Seritage Growth Properties Reports First Quarter 2025 Operating Results
"The Company's strategy following the completion of a smooth CEO transition remains the same. We will continue to pursue our Plan of Sale with the priority of repaying our remaining debt from the sale of assets. Our team is focused on executing transactions at appropriate pricing for our assets already in the market as well as taking the necessary steps to monetize the remaining assets in our portfolio to create value for our shareholders.” said
Q1 Sale Highlights:
-
Generated
$29.9 million of gross proceeds from the sale of an income producing asset reflecting a 7.7% capitalization rate. -
As of
May 15, 2025 , the Company has one asset owned by our consolidated joint venture under contract for sale subject to customary due diligence for anticipated gross proceeds of$14.0 million or$11.2 million at share. -
The Company is currently negotiating a definitive purchase and sale agreement on one premier development asset for anticipated gross proceeds of approximately
$70.0 million . The purchase and sales agreement, if executed, contemplates a long-dated closing due to the agreed upon pursuit of a master plan amendment.
Financial Highlights:
For the three months ended
-
As of
March 31, 2025 , the Company had cash on hand of$107.1 million , including$12.9 million of restricted cash. As ofMay 13, 2025 , the Company had cash on hand of$99.9 million , including$11.9 million of restricted cash. -
During the three months ended
March 31, 2025 , the Company invested$13.3 million in its consolidated properties. -
Net loss attributable to common shareholders of
($23.4) million , or ($0.42 ) per share. -
Net Operating Income-cash basis at share (“NOI-cash basis at share”) of
$2.6 million .
Future Sales Projections
The data below provides additional information regarding current estimated gross sales proceeds per asset in the portfolio as of
Gateway Markets
-
One Multi-Tenant Asset
$25 -$30 million -
Eight Premier Assets (
Dallas &San Diego are each assumed to be sold in two transactions)-
One Asset
$15 -$20 million -
One Asset
$20 -$30 million -
Three Assets
$30 -$40 million , each -
One Asset
$60 -$70 million -
One Asset
$100 -$150 million -
One Asset
$150 -$200 million
-
One Asset
Primary Markets
-
One Multi-Tenant Asset
$25 -$30 million -
Two Joint Venture Assets
$5 -$10 million , each -
One Joint Venture Asset under
$5 million
Secondary Markets
-
One Retail Asset
$5 -$10 million -
One Joint Venture Asset under
$5 million -
One Non-Core Asset
$5 -$10 million
Portfolio
The table below represents a summary of the Company’s properties by planned usage as of
Planned Usage |
|
Total |
|
Built SF / Acreage (1) |
|
Leased SF (1)(2) |
|
|
% Leased |
|
Avg. Acreage / Site |
||
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
||
Multi-Tenant Retail |
|
2 |
|
425 sf / 28 acres |
|
|
391 |
|
|
92.0% |
|
|
14.2 |
Residential (3) |
|
2 |
|
33 sf / 19 acres |
|
|
33 |
|
|
100.0% |
|
|
9.5 |
Premier |
|
4 |
|
228 sf / 69 acres |
|
|
189 |
|
|
83.2% |
|
|
17.2 |
Non-Core (4) |
|
1 |
|
134 sf /15 acres |
|
|
- |
|
|
0.0% |
|
|
14.8 |
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
||
Other Joint Ventures |
|
4 |
|
258 sf / 52 acres |
|
|
5 |
|
|
1.8% |
|
|
13.0 |
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
(3) Square footage represents built ancillary retail space whereas acreage represents both retail and residential acreage. Retail and residential are counted separately.
(4) Represents assets the Company previously designated for sale.
