Seritage Growth Properties (NYSE: SRG) (the “Company”), a
national owner and developer of retail, residential and mixed-use
properties today reported financial and operating results for the
three and six months ended June 30, 2023.
“We continue to make to progress on our strategy to maximize
value for our shareholders. Since initiating our plan of sale in
March of 2022, we have sold 127 properties for approximately $1.4
billion in gross proceeds and paid down $960 million on our term
loan. Our rapid deleveraging has eliminated $67.2 million in debt
service, $21.9 million in negative carry on wholly owned vacant or
non-income producing properties and significant annual carry and
development costs on disposed Joint Venture assets. Year to date we
have sold 54 wholly owned, consolidated or joint venture properties
for total gross proceeds of $654.6 million. Additionally, we have
over $200 million of assets either under contract or with accepted
offers. We plan to continue to use excess sales proceeds to reduce
the Company’s term loan balance. In conjunction with our sales
activity, we continue to build asset value through leasing,
development and entitlement activity for the properties slated for
sale later in our process,” said Andrea L. Olshan, Chief Executive
Officer and President.
Sale Highlights:
- Generated $295.4 million of gross proceeds during the quarter
ended June 30, 2023 from the sale of 19 wholly owned or
consolidated assets and five joint venture assets.
- Subsequent to quarter end, generated $68.4 million of gross
proceeds from the sale of one outparcel and two joint venture
assets.
- The Company has nine assets under contract for sale with no due
diligence contingencies or with an exercised put option for total
anticipated proceeds of $133.3 million and four assets under
contract for sale subject to customary due diligence for total
anticipated proceeds of $26.9 million. All assets for sale are
subject to customary closing conditions.
- The Company has accepted offers on and is currently negotiating
definitive purchase and sale agreements on six wholly owned assets
and one joint venture asset for total gross proceeds of
approximately $62.2 million.
Financial Highlights:
For the three months ended June 30, 2023:
- As of June 30, 2023, the Company had cash on hand of $137.8
million, including $12.9 million of restricted cash. As of August
11, 2023, the Company had cash on hand of $190.9 million, including
$12.9 million of restricted cash, prior to making an additional
principal prepayment of $70 million on August 14, 2023.
- Net loss attributable to common shareholders of ($96.9)
million, or ($1.73) per share.
- Total Net Operating Income (“Total NOI”) of $3.0 million.
- During the quarter, the Company made $250 million in principal
repayments on the Company’s term loan facility having a maturity
date of July 31, 2025 (the “Term Loan Facility”), reducing the
balance of the Term Loan Facility to $550 million. Subsequent to
quarter end, the Company made an additional $70 million in
principal repayments reducing the balance of our Term Loan Facility
to $480 million.
- During the quarter, the Company recorded a total of $104.5
million of impairment on four assets.
Other Highlights
- Signed one lease and one lease expansion covering 11 thousand
square feet in the second quarter at an average projected annual
net rent of $30.91 PSF.
- One ground lease covering approximately 5 thousand square feet
at a Multi-Tenant Retail asset at a projected annual net rent of
$38.50 PSF; and
- One ground floor lease expansion covering approximately 6
thousand square feet at a Multi-Tenant Retail asset at a projected
annual net rent of $24.30 PSF.
- Opened seven tenants in the second quarter totaling
approximately 26 thousand square feet (18 thousand square feet at
share) at an average net rent of $57.90 PSF.
Sales Activity
The two tables below provide additional information regarding
the Company’s disposition activity. The first table provides
disposition information as of August 11, 2023. The second table
provides updated information, as of August 11, 2023, on portfolio
status by market, property type and transaction size
consistent.
