W Hotel & Residences Developer Faces Delisting
May 22, 2009 20:56 Filed in: News
Stratus Properties, the developer of the W Hotel & Residences in the 2nd street district, is facing delisting from the NASDAQ for failure to promptly file financial reports.
While this sounds bad, the event alone should not jeopardize the project. However, the developer's accounting irregularities and delinquent financial reports will limit financial flexibility until the issue is resolved. This is an especially important issue for the W as one of it major lenders is in precarious financial shape. It could also violate covenants of the project's bank financing.
The best indicator of the situation is the fact that the stock continues to trade at a healthy value, signaling the market's belief that the issues will be resolved. While stock in Stratus is down 50% from it's 2009 high set on January 2nd, it's more than 50% above its March 9 low.
Here is a summary from the Austin Business Journal:
Stratus Properties Inc. will request a hearing to appeal the Nasdaq exchange's decision to delist the company's stock.
Stratus is behind in filing its financial reports because of past accounting errors the company is attempting to rectify. The delay in filings though breaks with Nasdaq rules and the company has been unable to meet deadlines for the plan it submitted to regain compliance.
Stratus (Nasdaq: STRS) received a letter from the Nasdaq on May 15 saying it is subject to delisting based on its delinquent financial reports. Stratus said Thursday it is working diligently to complete the preparation of its annual report for 2008 and its quarterly report for the three months that ended March 31.
Company officials say they intend to request a hearing before a Nasdaq Hearings Panel no later than May 22 asking for an extension to allow it time to complete and file its financials.
While this sounds bad, the event alone should not jeopardize the project. However, the developer's accounting irregularities and delinquent financial reports will limit financial flexibility until the issue is resolved. This is an especially important issue for the W as one of it major lenders is in precarious financial shape. It could also violate covenants of the project's bank financing.
The best indicator of the situation is the fact that the stock continues to trade at a healthy value, signaling the market's belief that the issues will be resolved. While stock in Stratus is down 50% from it's 2009 high set on January 2nd, it's more than 50% above its March 9 low.
Here is a summary from the Austin Business Journal:
Stratus Properties Inc. will request a hearing to appeal the Nasdaq exchange's decision to delist the company's stock.
Stratus is behind in filing its financial reports because of past accounting errors the company is attempting to rectify. The delay in filings though breaks with Nasdaq rules and the company has been unable to meet deadlines for the plan it submitted to regain compliance.
Stratus (Nasdaq: STRS) received a letter from the Nasdaq on May 15 saying it is subject to delisting based on its delinquent financial reports. Stratus said Thursday it is working diligently to complete the preparation of its annual report for 2008 and its quarterly report for the three months that ended March 31.
Company officials say they intend to request a hearing before a Nasdaq Hearings Panel no later than May 22 asking for an extension to allow it time to complete and file its financials.