Seritage Growth Properties (NYSE: SRG) (the “Company”), a
national owner and developer of 150 retail, residential and
mixed-use properties today reported financial and operating results
for the three and six months ended June 30, 2022.
“This has been an extremely productive quarter for the Company.
Our operating momentum continues with strong leasing, development
and entitlement progress. We now have only one major development in
active construction, Aventura, which is over 75% leased including
leases under negotiation and is set to open to the public in Q422.
With the great strides we are making in our disposition and
strategic process, and after taking our obligations into account,
we were pleased to be able to pay down another $100M of our term
loan facility in August. Based on our current projections, we
expect to continue more regular debt paydowns, reducing our cash
burn and bringing us closer to extending our debt before its
maturity,” said Andrea Olshan, Chief Executive Officer and
President.
Financial Highlights:
For the three months ended June 30, 2022:
- Net loss attributable to common shareholders of ($112.0)
million, or ($2.56) per share
- Total Net Operating Income (“Total NOI”) of $10.6 million,
which is an increase of 26% when compared to assets held in the
same manner at June 30, 2021
- As of June 30, 2022, the Company had cash on hand of $156.7
million, including $7.2 million of restricted cash. As of August 5,
2022, the Company had cash on hand of $97.8 million, including
$10.8 million of restricted cash, after making a $100 million
principal pay down on the Company’s term loan facility (“Term Loan
Facility”)
- Subsequent to June 30, reduced the balance of the Term Loan
Facility to $1.34 billion, resulting in a reduction to $540 million
of paydowns required to extend Term Loan Facility
Highlights
- Signed 13 leases covering 211 thousand square feet (144
thousand at share) in the second quarter at an average projected
annual rent of $15.52 PSF ($18.75 PSF at share).
- Signed leases in the second quarter included:
- Three new leases covering approximately 8 thousand square feet
of retail at Premier assets at an average projected annual rent of
$105.95 PSF net, bringing the portfolio to 64.5% leased;
- Seven leases covering approximately 54 thousand square feet at
Multi-Tenant Retail assets at an average projected annual rent of
$18.61 PSF net, bringing occupancy of the Multi-Tenant Retail
portfolio up to 84.0%;
- One retail lease covering approximately 8 thousand square feet
of retail at a Residential asset at an average projected annual
rent of $54.00 PSF net;
- One retail lease covering approximately 14 thousand square feet
at a Non-Core asset at an average projected annual rent of $16.00
PSF net; and
- One retail lease covering approximately 127 thousand square
feet (63 thousand at share) at other unconsolidated entities signed
at an average projected annual rent of $5.66 PSF net;
- Leases signed subsequent to quarter end were:
- Eight thousand square feet of outparcels at Multi-Tenant Retail
assets at a base rent of $21.88 PSF net;
- Four thousand square feet (two thousand at share) of ground
floor retail at Premier assets at a base rent of $90.87 PSF net;
and
- Two thousand square feet of second floor office at Premier
assets at a base rent of $72.00 PSF net.
- An additional 25 leases under negotiation representing over 300
thousand square feet at an average projected base rent of $20.54
PSF ($19.89 PSF at share) net;
- Brought 11 tenants online representing 273 thousand square feet
(255 thousand at share) and $3.4 million in annual base rent ($3.0
million at share);
- Generated $163.4 million of gross proceeds through disposition
activity during the three months ended June 30, 2022. Subsequent to
quarter end, the Company generated $102.3 million of gross proceeds
through disposition activity; and
- The Company has additional asset sales under contract for
anticipated gross proceeds of $260.8 million, subject to buyer
diligence and closing conditions and is currently negotiating
sales, evaluating bona fide offers received and marketing or about
to bring to market over $1.2 billion of properties for sale at
estimated fair value, which would provide sufficient proceeds to
qualify the Company for the extension of its $1.34 billion Term
Loan Facility, assuming all deals closed prior to July 2023 as
anticipated.