Sales Progress as of August
11, 2023 (1) (2)
Stabilized
Number
Cap
2023 Sales
2024 & Beyond
Sales
Gross Proceeds
Closed since March 31, 2023
2
7.2%
2
-
$
36,650
Under Contract - No DD
2
7.5%
2
-
$
48,200
Under Contract - In DD
1
6.6%
1
-
$
5,200
PSA Neg. / Accepted Offer
1
7.4%
1
-
$
34,000
Total
6
7.3%
6
-
$
124,050
Remaining Stabilized Sales
Parcels
3
-
3
Partially Stabilized
Number
Cap
2023 Sales
2024 & Beyond
Sales
Gross Proceeds
Closed since March 31, 2023
5
7.3%
5
-
$
102,450
Under Contract - No DD
2
5.8%
1
1
$
43,500
Under Contract - In DD
-
N/A
-
-
$
-
PSA Neg. / Accepted Offer
-
N/A
-
-
$
-
Total
7
6.8%
6
1
$
145,950
Remaining Partially Stabilized Sales
Parcels
5
2
3
Pads
Number
Cap
2023 Sales
2024 & Beyond
Sales
Gross Proceeds
Closed since March 31, 2023
2
5.7%
2
-
$
7,015
Under Contract - No DD
1
9.8%
1
-
$
2,450
Under Contract - In DD
1
5.5%
1
-
$
2,727
PSA Neg. / Accepted Offer
1
6.1%
1
-
$
4,000
Total
5
6.4%
5
-
$
16,192
Remaining Pad Sales Parcels
-
-
-
Joint Ventures
Number
PSF
2023 Sales
2024 & Beyond
Sales
Gross Proceeds
Closed since March 31, 2023
7
$
101.47
7
-
$
114,675
Under Contract - No DD
1
$
97.82
1
-
$
25,964
Under Contract - In DD
-
N/A
-
-
$
-
PSA Neg. / Accepted Offer
1
$
43.53
1
-
$
8,139
Total
9
$
94.01
9
-
$
148,778
Remaining Joint Venture Sales
Parcels
7
1
6
Non-Income Producing
Number
PSF
Per Acre
Carry Cost
2023 Sales
2024 & Beyond
Sales
Gross Proceeds
Closed since March 31, 2023
11
$
76.19
$
754
$
(5,809
)
11
-
$
102,997
Under Contract - No DD (3)
3
$
19.60
$
417
$
(822
)
3
-
$
13,137
Under Contract - In DD
2
$
69.73
$
890
$
(602
)
2
-
$
18,952
PSA Neg. / Accepted Offer
4
$
24.28
$
259
$
(1,241
)
3
1
$
16,100
Total
20
$
51.13
$
601
$
(8,474
)
19
1
$
151,186
Remaining Non-Income Producing Sales
Parcels
18
5
13
As of January 1, 2023
2023 Sales Projections as of
August 11, 2023
2024 & Beyond Sales
Projections as of August 11, 2023
Category
Sales Portfolio
Sold
Under Contract - No DD
Under Contract - in DD
PSA Neg. / Accepted
Offer
Pipeline
Under Contract - No DD
PSA Neg. / Accepted
Offer
Pipeline
Gateway markets
11
1
-
-
-
-
-
-
10
Primary markets
44
20
5
2
1
4
1
-
11
Secondary markets
35
24
1
2
2
2
-
1
3
Tertiary markets
17
9
2
-
3
2
-
-
1
Market Composition Total
107
54
8
4
6
8
1
1
25
Multi-Tenant Retail
32
23
2
-
1
1
1
-
4
Premier
10
1
-
-
-
-
-
-
9
Residential
5
3
-
-
-
-
-
-
2
Other Unconsolidated Entities
13
6
1
-
1
1
-
-
4
Non-Core Properties
47
21
5
4
4
6
-
1
6
Property Type Total
107
54
8
4
6
8
1
1
25
Under $10M
60
31
5
3
5
7
-
1
8
$10M - $30M
28
19
2
1
-
1
-
-
5
$30M - $50M
11
2
1
-
1
-
1
-
6
Over $50M
8
2
-
-
-
-
-
-
6
Transaction Size Total
107
54
8
4
6
8
1
1
25
(1) 2023 and 2024 sales projections are based on the Company’s
latest forecasts and assumptions, but the Company cautions that
actual results may differ materially. (2) Includes both partial and
full asset transactions currently being forecasted by Seritage. At
January 1, 2023, the Company had an interest in 97 properties. It
is currently projected that nine of these properties will be
parceled and sold in two or more separate transactions each, which
is subject to change, resulting in a total portfolio count of 107
transactions at this time.
