SRG-A Seritage Growth Properties

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 07, 2023

 

 

SERITAGE GROWTH PROPERTIES

(Exact name of Registrant as Specified in Its Charter)

 

 

Maryland			001-37420	38-3976287
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
500 Fifth Avenue, Suite 1530
New York, New York				10110
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 212 355-7800

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common shares of beneficial interest, par value $0.01 per share		SRG		New York Stock Exchange
7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share		SRG-PA		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On November 8, 2023, the Company issued a press release regarding its financial results for the three and nine months ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report.

In addition, on November 8, 2023, the Company published certain supplementary financial information relating to the three and nine months ended September 30, 2023. Such information is furnished as Exhibit 99.2 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD.

 

On November 8, 2023, Seritage Growth Properties (the “Company”) announced that on November 7, 2023 it made a voluntary prepayment in the amount of $40 million under its $1.6 billion Senior Secured Term Loan Agreement, dated July 31, 2018, among the Company, Seritage Growth Properties, L.P. and Berkshire Hathaway Life Insurance Company of Nebraska (as amended by amendment no. 1, dated May 5, 2020, by amendment no. 2, dated November 24, 2021, and by amendment no. 3, dated June 16, 2022, the “Term Loan Agreement”). Following the prepayment, the Company has repaid $1.24 billion since December 2021 and $360 million remains outstanding under the Term Loan Agreement. The prepayment will also reduce the Company's total annual interest expense related to the term loan facility by approximately $2.8 million.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Description
99.1		Press release dated November 8, 2023.
99.2		Supplementary Financial Information dated November 8, 2023.
104		Cover Page Interactive Data File (embedded within Inline XBRL document)

 

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

SERITAGE GROWTH PROPERTIES
By:		/s/ Matthew Fernand
		Matthew Fernand
		Chief Legal Officer

 

Date: November 8, 2023

 

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Exhibit 99.1

 

 

 

 

Seritage Growth Properties Reports Third Quarter 2023 Operating Results

 

New York – November 8, 2023– 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 nine months ended September 30, 2023.

“We continue to make significant progress on asset sales, grossing more than $156 million during the quarter. We now have a line of sight to a portfolio of approximately 25 assets comprised of many of our best properties in prime markets around the country. Our team's operational discipline has allowed us to reduce run rate G&A, a trend we expect to continue into 2024. We remain focused on our balance sheet, keeping ample cash balances while using excess proceeds to progressively pay down our debt. Looking ahead, we will press on with our plan of sale with a continued focus on delivering value to our shareholders,” said Andrea L. Olshan, Chief Executive Officer and President.

Sale Highlights:

 

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Financial Highlights:

For the three months ended September 30, 2023:

Other Highlights

Future Sales Projections

The data below provides additional information regarding current estimated gross sales proceeds per asset in the portfolio as of November 7, 2023 excluding assets under contract or in PSA negotiation, which are described above. The assets listed below are either being marketed or are to be marketed and, as a result, any sales thereof are anticipated to occur in 2024 and beyond. Sales projections are based on the Company’s latest forecasts and assumptions, but the Company cautions that actual results may differ materially. In addition, see “Market Update” below and the “Risk Factors” section contained in the Company’s filings with the Securities and Exchange Commission for discussion of the risks associated with such estimated gross sale proceeds.

Gateway Markets

 

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Primary Markets

Secondary Markets

Tertiary Markets

Portfolio

The table below represents a summary of the Company’s properties by planned usage as of September 30, 2023:

(in thousands except number of leases and acreage data):

Planned Usage		Total		Built SF / Acreage (1)		Leased SF (1)(2)				% Leased		Avg. Acreage / Site
Consolidated
Multi-Tenant Retail		7		1,135 sf / 111 acres			793			69.8.%			15.9
Residential (3)		2		33 sf / 19 acres			33			100.0%			9.5
Premier		4		228 sf / 69 acres			138			60.4%			17.2
Non-Core (4)		20		2,941 sf / 259 acres			119			4.0%			12.9
Unconsolidated
Other Joint Ventures		6		457 sf / 77 acres			11			2.3%			12.8
Premier		3		158 sf / 57 acres			106			67.4%			19.0

(1) Square footage is presented at the Company’s proportional share.

(2) Based on signed leases at September 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 September 30, 2023, the Company invested $0.5 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 and in negotiation leases as of September 30, 2023:

(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			29				649.4				57.2	%		$	15,648.0				83.7	%		$	24.10
SNO retail leases (1)(2)			7				143.3				12.6	%		$	3,054.8				16.3	%			21.32
Tenants in lease negotiation			2				104.0				9.2	%		$	696.2			N/A					6.69
Total retail leases			38				896.7				79.0	%		$	19,399.0				100.0	%		$	21.63
(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.

 

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During the three months ended September 30, 2023, the Company signed one new lease at its retail properties totaling approximately 8 thousand square feet at an average base rent of $46.12 PSF stabilized net. Additionally, the Company generated a leasing pipeline of over 100 thousand square feet. The Company has 649 thousand leased square feet and approximately 143 thousand square feet signed but not opened. The Company has total occupancy of 69.8% for its Multi-Tenant retail properties. As of September 30, 2023, there is an additional approximately 343 thousand square feet available for lease.

(in thousands except number of leases and PSF data)		Number of				Leased				Gross Annual Base				Gross Annual
		SNO Leases				GLA				Rent ("ABR")				Rent PSF ("ABR PSF")
As of June 30, 2023			8				164.4				3,146.5			$	19.14
Opened			(1	)			(1.2	)			(52.3	)			43.58
Sold / terminated			(1	)			(28.0	)			(413.0	)			14.75
Signed			1				8.1				373.6				43.12
As of September 30, 2023			7				143.3				3,054.8			$	21.32

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 September 30, 2023, the Company has 245 thousand in-place leased square feet (144 thousand square feet at share), 105 thousand square feet signed but not opened (100 thousand square feet at share), and 193 thousand square feet available for lease (142 thousand square feet at share).