Multi-Tenant Retail
The table below provides a summary of all Multi-Tenant Retail signed and in negotiation leases as of
Tenant |
|
Number of
|
|
|
Leased GLA |
|
|
% of Total
|
|
|
Gross Annual Base
|
|
|
% of
|
|
|
Gross Annual
Rent PSF
|
||||||
In-place retail leases |
|
|
7 |
|
|
|
250.1 |
|
|
|
58.8 |
% |
|
$ |
6,474.3 |
|
|
|
90.7 |
% |
|
|
25.89 |
SNO retail leases (1) |
|
|
1 |
|
|
|
141.1 |
|
|
|
33.2 |
% |
|
|
663.5 |
|
|
|
9.3 |
% |
|
|
4.7 |
Total retail leases |
|
|
8 |
|
|
|
391.2 |
|
|
|
92.0 |
% |
|
$ |
7,137.8 |
|
|
|
100.0 |
% |
|
$ |
18.25 |
(1) SNO = Signed not yet opened leases |
During the three months ended
Premier Mixed-Use
As of
The table below provides a summary of all signed leases at Premier assets as of
Tenant |
Number of
|
|
|
Leased
|
|
|
% of
|
|
|
Gross Annual
|
|
|
% of
|
|
|
Gross Annual
Rent PSF
|
||||||
In-place retail leases |
|
43 |
|
|
|
137.8 |
|
|
|
35.7 |
% |
|
$ |
10,104.7 |
|
|
|
48.1 |
% |
|
$ |
73.33 |
In-place office leases |
|
4 |
|
|
|
108.0 |
|
|
|
28.0 |
% |
|
|
7,070.2 |
|
|
|
33.7 |
% |
|
$ |
65.46 |
SNO retail leasesas of |
|
11 |
|
|
|
45.6 |
|
|
|
|
|
$ |
3,577.0 |
|
|
|
|
|
$ |
78.44 |
||
Opened |
|
(3 |
) |
|
|
(3.3 |
) |
|
|
|
|
|
(429.3 |
) |
|
|
|
|
$ |
130.09 |
||
Signed |
|
4 |
|
|
|
7.6 |
|
|
|
|
|
|
676.5 |
|
|
|
|
|
$ |
89.01 |
||
SNO retail leases as of |
|
12 |
|
|
|
49.9 |
|
|
|
12.9 |
% |
|
$ |
3,824.2 |
|
|
|
18.2 |
% |
|
$ |
76.70 |
Total diversified leases as of |
|
59 |
|
|
|
295.6 |
|
|
|
76.7 |
% |
|
$ |
20,999.1 |
|
|
|
100.0 |
% |
|
$ |
71.04 |
(1) SNO = Signed not yet opened leases |
|
|
|
|
|
|
|
|
|
During the three months ended
Financial Summary
The table below provides a summary of the Company’s financial results for the three months ended
|
|
Three Months Ended |
|
|
|||||
|
|
|
|
|
|
|
|
||
Net loss attributable to Seritage
|
|
$ |
(23,427 |
) |
|
$ |
(20,210 |
) |
|
Net loss per share attributable to Seritage
|
|
|
(0.42 |
) |
|
|
(0.36 |
) |
|
NOI-cash basis at share |
|
|
2,588 |
|
|
|
2,098 |
|
|
For the quarter ended
As of
Litigation Matters
On
Dividends
On
On
Strategic Review
At the 2022 Annual Meeting of Shareholders on
Appointment of New Chief Executive Officer and President
On
Market Update
The Company continues to face challenging market conditions such as elevated interest rates and continues to assess other potential macroeconomic impacts including supply chain issues and international conflicts associated with tariffs as well as potential labor issues. These conditions could apply downward pricing pressures on our remaining assets. In making decisions regarding whether and when to transact on each of the Company’s remaining assets, the Company considers 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 continue to adversely impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to shareholders.
Non-GAAP Financial Measures
The Company makes references to NOI-cash basis and NOI-cash basis at share which are financial measures that include adjustments to accounting principles generally accepted in
Neither of NOI-cash basis or NOI-cash basis at share 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 (Loss)-cash basis ("NOI-cash basis”) and Net Operating Income (Loss)-cash basis at share ("NOI-cash basis at share")
NOI-cash basis is defined as income from property operations less property operating expenses, adjusted for variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles. Other real estate companies may use different methodologies for calculating NOI-cash basis, and accordingly the Company’s depiction of NOI-cash basis may not be comparable to other real estate companies. The Company believes NOI-cash basis 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 NOI-cash basis at share, which includes its proportional share of
The Company also considers NOI-cash basis and NOI-cash basis at share 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.