Portfolio
The table below represents a summary of the Company’s properties
by planned usage as of June 30, 2023:
(in thousands except number of leases and acreage data)
Planned Usage
Total
Built SF / Acreage (1)
Leased SF (1)(2)
Avg. Acreage / Site
Consolidated
Multi-Tenant Retail
8
1,299 sf / 130 acres
948
16.3
Residential (3)
2
33 sf / 19 acres
33
9.5
Premier
4
228 sf / 69 acres
156
17.2
Non-Core (4)
24
3,624 sf / 303 acres
182
12.6
Unconsolidated
Other Entities
8
626 sf / 130 acres
152
16.2
Residential (3)
1
49 sf / 12 acres
32
11.7
Premier
3
158 sf / 57 acres
106
19.0
(1) Square footage is presented at the Company’s proportional
share. (2) Based on signed leases at June 30, 2023. (3) Square
footage represents built ancillary retail space whereas acreage
represents both retail and residential acreage. (4) Represents
assets the Company previously designated for sale.
Multi-Tenant Retail
During the three months ended June 30, 2023, the Company
invested $1.2 million in its multi-tenant retail properties. The
remaining capital expenditures in the multi-tenant retail portfolio
are primarily comprised of tenant improvements.
The table below provides a summary of all Multi-Tenant Retail
signed leases as of June 30, 2023, including unconsolidated
entities at the Company’s proportional share:
(in thousands except number of leases and
PSF data)
Number of
Leased
% of Total
Gross Annual Base
% of
Gross Annual
Tenant
Leases
GLA
Leasable GLA
Rent ("ABR")
Total ABR
Rent PSF ("ABR PSF")
In-place retail leases
38
784
60.3
%
$
19,126
85.9
%
$
24.40
SNO retail leases (1)(2)
8
164
12.7
%
3,146
14.1
%
19.18
Total retail leases
46
948
73.0
%
$
22,272
100.0
%
$
23.49
(1) SNO = signed not yet opened
leases.
(2) SNO GLA and rent include one tenant
expansion signed in Q2 2023 not counted as a lease.
During the three months ended June 30, 2023, the Company signed
one new lease and one lease expansion at its retail properties
totaling approximately 11 thousand square feet at an average base
rent of $30.91 PSF stabilized net. Additionally, the Company
generated a leasing pipeline of over 100 thousand square feet. The
Company has 784 thousand leased square feet and approximately 164
thousand square feet signed but not opened. Seritage has total
occupancy of 73.0% for its multi-tenant retail properties. As of
June 30, 2023, there is an additional approximately 351 thousand
square feet available for lease.
(in thousands except number of leases and
PSF data)
Number of
Annual
SNO Leases
GLA
ABR
Rent PSF
As of March 31, 2023
9
159
$
3,085
$
19.40
Opened
(1
)
(4
)
(129
)
32.25
Sold / terminated
(1
)
(2
)
(150
)
75.00
Signed
1
11
340
30.91
As of June 30, 2023
8
164
$
3,146
$
19.18
Premier Mixed-Use
The Company has three premier mixed-use projects in the active
leasing/tenant opening stage: Aventura, FL, Santa Monica, CA and
San Diego, CA. As of June 30, 2023, the Company has 205 thousand
in-place leased square feet (109 thousand square feet at share),
163 thousand square feet signed but not opened (153 thousand square
feet at share), and 175 thousand square feet available for lease
(124 thousand square feet at share).
The table below provides a summary of all signed leases at
Premier assets as of June 30, 2023, including unconsolidated
entities at the Company’s proportional share:
Number of
Leased
% of Total
Net Annual
% of Total
Net Annual
Tenant
Leases
GLA
Leasable GLA
Base Rent
Annual Rent
Rent PSF
In-place retail leases
24
47
12.1
%
$
3,070
17.3
%
$
65.32
In-place office leases
1
62
16.0
%
4,220
23.8
%
68.06
SNO retail leases as of March 31,
2022(1)
22
111
8,679
78.19
Opened
(4
)
(4
)
(381
)
95.25
SNO retail leases as of June 30,
2023(1)
18
107
27.8
%
8,298
46.9
%
77.55
SNO office leases as of March 31,
2022(1)
3
46
2,109
45.85
Opened
—
—
—
—
SNO retail leases as of June 30,
2023(1)
3
46
11.9
%
2,109
11.9
%
45.85
Total diversified leases as of June 30,
2023
46
262
67.8
%
$
17,697
100.0
%
$
67.55
(1) SNO = Signed not yet opened leases
(2) In thousands except number of leases
and PSF data
During the three months ended June 30, 2023, the Company
invested $15.4 million in its consolidated premier development and
operating properties and an additional $3.0 million into its
unconsolidated premier entities.
