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Seritage Growth Properties Reports First Quarter 2023 Operating Results

NEW YORK, May 10, 2023--(BUSINESS WIRE)--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 months ended March 31, 2023.

"We continue to make steady progress on our plan of sale since initiating the process in March of 2022. Year to date we have sold 31 wholly owned properties for total gross proceeds of $311.9 million. In addition to the sales closed year to date, we have over $500 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. Despite the ongoing challenging market conditions, we are prudently progressing our plan of sale to maximize value for our shareholders," said Andrea L. Olshan, Chief Executive Officer and President.

Sale Highlights:

  • Generated $290.8 million of gross proceeds during the quarter ended March 31, 2023 from the sale of 27 wholly owned or consolidated assets.

  • Subsequent to quarter end, generated $21.1 million of gross proceeds from the sale of four wholly owned assets.

  • The Company has 15 assets under contract for sale with no due diligence contingencies for total anticipated proceeds of $295.6 million and four assets under contract for sale subject to customary due diligence for total anticipated proceeds of $37.9 million. All assets for sale are subject to customary closing conditions.

  • The Company has exercised its put rights on four joint venture properties with anticipated proceeds of $106.5 million.

  • The Company has accepted offers on and is currently negotiating definitive purchase and sale agreements for assets with accepted offers of approximately $67.7 million on wholly owned assets and $35 million in joint ventures interests.

Financial Highlights:

For the quarter ended March 31, 2023:

  • As of March 31, 2023, the Company had cash on hand of $132.1 million, including $11.6 million of restricted cash. As of May 8, 2023, the Company had cash on hand of $143.5 million, including $11.6 million of restricted cash.

  • Net loss attributable to common shareholders of ($63.2) million, or ($1.13) per share.

  • Total Net Operating Income ("Total NOI") of $3.1 million.

  • During the quarter, the Company made $230 million in principal repayments on the Company’s term loan facility ("Term Loan Facility"), reducing the balance of the Term Loan Facility to $800 million. The Company also extended the maturity of the Term Loan Facility for an additional two years to July 31, 2025.

Other Highlights

  • Signed three leases covering 84 thousand square feet in the first quarter at an average projected annual rent of $16.33 PSF.

    • One new lease covering approximately eight thousand square feet at a Premier asset at an average projected annual net rent of $71.25 PSF; and

    • Two ground floor leases covering approximately 76 thousand square feet at a Multi-Tenant Retail asset at an average projected annual net rent of $10.54 PSF.

  • Opened seven tenants in the first quarter totaling approximately 139 thousand square feet (70 thousand square feet at share) at an average net rent of $67.47 PSF.

Sales Activity

The tables below provide additional information regarding the Company’s sales activity. The first table provides in chart format certain information contained in the Company’s April 4, 2023 business update. The second table updates this information as of May 9, 2023. The third table provides updated information, as of May 9, 2023, on portfolio status by market, property type and transaction size consistent with the Company’s prior disclosure on April 4, 2023.

Sales Progress as of April 4, 2023 (1)

Stabilized

Number

Cap

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Under Contract - No DD

2

7.2

%

2

-

$

36,650

Under Contract - In DD

1

8.6

%

1

-

$

25,313

PSA Neg. / Accepted Offer

1

9.2

%

1

-

$

10,400

Total

4

8.0

%

4

-

$

72,363

Remaining Stabilized Sales Parcels

5

2

3

Partially Stabilized

Number

Cap

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Under Contract - No DD

4

7.6

%

4

-

$

115,850

Under Contract - In DD

-

N/A

-

-

$

-

PSA Neg. / Accepted Offer

1

4.0

%

1

-

$

7,600

Total

5

7.5

%

5

-

$

123,450

Remaining Partially Stabilized Sales
Parcels

7

2

5

Pads

Number

Cap

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Under Contract - No DD

-

N/A

-

-

$

-

Under Contract - In DD

2

5.7

%

2

-

$

7,015

PSA Neg. / Accepted Offer

-

N/A

-

-

$

-

Total

2

5.7

%

2

-

$

7,015

Remaining Pad Sales Parcels

3

3

-

Joint Ventures

Number

PSF

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Under Contract - No DD

4

$

171.52

4

-

$

104,850

Under Contract - In DD

-

N/A

-

-

$

-

PSA Neg. / Accepted Offer

1

$

38.75

1

-

$

4,500

Total

5

$

150.32

5

-

$

109,350

Remaining Joint Venture Sales Parcels

10

2

8

Non-Income Producing

Number

PSF

Per Acre

Carry Cost

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Under Contract - No DD

9

$

128.06

$

1,277

$

(5,019

)

