10-Q 1 srg-20220930.htm 10-Q 10-Q
http://fasb.org/us-gaap/2022#ManagementServiceMemberApril 27, 2021April 26, 2022November 1, 2022--12-31July 26, 2022Q3October 26, 2021Jan. 14, 2022December 30, 2022http://www.seritage.com/20220930#SaleLeasebackFinancingObligationsDec. 31, 2021Jun. 30, 2021July 15, 2022February 16, 2022Mar. 31, 202266.67July 27, 2021falseMar. 31, 2021Apr. 15, 2021http://fasb.org/us-gaap/2022#ManagementServiceMemberSep. 30, 20210001628063Oct. 15, 2021January 16, 2023Apr. 15, 2022Sep. 30, 2022http://fasb.org/us-gaap/2022#ManagementServiceMemberhttp://fasb.org/us-gaap/2022#ManagementServiceMemberJul. 15, 2021February 23, 2021Jun. 30, 2022Oct. 17, 20220001628063us-gaap:AdditionalPaidInCapitalMember2021-09-300001628063us-gaap:FairValueInputsLevel2Member2021-12-310001628063srg:AllowanceForDeferralAgreementsMember2021-01-012021-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-12-3100016280632022-09-300001628063us-gaap:SubsequentEventMember2022-10-012022-11-040001628063srg:IncrementalFundingFacilityMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-09-300001628063us-gaap:SubsequentEventMemberus-gaap:SeriesAPreferredStockMember2022-11-012022-11-010001628063us-gaap:AdditionalPaidInCapitalMember2020-12-310001628063us-gaap:FairValueInputsLevel3Membersrg:LossOnImpairmentMember2022-07-012022-09-300001628063srg:OriginalAndHoldcoMasterLeaseMember2021-01-012021-09-300001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2021-11-242021-11-240001628063us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001628063srg:TermLoanFacilityMember2022-09-300001628063us-gaap:AboveMarketLeasesMember2022-09-300001628063srg:HialeahMember2020-12-012020-12-310001628063srt:MaximumMembersrg:SeriesACumulativeRedeemablePreferredSharesMembersrt:ScenarioForecastMember2022-12-132022-12-140001628063srt:MaximumMembersrg:TermLoanFacilityMembersrg:UnrestrictedCashMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2020-05-050001628063srg:TimeBasedRestrictedSharesAndRestrictedShareUnitsMember2021-12-310001628063srg:SeritageGrowthProperties2015SharePlanMember2015-07-070001628063us-gaap:LeasesAcquiredInPlaceMember2021-12-310001628063srg:UnconsolidatedEntitiesVenturesMember2021-12-310001628063srg:RDManagementMember2022-09-300001628063srg:SeriesACumulativeRedeemablePreferredSharesMember2017-01-012017-12-310001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2021-12-310001628063srg:VotingAndSupportAgreementMembersrg:FormerChairmanMember2022-09-300001628063us-gaap:FairValueInputsLevel2Member2022-09-300001628063us-gaap:SubsequentEventMembersrg:TermLoanFacilityMember2022-11-040001628063us-gaap:FairValueInputsLevel3Membersrg:LossOnImpairmentMember2021-01-012021-09-300001628063us-gaap:CommonClassAMember2022-01-012022-09-300001628063srg:InvescoRealEstateMembersrt:MaximumMember2021-09-300001628063srg:SeriesACumulativeRedeemablePreferredSharesMember2022-01-012022-09-300001628063us-gaap:NoncontrollingInterestMember2021-06-3000016280632021-01-012021-09-300001628063srg:RealEstateInvestmentTrustMembersrg:UnconsolidatedPropertyMember2022-01-012022-09-300001628063us-gaap:WhollyOwnedPropertiesMembersrg:RealEstateInvestmentTrustMember2022-09-300001628063srg:BrookfieldPropertiesRetailTwoMember2022-09-300001628063us-gaap:SeriesAPreferredStockMember2021-04-262021-04-270001628063srg:BelowMarketGroundLeasesMember2022-09-300001628063srg:InvescoRealEstateMember2022-09-300001628063srt:MinimumMember2022-01-012022-09-300001628063us-gaap:SeriesAPreferredStockMember2021-07-272021-07-270001628063us-gaap:RetainedEarningsMember2022-01-012022-09-300001628063us-gaap:CommonClassAMember2022-09-300001628063srg:Covid19PandemicMember2022-01-012022-09-300001628063srg:UnconsolidatedEntitiesVenturesMember2022-09-3000016280632021-06-300001628063us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