Aventura
During the second quarter of 2023, the Company continued to
advance 216 thousand square feet of office and retail leasing at
the project in Aventura, FL. The Company is finalizing construction
on the asset and opened its first tenants to the public in July and
August 2023 representing approximately 26 thousand square feet and
will continue with rolling openings going forward.
With occupancy at 66.6%, the Company has 72 thousand square feet
available for lease, of which 32 thousand square feet is in lease
negotiation and has leasing activity on over an additional 31
thousand square feet. See the “Impairment” section below for a
discussion of the impairment the Company recognized for the three
months ended June 30, 2023 on its development property in Aventura,
FL.
Financial Summary
The table below provides a summary of the Company’s financial
results for the three and six months ended June 30, 2023:
(in thousands except per share
amounts)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Net loss attributable to Seritage common
shareholders
$
(96,932
)
$
(111,980
)
$
(160,143
)
$
(165,410
)
Net loss per share attributable to
Seritage common shareholders
(1.73
)
(2.56
)
(2.85
)
(3.79
)
Total NOI
2,996
10,602
6,099
21,095
For the quarter ended June 30, 2023:
- Total NOI for the second quarter of 2023 reflects the impact of
$(0.1) million Total NOI relating to sold properties.
Total NOI is comprised of:
(in thousands)
Three Months Ended June
30,
Consolidated Properties
2023
2022
Multi-tenant retail
$
3,920
$
3,936
Premier
(402
)
(163
)
Residential
(57
)
—
Non-Core
(1,331
)
(1,044
)
Sold
(138
)
5,828
Total
1,992
8,557
Unconsolidated Properties
Residential
194
84
Premier
306
(96
)
Other joint ventures
504
2,057
Total
1,004
2,045
Total NOI
$
2,996
$
10,602
As of June 30, 2023, the Company had cash on hand of $137.8
million, including $12.9 million of restricted cash. The Company
expects to use these sources of liquidity, together with a
combination of future sales and/or potential debt and capital
markets transactions, to pay its financing obligations and fund its
operations and development activity. The availability of funding
from sales of assets, partnerships and credit or capital markets
transactions is subject to various conditions, and there can be no
assurance that such transactions will be consummated. For more
information on our liquidity position, including our going concern
analysis, please see the notes to the consolidated financial
statements included in Part I, Item 1 and in the section titled
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” each in our Quarterly Report on Form
10-Q.
Impairment
During the quarter ended June 30, 2023, due to increasing
development and construction costs and deteriorating market
conditions, the Company recognized a $101.5 million impairment on
its development property in Aventura, FL. In accordance with GAAP,
the impairment was recognized as a result of the carrying value of
the asset exceeding the undiscounted cash flows over the estimated
holding period. The amount of the impairment is determined by
applying a discount to the projected cash flows and writing down
the carrying value to the discounted current fair value.
The Company will continue to evaluate its portfolio, including
its development plans and holding periods, which may result in
additional impairments in future periods.
Dividends
On February 15, 2023, the Company’s Board of Trustees declared a
preferred stock dividend of $0.4375 per each Series A Preferred
Share. The preferred dividend was paid on April 17, 2023 to holders
of record on March 31, 2023.
On April 27, 2023, the Company’s Board of Trustees declared a
preferred stock dividend of $0.4375 per each Series A Preferred
Share. The preferred dividend was paid on July 14, 2023 to holders
of record on June 30, 2023.
On July 23, 2023, the Company’s Board of Trustees declared a
preferred stock dividend of $0.4375 per each Series A Preferred
Share. The preferred dividend will be paid on October 13, 2023 to
holders of record on September 30, 2023.
The Company’s Board of Trustees does not expect to declare
dividends on its common shares until such time as the Term Loan
Facility has been repaid in full.