Due to the adjustments noted, NOI-cash basis and NOI-cash basis at share should only be used as an alternative measure of the Company’s financial performance..
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,” “potential,” "will," "approximately," or "anticipates" 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; 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; environmental, health, safety and land use laws and regulations; and possible acts of war, terrorist activity or other acts of violence or cybersecurity incidents. 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
About
Prior to the adoption of the Company’s Plan of Sale, Seritage was principally engaged in the ownership, development, redevelopment, management, sale and leasing of diversified retail and mixed-use properties throughout
CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) |
||||||||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Investment in real estate |
|
|
|
|
|
|
||
Land |
|
$ |
55,081 |
|
|
$ |
65,009 |
|
Buildings and improvements |
|
|
219,224 |
|
|
|
239,978 |
|
Accumulated depreciation |
|
|
(35,599 |
) |
|
|
(39,940 |
) |
|
|
|
238,706 |
|
|
|
265,047 |
|
Construction in progress |
|
|
91,245 |
|
|
|
93,587 |
|
Net investment in real estate |
|
|
329,951 |
|
|
|
358,634 |
|
Real estate held for sale |
|
|
8,406 |
|
|
|
- |
|
Investment in unconsolidated entities |
|
|
176,104 |
|
|
|
189,699 |
|
Cash and cash equivalents |
|
|
94,268 |
|
|
|
85,206 |
|
Restricted cash |
|
|
12,864 |
|
|
|
12,503 |
|
Tenant and other receivables, net |
|
|
7,560 |
|
|
|
7,894 |
|
Lease intangible assets, net |
|
|
985 |
|
|
|
1,047 |
|
Prepaid expenses, deferred expenses and other assets, net |
|
|
19,562 |
|
|
|
22,791 |
|
Total assets (1) |
|
$ |
649,700 |
|
|
$ |
677,774 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
||
Term loan facility |
|
$ |
240,000 |
|
|
$ |
240,000 |
|
Accounts payable, accrued expenses and other liabilities |
|
|
27,250 |
|
|
|
31,971 |
|
Total liabilities (1) |
|
|
267,250 |
|
|
|
271,971 |
|
|
|
|
|
|
|
|
||
Commitments and Contingencies (Note 9) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Shareholders' Equity |
|
|
|
|
|
|
||
Class A common shares |
|
|
562 |
|
|
|
562 |
|
Series A preferred shares |
|
|
28 |
|
|
|
28 |
|
Additional paid-in capital |
|
|
1,362,718 |
|
|
|
1,362,644 |
|
Accumulated deficit |
|
|
(982,205 |
) |
|
|
(958,778 |
) |
Total shareholders' equity |
|
|
381,103 |
|
|
|
404,456 |
|
Non-controlling interests |
|
|
1,347 |
|
|
|
1,347 |
|
Total equity |
|
|
382,450 |
|
|
|
405,803 |
|
Total liabilities and equity |
|
$ |
649,700 |
|
|
$ |
677,774 |
|
(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 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) |
||||||||
|
|
For the Three Months
|
|
|||||
|
|
2025 |
|
|
2024 |
|
||
REVENUE |
|
|
|
|
|
|
||
Rental income |
|
$ |
4,457 |
|
|
$ |
5,725 |
|
Management and other fee income |
|
|
142 |
|
|
|
48 |
|
Total revenue |
|
|
4,599 |
|
|
|
5,773 |
|
EXPENSES |
|
|
|
|
|
|
||
Property operating |
|
|
2,908 |
|
|
|
3,673 |
|
