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What changed in Seritage Growth Properties's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Seritage Growth Properties's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+199 added−200 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-01)

Top changes in Seritage Growth Properties's 2024 10-K

199 paragraphs added · 200 removed · 145 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMarket Update Since the latter months of 2022, the Company, along with the commercial real estate market as a whole, has experienced and continues to experience challenging market conditions as a result of, among other things, the rise in interest rates, increases to required return hurdles for institutional buyers, availability of debt capital (including the willingness of commercial banks to lend in light of potential recession risks and balance sheet constraints), continued inflation resulting in higher construction and labor costs for development (which has the effect of, among other things, making cost estimates in development proformas more challenging), decreased demand for office development (with concerns about long term demand for office space including, but not limited to, continued work-from-home trends), slowing rent growth expectations due to potential recession concerns, political and election uncertainty in the United States and the possibility of geopolitical conflict spreading to other regions.
Biggest changeMarket Update Since the latter months of 2022, the Company, along with the commercial real estate market as a whole, has experienced and continues to experience challenging market conditions as a result of, among other things, elevated interest rates, increases to required return hurdles for institutional buyers, availability of debt capital, continued inflation, decreased demand for office properties, the threat of tariffs and trade wars, political uncertainty in the United States and the possibility of geopolitical conflict spreading to other regions.
Environmental Matters Our properties are subject to environmental laws regulating, among other things, air emissions, wastewater discharges and the handling and disposal of waste. Certain properties were built during the time that asbestos-containing building materials were routinely installed in residential and commercial structures.
Environmental Matters Our properties are subject to environmental laws regulating, among other things, air emissions, wastewater discharges and the handling and disposal of waste. Certain properties were built during the time that asbestos-containing building materials were - 2 - routinely installed in residential and commercial structures.
As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders, which provides the Company with greater flexibility to use its free cash flow.
As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its shareholders, which provides the Company with greater flexibility to use its free cash flow.
If these challenging market conditions persist, then we expect that they will impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to shareholders.
If these challenging market conditions persist, then we expect that they will continue to adversely impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to shareholders.
The Company's portfolio of 23 Consolidated Properties and nine Unconsolidated Properties was diversified by location across 13 states. - 2 - Competition We currently compete with other properties located in markets in which our assets are located both from an operations perspective and with respect to the disposition of our assets.
The Company's portfolio of 10 Consolidated Properties and seven Unconsolidated Properties was diversified by location across seven states. Competition We currently compete with other properties located in markets in which our assets are located both from an operations perspective and with respect to the disposition of our assets.
We believe that such insurance provides adequate coverage. REIT Qualification On March 31, 2022, the Company announced that its Board of Trustees, with the recommendation of the Special Committee, approved a plan to terminate the Company's REIT status and become a taxable C Corporation effective January 1, 2022.
REIT Qualification On March 31, 2022, the Company announced that its Board of Trustees, with the recommendation of the Special Committee, approved a plan to terminate the Company's REIT status and become a taxable C Corporation effective January 1, 2022.
However, we can make no assurances that the discovery of previously unknown environmental conditions or future laws, ordinances or regulations will not impose material environmental liabilities on us, or the current environmental condition of our properties will not be affected by tenants, the condition of land or operations in the vicinity of our properties (such as releases from underground storage tanks), or by third parties unrelated to us. - 3 - Insurance We have comprehensive liability, property and rental loss insurance, as applicable, with respect to our portfolio of properties.
However, we can make no assurances that the discovery of previously unknown environmental conditions or future laws, ordinances or regulations will not impose material environmental liabilities on us, or the current environmental condition of our properties will not be affected by tenants, the condition of land or operations in the vicinity of our properties (such as releases from underground storage tanks), or by third parties unrelated to us.
As of December 31, 2023, the Company’s portfolio consisted of interests in 32 properties comprised of approximately 4.1 million square feet of gross leasable area (“GLA”) or build-to-suit leased area and 460 acres of land.
As of December 31, 2024, the Company’s portfolio consisted of interests in 17 properties comprised of approximately 1.7 million square feet of gross leasable area (“GLA”) or build-to-suit leased area and 274 acres of land.
Available Information Our office is located at 500 Fifth Avenue, New York, New York 10110 and our telephone number is (212) 355-7800. Our website address is www.seritage.com .
In addition, our seven member Board of Trustees has three female members. Available Information Our office is located at 500 Fifth Avenue, New York, New York 10110 and our telephone number is (212) 355-7800. Our website address is www.seritage.com .
Business Strategies The Company’s primary objective is to create value for its shareholders through the monetization of the Company’s assets in accordance with the Plan of Sale, which can be suspended by the Board of Trustees.
Business Strategies The Company’s primary objective is to create value for its shareholders through the monetization of the Company's assets through the Plan of Sale, which can be suspended by the Board of Trustees. We look to enhance sale value through leasing our built footprint, densification of our sites, achievement of entitlements and modification of agreements that govern our properties.
The portfolio consists of approximately 2.8 million square feet of GLA and 326 acres held by 23 wholly owned properties (such properties, the “Consolidated Properties”) and 1.2 million square feet of GLA and 134 acres held by nine unconsolidated entities (such properties, the “Unconsolidated Properties”).
The portfolio encompasses 10 wholly owned properties consisting of approximately 0.9 million square feet of GLA and 166 acres (such properties, the “Consolidated Properties”) and seven unconsolidated entities consisting of approximately 0.8 million square feet of GLA and 108 acres (such properties, the “Unconsolidated Properties”).
In conjunction with adopting the Plan of Sale, the Company provided retention agreements to its employees to ensure that it has the talent in place to execute the Plan of Sale. We believe that diversity and inclusion at all levels of our organization are imperative to our success.
In conjunction with adopting the Plan of Sale, the Company provided retention agreements to its employees to ensure that it has the talent in place to execute the Plan of Sale. The number of full-time employees has decreased over time as we sell assets in connection with the Plan of Sale.
Refer to Note 7 – Income Taxes of the Notes to the consolidated financial statements included in Part IV of this Annual Report on Form 10-K. Financial Information about Industry Segments We currently operate in a single reportable segment, which includes the ownership, development, redevelopment, management, sale and leasing of real estate properties.
Refer to Note 7 – Income Taxes of the Notes to the consolidated financial statements included in Part IV of this Annual Report on Form 10-K.
Human Capital As of December 31, 2023, we had 19 full-time employees, all of whom are located in the United States, with the majority located in New York. As of January 1, 2024, due to the expiration of certain retention agreements, the number of employees decreased to 14 full-time employees.
The Company currently operates in a single reportable segment which includes the ownership, development, redevelopment, management, sale and leasing of real estate properties. Human Capital As of December 31, 2024, we had seven full-time employees, all of whom are located in the United States, with the majority located in New York.
As of December 31, 2023, the Company has one tenant that comprises 15.7% of annualized base rent, with no other tenants exceeding 10% of annualized base rent.
We continue to position all remaining assets for sale. Significant Tenants Management believes the Company’s portfolio is reasonably diversified and does not contain any significant concentrations of credit risk. As of December 31, 2024, the Company has one tenant that comprises 12.5% of annualized base rent, with no other tenants exceeding 10% of annualized base rent.
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Additionally, we have identified various sites that we believe have the demand and demographic profile to support other uses such as residential, biotechnology, office and others, which could create greater value for shareholders. Given our fee ownership of these properties and control over parking lots and outparcels, we believe that these sites are well positioned for such value creation opportunities.
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Insurance We have comprehensive liability, property and rental loss insurance, as applicable, with respect to our portfolio of properties. We believe that such insurance provides adequate coverage.
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We additionally will look to further lease our built retail footprint and densify any excess land through the addition of triple net (“NNN”) or ground lease pad sites, which are standalone sites upon which a customized space can be built or leased for a tenant, to the extent that we believe these actions would be accretive to shareholder value.
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Financial Information about Industry Segments During the year ended December 31 2024, given the continued decline in size of the portfolio and the continued progression of the Plan of Sale, the Company has concluded that they have one operating segment and one reportable segment as the Company is assessing performance and making operating decisions on an aggregated single segment basis.
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In order to achieve its objective, the Company intends to execute the following strategies: • Multi-tenant Retail: Our portfolio of six multi-tenant retail assets provides positive cash flow and are primarily leased to a variety of national credit tenants. As of December 31, 2023, this portfolio was 71.6% leased.
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As a result, we are not currently seeking to hire additional employees. We have also transitioned certain responsibilities to contractors to ensure that proper staffing is available. - 3 - As of March 31, 2025, we had five full-time employees, one of whom is female, and 16 contractors, nine of whom were female.
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A majority of our leases are subject to collect recoveries from tenants based on the structure of our leases, providing an important inflation hedge.
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We are working to maximize value of these assets and position them for sale. • Densification and Redevelopment Opportunities: In particular, we have identified various sites that we believe have the demand and demographic profile to support other uses such as residential, biotechnology, office and others.