Strategic Review
At the 2022 Annual Meeting of Shareholders on October 24, 2022,
Seritage shareholders approved the Company’s Plan of Sale. The
strategic review process remains ongoing as the Company executes
the Plan of Sale, and the Company remains open minded to pursuing
value maximizing alternatives, including a potential sale of the
Company. There can be no assurance regarding the success of the
process.
Market Update
As the Company has previously disclosed, the Company, along with
the commercial real estate market as a whole, has experienced and
continues to experience progressively more challenging market
conditions as a result of a variety of factors. These conditions
have applied and continue to apply downward pricing pressure on all
of our assets. In making decisions regarding whether and when to
transact on each of the Company’s remaining assets, the Company
will consider various factors including, but not limited to, the
breadth of the buyer universe, macroeconomic conditions, the
availability and cost of financing, as well as corporate, operating
and other capital expenses required to carry the asset. If these
challenging market conditions persist, then we expect that they
will impact the Plan of Sale proceeds from our assets and the
amounts and timing of distributions to shareholders.
D&O Insurance
Litigation
On March 2, 2021, the Company brought a lawsuit in Delaware
state court against QBE Insurance Corporation, Endurance American
Insurance Company, Allianz Global Risks US Insurance Company and
Continental Casualty Company, each of which are D&O insurance
providers of the Company (the “D&O Insurers”). The Company’s
lawsuit sought, among other things, declaratory relief and money
damages as a result of certain of the D&O Insurers refusal to
pay certain costs and expenses related to the defense of the Sears
Bankruptcy Litigation. During the fourth quarter of 2022, the
Company reached settlement agreements with two of the D&O
Insurers and received gross proceeds of $12.7 million. During the
three months ended March 31, 2023, the Company reached settlement
agreements with the other two D&O Insurers for gross proceeds
of $11.6 million. The Company received $3.8 million during the
three months ended March 31, 2023 and received $7.8 million during
the three months ended June 30, 2023, which is recorded in interest
and other income in the consolidated statements of operations.
Supplemental Report
A Supplemental Report will be available in the Investors section
of the Company’s website, www.seritage.com.
Non-GAAP Financial
Measures
The Company makes references to NOI and Total NOI which are
financial measures that include adjustments to accounting
principles generally accepted in the United States (“GAAP”).
Neither of NOI or Total NOI are measures that (i) represent cash
flow from operations as defined by GAAP; (ii) are indicative of
cash available to fund all cash flow needs, including the ability
to make distributions; (iii) are alternatives to cash flow as a
measure of liquidity; or (iv) should be considered alternatives to
net income (which is determined in accordance with GAAP) for
purposes of evaluating the Company’s operating performance.
Reconciliations of these measures to the respective GAAP measures
the Company deems most comparable have been provided in the tables
accompanying this press release.
Net Operating Income ("NOI”) and Total
NOI
NOI is defined as income from property operations less property
operating expenses. Other real estate companies may use different
methodologies for calculating NOI, and accordingly the Company’s
depiction of NOI may not be comparable to other real estate
companies. The Company believes NOI provides useful information
regarding Seritage, its financial condition, and results of
operations because it reflects only those income and expense items
that are incurred at the property level.
The Company also uses Total NOI, which includes its proportional
share of unconsolidated properties. This form of presentation
offers insights into the financial performance and condition of the
Company as a whole given the Company’s ownership of unconsolidated
properties that are accounted for under GAAP using the equity
method.
The Company also considers NOI and Total NOI to be a helpful
supplemental measure of its operating performance because it
excludes from NOI variable items such as termination fee income, as
well as non-cash items such as straight-line rent and amortization
of lease intangibles.
Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
relate to expectations, beliefs, projections, future plans and
strategies, anticipated events or trends and similar expressions
concerning matters that are not historical facts. In some cases,
you can identify forward-looking statements by the use of
forward-looking terminology such as “may,” “should,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” or “potential” or the negative of these words and
phrases or similar words or phrases that are predictions of or
indicate future events or trends and that do not relate solely to
historical matters. Forward-looking statements involve known and
unknown risks, uncertainties, assumptions and contingencies, many
of which are beyond the Company’s control, which may cause actual
results to differ significantly from those expressed in any
forward-looking statement. Factors that could cause or contribute
to such differences include, but are not limited to: declines in
retail, real estate and general economic conditions; the impact of
the COVID-19 pandemic on the business of the Company’s tenants and
business, income, cash flow, results of operations, financial
condition, liquidity, prospects, ability to service the Company’s
debt obligations and ability to pay dividends and other
distributions to shareholders; risks relating to redevelopment
activities; contingencies to the commencement of rent under leases;
the terms of the Company’s indebtedness and other legal
requirements to which the Company is subject; failure to achieve
expected occupancy and/or rent levels within the projected time
frame or at all; the impact of ongoing negative operating cash flow
on the Company’s ability to fund operations and ongoing
development; the Company’s ability to access or obtain sufficient
sources of financing to fund the Company’s liquidity needs; the
Company’s relatively limited history as an operating company; and
environmental, health, safety and land use laws and regulations.