Real estate taxes |
|
|
953 |
|
|
|
1,393 |
|
Depreciation and amortization |
|
|
2,075 |
|
|
|
5,271 |
|
General and administrative |
|
|
15,693 |
|
|
|
9,192 |
|
Total expenses |
|
|
21,629 |
|
|
|
19,529 |
|
Gain on sale of real estate, net |
|
|
6,936 |
|
|
|
1,139 |
|
Impairment of real estate assets |
|
|
— |
|
|
|
(1,148 |
) |
Equity in (loss) income of unconsolidated entities |
|
|
(7,928 |
) |
|
|
379 |
|
Interest and other income (expense), net |
|
|
860 |
|
|
|
1,423 |
|
Interest expense |
|
|
(5,230 |
) |
|
|
(7,011 |
) |
Loss before income taxes |
|
|
(22,392 |
) |
|
|
(18,974 |
) |
Benefit (provision) for income taxes |
|
|
190 |
|
|
|
(11 |
) |
Net loss |
|
|
(22,202 |
) |
|
|
(18,985 |
) |
Preferred dividends |
|
|
(1,225 |
) |
|
|
(1,225 |
) |
Net loss attributable to Seritage common
|
|
$ |
(23,427 |
) |
|
$ |
(20,210 |
) |
|
|
|
|
|
|
|
||
Net loss per share attributable to Seritage Class A
|
|
$ |
(0.42 |
) |
|
$ |
(0.36 |
) |
Net loss per share attributable to Seritage Class A
|
|
$ |
(0.42 |
) |
|
$ |
(0.36 |
) |
Weighted-average Class A common shares
|
|
|
56,283 |
|
|
|
56,215 |
|
Weighted-average Class A common shares
|
|
|
56,283 |
|
|
|
56,215 |
|
Reconciliation of Net Loss to NOI-cash basis and NOI-cash basis at share (in thousands)
|
|
Three Months Ended |
|
|||||
NOI-cash basis and NOI-cash basis at share |
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
(22,202 |
) |
|
$ |
(18,985 |
) |
Management and other fee income |
|
|
(142 |
) |
|
|
(48 |
) |
Depreciation and amortization |
|
|
2,075 |
|
|
|
5,271 |
|
General and administrative expenses |
|
|
15,693 |
|
|
|
9,192 |
|
Equity in (loss) income of unconsolidated entities |
|
|
7,928 |
|
|
|
(379 |
) |
Gain on sale of real estate, net |
|
|
(6,936 |
) |
|
|
(1,139 |
) |
Impairment of real estate assets |
|
|
— |
|
|
|
1,148 |
|
Interest and other income (expense), net |
|
|
(860 |
) |
|
|
(1,423 |
) |
Interest expense |
|
|
5,230 |
|
|
|
7,011 |
|
(Benefit) provision for income taxes |
|
|
(190 |
) |
|
|
11 |
|
Straight-line rent |
|
|
259 |
|
|
|
67 |
|
Above/below market rental expense |
|
|
43 |
|
|
|
38 |
|
NOI-cash basis |
|
$ |
898 |
|
|
$ |
764 |
|
Unconsolidated entities (1) |
|
|
|
|
|
|
||
Net operating income of unconsolidated entities (2) |
|
|
1,794 |
|
|
|
1,531 |
|
Straight-line rent |
|
|
(95 |
) |
|
|
(188 |
) |
Above/below market rental expense |
|
|
(9 |
) |
|
|
(9 |
) |
NOI-cash basis at share |
|
$ |
2,588 |
|
|
$ |
2,098 |
|
(1) Activity represents the Company's proportionate share of unconsolidated entity activity.
(2) Net operating income of unconsolidated entities excludes depreciation and amortization, gains, losses and impairments and management and administrative costs.
Properties sold during the three months ended
|
|
|
|
|
|
Total |
|
|
2025 Qtr |
|
|
City |
|
State |
|
Full / Partial Sale |
|
SF (1) |
|
|
Sold |
|
|
Braintree |
|
MA |
|
Full Site |
|
|
85,100 |
|
|
Q1 |
|
(1) Square footage at share
View source version on businesswire.com: https://www.businesswire.com/news/home/20250515952391/en/
(212) 355-7800
IR@Seritage.com
Source: