               |   | 2008             |   | 2009 |   | 2008 |   |
| Rental      income                       | $                  | 1,163  |             | $      | 1,158 |   | $ | 3,296 |   | $ | 3,278 |   |
| Rental      property costs               |               | (788   | )                |   | (944 | ) |   | (2,405 | ) |   | (2,683 | ) |
| Depreciation                             |               | (353   | )                |   | (382 | ) |   | (1,051 | ) |   | (1,064 | ) |
| General      and administrative expenses |               | (684   | )                |   | (241 | ) |   | (2,196 | ) |   | (739 | ) |
| Operating      loss                      | $                  | (662   | )                | $      | (409 | ) | $ | (2,356 | ) | $ | (1,208 | ) |
|                                     |               |   |             |   |   |   |   |   |   |   |   |   |

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| ·   | $10.2      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 $31.8 million. The revolving      credit facility matures in May2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $40.0      million of borrowings outstanding under seven unsecured term loans, which      include two $5.0 million loans, two $8.0 million loans, a $7.0 million      loan and two $3.5 million loans, all of which will mature in December      2011. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $21.1      million of borrowings outstanding under the Lantana promissory note, which      matures in January 2018. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | $4.7      million of borrowings outstanding under a term loan secured by Barton      Creek Village. The note bears interest at 6.25 percent per annum and      matures in April 2014. Payments of interest and principal are due monthly      beginning May 1, 2009. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Ite

P

Ite

|                         |   | (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 |
| July      1 to 31, 2009      |   | -              |   | -                |   | -                             |   | 161,145                     |
| August      1 to 31, 2009    |   | -              |   | -                |   | -                             |   | 161,145                     |
| September      1 to 30, 2009 |   | -              |   | -                |   | -                             |   | 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 loan agreement with Comerica      provides a limit of $6.5 million for common stock purchases after      September 30, 2005. At September 30, 2009, $0.9 million remained under the      Comerica agreement for purchases of common  stock. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

It

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ST

|    |                                                                                                                                                 | Filed          |                           |          |            |   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|--------------------------------|---------------|-----------------|--------|
| Exhibit |                                                                                                                                                 | with      this | Incorporated      by Reference |
| Number  | Exhibit      Title                                                                                                                                   | 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    | Amended      and Restated Construction Loan Agreement dated October 21, 2009, by and      between CJUF II Stratus Block 21 LLC and Beal Bank Nevada. | X              |                           |          |            |
|    |                                                                                                                                                 |           |                           |          |            |
| 10.2    | Amended      and Restated Promissory Note dated October 21, 2009, by and between CJUF      II Stratus Block 21 LLC and Beal Bank Nevada.             | X              |                           |          |            |
|    |                                                                                                                                                 |           |                           |          |            |
| 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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