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, 2022.
“In the third quarter the Company made tremendous progress
advancing our plan of sale, which our shareholders overwhelmingly
supported at our annual shareholders meeting last month. During the
quarter and subsequent to quarter end, our gross proceeds from
asset sales totaled $411.6 million, and we have now monetized
$583.9 million of assets year to date. This allowed us to repay
$280 million of debt from the beginning of Q3 to date, for a total
of $440 million of principal repayments since the end of 2021,
resulting in annualized interest savings of approximately $30.8
million. We have also developed a robust sales pipeline of over
$800 million worth of assets either under contract or with accepted
offers, providing a clear path towards further significant debt
paydowns. In addition to our success in selling assets and paying
down our debt, we continue to create value across the portfolio
through leasing, development and securing entitlements” said Andrea
Olshan, Chief Executive Officer and President.
Plan of Sale:
On October 24, 2022, at the 2022 Annual Meeting of Shareholders,
the shareholders voted to approve the Plan of Sale as detailed in
the Company’s Definitive Proxy statement filed with Securities and
Exchange Commission on September 14, 2022.
Sale Highlights:
- Generated $235.2 million of gross proceeds during the three
months ended September 30, 2022 from the sale of 22 wholly owned
properties and 8 joint venture assets.
- Subsequent to quarter end, generated $176.4 million of gross
proceeds from the sale of 12 assets.
- The Company has 10 assets under contract for sale with no due
diligence contingencies for total anticipated proceeds of $124.9
million and 26 assets under contract for sale subject to customary
due diligence for total anticipated proceeds of $421.5 million. All
assets for sale are subject to closing conditions. Additionally,
the Company has accepted offers and is currently negotiating
definitive purchase and sale agreements on assets with accepted
offers of approximately $299.2 million.
Financial Highlights:
For the three months ended September 30, 2022:
- Net loss attributable to common shareholders of ($4.7) million,
or ($0.08) per share, as compared to net loss attributable to
common shareholders of ($21.8) million, or ($0.50) per share for
the same period last year.
- Total Net Operating Income (“Total NOI”) of $12.2 million,
which is an increase of 50% when compared to assets held in the
same manner at September 30, 2021.
- As of September 30, 2022, the Company had cash on hand of
$140.6 million, including $10.8 million of restricted cash. As of
November 4, 2022, the Company had cash on hand of $134.1 million,
including $10.8 million of restricted cash.
- During the quarter, the Company made $170 million in principal
repayments on the Company’s term loan facility (“Term Loan
Facility”). Subsequent to quarter end, the Company made an
additional $110 million in principal repayments, reducing the
balance of the Term Loan Facility to $1.16 billion and resulting in
a reduction to $360 million of paydowns required by July 31, 2023
to extend the Term Loan Facility for an additional two years.
Other Highlights
- Signed 13 leases covering 85 thousand square feet (75 thousand
at share) in the third quarter at an average projected annual rent
of $22.06 PSF ($21.20 PSF at share).
- Signed leases in the third quarter included:
- Four new leases covering approximately 7 thousand square feet
(4 thousand at share) at Premier assets at an average projected
annual rent of $91.39 PSF net ($87.72 PSF at share), bringing the
portfolio to 63.5% leased;
- Six leases covering approximately 24 thousand square feet at
Multi-Tenant Retail assets at an average projected annual rent of
$34.13 PSF net, bringing occupancy of the Multi-Tenant Retail
portfolio up to 84.2%;
- Two retail leases covering approximately 39 thousand square
feet at Non-Core assets at an average projected annual rent of
$9.39 PSF net; and
- One retail lease covering approximately 15 thousand square feet
(7.5 thousand at share) at one other unconsolidated entity signed
at an average projected annual rent of $5.64 PSF net.
- Leases signed subsequent to quarter end were:
- One thousand square feet of second floor retail was leased at a
Premier asset at a base rent of $44.00 PSF net; and
- Ten thousand square feet (5 thousand at share) of ground floor
retail at Premier assets at a base rent of $55.65 PSF net ($60.81
PSF at share).
- An additional eight leases under negotiation representing over
100 thousand square feet at an average projected base rent of
$23.90 PSF net; and
- Brought 11 tenants online representing 207 thousand square feet
(202 thousand at share) and $4.0 million in annual base rent ($3.6
million at share).
Portfolio
The table below represents a summary of the Company’s properties
by planned usage as of September 30, 2022:
(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
38
5,334 sf / 523 acres
4,492
13.8
Residential (3)
11
44 sf / 134 acres
44
12.2
Premier
5
235 sf / 99 acres
147
19.7
Non-Core (4)
50
7,899 sf / 631 acres
815
12.6
Unconsolidated
Other Entities
14
1,106 sf / 226 acres
311
16.1
Residential (3)
1
49 sf / 12 acres
30
11.7
Premier
2
158 sf / 16 acres
101
8.0
(1) Square footage is presented at the Company’s proportional
share. (2) Based on signed leases at September 30, 2022. (3)
Represents ancillary tenants currently in place at assets intended
for residential use. (4) Represents assets the Company previously
designated for sale.
Multi-Tenant Retail
During the three months ended September 30, 2022, the Company
invested $9.2 million in its multi-tenant retail properties. The
remaining capital expenditures in the multi-tenant retail portfolio
are primarily comprised of tenant improvements. During the third
quarter, the Company opened stores representing 188 thousand square
feet and $3.0 million of annual base rent. The portfolio inclusive
of SNO is 84.2% leased at an average lease term of over 10 years
and average rates of $16.87 PSF gross.
The table below provides a summary of all Multi-Tenant Retail
signed leases as of September 30, 2022, 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
161
4,306
80.7
%
$
71,277
94.0
%
$
16.55
SNO retail leases (1)
17
185
3.5
%
4,510
6.0
%
24.38
Leases in negotiation
2
102
1.9
%
1,076
N/A
10.65
Total retail leases
180
4,593
86.1
%
$
76,863
100.0
%
$
16.73
(1) SNO = signed not yet opened
leases.
During the three months ended September 30, 2022, the Company
signed new leases at its retail properties totaling 24 thousand
square feet at an average base rent of $34.13 PSF net. The Company
has 4.3 million in-place leased square feet and approximately 185
thousand square feet signed but not opened. Seritage has total
occupancy of 84.2% for its multi-tenant retail properties. As of
September 30, 2022, there is an additional approximately 842
thousand square feet available for lease in the Multi-Tenant Retail
portfolio, with multi-tenant retail leases under negotiation for
102 thousand square feet at an average base rent of $10.65 PSF
net.
(in thousands except number of leases and
PSF data)
Number of
Annual
SNO Leases
GLA
ABR
Rent PSF
As of June 30, 2022
17
357
$
6,833
$
19.14
Opened
(5
)
(188
)
(3,028
)
16.11
Sold / terminated
(1
)
(8
)
(125
)
15.63
Signed
6
24
830
34.58
As of September 30, 2022
17
185
$
4,510
$
24.38
Premier Mixed-Use
The Company has one premier mixed-use project in the active
leasing stage, which is our property in Aventura, FL. As of
September 30, 2022, the Company has 66 thousand in-place leased
square feet (43 thousand at share), 283 thousand square feet signed
but not opened (205 thousand at share), and 201 thousand square
feet available for lease (145 thousand at share) with leases under
negotiation for over 20 thousand square feet.
The table below provides a summary of all signed leases at
Premier assets as of September 30, 2022, 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
17
43
10.9
%
$
2,527
15.2
%
$
58.77
SNO retail leases (1)
22
93
23.8
%
7,422
44.4
%
79.81
SNO office leases (1)
5
112
28.5
%
6,758
40.4
%
60.34
Leases in negotiation
6
23
5.8
%
1,880
N/A
85.45
Total Premier leases
50
271
69.0
%
$
18,587
100.0
%
$
68.59
(1) SNO = signed not yet opened
leases.
Premier - Retail
(in thousands except number of leases and
PSF data)
Number of
Annual
SNO Leases
GLA
ABR
Rent PSF
As of June 30, 2022
23
105
$
8,781
$
83.63
Opened
(2
)
(3
)
(262
)
96.00
Terminated
(2
)
(11
)
(1,211
)
112.52
Signed
3
3
244
81.33
Changes in Asset Categories / Tenant
Amendments (1)
-
(1
)
(130
)
N/A
As of September 30, 2022
22
93
$
7,422
$
79.81
(1) Represents short-term leases now
represented in specialty leasing or amendments negotiated with the
tenant.
Premier - Office
(in thousands except number of leases and
PSF data)
Number of
Annual
SNO Leases
GLA
ABR
Rent PSF
As of June 30, 2022
4
110
$
6,648
$
60.44
Signed
1
2
110
55.00
As of September 30, 2022
5
112
$
6,758
$
60.34
During the three months ended September 30, 2022, the Company
invested $15.1 million in its consolidated development and
operating properties and an additional $2.9 million into its
unconsolidated entities.
Aventura:
During the third quarter of 2022, the Company continued to
advance 216,000 square feet of mixed-use activation at the project
in Aventura, FL. The Company continues to advance construction on
Aventura and remains on track to open its first tenants to the
public in the fourth quarter of 2022, with rolling openings
thereafter.
During the quarter ended September 30, 2022, the Company signed
one new lease totaling two thousand square feet at an average base
rent of $72.00 PSF net. As of September 30, 2022, the Company has
127 thousand square feet signed but not opened. With occupancy at
59.0%, the Company has 89 thousand square feet available for lease,
of which 22 thousand square feet is in lease negotiation and has
leasing activity on over an additional 20 thousand square feet.
San Diego UTC:
As of September 30, 2022, the property has 47 thousand in-place
leased square feet and 156 thousand square feet signed but not
opened. Subsequent to quarter close, the remaining 10 thousand
square feet in vacant space was signed bringing office and retail
space to 100% leased.
Dispositions
During the three months ended September 30, 2022, the Company
sold 30 properties, generating $235.2 million of gross proceeds.
The Company also repurchased one asset for $22.2 million, which it
sold during the three months ended September 30, 2022. Of the Q3
transactions:
- $94.2 million of gross proceeds were from vacant or non-income
producing assets sold at $40.09 PSF. The sale of these assets
eliminates $4.9 million of carrying costs;
- $75.0 million of gross proceeds were from income producing
stabilized properties, partially leased development sites and
outparcel pads reflecting a 4.3% blended in-place capitalization
rate; and
- $66.0 million of gross proceeds from monetizing unconsolidated
entity interests.
During the quarter and subsequently, the Company was able to
generate a robust sales pipeline. As of November 4, 2022, we had
assets under contract for sale with no due diligence contingencies
for total anticipated proceeds of $124.9 million and assets under
contract for sale, subject to customary due diligence, for total
anticipated proceeds of $421.5 million. All assets for sale are
subject to closing conditions. Though all of these deals are
anticipated to close prior to July 31, 2023, even if only a portion
of the contracts actually closed prior to such date, the proceeds
from such portion of the contracts that actually closed would
provide sufficient proceeds to qualify the Company for the
extension of its Term Loan Facility. Additionally, the Company has
accepted offers and is currently negotiating definitive purchase
and sale agreements on assets with offers of approximately $299.2
million.
Financial Summary
The table below provides a summary of the Company’s financial
results for the three and nine months ended September 30, 2022:
(in thousands except per share
amounts)
Three Months Ended
Nine Months Ended
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Net loss attributable to Seritage common
shareholders
$
(4,664
)
$
(21,759
)
$
(170,074
)
$
(104,769
)
Net loss per share attributable to
Seritage common shareholders
(0.08
)
(0.50
)
(3.57
)
(2.50
)
Total NOI
12,150
8,075
33,245
25,061
For the quarter ended September 30, 2022:
- Total NOI for the third quarter of 2022 reflects the impact of
$(1.0) million total NOI relating to sold properties.
Total NOI is comprised of:
(in thousands)
Three Months Ended
Nine Months Ended
Consolidated Properties
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Multi-tenant retail
$
14,109
$
11,395
$
40,681
$
32,986
Premier
(1,061
)
(458
)
(2,900
)
(1,540
)
Residential
1,229
(3,099
)
(1,917
)
(6,440
)
Sell
(3,304
)
(974
)
(7,995
)
(4,040
)
Sold
(976
)
492
(346
)
411
Total
9,997
7,356
27,523
21,377
Unconsolidated Properties
Residential
282
50
77
50
Premier
2,158
132
1,854
660
Other joint ventures
(287
)
537
3,791
2,974
Total
2,153
719
5,722
3,684
Total NOI
$
12,150
$
8,075
$
33,245
$
25,061
The Company collected 99% of its base rent for the third
quarter.
As of September 30, 2022, the Company had cash on hand of $140.6
million, including $10.8 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 fund its operations and select 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 condensed consolidated financial statements
included in Part I, Item 1 and in the section entitled
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” each in our Quarterly Report on Form
10-Q.
Dividends
On February 16, 2022, 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 15, 2022 to holders
of record on March 31, 2022.
On April 26, 2022, 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 payable on July 15, 2022 to
holders of record on June 30, 2022.
On July 26, 2022, 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 payable on October 17, 2022
to holders of record on September 30, 2022.
On November 1, 2022, 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 payable on January 16, 2022
to holders of record on December 30, 2022.
The Company’s Board of Trustees does not expect to declare
dividends on its common shares in 2022.
Strategic Review
The 2022 Annual Meeting of Shareholders occurred on October 24,
2022, following our filing of a final proxy statement with the SEC
on September 14, 2022. During the meeting, the Plan of Sale was
approved by the shareholders. 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.