-12-310001628063us-gaap:NoncontrollingInterestMember2022-06-300001628063srg:OriginalAndHoldcoMasterLeaseMember2022-01-012022-09-300001628063us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2022-01-012022-09-300001628063us-gaap:NoncontrollingInterestMember2021-01-012021-09-3000016280632015-07-070001628063us-gaap:NoncontrollingInterestMember2021-09-300001628063srg:InitialFundingMemberus-gaap:SubsequentEventMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-10-280001628063srg:SearsHoldingsCorporationMember2015-07-062015-07-070001628063srg:TwoPutOptionsMember2022-01-012022-09-300001628063us-gaap:LeasesAcquiredInPlaceMember2022-01-012022-09-300001628063srg:AllowanceForDeferralAgreementsMember2022-01-012022-09-300001628063srg:CockeysvilleJVMembersrt:MaximumMember2019-03-290001628063srg:InitialFundingMemberus-gaap:SubsequentEventMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-10-282022-10-280001628063srg:HoldcoMasterLeaseMembersrg:OriginalAndHoldcoMasterLeaseMember2022-01-012022-09-300001628063srg:TimeBasedRestrictedSharesAndRestrictedShareUnitsMember2022-01-012022-09-300001628063us-gaap:SeriesAPreferredStockMember2021-12-310001628063us-gaap:LeasesAcquiredInPlaceMember2022-07-012022-09-300001628063srg:MarkThreeHundredTwoJointVentureLimitedLiabilityCompanyMember2022-01-012022-09-300001628063srg:InitialFundingMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2018-07-310001628063us-gaap:LeasesAcquiredInPlaceMember2021-07-012021-09-300001628063srg:SearsHoldingsCorporationMembersrt:MinimumMember2019-11-252019-11-250001628063us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2022-07-012022-09-300001628063us-gaap:RestrictedStockMember2022-09-300001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2020-05-050001628063srg:MarchTwoThousandTwentyOneMembersrg:Covid19PandemicMember2022-01-012022-09-300001628063us-gaap:NoncontrollingInterestMember2021-12-310001628063us-gaap:AdditionalPaidInCapitalMember2022-06-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2022-01-012022-09-3000016280632021-07-012021-09-3000016280632022-08-092022-08-090001628063us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2022-09-300001628063us-gaap:AboveMarketLeasesMember2021-12-310001628063srg:BrookfieldPropertiesRetailTwoMember2022-01-012022-09-300001628063srg:InvescoRealEstateMembersrt:MaximumMember2022-01-012022-09-300001628063us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2020-12-310001628063us-gaap:BeneficialOwnerMembersrg:OperatingPartnershipMembersrg:SearsHoldingsCorporationMemberus-gaap:CommonClassAMember2022-09-300001628063srg:InvescoRealEstateMember2022-01-012022-09-300001628063srg:MarkThreeHundredTwoJointVentureLimitedLiabilityCompanyMembersrg:InvescoRealEstateMembersrt:MinimumMembersrg:SantaMonicaCAMember2018-03-200001628063us-gaap:FairValueInputsLevel3Membersrg:LossOnImpairmentMember2022-04-012022-06-3000016280632020-12-310001628063us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2021-12-310001628063srg:TechRidgeJVMember2022-01-012022-09-300001628063srg:CockeysvilleJVMember2022-01-012022-09-300001628063srg:RealEstateInvestmentTrustMember2022-09-300001628063srg:ContractForSaleCustomaryDueDiligenceMemberus-gaap:SubsequentEventMember2022-11-042022-11-040001628063us-gaap:AdditionalPaidInCapitalMember2021-06-300001628063srt:MaximumMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-01-012022-09-3000016280632022-01-012022-03-310001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-06-300001628063us-gaap:RestrictedStockMember2021-01-012021-09-300001628063srg:SeriesACumulativeRedeemablePreferredSharesMembersrt:ScenarioForecastMember2022-12-1400016280632022-06-300001628063srg:SearsHoldingsCorporationMember2015-07-070001628063us-gaap:SeriesAPreferredStockMember2022-02-162022-02-160001628063us