For additional discussion of these and other applicable risks,
assumptions and uncertainties, see the “Risk Factors” and
forward-looking statement disclosure contained in the Company’s
filings with the Securities and Exchange Commission, including the
Company’s annual report on Form 10-K for the year ended December
31, 2022 and any subsequent Form 10-Qs. While the Company believes
that its forecasts and assumptions are reasonable, the Company
cautions that actual results may differ materially. The Company
intends the forward-looking statements to speak only as of the time
made and do not undertake to update or revise them as more
information becomes available, except as required by law.
About Seritage Growth
Properties
Seritage is principally engaged in the ownership, development,
redevelopment, management and leasing of retail and mixed-use
properties throughout the United States. As of June 30, 2023, the
Company’s portfolio consisted of interests in 50 properties
comprised of approximately 6.8 million square feet of gross
leasable area (“GLA”) or build-to-suit leased area, approximately
157 acres held for or under development and approximately 3.6
million square feet or approximately 303 acres to be disposed of.
The portfolio consists of approximately 5.2 million square feet of
GLA held by 38 wholly owned properties (such properties, the
“Consolidated Properties”) and 1.7 million square feet of GLA held
by 12 unconsolidated entities (such properties, the “Unconsolidated
Properties”).
SERITAGE GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEETS (In thousands, except share
and per share amounts) (Unaudited)
June 30, 2023
December 31, 2022
ASSETS
Investment in real estate
Land
$
134,291
$
172,813
Buildings and improvements
356,952
463,616
Accumulated depreciation
(43,369
)
(57,330
)
447,874
579,099
Construction in progress
128,931
185,324
Net investment in real estate
576,805
764,423
Real estate held for sale
98,084
455,617
Investment in unconsolidated entities
301,493
382,597
Cash and cash equivalents
124,850
133,480
Restricted cash
12,904
11,459
Tenant and other receivables, net
22,188
41,495
Lease intangible assets, net
1,524
1,791
Prepaid expenses, deferred expenses and
other assets, net
30,119
50,859
Total assets (1)
$
1,167,967
$
1,841,721
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Term loan facility, net
$
549,965
$
1,029,754
Accounts payable, accrued expenses and
other liabilities
56,320
89,368
Total liabilities (1)
606,285
1,119,122
Commitments and contingencies (Note 9)
Shareholders' Equity
Class A common shares $0.01 par value;
100,000,000 shares authorized; 56,182,522 and 56,052,546 shares
issued and outstanding as of June 30, 2023 and December 31, 2022,
respectively
562
561
Series A preferred shares $0.01 par value;
10,000,000 shares authorized; 2,800,000 shares issued and
outstanding as of June 30, 2023 and December 31, 2022; liquidation
preference of $70,000
28
28
Additional paid-in capital
1,360,718
1,360,411
Accumulated deficit
(800,674
)
(640,531
)
Total shareholders' equity
560,634
720,469
Non-controlling interests
1,048
2,130
Total equity
561,682
722,599
Total liabilities and equity
$
1,167,967
$
1,841,721
(1) The Company's consolidated balance
sheets include assets and liabilities of consolidated variable
interest entities ("VIEs"). See Note 2. The consolidated balance
sheets, as of June 30, 2023, include the following amounts related
to our consolidated VIEs, excluding the Operating Partnership: $3.3
million of land, $2.8 million of building and improvements, $(0.8)
million of accumulated depreciation and $2.3 million of other
assets included in other line items. The Company's consolidated
balance sheets as of December 31, 2022, include the following
amounts related to our consolidated VIEs, excluding the Operating
Partnership: $6.6 million of land, $3.9 million of building and
improvements, $(1.0) million of accumulated depreciation and $4.0
million of other assets included in other line items.
