November 12, 2024 05:06 PM Eastern Standard Time

NEW YORK--(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 and nine months ended September 30, 2024.

"We have made tremendous strides in simplifying our portfolio and improving our balance sheet while maintaining and enhancing our best assets. Our near term priority is our pending term loan maturity in July 2025, and we are simultaneously exploring multiple options to determine which would be the most beneficial to our shareholders. To this end, we are currently engaged in the following: discussions with our current lender on a potential extension of the maturity, in the market for a possible refinancing of the debt with other lenders, pursuing other recapitalization options, and continuing to explore other strategic alternatives. We are doing all of this while continuing our plan of sale and further reducing our debt,” said Andrea L. Olshan, Chief Executive Officer.

Sale Highlights:

• Generated $24.0 million of gross proceeds from the sale of an income producing asset reflecting an 8.5% capitalization rate.
• Subsequent to September 30, 2024, generated $17.1 million in gross proceeds from a vacant/non-income producing asset sold at $87.43 PSF eliminating $0.6 million of carry costs.
• As of November 12, 2024, the Company has five assets under contract for anticipated gross proceeds of $87.9 million. All assets for sale are subject to customary closing conditions. Of these five assets, two are for sale with no due diligence contingencies for total anticipated gross proceeds of $33.7 million and three assets are under contract for sale subject to customary due diligence for anticipated gross proceeds of $54.2 million at share including:
  • $33.7 million in gross proceeds from two vacant/non-income producing properties to be sold at $95.90 PSF eliminating $0.6 million of carry costs;
  • $54.2 million in gross proceeds from monetizing three unconsolidated entity interests.
• The Company has accepted an offer and is currently negotiating a definitive purchase and sale agreement on one income producing asset for gross proceeds of $29.9 million.

Financial Highlights:

For the three months ended September 30, 2024:

• As of September 30, 2024, the Company had cash on hand of $98.2 million, including $12.6 million of restricted cash. As of November 11, 2024, the Company had cash on hand of $87.7 million, including $12.6 million of restricted cash.
• During the three months ended September 30, 2024, the Company invested $3.3 million in its consolidated properties and $5.8 million in its unconsolidated entities.
• Net loss attributable to common shareholders of ($23.2) million, or ($0.41) per share.
• Net Operating Income-cash basis at share (“NOI-cash basis at share”) of ($0.9) million.

Other Highlights

• Signed two leases covering 5.5 thousand square feet in the third quarter at a projected average annual net rent of $65.57 PSF.
• Opened two tenants in the third quarter totaling approximately 6.5 thousand square feet at an average net rent of $63.11 PSF.

Future Sales Projections

The data below provides additional information regarding current estimated gross sales proceeds per asset in the portfolio as of November 12, 2024, excluding assets under contract or in PSA negotiation, which are described above. The assets listed below are either being marketed or are to be marketed at the appropriate time based on market conditions and, as a result, any sales thereof are anticipated to occur in 2025 and beyond. Sales projections, including timing of sale, are based on the Company’s latest forecasts and assumptions, but the Company cautions that actual results may differ materially. In addition, see “Market Update” below and the “Risk Factors” section contained in the Company’s filings with the Securities and Exchange Commission for discussion of the risks associated with such estimated gross sale proceeds.

Gateway Markets

• One Multi-Tenant Asset $25 - $30 million
• Eight Premier Assets (Dallas & San Diego are each assumed to be sold in two transactions)
  • One Asset $15 - $20 million
  • Two Assets $30 - $35 million, each
  • One Asset $50 - $60 million
  • One Asset $60 - $70 million
  • One Asset $70 - $80 million
  • One Asset $100 - $150 million
  • One Asset $150 - $200 million

Primary Markets

• One Multi-Tenant Asset $25 - $30 million
• Three Joint Venture Assets $5 - $10 million, each
• One Joint Venture Asset under $5 million

Secondary Markets

• One Residential Asset with adjacent Retail asset $5 - $10 million
• One Non-Core Asset $5 - $10 million

Portfolio

The table below represents a summary of the Company’s properties by planned usage as of September 30, 2024 (in thousands except number of leases and acreage data):

Multi-Tenant Retail

The table below provides a summary of all Multi-Tenant Retail signed and in negotiation leases as of September 30, 2024 (in thousands except for number of leases and PSF data):