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001628063srg:InitialFundingMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-09-300001628063srg:PropertyOperatingExpenseMember2021-01-012021-09-300001628063us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001628063us-gaap:CommonClassAMember2022-11-040001628063us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2021-09-300001628063us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001628063us-gaap:RetainedEarningsMember2021-07-012021-09-300001628063us-gaap:RetainedEarningsMember2020-12-310001628063srg:BrookfieldPropertiesRetailOneMember2022-09-300001628063us-gaap:RetainedEarningsMember2022-09-300001628063us-gaap:RetainedEarningsMember2022-07-012022-09-300001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2020-05-052020-05-050001628063srg:CockeysvilleJVMembersrg:LandmarkLandHoldingsLlcMember2021-01-012021-12-310001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2018-07-310001628063us-gaap:CommonClassAMember2021-12-310001628063us-gaap:SubsequentEventMember2022-11-092022-11-090001628063us-gaap:RetainedEarningsMember2022-06-300001628063srg:PropertyOperatingExpenseMember2022-07-012022-09-300001628063srg:TimeBasedRestrictedSharesAndRestrictedShareUnitsMember2022-09-300001628063us-gaap:RetainedEarningsMember2021-09-300001628063us-gaap:CommonClassBMember2022-11-040001628063us-gaap:ManagementServiceMember2022-01-012022-09-3000016280632022-07-012022-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-01-012021-09-300001628063us-gaap:FairValueInputsLevel2Membersrg:LossOnImpairmentMember2022-04-012022-06-300001628063us-gaap:CommonClassAMember2021-07-012021-09-300001628063srg:SeriesACumulativeRedeemablePreferredSharesMember2017-12-3100016280632021-09-300001628063us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001628063us-gaap:SeriesAPreferredStockMember2022-07-262022-07-260001628063us-gaap:SubsequentEventMember2022-11-040001628063srg:SimonPropertyGroupIncMember2022-01-012022-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-12-310001628063srt:MinimumMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-01-012022-09-300001628063us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-01-012021-09-300001628063us-gaap:BuildingMembersrt:MinimumMember2022-01-012022-09-300001628063us-gaap:NoncontrollingInterestMember2022-07-012022-09-300001628063us-gaap:CommonClassAMember2021-01-012021-09-300001628063srg:InvescoRealEstateTwoMember2022-01-012022-09-300001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2018-07-312018-07-310001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2022-09-300001628063srg:IncrementalFundingFacilityMembersrg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2018-07-310001628063us-gaap:SubsequentEventMembersrg:ContractForSaleMember2022-11-042022-11-040001628063srg:RDManagementMember2022-01-012022-09-300001628063srg:SimonPropertyGroupIncMember2022-09-300001628063us-gaap:RestrictedStockMember2021-12-310001628063srg:MacerichMember2022-01-012022-09-300001628063us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-07-012021-09-300001628063srg:MacerichMember2022-09-300001628063us-gaap:CommonClassAMember2015-07-070001628063srg:AllowanceForDeferralAgreementsMember2022-07-012022-09-300001628063us-gaap:AdditionalPaidInCapitalMember2021-12-310001628063srt:MaximumMemberus-gaap:LandImprovementsMember2022-01-012022-09-300001628063us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-07-012021-09-300001628063srg:InvescoRealEstateTwoMember2022-09-300001628063us-gaap:NoncontrollingInterestMember2022-01-012022-09-300001628063us-gaap:RetainedEarningsMember2021-06-300001628063srg:SearsHoldingsCorporationMembersrt:MaximumMember2019-11-252019-11-250001628063us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001628063us-gaap:FairValueInputsLevel3Membersrg:LossOnImpairmentMember2021-07-012021-09-300001628063us-gaap:RetainedEarningsMember2021-01-012021-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2022-06-300001628063us-gaap:CommonClassAMember2022-07-012022-09-300001628063us-gaap:SeriesAPreferredStockMember2021-02-222021-02-230001628063us-gaap:FairValueInputsLevel3Membersrg:LossOnImpairmentMember2022-01-012022-09-300001628063us-gaap:WhollyOwnedPropertiesMembersrg:RealEstateInvestmentTrustMember2022-01-012022-09-300001628063us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2021-06-300001628063us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-12-310001628063srg:UnconsolidatedPropertyMember2022-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-09-300001628063us-gaap:LeasesAcquiredInPlaceMember2022-09-300001628063us-gaap:SubsequentEventMembersrg:TermLoanFacilityMember2022-10-012022-11-040001628063us-gaap:SeriesAPreferredStockMember2022-09-300001628063srg:LandmarkLandHoldingsLlcMember2022-01-012022-09-300001628063us-gaap:RestrictedStockMember2021-09-300001628063us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-09-300001628063us-gaap:CommonClassCMember2022-11-0400016280632021-12-310001628063us-gaap:AdditionalPaidInCapitalMember2022-09-300001628063srg:OperatingPartnershipMember2022-09-300001628063us-gaap:NoncontrollingInterestMember2021-07-012021-09-300001628063srg:RealEstateInvestmentTrustMembersrg:UnconsolidatedPropertyMember2022-09-300001628063us-gaap:RestrictedStockMemberus-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001628063us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2022-09-300001628063us-gaap:RestrictedStockMember2022-01-012022-09-300001628063srg:HialeahMember2020-12-310001628063us-gaap:LeasesAcquiredInPlaceMember2021-01-012021-09-300001628063srt:MinimumMember2019-09-270001628063us-gaap:RestrictedStockMemberus-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001628063us-gaap:SeriesAPreferredStockMember2022-01-012022-09-300001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-09-300001628063us-gaap:CommonClassBMember2022-09-300001628063srg:SearsHoldingsCorporationMember2022-01-012022-09-300001628063srt:ChiefFinancialOfficerMember2022-01-140001628063us-gaap:NoncontrollingInterestMember2020-12-310001628063srg:PropertyOperatingExpenseMember2021-07-012021-09-300001628063srg:TermLoanFacilityMembersrg:BerkshireHathawayLifeInsuranceCompanyMember2022-01-012022-09-300001628063us-gaap:CommonClassCMember2022-09-300001628063srg:TermLoanFacilityMember2022-01-012022-09-300001628063srg:PropertyOperatingExpenseMember2022-01-012022-09-300001628063srt:MaximumMemberus-gaap:BuildingMember2022-01-012022-09-300001628063us-gaap:SeriesAPreferredStockMember2022-04-262022-04-2600016280632022-01-012022-09-300001628063us-gaap:SeriesAPreferredStockMember2021-10-262021-10-260001628063srg:ClassBNonEconomicCommonSharesMember2022-09-300001628063us-gaap:RestrictedStockMemberus-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001628063us-gaap:RestrictedStockMemberus-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001628063srg:LandmarkLandHoldingsLlcMember2022-09-300001628063srt:MinimumMemberus-gaap:LandImprovementsMember2022-01-012022-09-300001628063srg:AllowanceForDeferralAgreementsMember2021-07-012021-09-300001628063us-gaap:CommonStockMemberus-gaap:CommonClassAMember2022-07-012022-09-300001628063us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2022-06-300001628063us-gaap:NoncontrollingInterestMember2022-09-300001628063srg:BrookfieldPropertiesRetailOneMember2022-01-012022-09-300001628063us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001628063us-gaap:RetainedEarningsMember2021-12-31srg:Segmentxbrli:pureutr:sqftiso4217:USDxbrli:sharessrg:JointVenturesrg:Optionssrg:Acresxbrli:sharessrg:Entitysrg:Tenantiso4217:USDsrg:Propertysrg:State