The table below provides a summary of all signed leases at Premier assets as of September 30, 2023, including unconsolidated entities at the Company’s proportional share:

	Number of				Leased				% of Total				Gross Annual				% of				Gross Annual
Tenant	Leases				GLA				Leasable GLA				Base Rent ("ABR")				Total ABR				Rent PSF ("ABR PSF")
In-place retail leases		27				63.9				16.6	%		$	4,481.6				26.8	%		$	70.13
In-place office leases		2				79.9				20.7	%		$	5,219.6				31.4	%			65.33
SNO retail leases as of June 30, 2023(1)		18				107.1							$	8,298.0								77.48
Opened		(3	)			(17.0	)						$	(1,403.5	)							82.56
Terminated		(1	)			(22.0	)						$	(1,820.3	)							82.74
Signed		2				4.1							$	312.8								76.29
SNO retail leases as of September 30, 2023(1)		16				72.2				18.7	%		$	5,387.0				32.4	%			74.61
SNO office leases as of June 30, 2023(1)		3				46.2							$	2,108.5								45.64
Opened		(1	)			(18.2	)						$	(999.8	)							54.93
Lease amendment		—				—							$	432.5								—
SNO retail leases as of September 30, 2023(1)		2				28.0				7.3	%		$	1,541.2				9.3	%			55.04
Total diversified leases as of September 30, 2023		47				244.0				63.3	%		$	16,629.4				100.0	%		$	68.15
(1) SNO = Signed not yet opened leases
(2) In thousands except number of leases and PSF data

During the three months ended September 30, 2023, the Company invested $10.1 million in its consolidated premier development and operating properties and an additional $0.5 million into its unconsolidated premier entities.

Aventura

During the third 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 2023 with approximately 58 thousand square feet representing 27% of the asset opened through November 3, 2023 and will continue with rolling openings going forward.

With 58.4% leased through November 3, 2023, the Company has 90 thousand square feet or 41.6% available for lease, of which approximately 32 thousand square feet or 14.8% is in lease negotiation and has leasing activity on over an additional 14 thousand square feet or 6.5%. This leasing percentage reflects two leases that were terminated due to those tenants failure to perform representing approximately 24 thousand square feet or 10.9%.

 

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Financial Summary

The table below provides a summary of the Company’s financial results for the three and nine months ended September 30, 2023:

(in thousands except per share amounts)		Three Months Ended								Nine Months Ended
		September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Net loss attributable to Seritage    common shareholders		$	(2,127	)		$	(4,664	)		$	(162,270	)		$	(170,074	)
Net loss per share attributable to Seritage    common shareholders			(0.04	)			(0.08	)			(2.89	)			(3.57	)
Total NOI			1,119				12,150				7,218				33,245

For the quarter ended September 30, 2023:

Total NOI is comprised of:

 

(in thousands)		Three Months Ended September 30,
Consolidated Properties		2023				2022
Multi-tenant retail		$	2,749			$	4,154
Premier			(589	)			(632	)
Residential			57				—
Non-Core			(1,310	)			(422	)
Sold			(601	)			6,897
Total			306				9,997
Unconsolidated Properties
Residential			277				282
Premier			64				2,158
Other joint ventures			472				(287	)
Total			813				2,153
Total NOI		$	1,119			$	12,150

As of September 30, 2023, the Company had cash on hand of $114.8 million, including $16.0 million of restricted cash. The Company expects to use these sources of liquidity, together with a combination of future sales, to pay its financing obligations and fund its operations and development activity. The availability of funding from sales of assets 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.

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 was paid on October 13, 2023 to holders of record on September 30, 2023.

On October 30, 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 January 16, 2024 to holders of record on December 29, 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.

 

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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.

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.

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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 September 30, 2023, the Company’s portfolio consisted of interests in 42 properties comprised of approximately 5.6 million square feet of gross leasable area (“GLA”) or build-to-suit leased area, approximately 126 acres held for or under development and approximately 2.9 million square feet or approximately 259 acres to be disposed of. The portfolio consists of approximately 4.3 million square feet of GLA held by 33 wholly owned properties (such properties, the “Consolidated Properties”) and 1.2 million square feet of GLA held by 9 unconsolidated entities (such properties, the “Unconsolidated Properties”).

Contact

Seritage Growth Properties

(212) 355-7800

IR@Seritage.com

 

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Seritage Growth Properties

Consolidated Balance SheetS

(In thousands, except share and per share amounts)

(Unaudited)

 

		September 30, 2023				December 31, 2022
ASSETS
Investment in real estate
Land		$	108,366			$	172,813
Buildings and improvements			324,781				463,616
Accumulated depreciation			(35,119	)			(57,330	)
			398,028				579,099
Construction in progress			131,015				185,324
Net investment in real estate			529,043				764,423
Real estate held for sale			110,616				455,617
Investment in unconsolidated entities			208,672				382,597
Cash and cash equivalents			98,886				133,480
Restricted cash			15,962				11,459
Tenant and other receivables, net			20,638				41,495
Lease intangible assets, net			930				1,791
Prepaid expenses, deferred expenses and other assets, net			31,543				50,859
Total assets (1)		$	1,016,290			$	1,841,721
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Term loan facility, net		$	400,000			$	1,029,754
Accounts payable, accrued expenses and other liabilities			56,028				89,368
Total liabilities (1)			456,028				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 September 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 September 30, 2023 and    December 31, 2022; liquidation preference of $70,000			28				28
Additional paid-in capital			1,361,384				1,360,411
Accumulated deficit			(802,801	)			(640,531	)
Total shareholders' equity			559,173				720,469
Non-controlling interests			1,089				2,130
Total equity			560,262				722,599
Total liabilities and equity		$	1,016,290			$	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 September 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 $2.0 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.