Portfolio
The table below represents a summary of the Company’s properties
by planned usage as of June 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
5,328 sf / 523 acres
4,475
13.8
Residential (3)
18
100 sf / 215 acres
100
11.9
Premier (4)
5
235 sf / 99 acres
157
19.7
Non-Core (5)
64
9,900 sf / 821 acres
1,320
12.8
Unconsolidated
Other Entities
21
1,599 sf / 310 acres
607
14.8
Residential (3)
2
130 sf / 23 acres
30
11.3
Premier (4)
2
158 sf / 16 acres
99
8.0
(1) Square footage is presented at the
Company’s proportional share
(2) Based on signed leases at June 30,
2022
(3) Represents ancillary tenants currently
in place at assets intended for residential use
(4) Refer to Premier Mixed-Use below for
information on entitlements
(5) Represents assets the Company may
strategically monetize
Multi-Tenant Retail
During the three months ended June 30, 2022, the Company
invested $11.2 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 second
quarter, the Company opened stores representing 226 thousand square
feet and $2.3 million of annual base rent. The portfolio inclusive
of SNO is 84.0% leased at an average lease term of over 10 years
and average rents of $16.78 PSF gross.
The table below provides a summary of all Multi-Tenant Retail
signed leases as of June 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
156
4,118
77.3
%
$
68,245
90.9
%
$
16.57
SNO retail leases (1)
17
357
6.7
%
6,833
9.1
%
19.14
Leases in negotiation
11
179
3.4
%
2,733
N/A
15.30
Total retail leases
184
4,654
87.4
%
$
77,811
100.0
%
$
16.72
(1) SNO = signed not yet opened
leases.
During the three months ended June 30, 2022, the Company signed
new leases at its retail properties totaling 54 thousand square
feet at an average base rent of $18.61 PSF net. The Company has 4.1
million in-place leased square feet and approximately 357 thousand
square feet signed but not opened. Seritage has total occupancy of
84.0% for its multi-tenant retail properties. As of June 30, 2022,
there is an additional approximately 852 thousand square feet
available for lease in the Multi-Tenant Retail portfolio, with
multi-tenant retail leases under negotiation for 179 thousand
square feet at an average base rent of $15.30 PSF net. The Company
has also identified 30 potential pad sites for development subject
to governmental and REA approval at the sites.
(in thousands except number of leases and
PSF data)
Number of
Annual
SNO Leases
GLA
ABR
Rent PSF
As of March 31, 2022
21
563
$
8,648
$
15.36
Opened
(8
)
(226
)
(2,258
)
9.99
Sold / terminated
(1
)
(3
)
(138
)
46.00
Signed
7
54
1,006
18.63
Changes in asset categories
(2
)
(31
)
(425
)
13.34
As of June 30, 2022
17
357
$
6,833
$
19.14
Premier Mixed-Use
The Company has one premier mixed-use projects in the active
leasing stage, which is our property in Aventura, FL. For the
office development components of its mixed-use projects, which are
all entitled, the Company is seeking build to suit opportunities
and is not looking to develop speculatively. As of June 30, 2022,
the Company has 63 thousand in-place leased square feet (41
thousand at share), 293 thousand square feet signed but not opened
(215 thousand at share), and 196 thousand square feet available for
lease (137 thousand at share) with leases under negotiation for
over 30 thousand square feet.
The table below provides a summary of all signed leases at
Premier assets as of June 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
16
41
10.4
%
$
3,750
19.6
%
$
91.46
SNO retail leases (1)
23
105
26.7
%
8,781
45.8
%
83.63
SNO office leases (1)
4
110
28.1
%
6,648
34.6
%
60.44
Leases in negotiation
11
32
8.0
%
2,220
N/A
69.38
Total Premier leases
54
288
73.2
%
$
21,399
100.0
%
$
74.30
(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 March 31, 2022
23
107
$
8,373
$
78.25
Opened
(1
)
-
(48
)
96.00
Signed
2
4
456
114.00
Lease Amendments (1)
(1
)
(6
)
-
-
As of June 30, 2022
23
105
$
8,781
$
83.63
(1) Represents lease amendments for
tenants included in Q1 SNO figures.
Premier - Office
(in thousands except number of leases and
PSF data)
Number of
Annual
SNO Leases
GLA
ABR
Rent PSF
As of March 31, 2022
3
106
$
6,218
$
58.66
Signed
1
4
430
107.50
As of June 30, 2022
4
110
$
6,648
$
60.44
(1) Represents lease amendments for
tenants included in Q1 SNO figures.