Sears Bankruptcy
Litigation
On April 6, 2022, the Court entered an order in the Consolidated
Litigation, upon the agreement of the parties thereto, providing
for a mediation of the litigation. The parties and the Court
extended the mediation several times, through August, and up until
the settlement described below was reached.
On August 9, 2022, following the mediation, all of the parties
to the Litigation and certain of the parties to the Shareholder
Litigation (to which Seritage is not a defendant) entered into a
settlement agreement pursuant to which the defendants paid to the
Sears estate $175 million (of which the Seritage Defendants
contributed approximately $35.0 million) in exchange for dismissal
of the Consolidated Litigation and for the full and final
satisfaction and release of all claims in the Consolidated
Litigation (including, in the case of the Seritage Defendants, any
and all claims between the Seritage Defendants and the Sears estate
in the Sears bankruptcy proceeding).
On September 2, 2022, the United States Bankruptcy Court for the
Southern District of New York entered an order approving the
settlement and, on October 18, 2022, the Litigation was dismissed.
While the Company believes that the claims against the Seritage
Defendants in the Litigation were without merit, the Company
entered into the settlement, without admitting any fault or
wrongdoing, in order to avoid the continued imposition of legal
defense costs, distraction, and the uncertainty and risk inherent
in any litigation.
The Company has reserved the settlement amount described above
based on the Company’s contributions to the settlement of the
Litigation. This estimate is recorded as litigation reserve in the
condensed consolidated statement of operations during the nine
months ended September 30, 2022. The Company paid the settlement
amount described above in October 2022.
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 is seeking, 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 Litigation discussed above. Any amounts received from the
insurers will offset the Seritage Defendants' contribution.
Subsequent to September 30, 2022, the Company reached settlement
agreements with two of the D&O Insurers for gross proceeds of
$12.7 million. The litigation remains outstanding with respect to
the remaining D&O Insurers.
Supplemental Report
A Supplemental Report will be available in the Investors section
of the Company’s website, www.seritage.com.
COVID-19 Pandemic
The Coronavirus (“COVID-19”) pandemic has caused significant
impacts on the real estate industry in the United States, including
the Company’s properties.
As a result of the development, fluidity and uncertainty
surrounding this situation, the Company expects that these
conditions may change, potentially significantly, in future periods
and results for the three and nine months ended September 30, 2022
may not be indicative of the impact of the COVID-19 pandemic on the
Company’s business for future periods. As such, the Company cannot
reasonably estimate the impact of COVID-19 on its financial
condition, results of operations or cash flows over the foreseeable
future.
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.
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, 2021 and in Part II, Item 1A of the Company’s Quarterly Report
on Form 10-Q for the three and nine months ended September 30,
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 September 30, 2022,
the Company’s portfolio consisted of interests in 121 properties
comprised of approximately 16.1 million square feet of gross
leasable area ("GLA") or build-to-suit leased area, approximately
313 acres held for or under development and approximately 7.9
million square feet or approximately 631 acres to be disposed of.
The portfolio consists of approximately 13.5 million square feet of
GLA held by 104 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
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share amounts)
(Unaudited)
September 30, 2022
December 31, 2021
ASSETS
Investment in real estate
Land
$
282,917
$
475,667
Buildings and improvements
804,882
994,221
Accumulated depreciation
(127,043
)
(154,971
)
960,756
1,314,917
Construction in progress
260,007
381,194
Net investment in real estate
1,220,763
1,696,111
Real estate held for sale
202,777
—
Investment in unconsolidated entities
383,061
498,563
Cash and cash equivalents
129,767
106,602
Restricted cash
10,821
7,151
Tenant and other receivables, net
39,943
29,111
Lease intangible assets, net
4,511
14,817
Prepaid expenses, deferred expenses and
other assets, net
62,883
61,783
Total assets (1)
$
2,054,526
$
2,414,138
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Term loan facility, net
$
1,269,648
$
1,439,332
Sales-leaseback financing obligations
—
20,627
Litigation reserve
35,533
—
Accounts payable, accrued expenses and
other liabilities
118,700
109,379
Total liabilities (1)
1,423,881
1,569,338
Commitments and contingencies (Note 9)
Shareholders' Equity
Class A common shares $0.01 par value;
100,000,000 shares authorized; 56,032,381 and 43,632,364 shares
issued and outstanding as of September 30, 2022 and December 31,
2021, respectively
560
436
Series A preferred shares $0.01 par value;
10,000,000 shares authorized; 2,800,000 shares issued and
outstanding as of September 30, 2022 December 31, 2021; liquidation
preference of $70,000
28
28
Additional paid-in capital
1,359,686
1,241,048
Accumulated deficit
(731,759
)
(553,771
)
Total shareholders' equity
628,515
687,741
Non-controlling interests
2,130
157,059
Total equity
630,645
844,800
Total liabilities and shareholders'
equity
$
2,054,526
$
2,414,138
(1) The Company's condensed consolidated
balance sheets include assets and liabilities of consolidated
variable interest entities ("VIEs"). See Note 2. The condensed
consolidated balance sheets, as of September 30, 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. The Company's condensed consolidated balance sheets as
of December 31, 2021, 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, $(0.9)
million of accumulated depreciation and $4.0 million of other
assets included in other line items.