 

 

 

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Seritage Growth Properties

Consolidated Statements of OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
REVENUE
Rental income		$	4,525			$	23,253			$	10,459			$	81,755
Management and other fee income			523				248				1,152				2,355
Total revenue			5,048				23,501				11,611				84,110
EXPENSES
Property operating			4,564				9,700				17,945				31,535
Real estate taxes			1,204				6,483				4,910				21,056
Depreciation and amortization			2,913				9,169				11,628				31,772
General and administrative			8,030				10,811				30,349				30,996
Litigation settlement			—				533				—				35,533
Total expenses			16,711				36,696				64,832				150,892
Gain on sale of real estate, net			18,506				45,433				64,386				112,449
(Loss) gain on sale of interest in unconsolidated entities			(916	)			(139	)			6,407				(139	)
Impairment of real estate assets			—				(10,275	)			(107,043	)			(120,609	)
Equity in income (loss) of unconsolidated entities			993				(2,275	)			(49,077	)			(69,071	)
Interest and other income			2,030				(1,047	)			17,484				(937	)
Interest expense			(9,763	)			(21,916	)			(37,493	)			(67,167	)
Loss before income taxes			(813	)			(3,414	)			(158,557	)			(212,256	)
Provision for income taxes			(89	)			(67	)			(38	)			(295	)
Net loss			(902	)			(3,481	)			(158,595	)			(212,551	)
Net loss attributable to non-controlling interests			—				42				—				46,152
Net loss attributable to Seritage		$	(902	)		$	(3,439	)		$	(158,595	)		$	(166,399	)
Preferred dividends			(1,225	)			(1,225	)			(3,675	)			(3,675	)
Net loss attributable to Seritage common shareholders		$	(2,127	)		$	(4,664	)		$	(162,270	)		$	(170,074	)
Net loss per share attributable to Seritage Class A    common shareholders - Basic		$	(0.04	)		$	(0.08	)		$	(2.89	)		$	(3.57	)
Net loss per share attributable to Seritage Class A    common shareholders - Diluted		$	(0.04	)		$	(0.08	)		$	(2.89	)		$	(3.57	)
Weighted average Class A common shares    outstanding - Basic			56,183				55,361				56,139				47,600
Weighted average Class A common shares    outstanding - Diluted			56,183				55,361				56,139				47,600

 

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Reconciliation of Net Loss to NOI and Total NOI (in thousands)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
NOI and Total NOI		2023				2022				2023				2022
Net loss		$	(902	)		$	(3,481	)		$	(158,595	)		$	(212,551	)
Termination fee income			—				—				—				(369	)
Management and other fee income			(523	)			(248	)			(1,152	)			(2,355	)
Depreciation and amortization			2,913				9,169				11,628				31,772
General and administrative expenses			8,030				10,811				30,349				30,996
Litigation settlement			—				533				—				35,533
Equity in loss of unconsolidated entities			(993	)			2,275				49,077				69,071
Loss (gain) on sale of interest in unconsolidated entities			916				139				(6,407	)			139
Gain on sale of real estate, net			(18,506	)			(45,433	)			(64,386	)			(112,449	)
Impairment of real estate assets			—				10,275				107,043				120,609
Interest and other income			(2,030	)			1,047				(17,484	)			937
Interest expense			9,763				21,916				37,493				67,167
(Benefit) provision for income taxes			89				67				38				295
Straight-line rent			1,504				2,873				16,142				(1,447	)
Above/below market rental expense			45				54				138				175
NOI		$	306			$	9,997			$	3,884			$	27,523
Unconsolidated entities
Net operating income of unconsolidated entities			3,445				2,450				6,404				6,563
Straight-line rent			(2,629	)			(305	)			(3,069	)			(860	)
Above/below market rental expense			(3	)			8				(1	)			19
Total NOI		$	1,119			$	12,150			$	7,218			$	33,245

 

10

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Exhibit 99.2

 

 

 

 

1

---

Forward-Looking Statements

 

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “would,” “may” or other similar expressions in the Company’s Annual Report on Form 10-K. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and in any of our subsequent Form 10-Qs. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date hereof. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date hereof. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part 1 of the Quarterly Report.

 

2

---

 

 

 

 

 

 

 

 

 

 

 

 

Financial Information

 

3

---

 

Summary Information

September 30, 2023

(in thousands, except per share and PSF amounts)

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
Financial Results		2023				2022				2022				2021
Net loss attributable to Seritage    common shareholders		$	(2,127	)		$	(4,664	)		$	(162,270	)		$	(170,074	)
Total NOI		$	1,119			$	12,150			$	7,218			$	33,245
Net loss per share attributable to Seritage    common shareholders		$	(0.04	)		$	(0.08	)		$	(2.89	)		$	(3.57	)
Wtd. avg. shares - EPS			56,183				55,361				56,139				47,600
Stock trading price range		$7.19 to $9.69				$5.40 to $14.06				$7.19 to $12.70				$5.21 to $14.45

 

4

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Consolidated Balance Sheets (unaudited)

September 30, 2023

(in thousands, except share and per share amounts)

 

		September 30, 2023				December 31, 2022
ASSETS
Investment in real estate
Land		$	108,366			$	172,813
Buildings and improvements			324,781				463,616
Accumulated depreciation			(35,119	)			(57,330	)
			398,028				579,099
Construction in progress			131,015				185,324
Net investment in real estate			529,043				764,423
Real estate held for sale			110,616				455,617
Investment in unconsolidated entities			208,672				382,597
Cash and cash equivalents			98,886				133,480
Restricted cash			15,962				11,459
Tenant and other receivables, net			20,638				41,495
Lease intangible assets, net			930				1,791
Prepaid expenses, deferred expenses and other assets, net			31,543				50,859
Total assets (1)		$	1,016,290			$	1,841,721
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Term loan facility, net		$	400,000			$	1,029,754
Accounts payable, accrued expenses and other liabilities			56,028				89,368
Total liabilities (1)			456,028				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 September 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 September 30, 2023 and    December 31, 2022; liquidation preference of $70,000			28				28
Additional paid-in capital			1,361,384				1,360,411
Accumulated deficit			(802,801	)			(640,531	)
Total shareholders' equity			559,173				720,469
Non-controlling interests			1,089				2,130
Total equity			560,262				722,599
Total liabilities and equity		$	1,016,290			$	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 September 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 $2.0 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.