During the three months ended June 30, 2022, the Company
invested $18.4 million in its consolidated development and
operating properties and an additional $2.6 million into its
unconsolidated entities.
Aventura:
During the second 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 grand open to the public in the
fourth quarter of 2022.
During the quarter ended June 30, 2022, the Company signed new
leases totaling eight thousand square feet at an average base rent
of $105.95 PSF net. As of June 30, 2022, the Company has 138
thousand square feet signed but not opened. With occupancy at
63.9%, the Company has 78 thousand square feet available for lease,
26 thousand square feet in lease negotiation and leasing activity
on over 20 thousand square feet.
San Diego UTC:
As of June 30, 2022, the property has 43 thousand in-place
leased square feet and 155 thousand square feet signed but not
opened. Subsequent to quarter end, the Company signed new leases
totaling four thousand square feet (two thousand at share) at a
base rent of $90.87 PSF net. With occupancy at 93.1% (100% of
office space is leased and approximately 83.6% of Retail), the
Company has now stabilized the first phase and has 15 thousand
square feet available for lease. The company has 11 thousand square
feet of leases in negotiation at this time.
Residential
During the quarter, we prioritized entitling properties with the
clearest line of sight to development and are currently looking to
monetize 14 assets previously held for residential. The Company
continues to advance residential plans and entitlement applications
for 10 to 15 properties with a target of 3,700 to 4,600 residential
units.
Dispositions
During the three months ended June 30, 2022, the Company sold 13
properties, generating $163.4 million of gross proceeds. Of the Q2
transactions:
- $61.4 million of gross proceeds were from vacant assets sold at
$74.87 PSF. The sale of these assets eliminates $2.5 million of
carrying costs; and
- $102.0 million of gross proceeds were from stabilized asset
sales at a 4.4 % blended in-place capitalization rate.
During the quarter and subsequently, the Company was able to
generate a robust sales pipeline. As of August 8, 2022, we had
assets under contract for sale with no contingencies for total
anticipated proceeds of $83.5 million and assets under contract for
sale for total anticipated proceeds of $177.3 million, subject to
customary due diligence and closing conditions. Since Seritage
began its capital recycling program in July 2017, the Company has
raised approximately $1.6 billion of gross cash proceeds from the
sale of wholly-owned properties or joint venture interests in 134
properties, plus outparcels at various properties. We have
projected sales in negotiation, are evaluating bona fide offers
received, and are marketing or about to bring to market assets with
an estimated fair value of $1.2 billion, which would provide
sufficient proceeds to qualify the Company for the extension of its
$1.34 billion Term Loan Facility, assuming all deals closed prior
to July 2023 as anticipated.
Financial Summary
The table below provides a summary of the Company’s financial
results for the three and six months ended June 30, 2022:
(in thousands except per share
amounts)
Three Months Ended
Six Months Ended
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Net loss attributable to Seritage common
shareholders
$
(111,980
)
$
(74,065
)
$
(165,410
)
$
(83,010
)
Net loss per share attributable to
Seritage common shareholders
(2.56
)
(1.73
)
(3.79
)
(2.02
)
Total NOI
10,602
7,552
21,095
16,986
For the quarter ended June 30, 2022:
- Total NOI for the second quarter of 2022 reflects the impact of
$0.6 million total NOI relating to sold properties.
Total NOI is comprised of:
(in thousands)
Three Months Ended
Consolidated Properties
June 30, 2022
June 30, 2021
Multi-tenant retail
$
12,940
$
10,917
Premier
(439
)
(614
)
Residential
(976
)
(1,055
)
Sell
(3,541
)
(2,728
)
Sold
573
(408
)
Total
8,557
6,112
Unconsolidated Properties
Residential
84
-
Premier
(96
)
383
Other joint ventures
2,057
1,057
Total
2,045
1,440
Total NOI
$
10,602
$
7,552
The Company collected 99% of its billed rent and other
recoverable expenses for the second quarter.
As of June 30, 2022, the Company had cash on hand of $156.7
million, including $7.2 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.
The Company’s Board of Trustees does not expect to declare
dividends on its common shares in 2022.