9

-

$

155,375

Under Contract - In DD

2

$

38.92

$

491

$

(854

)

2

-

$

11,000

PSA Neg. / Accepted Offer

7

$

33.81

$

453

$

(1,811

)

7

-

$

42,489

Total

18

$

75.87

$

878

$

(7,683

)

18

-

$

208,864

Remaining Non-Income
Producing Sales Parcels

19

9

10

Sales Progress as of May 9, 2023 (1)

Stabilized

Number

Cap

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Closed since April 4, 2023

-

N/A

-

-

$

-

Under Contract - No DD

2

7.2%

2

-

$

36,650

Under Contract - In DD

1

9.2%

1

-

$

10,400

PSA Neg. / Accepted Offer

-

N/A

-

-

$

-

Total

3

7.6%

3

-

$

47,050

Remaining Stabilized Sales Parcels (2)

6

4

2

Partially Stabilized

Number

Cap

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Closed since April 4, 2023

-

N/A

-

-

$

-

Under Contract - No DD

4

7.6%

4

-

$

115,850

Under Contract - In DD

1

3.0%

1

-

$

16,500

PSA Neg. / Accepted Offer

2

4.3%

2

-

$

14,600

Total

7

6.9%

7

-

$

146,950

Remaining Partially Stabilized Sales Parcels

5

2

3

Pads

Number

Cap

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Closed since April 4, 2023

-

N/A

-

-

$

-

Under Contract - No DD

2

5.7%

2

-

$

7,015

Under Contract - In DD

-

N/A

-

-

$

-

PSA Neg. / Accepted Offer

1

5.3%

1

-

$

2,857

Total

3

5.5%

3

-

$

9,872

Remaining Pad Sales Parcels

2

2

-

Joint Ventures

Number

PSF

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Closed since April 4, 2023

$

-

Under Contract - No DD

4

$

174.24

4

-

$

106,515

Under Contract - In DD

-

N/A

-

-

$

-

PSA Neg. / Accepted Offer

4

$

44.63

4

-

$

35,000

Total

8

$

101.40

8

-

$

141,515

Remaining Joint Venture Sales Parcels

7

2

5

Non-Income Producing

Number

PSF

Per Acre

Carry Cost

2023 Sales

2024 & Beyond Sales

Gross Proceeds

Closed since April 4, 2023

4

$

33.77

$

457

$

(1,601

)

4

-

$

21,125

Under Contract - No DD (3)

7

$

142.25

$

1,481

$

(4,200

)

5

2

$

136,055

Under Contract - In DD

2

$

38.92

$

491

$

(854

)

2

-

$

11,000

PSA Neg. / Accepted Offer

8

$

41.81

$

491

$

(2,392

)

6

2

$

50,239

Total

21

$

74.13

$

831

$

(9,047

)

17

4

$

218,419

Remaining Non-Income
Producing Sales Parcels

16

7

9

(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) Remaining Stabilized Sales Parcels includes one asset under contract as of April 4, 2023 that was subsequently terminated

(3) Gross sales price per square foot excludes one asset which is land only

As of January
1, 2023

2023 Sales Projections as of May 9, 2023

2024 & Beyond Sales Projections as of
May 9, 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

-

-

-

1

-

9

Primary markets

43

11

8

1

4

11

1

-

7

Secondary markets

35

14

6

1

7

3

-

1

3

Tertiary markets

16

6

2

2

2

3

-

1

-

Market Composition
Total

105

31

17

4

13

17

2

2

19

Multi-Tenant Retail

32

18

6

1

-

4

-

-

3

Premier

10

-

1

-

-

-

1

-

8

Residential

5

2

1

-

-

-

-

-

2

Other Unconsolidated
Entities

13

-

3

-

4

2

-

-

4

Non-Core Properties

45

11

6

3

9

11

1

2

2

Property Type Total

105

31

17

4

13

17

2

2

19

Under $10M

57

20

5

2

10

12

-

2

6

$10M - $30M

29

10

8

2

3

3

1

-

2

$30M - $50M

11

1

2

-

-

2

1

-

5

Over $50M

8

-

2

-

-

-

-

-

6

Transaction Size Total

105

31

17

4

13

17

2

2

19

(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 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.