 

 

 

5

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Consolidated Statements of Operations (unaudited)

September 30, 2023

(in thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
REVENUE
Rental income		$	4,525			$	23,253			$	10,459			$	81,755
Management and other fee income			523				248				1,152				2,355
Total revenue			5,048				23,501				11,611				84,110
EXPENSES
Property operating			4,564				9,700				17,945				31,535
Real estate taxes			1,204				6,483				4,910				21,056
Depreciation and amortization			2,913				9,169				11,628				31,772
General and administrative			8,030				10,811				30,349				30,996
Litigation settlement			—				533				—				35,533
Total expenses			16,711				36,696				64,832				150,892
Gain on sale of real estate, net			18,506				45,433				64,386				112,449
(Loss) gain on sale of interest in unconsolidated entities			(916	)			(139	)			6,407				(139	)
Impairment of real estate assets			—				(10,275	)			(107,043	)			(120,609	)
Equity in income (loss) of unconsolidated entities			993				(2,275	)			(49,077	)			(69,071	)
Interest and other income			2,030				(1,047	)			17,484				(937	)
Interest expense			(9,763	)			(21,916	)			(37,493	)			(67,167	)
Loss before income taxes			(813	)			(3,414	)			(158,557	)			(212,256	)
Provision for income taxes			(89	)			(67	)			(38	)			(295	)
Net loss			(902	)			(3,481	)			(158,595	)			(212,551	)
Net loss attributable to non-controlling interests			—				42				—				46,152
Net loss attributable to Seritage		$	(902	)		$	(3,439	)		$	(158,595	)		$	(166,399	)
Preferred dividends			(1,225	)			(1,225	)			(3,675	)			(3,675	)
Net loss attributable to Seritage common shareholders		$	(2,127	)		$	(4,664	)		$	(162,270	)		$	(170,074	)
Net loss per share attributable to Seritage Class A    common shareholders - Basic		$	(0.04	)		$	(0.08	)		$	(2.89	)		$	(3.57	)
Net loss per share attributable to Seritage Class A    common shareholders - Diluted		$	(0.04	)		$	(0.08	)		$	(2.89	)		$	(3.57	)
Weighted average Class A common shares    outstanding - Basic			56,183				55,361				56,139				47,600
Weighted average Class A common shares    outstanding - Diluted			56,183				55,361				56,139				47,600

 

6

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Total Net Operating Income

September 30, 2023

(in thousands)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
NOI and Total NOI		2023				2022				2023				2022
Net loss		$	(902	)		$	(3,481	)		$	(158,595	)		$	(212,551	)
Termination fee income			—				—				—				(369	)
Management and other fee income			(523	)			(248	)			(1,152	)			(2,355	)
Depreciation and amortization			2,913				9,169				11,628				31,772
General and administrative expenses			8,030				10,811				30,349				30,996
Litigation settlement			—				533				—				35,533
Equity in loss of unconsolidated entities			(993	)			2,275				49,077				69,071
Loss (gain) on sale of interest in unconsolidated entities			916				139				(6,407	)			139
Gain on sale of real estate, net			(18,506	)			(45,433	)			(64,386	)			(112,449	)
Impairment of real estate assets			—				10,275				107,043				120,609
Interest and other income			(2,030	)			1,047				(17,484	)			937
Interest expense			9,763				21,916				37,493				67,167
(Benefit) provision for income taxes			89				67				38				295
Straight-line rent			1,504				2,873				16,142				(1,447	)
Above/below market rental expense			45				54				138				175
NOI		$	306			$	9,997			$	3,884			$	27,523
Unconsolidated entities
Net operating income of unconsolidated entities			3,445				2,450				6,404				6,563
Straight-line rent			(2,629	)			(305	)			(3,069	)			(860	)
Above/below market rental expense			(3	)			8				(1	)			19
Total NOI		$	1,119			$	12,150			$	7,218			$	33,245

 

7

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Additional Information

September 30, 2023

(in thousands)

 

		As of				As of
Debt Summary		September 30, 2023				December 31, 2022
Term Loan Facility (drawn / undrawn)		$400,000 / 400,000				$1,030,000 / 400,000
Interest rate / undrawn rate		7.00% / 1.00%				7.00% / 1.00%
Maturity		July 2025				July 2023
Prepaid Expenses, Deferred Expenses and Other Assets		September 30, 2023				December 31, 2022
Right of Use Asset		$	14,653			$	16,161
Prepaid insurance			6,109				5,492
Other prepaid expenses			4,207				4,133
Deferred expenses			3,834				17,367
Other assets			1,747				5,551
FF&E			751				1,129
Prepaid real estate taxes			242				1,026
Total prepaid expenses, deferred expenses and other assets		$	31,543			$	50,859

 

		September 30, 2023				December 31, 2022
Accrued development expenditures		$	21,668			$	37,983
Accounts payable and accrued expenses			18,837				25,454
Lease liability			5,397				5,916
Accrued real estate taxes			4,067				8,638
Prepaid rental income			2,241				4,977
Accrued interest			1,416				3,286
Below-market leases			1,340				1,560
Common and preferred dividends and OP     Unit distributions payable			1,062				1,554
Total accounts payable, accrued expenses and    other liabilities		$	56,028			$	89,368

 

 

8

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Additional Information (cont’d)

September 30, 2023

(in thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
Rental Revenue Detail		2023				2022				2023				2022
Revenue
Rental income		$	4,319			$	19,004				9,048				66,998
Tenant reimbursements			206				4,249				1,411				14,387
Termination income			—				—				—				370
Total		$	4,525			$	23,253			$	10,459			$	81,755
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Select Non-Cash Items
Straight-line rental income
Wholly-owned		$	(1,504	)		$	(2,873	)			(16,142	)		$	1,447
Joint ventures			2,629				305				3,069				860
Total		$	1,125			$	(2,568	)		$	(13,073	)		$	2,307
Net amortization of above/below market    rental income/expense
Wholly-owned		$	(45	)		$	(54	)		$	(138	)		$	(175	)
Joint ventures			3				(8	)			1				(19	)
Total		$	(42	)		$	(62	)		$	(137	)		$	(194	)
Amortization of deferred financing costs		$	(35	)		$	(105	)		$	(246	)		$	(316	)
Share-based compensation expense			(647	)			(843	)			(2,074	)			(1,735	)

 

 

 

9

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SNO Lease Summary

 

Multi-Tenant Retail

The table below provides a summary of all Multi-Tenant Retail signed leases as of September 30, 2023:

 

(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			29				649.4				57.2	%		$	15,648.0				83.7	%		$	24.10
SNO retail leases (1)(2)			7				143.3				12.6	%		$	3,054.8				16.3	%			21.32
Tenants in lease negotiation			2				104.0				9.2	%		$	696.2			N/A					6.69
Total retail leases			38				896.7				79.0	%		$	19,399.0				100.0	%		$	21.63
(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.