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Given our fee ownership of these properties and control over parking lots and outparcels, we believe that these sites are well positioned for such value creation opportunities through entitlements, leasing and development.
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As of December 31, 2023, our full portfolio included approximately 460 acres of land, or an average of 14.4 acres per site, and our most significant geographic concentrations were in higher growth markets in California, Florida, Texas, and the Northeast.
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We have redeveloped a number of properties to completion or near completion and have achieved leasing of 100% at UTC and 69% at Aventura. • Non-core Assets: We continue to assess the best use for all sites within our portfolio, including residential, retail, and converting excess land area to pad sites.
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The non-core assets are those assets where we believe we will maximize value by selling in its current state. Significant Tenants Management believes the Company’s portfolio is reasonably diversified and does not contain any significant concentrations of credit risk.
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We review operating and financial results for each property on an individual basis. We, therefore, aggregate all of our properties into one reportable segment due to their similarities with regard to the nature and economics of the properties, tenants and operational process.
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We have focused our diversity and inclusion efforts on remaining employee engagement, consulting engagements, community outreach and partnering with like-minded organizations. As of December 31, 2023, our organization was comprised of 42% women and 21% people of color.
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Our management team, which is defined as Senior Vice Presidents and above, including consultants who hold roles in those positions, was comprised of 25% women and we had three female members of our Board of Trustees. All employees receive training in the prevention and reporting of sexual harassment, discriminatory and abusive conduct in the workplace.
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Because the engagement of our employees is important, we encourage a work environment that fosters collaboration across departments and levels. We take pride in being able to have the newest member of the team work side-by-side with our most tenured and senior executives. We believe this encourages creativity, creates opportunities for improvements and efficiencies, and strengthens our team.
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We regularly solicit feedback from our employees and take actions designed to increase employee engagement. We depend on our people to create value in our portfolio and company. We offer attractive compensation with comprehensive benefits for employees and their dependents.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA future pandemic could have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations, liquidity and cash flows due to, among other factors: • Difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us; • The financial impact could negatively impact our ability to pay dividends on our preferred shares, including the Series A Preferred Shares; • The financial impact of a pandemic could negatively impact our future compliance with financial covenants of our term loan facility (the “Term Loan Facility”) with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”) or result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Incremental Funding Facility (as defined below), conduct asset sales, fund development activity or pay dividends on our preferred shares, including the Series A Preferred Shares; • The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our adversely impacted properties could result in the recognition of substantial impairment charges imposed on our assets; • The credit quality of our tenants could be negatively impacted and we may significantly increase our allowance for doubtful accounts; • Difficulties completing our redevelopment projects on a timely basis, on budget or at all; • A general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to reinvest in or redevelop our properties; and • The potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption. - 19 - Risks Related to Our Tax Status If we experience an “ownership change” for purposes of Section 382 of the Code, our ability to utilize our net operating loss and net capital loss carryforwards and certain built-in losses to reduce our future taxable income could be limited, potentially increasing the net taxable income on which we must pay corporate-level taxes, and potentially adversely affecting our liquidity, and our desire to preserve our net operating losses and net capital loss carryforwards may cause us to forgo otherwise attractive opportunities.
Biggest changeA future pandemic could have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations, liquidity and cash flows due to, among other factors: • Difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us; • The financial impact could negatively impact our ability to pay dividends on our preferred shares, including the Series A Preferred Shares; • The financial impact of a pandemic could negatively impact our future compliance with financial covenants of our term loan facility (the “Term Loan Facility”) with Berkshire Hathaway or result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Incremental Funding Facility (as defined below), conduct asset sales, fund development activity or pay dividends on our preferred shares, including the Series A Preferred Shares; • The worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our adversely impacted properties could result in the recognition of substantial impairment charges imposed on our assets; • The credit quality of our tenants could be negatively impacted and we may significantly increase our allowance for doubtful accounts; • Difficulties completing our redevelopment projects on a timely basis, on budget or at all; • A general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to reinvest in or redevelop our properties; and • The potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption. - 19 - We have been, and in the future may be, subject to securities class action, derivative, and other litigation, which may harm our business and results of operations.
Risks Related to Ownership of our Securities • The market price and trading volume of our securities may be volatile. • We have issued Series A Preferred Shares, which, along with future offerings of debt or preferred equity securities, rank senior to our common shares for purposes of distributions or upon liquidation, may adversely affect the market price of our common shares. • The number of shares available for future sale and our earnings could adversely affect the market price of Class A common shares. • The Series A preferred shares have not been rated. • A lack of active trading market for the Series A Preferred Shares may negatively affect the market value of, and the ability of holders of our Series A Preferred Shares to transfer or sell, their shares. • The Series A Preferred Shares are subordinate in right of payment to debt.
Risks Related to Ownership of our Securities • The market price and trading volume of our securities may be volatile. • We have issued Series A Preferred Shares, which, along with future offerings of debt or preferred equity securities, rank senior to our common shares for purposes of distributions or upon liquidation, which may adversely affect the market price of our common shares. • The number of shares available for future sale and our earnings could adversely affect the market price of Class A common shares. • The Series A preferred shares have not been rated. • A lack of active trading market for the Series A Preferred Shares may negatively affect the market value of, and the ability of holders of our Series A Preferred Shares to transfer or sell, their Series A Preferred Shares. • The Series A Preferred Shares are subordinate in right of payment to debt.
The amount of any environmental liabilities could exceed the amounts for which third parties would be required to indemnify us (or the applicable unconsolidated entity) or their financial ability to do so. - 13 - Each unconsolidated entity is subject to similar risks relating to environmental compliance costs and liabilities associated with its Unconsolidated Properties, which may reduce the value of our investment in, or distributions to us by, one or more unconsolidated entities, or require that we make additional capital contributions to one or more unconsolidated entities.
The amount of any environmental liabilities could exceed the amounts for which third parties would be required to indemnify us (or the applicable unconsolidated entity) or their financial ability to do so. - 13 - Each unconsolidated entity is subject to similar risks relating to environmental costs and liabilities associated with its Unconsolidated Properties, which may reduce the value of our investment in, or distributions to us by, one or more unconsolidated entities, or require that we make additional capital contributions to one or more unconsolidated entities.
As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock. • Properties in our portfolio may be subject to ground leases; if we are found to be in breach of these ground leases or are unable to renew them, we could be materially and adversely affected. • Certain properties within our portfolio are subject to restrictions pursuant to reciprocal easement agreements, operating agreements, or similar agreements, some of which contain a purchase option or right of first refusal or right of first offer in favor of a third party. • Economic conditions, higher interest rates and a possible recession could materially adversely affect our business. • Rising expenses could reduce cash flow. • We may face increased risks and costs associated with volatility in commodity and labor prices or as a result of supply chain or procurement disruptions, which may adversely affect the status of our construction projects. • Compliance with the Americans with Disabilities Act may require us to make expenditures. • Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations or otherwise cause us to incur significant costs. • Environmental costs and liabilities associated with contamination at real estate properties owned by us may materially and adversely affect us. • Our business faces potential risks associated with natural disasters, severe weather conditions and climate change and related legislation and regulations, which could have an adverse effect on our cash flow and operating results. • Possible acts of war, terrorist activity or other acts of violence or cybersecurity incidents could adversely affect our financial condition and results of operations. • Cybersecurity incidents could cause a disruption to our operations, a compromise of confidential information and damage to our business relationships, all of which could negatively impact our business, financial condition and operating results. - 5 - • We may incur mortgage indebtedness and other borrowings, which may increase our business risks. • Covenants in our Term Loan Facility may limit our operational flexibility and a covenant breach or default could adversely affect our business and financial condition. • Our rights and the rights of our shareholders to take action against our trustees and officers are limited. • Our Declaration of Trust and Maryland law contain provisions that may delay, defer or prevent an acquisition of Class A common shares or a change in control. • We may experience insurance related losses or insurance proceeds may not be available to us, which could result in a significant loss, decrease anticipated future revenues or cause us to incur unanticipated expense. • Mr.
As a result, our shareholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common shares. • Properties in our portfolio may be subject to ground leases; if we are found to be in breach of these ground leases or are unable to renew them, we could be materially adversely affected. • Certain properties within our portfolio are subject to restrictions pursuant to reciprocal easement agreements, operating agreements, or similar agreements, some of which contain a purchase option or right of first refusal or right of first offer in favor of a third party. • Economic conditions, elevated interest rates and a possible recession could materially adversely affect our business. • Rising expenses could reduce cash flow. • We may face increased risks and costs associated with volatility in commodity and labor prices or as a result of supply chain or procurement disruptions, which may adversely affect the status of our construction projects. • Compliance with the Americans with Disabilities Act may require us to make expenditures. • Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations or otherwise cause us to incur significant costs. • Environmental costs and liabilities associated with contamination at real estate properties owned by us may materially and adversely affect us. • Our business faces potential risks associated with natural disasters, severe weather conditions and climate change and related legislation and regulations, which could have an adverse effect on our cash flow and operating results. • Possible acts of war, terrorist activity or other acts of violence or cybersecurity incidents could adversely affect our financial condition and results of operations. • Cybersecurity incidents could cause a disruption to our operations, a compromise of confidential information and damage to our business relationships, all of which could negatively impact our business, financial condition and operating results. - 5 - • We may incur mortgage indebtedness and other borrowings, which may increase our business risks. • Covenants in our Term Loan Facility may limit our operational flexibility and a covenant breach or default could adversely affect our business and financial condition. • Our rights and the rights of our shareholders to take action against our trustees and officers are limited. • Our Declaration of Trust and Maryland law contain provisions that may delay, defer or prevent an acquisition of Class A common shares or a change in control. • We may experience insurance-related losses or insurance proceeds may not be available to us, which could result in a significant loss, decrease anticipated future revenues or cause us to incur unanticipated expense. • Mr.
The price of commodities and skilled labor for our construction projects may increase unpredictably due to external factors, including, but not limited to, performance of third-party suppliers and contractors; overall market supply and demand; government regulation; international trade; supply chain disruptions; and changes in general business, economic, or political conditions.
The price of commodities and skilled labor for our construction projects may increase unpredictably due to external factors, including, but not limited to, performance of third-party suppliers and contractors; overall market supply and demand; government regulation; tariffs; international trade; supply chain disruptions; and changes in general business, economic, or political conditions.
If these challenging market conditions persist, then we expect that they will adversely impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to our shareholders. We cannot assure our shareholders of the amount they will receive in shareholder distributions under the Plan of Sale or when they will receive them.
If these challenging market conditions persist, then we expect that they will continue to adversely impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to shareholders. We cannot assure our shareholders of the amount they will receive in shareholder distributions under the Plan of Sale or when they will receive them.
However, qualification as a REIT involves the application of highly technical and complex provisions of the Code, for which only a limited number of judicial and administrative interpretations exist. Even a technical or inadvertent violation could jeopardize our REIT qualification through 2021.
However, qualification as a - 20 - REIT involves the application of highly technical and complex provisions of the Code, for which only a limited number of judicial and administrative interpretations exist. Even a technical or inadvertent violation could jeopardize our REIT qualification through 2021.
We have issued Series A Preferred Shares, which, along with future offerings of debt or preferred equity securities, rank senior to our common shares for purposes of distributions or upon liquidation, may adversely affect the market price of our common shares.
We have issued Series A Preferred Shares, which, along with future offerings of debt or preferred equity securities, rank senior to our common shares for purposes of distributions or upon liquidation, and may adversely affect the market price of our common shares.
Risks Related to Our Tax Status • If we experience an “ownership change” for purposes of Section 382 of the Code, our ability to utilize our net operating loss and net capital loss carryforwards and certain built-in losses to reduce our future taxable income could be limited, potentially increasing the net taxable income on which we must pay corporate-level taxes, and potentially adversely affecting our liquidity, and our desire to preserve our net operating losses and net capital loss carryforwards may cause us to forgo otherwise attractive opportunities. • If we do not qualify to be taxed as a REIT for any taxable year through 2021, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our shareholders. • We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our common stock.
Risks Related to Our Tax Status • If we experience an “ownership change” for purposes of Section 382 of the Code, our ability to utilize our net operating loss and net capital loss carryforwards and certain built-in losses to reduce our future taxable income could be limited, potentially increasing the net taxable income on which we must pay corporate-level taxes, and potentially adversely affecting our liquidity, and our desire to preserve our net operating losses and net capital loss carryforwards may cause us to forgo otherwise attractive opportunities. • If we do not qualify to be taxed as a REIT for any taxable year through 2021, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our shareholders. • We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our Class A common shares.
The estimates initially prepared and included in our most recent annual proxy statement about the amount of shareholder distributions that we may make in connection with the Plan of Sale were based on many estimates and assumptions (which were derived based on data and information reviewed by Company management and advisors as of or prior to June 2022), one or more of which may prove to be incorrect and/or, as noted above, may be adversely affected by market conditions and other circumstances that have changed since the preparation of those estimates.
The estimates initially prepared and included in our 2022 annual proxy statement about the amount of shareholder distributions that we may make in connection with the Plan of Sale were based on many estimates and assumptions (which were derived based on data and information reviewed by Company management and advisors as of or prior to June 2022), one or more of which may prove to be incorrect and/or, as noted above, may be adversely affected by market conditions and other circumstances that have changed since the preparation of those estimates.
Other than the limited conversion right afforded to holders of Series A Preferred Shares that may occur in connection with a Change of Control, none of the provisions relating to the Series A Preferred Shares contain any provisions relating to or limiting our indebtedness or affording the holders of the Series A Preferred Shares protection in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, that might adversely affect the holders of the Series A Preferred Shares, so long as the rights of holders of the Series A Preferred Shares are not materially and adversely affected. - 22 - Dividends on our preferred shares, including the Series A Preferred Shares, are discretionary.
Other than the limited conversion right afforded to holders of Series A Preferred Shares that may occur in connection with a Change of Control, none of the provisions relating to the Series A Preferred Shares contain any provisions relating to or limiting our indebtedness or affording the holders of the Series A Preferred Shares protection in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, that might adversely affect the holders of the Series A Preferred Shares, so long as the rights of holders of the Series A Preferred Shares are not materially and adversely affected. - 23 - Dividends on our preferred shares, including the Series A Preferred Shares, are discretionary.
Therefore, no assurance can be provided as to whether an ownership change will occur in the future. Moreover, the potential negative consequences of the limitations that would result from an ownership change may discourage us from, among other things, redeeming our stock or issuing additional common stock to raise capital or to acquire businesses or assets.
Therefore, no assurance can be provided as to whether an ownership change will occur in the future. Moreover, the potential negative consequences of the limitations that would result from an ownership change may discourage us from, among other things, redeeming our shares or issuing additional common shares to raise capital or to acquire businesses or assets.
Risks Related to Our Business and Operations • There can be no assurance that we will be able to complete any strategic transaction or strategic change on terms satisfactory to the Board of Trustees. • We have experienced challenging market conditions and there can be no assurances that these challenges will abate, which may adversely impact the net Plan of Sale proceeds from our assets. • We cannot assure our shareholders of the amount they will receive in shareholder distributions under the Plan of Sale or when they will receive them. • If we are unable to find buyers for our assets on a timely basis or at our expected sales prices, our shareholder distributions under the Plan of Sale may be delayed or reduced. • Our expected sales prices may be impacted by tenant issues at our properties. • We have ongoing capital needs and may not be able to obtain additional financing or other sources of funding on acceptable terms. • Real estate taxes may increase, and if these increases are not passed on to tenants, our net income will be reduced. • Changes in building and/or zoning laws may require us to meet additional or more stringent construction requirements. • Our real estate assets and equity method investments may be subject to impairment charges. • We have identified material weaknesses in our internal control over financial reporting and such material weaknesses have not yet been fully remediated.
Risks Related to Our Business and Operations • There can be no assurance that we will be able to complete any strategic transaction or strategic change on terms satisfactory to the Board of Trustees. • We have experienced challenging market conditions and there can be no assurances that these challenges will abate, which may adversely impact the net Plan of Sale proceeds from our assets. • We cannot assure our shareholders of the amount they will receive in shareholder distributions under the Plan of Sale or when they will receive them. • If we are unable to find buyers for our assets on a timely basis or at our expected sales prices, our shareholder distributions under the Plan of Sale may be delayed or reduced. • Our expected sales prices may be impacted by tenant issues at our properties. • We have ongoing capital needs and may not be able to obtain additional financing or other sources of funding on acceptable terms. • Real estate taxes may increase, and if these increases are not passed on to tenants, our net income will be reduced. • Changes in building and/or zoning laws may require us to meet additional or more stringent construction requirements. • Our real estate assets and equity method investments may be subject to impairment charges. • We have previously identified material weaknesses in our internal control over financial reporting which we have since remediated.
You are urged to consult with your tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares. - 20 - Risks Related to Ownership of our Securities The market price and trading volume of our securities may be volatile.
You are urged to consult with your tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares. - 21 - Risks Related to Ownership of our Securities The market price and trading volume of our securities may be volatile.
If an impairment indicator is identified, a property’s value is considered to be impaired only if management’s estimate of current and projected operating cash flows (undiscounted and unlevered), taking into account the anticipated and probability weighted holdings periods, are less than the carrying value of the property.
If an impairment indicator is identified, a property’s value is considered to be impaired only if management’s estimate of current and projected operating cash flows (undiscounted and unlevered), taking into account the anticipated and probability weighted holding periods, are less than the carrying value of the property.
However, we may have overestimated the sales prices that we will ultimately be able to obtain for these assets and/or, as noted above, market conditions and other circumstances have changed in the months since the preparation of those estimates.
However, we may have overestimated the sales prices that we will ultimately be able to obtain for these assets and/or, as noted above, market conditions and other circumstances have changed in the time since the preparation of those estimates.
Although existing and future leases are expected to require tenants generally to indemnify us for their non-compliance with environmental laws as a result of their occupancy, such tenants typically will not be required to indemnify us for environmental non-compliance arising prior to their occupancy.
Although existing and future leases are expected to require tenants generally to indemnify us for their non-compliance with environmental laws or contamination as a result of their occupancy, such tenants typically will not be required to indemnify us for environmental non-compliance or contamination arising prior to their occupancy.
As of December 31, 2023, we have not achieved this level of rental income from non-Sears Holdings tenants. Our rights and the rights of our shareholders to take action against our trustees and officers are limited.
As of December 31, 2024, we have not achieved this level of rental income from non-Sears Holdings tenants. Our rights and the rights of our shareholders to take action against our trustees and officers are limited.
Further, as we commence implementing the Plan of Sale, it may dissuade parties that might have an interest in acquiring our Company as a whole by means of a merger transaction or otherwise from pursing such an acquisition and may also preclude other possible courses of action not yet identified by our Board.
Further, as we implement the Plan of Sale, it may dissuade parties that might have an interest in acquiring our Company as a whole by means of a merger transaction or otherwise from pursing such an acquisition and may also preclude other possible courses of action not yet identified by our Board.
Sales of a substantial number of Class A common shares in the public market, or the perception that such sales might occur, could adversely affect the market price of the Class A common shares. - 21 - The Series A Preferred Shares have not been rated.
Sales of a substantial number of Class A common shares in the public market, or the perception that such sales might occur, could adversely affect the market price of the Class A common shares. - 22 - The Series A Preferred Shares have not been rated.
For example, in order to find buyers in a timely manner, we may be required to lower our asking price below the low end of our current estimate of the asset’s market value.
For example, in order to find buyers in a timely manner, we may be required to lower our asking price below the low end of our current estimate of the assets' market value.
These deficiencies contributed to the potential for there to be material errors in our financial statements. Additionally, we identified a material weakness due to a deficiency in the design of our controls over the accounting for certain non-routine transactions particularly related to accounting for transactions with joint ventures and certain consulting contracts.
These deficiencies contributed to the potential for there to be material errors in our financial statements. Additionally, during the same period, we identified a material weakness due to a deficiency in the design of our controls over the accounting for certain non-routine transactions particularly related to accounting for transactions with joint ventures and certain consulting contracts.
An ownership change can occur as a result of a public offering of stock, as well as through secondary market purchases of our stock and certain types of reorganization transactions.
An ownership change can occur as a result of a public offering of shares, as well as through secondary market purchases of our shares and certain types of reorganization transactions.
Economic conditions, high interest rates and a possible recession could materially adversely affect our business and/or the net proceeds available from the sale of our assets. Our business is affected by a number of factors that are largely beyond our control but may nevertheless have a significant negative impact on us and on the Plan of Sale.
Economic conditions, high interest rates and macroeconomic uncertainty could materially adversely affect our business and/or the net proceeds available from the sale of our assets. Our business is affected by a number of factors that are largely beyond our control but may nevertheless have a significant negative impact on us and on the Plan of Sale.
In making decisions regarding whether and when to transact on each of our remaining assets, we will consider various factors including, but not limited to, the breadth of the buyer universe, macroeconomic conditions, the availability and cost of financing, as well as corporate, operating and other capital expenses required to carry the asset.
In making decisions regarding whether and when to transact on each of the Company’s remaining assets, the Company will consider various factors including, but not limited to, the breadth of the buyer universe, macroeconomic conditions, the availability and cost of financing, as well as corporate, operating and other capital expenses required to carry the asset.
The determination of whether an ownership change has occurred or will occur is complicated and depends on changes in percentage stock ownership among stockholders. In addition, we may decide in the future that it is necessary or in our interest to take certain actions that could result in an ownership change.
The determination of whether an ownership change has occurred or will occur is complicated and depends on changes in percentage share ownership among shareholders. In addition, we may decide in the future that it is necessary or in our interest to take certain actions that could result in an ownership change.