Portfolio

The table below represents a summary of the Company’s properties by planned usage as of March 31, 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

13

2,019 sf / 198 acres

1,534

15.2

Residential (3)

2

33 sf / 19 acres

33

9.5

Premier

5

235 sf / 99 acres

163

19.7

Non-Core (4)

35

5,292 sf / 428 acres

325

12.2

Unconsolidated

Other Entities

13

1,106 sf / 185 acres

278

14.2

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 March 31, 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 March 31, 2023, the Company invested $4.1 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 March 31, 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

55

1,374

68.1

%

$

30,014

90.7

%

$

21.84

SNO retail leases (1)

9

160

7.9

%

3,085

9.3

%

19.28

Total retail leases

64

1,534

76.0

%

$

33,099

100.0

%

$

21.58

(1) SNO = signed not yet opened leases.

During the three months ended March 31, 2023, the Company signed new leases at its retail properties totaling approximately 76 thousand square feet at an average base rent of $10.54 PSF stabilized net. Additionally, the Company generated a leasing pipeline of over 100 thousand square feet. The Company has 1.4 million leased square feet and approximately 160 thousand square feet signed but not opened. Seritage has total occupancy of 76.0% for its multi-tenant retail properties. As of March 31, 2023, there is an additional approximately 484 thousand square feet available for lease.

(in thousands except number of leases and PSF data)

Number of
SNO Leases

GLA

ABR

Annual
Rent PSF

As of December 31, 2022

15

141

$

3,355

$

23.79

Sold / terminated

(8

)

(58

)

(1,071

)

18.47

Signed

2

76

801

10.54

As of March 31, 2023

9

159

$

3,085

$

19.28

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 March 31, 2023, the Company has 205 thousand in-place leased square feet (112 thousand square feet at share), 171 thousand square feet signed but not opened (157 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 March 31, 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

22

50

12.8

%

$

3,215

17.6

%

$

64.30

In-place office leases

1

62

15.7

%

4,220

23.2

%

68.06

SNO retail leases as of December 31, 2022(1)

27

111

8,612

77.59

Opened

(6

)

(8

)

(503

)

62.88

Signed

1

8

570

71.25

SNO retail leases as of March 31, 2023(1)

22

111

28.2

%

8,679

47.6

%

78.19

SNO office leases as of December 31, 2022(1)

4

108

$

6,329

58.60

Opened

(1

)

(62

)

$

(4,220

)

68.06

SNO retail leases as of March 31, 2023(1)

3

46

11.8

%

$

2,109

11.6

%

45.85

Total diversified leases as of March 31, 2023

48

270

68.5

%

$

18,223

100.0

%

$

67.49

(1) SNO = Signed not yet opened leases

(2) In thousands except number of leases and PSF data

During the three months ended March 31, 2023, the Company invested $27.2 million in its consolidated development and operating properties and an additional $2.8 million into its unconsolidated entities.

Aventura

During the first 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 remains on track to open its first tenants to the public in the second quarter of 2023, with rolling openings thereafter.

During the quarter ended March 31, 2023, the Company signed one new lease totaling eight thousand square feet at an average base rent of $71.25 PSF stabilized net and has 144 thousand square feet signed but not opened. With occupancy at 66.6%, the Company has 72 thousand square feet available for lease, of which one thousand square feet is in lease negotiation and has leasing activity on over an additional 71 thousand square feet.

Financial Summary

The table below provides a summary of the Company’s financial results for the three months ended March 31, 2023:

(in thousands except per share amounts)

Three Months Ended

March 31, 2023

March 31, 2022

Net loss attributable to Seritage
common shareholders

$

(63,211

)

$

(53,430

)

Net loss per share attributable to Seritage
common shareholders

(1.13

)

(1.22

)

Total NOI

3,104

10,493

For the quarter ended March 31, 2023:

  • Total NOI for the first quarter of 2023 reflects the impact of $0.5 million Total NOI relating to sold properties.

Total NOI is comprised of:

(in thousands)

Three Months Ended March 31,

Consolidated Properties

2023

2022

Multi-tenant retail

$

6,432

$

6,205

Premier

(1,441

)

(1,400

)

Residential

(735

)

(717

)

Non-Core

(2,317

)

(687

)

Sold

(352

)

5,568

Total

1,587

8,969

Unconsolidated Properties

Residential

9

(289

)

Premier

331

(209

)

Other joint ventures

1,177

2,022

Total

1,517

1,524

Total NOI

$

3,104

$

10,493

As of March 31, 2023, the Company had cash on hand of $132.1 million, including $11.6 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.