 

(in thousands except number of leases and PSF data)		Number of				Leased				Gross Annual Base				Gross Annual
		SNO Leases				GLA				Rent ("ABR")				Rent PSF ("ABR PSF")
As of June 30, 2023			8				164.4				3,146.5			$	19.14
Opened			(1	)			(1.2	)			(52.3	)			43.58
Sold / terminated			(1	)			(28.0	)			(413.0	)			14.75
Signed			1				8.1				373.6				43.12
As of September 30, 2023			7				143.3				3,054.8			$	21.32

 

Premier Mixed-Use

The table below provides a summary of all signed leases at Premier assets as of September 30, 2023, including unconsolidated entities at the Company’s proportional share:

	Number of				Leased				% of Total				Gross Annual				% of				Gross Annual
Tenant	Leases				GLA				Leasable GLA				Base Rent ("ABR")				Total ABR				Rent PSF ("ABR PSF")
In-place retail leases		27				63.9				16.6	%		$	4,481.6				26.8	%		$	70.13
In-place office leases		2				79.9				20.7	%		$	5,219.6				31.4	%			65.33
SNO retail leases as of June 30, 2023(1)		18				107.1							$	8,298.0								77.48
Opened		(3	)			(17.0	)						$	(1,403.5	)							82.56
Terminated		(1	)			(22.0	)						$	(1,820.3	)							82.74
Signed		2				4.1							$	312.8								76.29
SNO retail leases as of September 30, 2023(1)		16				72.2				18.7	%		$	5,387.0				32.4	%			74.61
SNO office leases as of June 30, 2023(1)		3				46.2							$	2,108.5								45.64
Opened		(1	)			(18.2	)						$	(999.8	)							54.93
Lease amendment		—				—							$	432.5								—
SNO retail leases as of September 30, 2023(1)		2				28.0				7.3	%		$	1,541.2				9.3	%			55.04
Total diversified leases as of September 30, 2023		47				244.0				63.3	%		$	16,629.4				100.0	%		$	68.15
(1) SNO = Signed not yet opened leases
(2) In thousands except number of leases and PSF data

 

 

 

 

 

 

10

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Top Tenants

September 30, 2023

(rent in thousands)

 

The following table lists the top tenants in the portfolio as of September 30, 2023, based on signed leases and including Unconsolidated Properties presented at the Company’s proportional share:

	Number of				Total			% of Total
Tenant	Leases	SF			Rent			Rent	Concepts / Brands
Amazon	2		99,193			5,435		14.2%
Dick's Sporting Goods	2		137,020			3,223		8.4%
Nordstrom Rack	3		116,868			2,578		6.7%
Round One Entertainment	2		96,922			2,205		5.8%
Primark	1		65,747			1,644		4.3%
Pinstripes	1		26,515			1,482		3.9%
Industrious	1		26,501			1,431		3.7%
Whole Foods	2		71,235			1,258		3.3%
TJX	3		61,026			1,125		2.9%	HomeGoods, Sierra Trading Post
CCRM	1		18,179			1,000		2.6%
GameTime	1		49,811			996		2.6%
Dave & Buster's	1		40,351			896		2.3%
Grupo Carolo	1		7,742			774		2.0%
Joey	1		8,150			734		1.9%
Ulta Salon	2		21,498			686		1.8%
Darden	3		23,386			675		1.8%	Longhorn Steakhouse, Yardhouse, Seasons 52
STK	1		7,651			570		1.5%
Jarana	1		5,115			537		1.4%
Floor & Décor	1		57,204			515		1.3%
Sweetgreen	2		4,169			445		1.2%
Total	32		944,283			28,209		73.6%

 

 

11

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Multi-tenant Retail

 

Consolidated Properties

 

						Total				Leased				SNO						Land
Property Address		City		State		GLA (1)				SF (1)				SF (1)				Leased (1)		Acres				Significant Tenants (1)
40710 Winchester Road		Temecula		CA			126,500				112,800				13,800			100.0%			10			Round One Entertainment, Dick's Sporting Goods, Texas Roadhouse
145 West Hillcrest Drive		Thousand Oaks (3)		CA			172,000				102,600				-			59.7%			11			Dave & Busters, DSW, Nordstrom Rack
200 Grossman Drive		Braintree		MA			85,100				47,600				37,500			100.0%			34			Nordstrom Rack, Ulta Beauty
1640 Route 22		Watchung		NJ			87,300				85,000				2,400			100.0%			7			Cinemark, HomeGoods, Sierra Trading Post, Ulta Beauty, Chick-fil-A , City MD, Starbucks
160 North Gulph Road		King of Prussia (2)		PA			208,700				166,400				8,100			79.7%			14			Dick's Sporting Goods, Primark, Yardhouse
27001 U.S. 19 North		Clearwater		FL			212,900				75,500				-			35.5%			14			Whole Foods, Nordstrom Rack
1425 Central Avenue		Albany		NY			242,800				59,600				81,500			58.1%			21			Whole Foods, Ethan Allen, Sierra Trading Post
Total							1,135,300				649,500				143,300			69.8%			111

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

(2) Property is subject to a ground lease

(3) Indicates assets that have been sold subsequent to September 30, 2023

 

 

12

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Residential

 

Consolidated Properties

Land

% of Auxiliary

Auxiliary

Property Address

City

State

Acres

Leased SF (1)

Leased SF (1)

Significant Tenants (1)

5261 Arlington Avenue

Riverside - Resi

CA

14

0%

-

n/a

5261 Arlington Avenue

Riverside - Retail (2)

CA

5

100%

33,200

Bank of America, Aldi

Total

19

100%

33,200

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

(2) Riverside Retail doesn’t include residential but includes retail leasing that is 100% SRG owned and complementary to the Residential developments at the sites.