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to _______

Commission File Number 001-37420

SERITAGE GROWTH PROPERTIES

(Exact name of registrant as specified in its charter)

 

Maryland

38-3976287

(State of Incorporation)

(I.R.S. Employer Identification No.)

 

500 Fifth Avenue, Suite 1530, New York, New York

10110

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (212) 355-7800

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A common shares of beneficial interest, par value $0.01 per share

SRG

New York Stock Exchange

7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share

SRG-PA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of November 4, 2022, the registrant had the following common shares outstanding:

 

Class

Shares Outstanding

Class A common shares of beneficial interest, par value $0.01 per share

56,032,381

Class B common shares of beneficial interest, par value $0.01 per share

0

Class C common shares of beneficial interest, par value $0.01 per share

0

 


SERITAGE GROWTH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED September 30, 2022

TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

 

 

 

Page

 

 

 

Item 1.

Condensed Consolidated Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

3

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021

4

 

Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2022 and 2021

5

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

6

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

 

 

 

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

39

 

 

 

Item 4.

Controls and Procedures

39

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

40

 

 

 

Item 1A.

Risk Factors

40

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

49

 

 

 

Item 3.

Defaults upon Senior Securities

49

 

 

 

Item 4.

Mine Safety Disclosures

49

 

 

 

Item 5.

Other Information

49

 

 

 

Item 6.

Exhibits

50

 

 

 

SIGNATURES

 

51

 


PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share and per share amounts)

 

 

 

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.

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements. 

- 3 -


SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except per share amounts)

 

 

 

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

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

- 4 -


SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, amounts in thousands, except per share amounts)

 

 

 

Class A
Common

 

 

Series A
Preferred

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Non-
Controlling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interests

 

 

Equity

 

Balance at January 1, 2021

 

 

38,896

 

 

$

389

 

 

 

2,800

 

 

$

28

 

 

$

1,177,260

 

 

$

(528,637

)

 

$

233,687

 

 

$

882,727

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(101,094

)

 

 

(31,492

)

 

 

(132,586

)

Preferred dividends declared ($1.3125
   per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,675

)

 

 

 

 

 

(3,675

)

Vesting of restricted share units

 

 

87

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,263

 

 

 

 

 

 

 

 

 

1,263

 

OP Units exchanges (4,647,943 units)

 

 

4,648

 

 

 

46

 

 

 

 

 

 

 

 

 

61,789

 

 

 

 

 

 

(61,835

)

 

 

 

Contributions to consolidated variable interest entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,915

 

 

 

(3,955

)

 

 

3,960

 

Balance at September 30, 2021

 

 

43,631

 

 

$

436

 

 

$

2,800

 

 

$

28

 

 

$

1,240,311

 

 

$

(625,491

)

 

$

136,405

 

 

$

751,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

 

43,632

 

 

$

436

 

 

 

2,800

 

 

$

28

 

 

$

1,241,048

 

 

$

(553,771

)

 

$

157,059

 

 

$

844,800

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(166,399

)

 

 

(46,152

)

 

 

(212,551

)

Preferred dividends declared ($1.3125
   per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,675

)

 

 

 

 

 

(3,675

)

Vesting of restricted share units

 

 

45

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,071

 

 

 

 

 

 

 

 

 

2,071

 

OP Unit exchanges (12,354,963 units)

 

 

12,355

 

 

 

123

 

 

 

 

 

 

 

 

 

116,568

 

 

 

(7,914

)

 

 

(108,777

)

 

 

 

Balance at September 30, 2022

 

 

56,032

 

 

$

560

 

 

 

2,800

 

 

$

28

 

 

$

1,359,686

 

 

$

(731,759

)

 

$

2,130

 

 

$

630,645

 

 

 

 

Class A
Common

 

 

Series A
Preferred

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Non-
Controlling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interests

 

 

Equity

 

Balance at July 1, 2021

 

 

42,795

 

 

$

428

 

 

 

2,800

 

 

$

28

 

 

$

1,230,009

 

 

$

(611,647

)

 

$

156,071

 

 

 

774,889

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,534

)

 

 

(5,815

)

 

 

(26,349

)

Preferred dividends declared ($0.4375
   per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,225

)

 

 

 

 

 

(1,225

)

Vesting of restricted share units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation