Seritage Growth Properties Provides Update on Q1 2023 Transaction Activity
04 Avril 2023 - 12:55PM
Business Wire
2023 Year to Date Gross Proceeds from Asset
Sales of $290.4M
$525.0 M of Pipeline from Sales Under
Contract or with Accepted Offers
Seritage Growth Properties (NYSE: SRG) (the “Company”), a
national owner and developer of retail, residential and mixed-use
properties, today provided an update on the Company’s disposition
activity through the end of Q1 2023.
Q1 2023 Disposition
Update
- Generated $290.4 million of gross proceeds from the sale of 27
wholly owned or consolidated assets:
- $254.8 million from the sale of 21 stabilized, partially
stabilized and pad sites at prices reflecting blended cap rates of
9.2%, 8.3% and 4.7% respectively; and
- $35.6 million of gross proceeds from the sale of six vacant or
non-income producing assets at a price reflecting, on average,
$52.35 PSF or $508 thousand per acre. The sale of these assets
eliminates $2.1 million of annual carrying costs.
- Prepaid $230 million towards the Company’s term loan reducing
annual interest expense by approximately $16.1 million.
- As of March 31, 2023, the Company had cash on hand of
approximately $130 million, including $11 million of restricted
cash.
Sale Process Look Ahead
As of April 4, 2023, the Company had assets under contract for
sale for total anticipated gross proceeds of $456.0 million (the
“Pending Sales”) composed of:
- $412.7 million anticipated from transactions subject to
customary closing conditions, but no due diligence contingency
including joint venture interest puts in process
- $152.5 million of gross proceeds from the sale of six
stabilized and partially stabilized sites at prices reflecting
blended cap rates of 7.2% and 7.6% respectively;
- $155.4 million of gross proceeds from the sale of nine vacant
or non-income producing assets at a price reflecting, on average,
$128.06 PSF or $1.3 million per acre. The sale of these assets
would eliminate $5.0 million of annual carrying costs; and
- $104.8 million of estimated gross proceeds from monetizing
unconsolidated entity interests.
- $43.3 million anticipated from transactions subject to due
diligence contingencies and customary closing conditions.
- $32.3 million of gross proceeds from the sale of three
stabilized and pad sites at prices reflecting blended cap rates of
8.6% and 5.7% respectively; and
- $11.0 million of gross proceeds from the sale of two vacant or
non-income producing assets at a price reflecting, on average,
$38.92 PSF or $491 thousand per acre. The sale of these assets
would eliminate $0.9 million of annual carrying costs.
Additionally, the Company has accepted offers and is currently
negotiating definitive purchase and sale agreements on assets for
total anticipated gross proceeds of approximately $65.0 million
(the “Pipeline Sales”) composed of:
- $18.0 million of gross proceeds from the sale of two stabilized
and partially stabilized sites at prices reflecting blended cap
rates of 9.2% and 4.0% respectively; and
- $47.0 million of gross proceeds from the sale of eight vacant
or non-income producing assets at a price reflecting, on average,
$37.40 PSF or $483 thousand per acre. The sale of these assets
would eliminate $1.8 million of annual carrying costs.
The Pending Sales and the Pipeline Sales are comprised of a
combination of multi-tenant retail assets, certain premier and
mixed-use assets, residential assets, joint venture interests as
well as non-core assets as more detailed in the chart below.
As of 1/1/2023
2023 Sales Projections as of
3/31/2023
2024 & Beyond
Category
Total Properties
Sold
Under Contract - No DD
Under Contract - in DD
PSA Neg.
Remaining 2023
Transactions
Remaining
Gateway markets
11
-
2
-
-
-
9
Primary markets
43
10
9
1
4
9
10
Secondary markets
35
12
6
2
3
5
7
Tertiary markets
16
5
2
2
3
4
-
Market Composition Total
105
27
19
5
10
18
26
Multi-Tenant Retail
32
18
6
1
1
1
5
Premier
10
-
2
-
-
-
8
Residential
5
2
1
-
-
-
2
Other Unconsolidated Entities
13
-
3
-
1
2
7
Non-Core Properties
45
7
7
4
8
15
4
Property Type Total
105
27
19
5
10
18
26
Under $10M
59
16
5
4
9
16
9
$10M - $30M
27
10
9
1
1
1
5
$30M - $50M
11
1
3
-
-
1
6
Over $50M
8
-
2
-
-
-
6
Transaction Size Total
105
27
19
5
10
18
26
- 2023 and 2024 projections are based on the Company’s latest
forecasts and assumptions, but the Company cautions that actual
results may differ materially.
- PSA Negotiation includes one asset which is currently
forecasted to close in Q1 2024.
- 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 seven
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 105 transactions at this time.
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. 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.
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. 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
Seritage is principally engaged in the ownership, development,
redevelopment, management and leasing of retail and mixed-use
properties throughout the United States. As of March 31, 2023, the
Company’s portfolio consisted of interests in 72 properties
comprised of approximately 10.2 million square feet of gross
leasable area (“GLA”) or build-to-suit leased area, approximately
157 acres held for or under development and approximately 5.3
million square feet or approximately 428 acres to be disposed of.
The portfolio consists of approximately 7.6 million square feet of
GLA held by 55 wholly owned properties (such properties, the
“Consolidated Properties”) and 2.6 million square feet of GLA held
by 17 unconsolidated entities (such properties, the “Unconsolidated
Properties”).
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version on businesswire.com: https://www.businesswire.com/news/home/20230404005170/en/
Seritage Growth Properties John Garilli Interim Chief Financial
Officer (212) 355-7800 IR@Seritage.com
Seritage Growth Properties (NYSE:SRG)
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