Strategic Review/Preliminary Proxy
Materials
On July 7, 2022, we filed our preliminary proxy materials with
the SEC in connection with our 2022 Annual Meeting of Shareholders
seeking a shareholder vote to approve a proposed plan of sale of
the Company’s assets and dissolution (the “Plan of Sale”) that will
allow the Board to sell all of our assets, distribute the net
proceeds to shareholders and dissolve the Company. The Plan of Sale
is expected to increase the universe of potential buyers by
allowing Seritage and potential buyers to enter into and complete
value maximizing transactions without subjecting any such
transaction to the delay and conditionality associated with having
to seek and obtain shareholder approval. The affirmative vote of at
least two-thirds of all outstanding common shares of the Company is
required to approve the Plan of Sale. On July 6, 2022, Edward
Lampert, the Company’s former Chairman, entered into a Voting and
Support Agreement under which he exchanged his equity interest in
the Operating Partnership for Class A common shares and agreed to
vote his shares in favor of the Plan of Sale. As of July 6, 2022,
after giving effect to the exchange of his Operating Partnership
interests, Mr. Lampert owns approximately 29.1% of the Company’s
outstanding Class A common shares, and Seritage is the sole owner
of all outstanding Operating Partnership interests. The strategic
review process remains ongoing, 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, pending final Court
approval, the defendants will pay to the Sears estate $175 million
(of which the Seritage Defendants will contribute approximately $35
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). The settlement is subject to final Court approval,
following notice and an opportunity for objections (if any) at a
hearing currently scheduled for August 31, 2022. As previously
disclosed, the Company remains in active litigation with its
D&O insurers concerning potential coverage for the Consolidated
Litigation, and any amounts received from the insurers will offset
the Seritage Defendants’ approximately $35 million
contribution.
While the Company believes that the claims against the Seritage
Defendants in the Consolidated Litigation are without merit, the
Company has 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. If the settlement does not receive
final Court approval, the Company intends to defend against the
claims in the Consolidated Litigation vigorously. The Company has
reserved $35 million based on the Company’s contribution to the
proposed settlement, subject to final Court approval, of the
Consolidated Litigation. This estimate is recorded as litigation
reserve in the condensed consolidated statement of operations
during the three and six months ended June 30, 2022.
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 six months ended June 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, the Company’s historical exposure to
Sears Holdings and the effects of its previously announced
bankruptcy filing; the litigation filed against us and other
defendants in the Sears Holdings adversarial proceeding pending in
bankruptcy court; 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 six
months ended June 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 June 30, 2022, the
Company’s portfolio consisted of interests in 150 properties
comprised of approximately 19.5 million square feet of gross
leasable area ("GLA") or build-to-suit leased area, approximately
433 acres held for or under development and approximately 9.9
million square feet or approximately 821 acres to be disposed of.
The portfolio consists of approximately 15.6 million square feet of
GLA held by 125 wholly owned properties (such properties, the
“Consolidated Properties”) and 3.9 million square feet of GLA held
by 25 unconsolidated entities (such properties, the “Unconsolidated
Properties”).
SERITAGE GROWTH
PROPERTIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share amounts)
(Unaudited)
June 30, 2022
December 31, 2021
ASSETS
Investment in real estate
Land
$
360,067
$
475,667
Buildings and improvements
818,496
994,221
Accumulated depreciation
(145,584
)
(154,971
)
1,032,979
1,314,917
Construction in progress
371,168
381,194
Net investment in real estate
1,404,147
1,696,111
Real estate held for sale
117,013
—
Investment in unconsolidated entities
445,152
498,563
Cash and cash equivalents
149,529
106,602
Restricted cash
7,155
7,151
Tenant and other receivables, net
42,816
29,111
Lease intangible assets, net
10,295
14,817
Prepaid expenses, deferred expenses and
other assets, net
61,206
61,783
Total assets (1)
$
2,237,313
$
2,414,138
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Term loan facility, net
$
1,439,543
$
1,439,332
Sales-leaseback financing obligations
20,652
20,627
Litigation reserve
35,000
—
Accounts payable, accrued expenses and
other liabilities
107,720
109,379
Total liabilities (1)
1,602,915
1,569,338
Commitments and contingencies (Note 9)
Shareholders' Equity
Class A common shares $0.01 par value;
100,000,000 shares authorized; 43,677,418 and 43,632,364 shares
issued and outstanding as of June 30, 2022 and December 31, 2021,
respectively
437
436
Series A preferred shares $0.01 par value;
10,000,000 shares authorized; 2,800,000 shares issued and
outstanding as of June 30, 2022 December 31, 2021; liquidation
preference of $70,000
28
28
Additional paid-in capital
1,242,165
1,241,048
Accumulated deficit
(719,181
)
(553,771
)
Total shareholders' equity
523,449
687,741
Non-controlling interests
110,949
157,059
Total equity
634,398
844,800
Total liabilities and shareholders'
equity
$
2,237,313
$
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 June 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 June
30,
Six Months Ended June
30,
2022
2021
2022
2021
REVENUE
Rental income
$
29,418
$
27,595
$
58,502
$
58,741
Management and other fee income
286
279
2,107
414
Total revenue
29,704
27,874
60,609
59,155
EXPENSES
Property operating
10,801
11,286
21,833
21,929
Real estate taxes
6,425
9,061
14,575
19,216
Depreciation and amortization
10,669
13,328
22,603
26,470
General and administrative
11,093
11,990
20,185
23,222
Litigation reserve
35,000
—
35,000
—
Total expenses
73,988
45,665
114,196
90,837
Gain on sale of real estate, net
68,031
18,097
67,016
42,305
Impairment of real estate assets
(109,343
)
(64,539
)
(110,334
)
(66,239
)
Equity in loss of unconsolidated
entities
(33,720
)
(2,327
)
(66,796
)
(3,489
)
Interest and other income
99
530
110
8,154
Interest expense
(22,663
)
(28,976
)
(45,251
)
(55,126
)
Loss before income taxes
(141,880
)
(95,006
)
(208,842
)
(106,077
)
(Provision) for income taxes
(203
)
(298
)
(228
)
(160
)
Net loss
(142,083
)
(95,304
)
(209,070
)
(106,237
)
Net loss attributable to non-controlling
interests
31,328
22,464
46,110
25,677
Net loss attributable to Seritage
$
(110,755
)
$
(72,840
)
$
(162,960
)
$
(80,560
)
Preferred dividends
(1,225
)
(1,225
)
(2,450
)
(2,450
)
Net loss attributable to Seritage common
shareholders
$
(111,980
)
$
(74,065
)
$
(165,410
)
$
(83,010
)
Net loss per share attributable to
Seritage Class A common shareholders - Basic
$
(2.56
)
$
(1.73
)
$
(3.79
)
$
(2.02
)
Net loss per share attributable to
Seritage Class A common shareholders - Diluted
$
(2.56
)
$
(1.73
)
$
(3.79
)
$
(2.02
)
Weighted average Class A common shares
outstanding - Basic
43,677
42,772
43,656
41,134
Weighted average Class A common shares
outstanding - Diluted
43,677
42,772
43,656
41,134
Reconciliation of Net Loss to NOI and
Total NOI (in thousands)
Three Months Ended
NOI and Total NOI
June 30, 2022
March 31, 2022
June 30, 2021
Net loss
$
(142,083
)
$
(66,987
)
$
(95,304
)
Termination fee income
(92
)
(277
)
—
Management and other fee (income)
(286
)
(1,821
)
(279
)
Depreciation and amortization
10,669
11,934
13,328
General and administrative expenses
11,093
9,092
11,990
Litigation reserve
35,000
—
—
Equity in loss of unconsolidated
entities
33,720
33,076
2,327
Gain on sale of real estate, net
(68,031
)
1,015
(18,097
)
Impairment of real estate assets
109,343
991
64,539
Interest and other income
(99
)
(11
)
(530
)
Interest expense
22,663
22,588
28,976
Provision for income taxes
203
25
298
Straight-line rent
(3,599
)
(721
)
(1,238
)
Above/below market rental expense
56
65
102
NOI
$
8,557
$
8,969
$
6,112
Unconsolidated
entities
Net operating income of unconsolidated
entities
2,267
1,846
1,646
Straight-line rent
(228
)
(328
)
(168
)
Above/below market rental
(income)/expense
6
6
(29
)
Termination fee income
—
—
(9
)
Total NOI
$
10,602
$
10,493
$
7,552
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809006069/en/
Seritage Growth Properties (212) 355-7800 IR@Seritage.com
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