SERITAGE GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share amounts) (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
REVENUE
Rental income
$
5,517
$
29,418
$
5,935
$
58,502
Management and other fee income
367
286
629
2,107
Total revenue
5,884
29,704
6,564
60,609
EXPENSES
Property operating
5,196
10,801
13,381
21,833
Real estate taxes
2,170
6,425
3,707
14,575
Depreciation and amortization
4,151
10,669
8,715
22,603
General and administrative
10,099
11,093
22,319
20,185
Litigation settlement
—
35,000
—
35,000
Total expenses
21,616
73,988
48,122
114,196
Gain on sale of real estate, net
33,488
68,031
45,880
67,016
Gain on sale of interest in unconsolidated
entities
7,323
—
7,323
—
Impairment of real estate assets
(104,467
)
(109,343
)
(107,043
)
(110,334
)
Equity in loss of unconsolidated
entities
(13,698
)
(33,720
)
(50,070
)
(66,796
)
Interest and other income
9,869
99
15,454
110
Interest expense
(12,528
)
(22,663
)
(27,730
)
(45,251
)
Loss before income taxes
(95,745
)
(141,880
)
(157,744
)
(208,842
)
Benefit (provision) for income taxes
38
(203
)
51
(228
)
Net loss
(95,707
)
(142,083
)
(157,693
)
(209,070
)
Net loss attributable to non-controlling
interests
—
31,328
—
46,110
Net loss attributable to Seritage
$
(95,707
)
$
(110,755
)
$
(157,693
)
$
(162,960
)
Preferred dividends
(1,225
)
(1,225
)
(2,450
)
(2,450
)
Net loss attributable to Seritage common
shareholders
$
(96,932
)
$
(111,980
)
$
(160,143
)
$
(165,410
)
Net loss per share attributable to
Seritage Class A common shareholders - Basic
$
(1.73
)
$
(2.56
)
$
(2.85
)
$
(3.79
)
Net loss per share attributable to
Seritage Class A common shareholders - Diluted
$
(1.73
)
$
(2.56
)
$
(2.85
)
$
(3.79
)
Weighted average Class A common shares
outstanding - Basic
56,173
43,677
56,116
43,656
Weighted average Class A common shares
outstanding - Diluted
56,173
43,677
56,116
43,656
Reconciliation of Net Loss to NOI and Total NOI (in
thousands)
Three Months Ended June
30,
Six Months Ended June
30,
NOI and Total NOI
2023
2022
2023
2022
Net loss
$
(95,707
)
$
(142,083
)
$
(157,693
)
$
(209,070
)
Termination fee income
—
(92
)
—
(369
)
Management and other fee income
(367
)
(286
)
(629
)
(2,107
)
Depreciation and amortization
4,151
10,669
8,715
22,603
General and administrative expenses
10,099
11,093
22,319
20,185
Litigation settlement
—
35,000
—
35,000
Equity in loss of unconsolidated
entities
13,698
33,720
50,070
66,796
Gain on sale of interest in unconsolidated
entities
(7,323
)
—
(7,323
)
—
Gain on sale of real estate, net
(33,488
)
(68,031
)
(45,880
)
(67,016
)
Impairment of real estate assets
104,467
109,343
107,043
110,334
Interest and other income
(9,869
)
(99
)
(15,454
)
(110
)
Interest expense
12,528
22,663
27,730
45,251
(Benefit) provision for income taxes
(38
)
203
(51
)
228
Straight-line rent
3,796
(3,599
)
14,638
(4,320
)
Above/below market rental expense
45
56
93
121
NOI
$
1,992
$
8,557
$
3,578
$
17,526
Unconsolidated
entities
Net operating income of unconsolidated
entities
1,301
2,267
2,959
4,113
Straight-line rent
(294
)
(228
)
(440
)
(556
)
Above/below market rental expense
(3
)
6
2
12
Total NOI
$
2,996
$
10,602
$
6,099
$
21,095
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814953698/en/
Seritage Growth Properties (212) 355-7800 IR@Seritage.com
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