SERITAGE GROWTH
PROPERTIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
REVENUE
Rental income
$
23,253
$
28,819
$
81,755
$
87,560
Management and other fee income
248
184
2,355
598
Total revenue
23,501
29,003
84,110
88,158
EXPENSES
Property operating
9,700
11,585
31,535
33,514
Real estate taxes
6,483
8,542
21,056
27,758
Depreciation and amortization
9,169
13,159
31,772
39,629
General and administrative
10,811
8,780
30,996
32,002
Litigation reserve
533
—
35,533
—
Total expenses
36,696
42,066
150,892
132,903
Gain on sale of real estate, net
45,433
22,774
112,449
65,079
Loss on sale of interests in
unconsolidated entities
(139
)
—
(139
)
—
Impairment of real estate assets
(10,275
)
(3,814
)
(120,609
)
(70,053
)
Equity in loss of unconsolidated
entities
(2,275
)
(5,535
)
(69,071
)
(9,024
)
Interest and other (expense) income
(1,047
)
48
(937
)
8,202
Interest expense
(21,916
)
(26,721
)
(67,167
)
(81,847
)
Loss before income taxes
(3,414
)
(26,311
)
(212,256
)
(132,388
)
Provision for income taxes
(67
)
(38
)
(295
)
(198
)
Net loss
(3,481
)
(26,349
)
(212,551
)
(132,586
)
Net loss attributable to non-controlling
interests
42
5,815
46,152
31,492
Net loss attributable to Seritage
$
(3,439
)
$
(20,534
)
$
(166,399
)
$
(101,094
)
Preferred dividends
(1,225
)
(1,225
)
(3,675
)
(3,675
)
Net loss attributable to Seritage common
shareholders
$
(4,664
)
$
(21,759
)
$
(170,074
)
$
(104,769
)
Net loss per share attributable to
Seritage Class A common shareholders - Basic
$
(0.08
)
$
(0.50
)
$
(3.57
)
$
(2.50
)
Net loss per share attributable to
Seritage Class A common shareholders - Diluted
$
(0.08
)
$
(0.50
)
$
(3.57
)
$
(2.50
)
Weighted average Class A common shares
outstanding - Basic
55,361
43,631
47,600
41,976
Weighted average Class A common shares
outstanding - Diluted
55,361
43,631
47,600
41,976
Reconciliation of Net Loss to NOI and
Total NOI (in thousands)
Three Months Ended
NOI and Total NOI
September 30, 2022
June 30, 2022
September 30, 2021
Net loss
$
(3,481
)
$
(142,083
)
$
(26,349
)
Termination fee income
—
(92
)
(379
)
Management and other fee income
(248
)
(286
)
(184
)
Depreciation and amortization
9,169
10,669
13,159
General and administrative expenses
10,811
11,093
8,780
Litigation reserve
533
35,000
—
Equity in loss of unconsolidated
entities
2,275
33,720
5,535
Gain on sale of interests in
unconsolidated entities
139
—
—
Gain on sale of real estate, net
(45,433
)
(68,031
)
(22,774
)
Impairment of real estate assets
10,275
109,343
3,814
Interest and other (income) expense
1,047
(99
)
(48
)
Interest expense
21,916
22,663
26,721
Provision for income taxes
67
203
38
Straight-line rent
2,873
(3,599
)
(1,005
)
Above/below market rental expense
54
56
48
NOI
$
9,997
$
8,557
$
7,356
Unconsolidated
entities
Net operating income of unconsolidated
entities
2,450
2,267
666
Straight-line rent
(305
)
(228
)
(272
)
Above/below market rental
(income)/expense
8
6
181
Termination fee income
—
—
144
Total NOI
$
12,150
$
10,602
$
8,075
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005682/en/
Seritage Growth Properties (212) 355-7800 IR@Seritage.com
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