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 be 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 will be paid on July 14, 2023 to holders of record on June 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, which is recorded in interest and other income in the consolidated statements of operations and received $7.8 million subsequent to March 31, 2023.

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. 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 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").

SERITAGE GROWTH PROPERTIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

March 31, 2023

December 31, 2022

ASSETS

Investment in real estate

Land

$

154,807

$

172,813

Buildings and improvements

464,586

463,616

Accumulated depreciation

(55,347

)

(57,330

)

564,046

579,099

Construction in progress

157,824

185,324

Net investment in real estate

721,870

764,423

Real estate held for sale

245,894

455,617

Investment in unconsolidated entities

353,919

382,597

Cash and cash equivalents

120,476

133,480

Restricted cash

11,576

11,459

Tenant and other receivables, net

25,982

41,495

Lease intangible assets, net

1,615

1,791

Prepaid expenses, deferred expenses and other assets, net

35,041

50,859

Total assets (1)

$

1,516,373

$

1,841,721

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Term loan facility, net

$

799,859

$

1,029,754

Accounts payable, accrued expenses and other liabilities

58,559

89,368

Total liabilities (1)

858,418

1,119,122

Commitments and contingencies (Note 9)

Shareholders' Equity

Class A common shares $0.01 par value; 100,000,000 shares authorized;
56,059,530 and 56,052,546 shares issued and outstanding
as of March 31, 2023 and December 31, 2022, respectively

561

561

Series A preferred shares $0.01 par value; 10,000,000 shares authorized;
2,800,000 shares issued and outstanding as of March 31, 2023 and
December 31, 2022; liquidation preference of $70,000

28

28

Additional paid-in capital

1,360,060

1,360,411

Accumulated deficit

(703,742

)

(640,531

)

Total shareholders' equity

656,907

720,469

Non-controlling interests

1,048

2,130

Total equity

657,955

722,599

Total liabilities and shareholders' equity

$

1,516,373

$

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 March 31, 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, $(0.7) million of accumulated depreciation and $3.4 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
March 31,

2023

2022

REVENUE

Rental income

$

418

$

29,084

Management and other fee income

262

1,821

Total revenue

680

30,905

EXPENSES

Property operating

8,185

11,032

Real estate taxes

1,537

8,150

Depreciation and amortization

4,564

11,934

General and administrative

12,220

9,092

Total expenses

26,506

40,208

Gain (loss) on sale of real estate, net

12,392

(1,015

)

Impairment of real estate assets

(2,576

)

(991

)

Equity in loss of unconsolidated entities

(36,372

)

(33,076

)

Interest and other income

5,585

11

Interest expense

(15,202

)

(22,588

)

Loss before income taxes

(61,999

)

(66,962

)

Benefit (provision) for income taxes

13

(25

)

Net loss

(61,986

)

(66,987

)

Net loss attributable to non-controlling interests

14,782

Net loss attributable to Seritage

$

(61,986

)

$

(52,205

)

Preferred dividends

(1,225

)

(1,225

)

Net loss attributable to Seritage common shareholders

$

(63,211

)

$

(53,430

)

Net loss per share attributable to Seritage Class A
common shareholders - Basic

$

(1.13

)

$

(1.22

)

Net loss per share attributable to Seritage Class A
common shareholders - Diluted

$

(1.13

)

$

(1.22

)

Weighted average Class A common shares
outstanding - Basic

56,059

43,634

Weighted average Class A common shares
outstanding - Diluted

56,059

43,634

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

Three Months Ended March 31,

NOI and Total NOI

2023

2022

Net loss

$

(61,986

)

$

(66,987

)

Termination fee income

(277

)

Management and other fee income

(262

)

(1,821

)

Depreciation and amortization

4,564

11,934

General and administrative expenses

12,220

9,092

Equity in loss of unconsolidated entities

36,372

33,076

(Gain) loss on sale of real estate, net

(12,392

)

1,015

Impairment of real estate assets

2,576

991

Interest and other income

(5,585

)

(11

)

Interest expense

15,202

22,588

(Benefit) provision for income taxes

(13

)

25

Straight-line rent

10,843

(721

)

Above/below market rental expense

48

65

NOI

$

1,587

$

8,969

Unconsolidated entities

Net operating income of unconsolidated entities

1,659

1,846

Straight-line rent

(147

)

(328

)

Above/below market rental expense

5

6

Total NOI

$

3,104

$

10,493

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006215/en/

Contacts

Seritage Growth Properties
(212) 355-7800
IR@Seritage.com