 

13

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Premier Mixed-Use Properties

 

Consolidated Properties

						Total				Leased				SNO								Land
Property Address		City		State		GLA (1)				SF (1)				SF (1)				Leased (1)				Acres		Significant Tenants (1)
19505 Biscayne Boulevard		Aventura		FL			216,100				30,400				95,600				58.3	%		13		CCRM, Industrious, Pinstripes
5900 Glades Road		Boca Raton		FL			4,200				4,200				-				100.0	%		19		n/a
13131 Preston Road		Dallas		TX			-				-				-				0.0	%		23		n/a
2200 148th Avenue Northeast		Redmond		WA			7,500				7,500				-				100.0	%		15		n/a
Total							227,800				42,100				95,600				60.4	%		70

 

 

Joint Ventures

						Total				Leased				SNO						Land
Property Address		City		State		GLA (1)				SF (1)				SF (1)				Leased (1)		Acres		Significant Tenants (1)
302 Colorado Ave		Santa Monica		CA			51,500				-				-			0.0%		3		n/a
4575 La Jolla Village Dr		San Diego		CA			106,200				101,600				4,700			100.0%		13		Amazon, Williams-Sonoma, Rejuvenation
5901 Duke St		Alexandria		VA			-				-				-			0.0%		41		n/a
Total							157,700				101,600				4,700			67.4%		57

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

 

14

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Other Unconsolidated Entities

Other Joint Ventures

 

Brookfield Retail Partners (formerly GGP, Inc.) Joint Venture Properties

Total

In-Place

SNO

Land

Mall Name

City

State

Joint Venture

SF (1)

SF (1)

SF (1)

Leased (1)

Acres

Significant Tenants (1)

Altamonte Mall

Altamonte Springs

FL

GGP II JV

93,500

4,700

-

5.0%

17

n/a

Stonebriar Centre

Frisco

TX

GCP I JV

87,500

6,000

-

6.9%

11

n/a

Total

181,000

10,700

-

43.5%

28

Simon Joint Venture Properties

Total

Leased

SNO

Land

Mall Name

City

State

Joint Venture

GLA (1)

SF (1)

SF (1)

Leased (1)

Acres

Significant Tenants (1)

Santa Rosa Plaza

Santa Rosa

CA

Simon JV

82,700

-

-

0.0%

7

n/a

The Shops at Nanuet

Nanuet

NY

Simon JV

110,700

-

-

0.0%

14

n/a

Barton Creek Square

Austin

TX

Simon JV

82,300

-

-

0.0%

16

n/a

Total

275,700

-

-

0.0%

37

 

Other

Total

Leased

SNO

Land

Property Address

City

State

Joint Venture

GLA (1)

SF (1)

SF (1)

Leased (1)

Acres

Significant Tenants (1)

12625 North Interstate Highway 35

Austin

TX

RD Development JV

-

-

-

0.0%

11

n/a

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

 

15

---

Non-core Properties

 

Consolidated Properties

						Total				Leased				SNO						Land
Property Address		City		State		GLA (1)				SF (1)				SF (1)				Leased (1)		Acres				Significant Tenants (1)
3930 McCain Boulevard		North Little Rock		AR			177,300				13,000				-			7.3%			15			Aspen Dental, Longhorn Steakhouse
3150 South 4th Avenue		Yuma		AZ			90,100				-				-			0.0%			15			n/a
1011 West Olive Avenue		Merced		CA			5,300				5,300				-			100.0%			9			Chilis
1625 Northwest 107th Avenue		Doral		FL			195,600				-				-			0.0%			13			n/a
733 North Highway 231		Panama City		FL			134,300				-				-			0.0%			15			n/a
7171 North Davis Highway		Pensacola		FL			7,900				7,900				-			100.0%			14			Bubba's 33
4600 1st Avenue Northeast		Cedar Rapids		IA			146,300				-				-			0.0%			12			n/a
4000 Meadows Lane		Las Vegas		NV			132,600				42,500				-			32.1%			11			Round One Entertainment
4000 North Shepherd		Houston (2)		TX			201,600				-				-			0.0%			12			n/a
8000 West Broward Boulevard		Plantation		FL			204,100				-				49,800			24.4%			18			GameTime
6515 East Southern Avenue		Mesa		AZ			136,000				-				-			0.0%			5			n/a
7611 West Thomas Road		Phoenix (2)		AZ			144,500				-				-			0.0%			5			n/a
7875 Johnnycake Ridge Road		Mentor		OH			215,300				-				-			0.0%			20			n/a
100 Inland Center		San Bernardino		CA			264,700				-				-			0.0%			20			n/a
850 Hartford Turnpike		Waterford (2)		CT			149,200				-				-			0.0%			11			n/a
4125 Cleveland Avenue		Ft. Myers		FL			146,800				-				-			0.0%			12			n/a
14250 Buck Hill Road		Burnsville		MN			167,300				-				-			0.0%			15			n/a
3001 White Bear Avenue North		Maplewood (2)		MN			175,000				-				-			0.0%			14			n/a
7780 W Arrowhead Towne Center		Glendale (2)		AZ			125,000				-				-			0.0%			9			n/a
3207 Solomons Island Road		Edgewater		MD			122,000				-				-			0.0%			14			n/a
Total							2,940,900				68,700				49,800			4.0%			259

 

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

(2) Indicates assets that have been sold subsequent to September 30, 2023

 

16

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Remaining Asset Demographics

 

Remaining Asset Breakout as of 11/6/2023					Within 5 Miles of Site							Within 10 Miles of Site
Asset	State	Planned Usage	Acreage		Avg. Population			Avg. Income				Avg. Population			Avg. Income
Mesa	AZ	Non-Core Properties	5			291,338		$	87,909				877,127		$	94,748
Yuma	AZ	Non-Core Properties	15			90,876		$	60,239				135,394		$	60,806
Riverside (Arlington) (2)	CA	Residential	19			298,742		$	95,082				855,387		$	98,676
Santa Rosa	CA	Other Joint Ventures	7			201,617		$	108,715				325,340		$	112,893
Temecula	CA	Multi-Tenant Retail	10			164,067		$	120,580				296,304		$	127,223
San Bernardino	CA	Non-Core Properties	20			345,038		$	67,925				946,839		$	83,345
Santa Monica	CA	Premier	3			403,540		$	137,448				1,122,410		$	127,772
San Diego (UTC)	CA	Premier	13			212,993		$	135,329				780,708		$	129,167
Merced	CA	Non-Core Properties	9			112,118		$	79,851				170,996		$	81,375
Altamonte Springs	FL	Other Joint Ventures	17			240,486		$	87,726				790,369		$	89,619
Ft. Myers	FL	Non-Core Properties	12			158,409		$	81,570				502,280		$	83,012
Plantation	FL	Non-Core Properties	17			398,091		$	80,794				1,319,503		$	85,754
Aventura	FL	Premier	13			403,261		$	77,327				1,058,115		$	76,173
Boca Raton	FL	Premier	18			272,009		$	105,533				758,356		$	100,271
Panama City	FL	Non-Core Properties	15			81,407		$	72,910				137,915		$	78,191
Braintree	MA	Multi-Tenant Retail	34			247,793		$	111,753				961,297		$	116,371
Watchung	NJ	Multi-Tenant Retail	7			264,946		$	147,445				1,033,302		$	136,088
Nanuet	NY	Other Joint Ventures	14			250,123		$	134,972				637,348		$	150,125
Albany	NY	Multi-Tenant Retail	21			174,078		$	91,222				521,169		$	91,315
Las Vegas	NV	Non-Core Properties	11			531,172		$	47,544				1,645,636		$	79,865
Mentor	OH	Non-Core Properties	20			105,425		$	85,501				276,509		$	80,200
King of Prussia	PA	Multi-Tenant Retail	14			198,904		$	122,428				630,317		$	138,025
Austin (Tech Ridge)	TX	Other Joint Ventures	11			278,440		$	89,564				858,035		$	106,249
Austin (Barton Creek)	TX	Other Joint Ventures	16			287,514		$	117,631				814,764		$	112,342
Frisco	TX	Other Joint Ventures	11			325,953		$	144,362				1,228,010		$	126,024
Dallas (Park Heritage)	TX	Premier	23			356,290		$	107,560				1,418,534		$	107,880
Alexandria	VA	Premier	41			548,580		$	138,078				1,682,077		$	144,775
Redmond	WA	Premier	15			290,978		$	174,386				1,086,635		$	154,190
Total	28		431

 

(1) Excludes assets that are under contract (8).

(2) Riverside Arlington includes both wholly owned & joint venture components.

(3) Asset demographic statistics are based on CoStar data as of November 6, 2023.

 

17

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Sold Properties through November 3, 2023

 

								Total				In-Place				SNO						2023 Qtr
Property Address		City		State		Full / Partial Sale		SF (1)				SF (1)				SF (1)				Leased (1)		Sold
2 Orland Square Drive		Orland Park		IL		Full Site			202,800				-				-			0.0%		Q1
4000 Jericho Turnpike		East Northport		NY		Full Site			179,800				167,600				-			93.2%		Q1
12025 North 32nd Street		Phoenix		AZ		Full Site			151,200				151,200				-			100.0%		Q1
2860 South Highland Avenue		Lombard		IL		Full Site			139,300				139,300				-			100.0%		Q1
7503 West Cermak Road		North Riverside		IL		Full Site			214,700				163,900				19,700			85.5%		Q1
2500 Wabash Avenue		Springfield		IL		Full Site			119,400				108,000				11,400			100.0%		Q1
4201 Coldwater Road		Ft. Wayne		IN		Full Site			84,100				76,700				6,200			98.6%		Q1
101 West Lincoln Highway		Merrillville		IN		Full Site			171,300				163,000				1,600			96.1%		Q1
4700 2nd Avenue		Kearney		NE		Full Site			64,900				64,900				-			100.0%		Q1
4100 Belden Village Avenue Northwest		Canton		OH		Full Site			192,300				128,300				10,000			71.9%		Q1
4570 Poplar Avenue		Memphis		TN		Full Site			116,000				101,200				8,800			94.8%		Q1
12625 North Interstate Highway 35		Austin		TX		Full Site			52,700				45,000				-			85.4%		Q1
9484 Dyer Street		El Paso		TX		Full Site			107,800				99,100				-			91.9%		Q1
12605 North Gessner Road		Houston		TX		Full Site			134,000				134,000				-			100.0%		Q1
201 Central Park Mall		San Antonio		TX		Full Site			164,600				158,200				-			96.1%		Q1
5200 South 76th Street		Greendale		WI		Full Site			217,600				133,700				-			61.4%		Q1
53 West Towne Mall		Madison		WI		Full Site			110,600				110,600				-			100.0%		Q1
2501 Irving Mall		Irving		TX		Partial Site			94,865				-				-			0.0%		Q1
2010 North Main Street		Layton		UT		Full Site			82,700				67,500				-			81.6%		Q1
7801 Rivers Avenue		Charleston		SC		Full Site			106,200				52,900				-			49.8%		Q1
1209 Plaza Drive		West Covina - Retail		CA		Full Site			11,000				11,000				-			100.0%		Q1
1209 Plaza Drive		West Covina - Resi		CA		Full Site			11,000				11,000				-			100.0%		Q1
2501 Irving Mall		Irving		TX		Partial Site			4,992				4,992				-			100.0%		Q1
2501 Irving Mall		Irving		TX		Partial Site			7,500				7,500				-			100.0%		Q1
3636 North Blackstone Avenue		Fresno		CA		Full Site			201,800				43,400				-			21.5%		Q1
6301 Northwest Loop 410		Ingram		TX		Full Site			169,900				-				-			0.0%		Q1
600 Lee Boulevard		Yorktown Heights		NY		Full Site			153,200				38,500				-			25.1%		Q1
575 Fletcher Parkway		El Cajon		CA		Full Site			227,300				184,400				-			81.1%		Q2
3111 East Colonial Drive		Orlando		FL		Full Site			107,600				94,300				2,300			89.8%		Q2
1500 South Willow Street		Manchester		NH		Full Site			105,700				80,400				-			76.1%		Q2
12000 Fair Oaks Mall		Fairfax		VA		Full Site			212,700				154,400				-			72.6%		Q2
141 West Lee Highway		Warrenton		VA		Full Site			71,500				62,400				-			87.3%		Q2
195 North Broadway		Hicksville		NY		Full Site			7,600				7,600				-			100.0%		Q2
3751 South Dogwood Road		El Centro		CA		Full Site			9,700				9,700				-			100.0%		Q2
1400 East 104th Avenue		Thornton		CO		Full Site			193,700				61,700				-			31.9%		Q2
5050 South Kedzie Avenue		Chicago		IL		Full Site			175,900				17,200				-			9.8%		Q2
3231 Chicago Road		Steger		IL		Full Site			101,700				-				-			0.0%		Q2
317 Greece Ridge Center Drive		Rochester		NY		Full Site			139,600				-				-			0.0%		Q2
2700 Miamisburg Centerville Road		Dayton		OH		Full Site			13,400				13,400				-			100.0%		Q2
4400 South Western Avenue		Oklahoma City		OK		Full Site			147,500				-				-			0.0%		Q2
1675 West 49th Street		Hialeah		FL		Full Site			153,200				-				-			0.0%		Q2
15700 Emerald Way		Bowie		MD		Full Site			126,400				-				-			0.0%		Q2
425 Rice Street		St. Paul		MN		Full Site			201,900				100				-			0.0%		Q2
2800 North Germantown Parkway		Cordova		TN		Full Site			160,600				-				-			0.0%		Q2
3177 Chandler Village Dr		Chandler		AZ		Full Site			70,300				5,000				-			7.1%		Q2
100 Los Cerritos Mall		Cerritos		CA		Full Site			138,800				-				-			0.0%		Q2
7 Backus Ave (Ex 3 Rt 84)		Danbury		CT		Full Site			88,000				24,700				63,300			100.0%		Q2
3710 US Hwy 9 site 1100		Freehold		NJ		Full Site			68,800				32,700				-			47.5%		Q2
9800 SW Washington Square Rd		Portland		OR		Full Site			114,300				-				-			0.0%		Q2
1011 West Olive Avenue		Merced		CA		Partial Site			87,400				-				-			0.0%		Q2

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

 

 

 

18

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Sold Properties through September 30, 2023 continued

 

								Total				In-Place				SNO						2023 Qtr
Property Address		City		State		Full / Partial Sale		SF (1)				SF (1)				SF (1)				Leased (1)		Sold
18600 Alderwood Mall Pkwy		Lynnwood		WA		Full Site			48,584				28,778				3,044			65.5%		Q3
2000 9th St N		Naples		FL		Full Site			36,300				28,300				8,000			100.0%		Q3
1180 Southeast 82nd Avenue		Happy Valley		OR		Full Site			139,800				45,000				-			32.2%		Q3
5400 Meadowood Mall Circle		Reno		NV		Full Site			18,000				18,000				-			100.0%		Q3
1640 Route 22		Watchung		NJ		Partial Site			37,600				37,600				-			100.0%		Q3
6950 West 130th Street		Middleburg Heights		OH		Full Site			369,500				-				-			0.0%		Q3
3800 US Highway 98 North		Lakeland		FL		Full Site			156,200				-				-			0.0%		Q3
50 Route 46		Wayne		NJ		Full Site			132,700				105,200				-			79.3%		Q3
2300 Tyrone Boulevard North		St. Petersburg		FL		Full Site			125,700				97,700				28,000			100.0%		Q3
145 West Hillcrest Drive		Thousand Oaks		CA		Full Site			172,008				102,551				-			59.6%		Q4
850 Hartford Turnpike		Waterford - Auction		CT		Full Site			149,240				-				-			0.0%		Q4
7611 West Thomas Road		Phoenix (Desert Sky)		AZ		Full Site			144,542				-				-			0.0%		Q4
7780 W Arrowhead Towne Center		Glendale		AZ		Full Site			124,991				-				-			0.0%		Q4
4000 North Shepherd		Houston (N Shepherd)		TX		Full Site			201,583				-				-			0.0%		Q4
3001 White Bear Avenue North		Maplewood		MN		Full Site			174,970				-				-			0.0%		Q4
Total									8,021,575				3,392,621				162,344			44.3%

(1) Based on signed leases as of September 30, 2023; GLA presented at the Company’s proportional share

 

19

---

REA Status by Sites and Category

 

		No / Expired REA				Expires in <5 years				Expires in >5 and <10 years				Expires in >10 years
Multi-Tenant Retail			1				-				2				4
Premier Mixed-use			5				1				-				1
Residential			2				-				-				-
Other Joint Ventures			-				-				2				4
Non-Core Properties			6				1				2				11
Total			14				2				6				20
% of Total			33	%			5	%			14	%			48	%

 

20

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Non-GAAP Financial Measures

The Company makes reference 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.

 

21

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v3.23.3

Document And Entity Information	Nov. 07, 2023
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 07, 2023
Entity Registrant Name	SERITAGE GROWTH PROPERTIES
Entity Central Index Key	0001628063
Entity Emerging Growth Company	false
Securities Act File Number	001-37420
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	38-3976287
Entity Address, Address Line One	500 Fifth Avenue, Suite 1530
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10110
City Area Code	212
Local Phone Number	355-7800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Class A common shares of beneficial interest, par value $0.01 per share
Trading Symbol	SRG
Security Exchange Name	NYSE
7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share [Member]
Document Information [Line Items]
Title of 12(b) Security	7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share
Trading Symbol	SRG-PA
Security Exchange Name	NYSE

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