Additionally, management did not maintain adequate evidence of the review of information used in the impairment indicator analysis and the fair value of investments in real estate and equity method investments. Further, management identified a deficiency in the operating effectiveness in our review over the calculation of other than temporary impairments.
The deficiencies related to the identification of impairment indicators. Additionally, management did not maintain adequate evidence of the review of information used in the impairment indicator analysis and the fair value of investments in real estate and equity method investments. Further, management identified a deficiency in the operating effectiveness in our review over the calculation of other than temporary impairments.
We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our common stock. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury.
We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our Class A common shares. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S.
As of December 31, 2023, our total indebtedness was $360 million. In addition, we may incur additional indebtedness in the future. Our Declaration of Trust currently authorizes the issuance of up to 10,000,000 shares of preferred shares in one or more classes or series.
As of December 31, 2024, our total indebtedness was $240.0 million. In addition, we may incur additional indebtedness in the future. Our Declaration of Trust currently authorizes the issuance of up to 10,000,000 shares of preferred shares in one or more classes or series.
As of December 31, 2023, we had aggregate outstanding indebtedness of $360 million. Our existing debt could require a substantial portion of our cash flow to make interest and principal payments.
As of December 31, 2024, we had aggregate outstanding indebtedness of $240 million. Our existing debt could require a substantial portion of our cash flow to make interest and principal payments.
Lampert may exert substantial influence over us, and his interests may differ from or conflict with the interests of our other shareholders. As of December 31, 2023, Mr. Lampert owned approximately 25% of our outstanding Class A common shares. Mr.
Lampert may exert substantial influence over us, and his interests may differ from or conflict with the interests of our other shareholders. As of December 31, 2024, Mr. Lampert owned approximately 24.0% of our outstanding Class A common shares. Mr.
Lampert may exert substantial influence over us, and his interests may differ from or conflict with the interests of our other shareholders. • Our investments in or redevelopment of properties may be unsuccessful or fail to meet our expectations. • Current and future redevelopment may not yield expected returns. • If members of our management team terminate their employment with us or we are unable to retain talented employees our financial results and/or the Plan of Sale may be adversely affected. • The future outbreak of highly infectious or contagious diseases may, materially and adversely impact the business of our tenants and our business.
Lampert may exert substantial influence over us, and his interests may differ from or conflict with the interests of our other shareholders. • Our investments in or redevelopment of properties may be unsuccessful or fail to meet our expectations. • Current and future redevelopment may not yield expected returns. • If members of our management team terminate their employment with us or we are unable to retain talented employees our financial results and/or the Plan of Sale may be adversely affected. • The future outbreak of highly infectious or contagious diseases may, materially and adversely impact the business of our tenants and our business. • We have been, and in the future may be, subject to securities class action, derivative, and other litigation, which may harm our business and results of operations.
Lampert, who owned approximately 25% of the Company’s outstanding Class A common shares as of December 31, 2023. • Certain Provisions of Maryland Law May Limit the Ability of a Third Party to Acquire Control of Us .
Lampert, who owned approximately 24.0% of the Company’s outstanding Class A common shares as of December 31, 2024. • Certain Provisions of Maryland Law May Limit the Ability of a Third Party to Acquire Control of Us .
These challenging market conditions have applied and may continue to apply downward pricing pressure on all of our assets.
These conditions have applied and continue to apply downward pricing pressure on all of our assets.
Edward Lampert, who owned approximately 25% of our outstanding Class A shares as of December 31, 2023, voted in favor of the Plan of Sale, pursuant to an agreement with the Company.
Edward Lampert, who owned approximately 24.0% of our outstanding Class A shares as of December 31, 2024, voted in favor of the Plan of Sale, pursuant to an agreement with the Company.
These factors include, but are not limited to: • interest rates and credit spreads have increased significantly during 2022 and 2023, which could negatively impact potential buyers’ ability to purchase our properties; • the availability of credit, including the price, terms and conditions under which it can be obtained; • a decrease in consumer spending or sentiment, including as a result of increases in savings rates and tax increases, and any effect that this may have on retail activity; • the actual and perceived state of the real estate and retail markets and public capital markets in general; • unemployment rates, both nationwide and within the primary markets in which we operate; and • an economic slowdown, in the U.S. or globally, including the possibility of a recession.
These factors include, but are not limited to: • interest rates and credit spreads remained high throughout 2024, which could negatively impact potential buyers’ ability to purchase our properties; • the availability of credit, including the price, terms and conditions under which it can be obtained; • a decrease in consumer spending or sentiment, including as a result of increases in savings rates and tax increases, and any effect that this may have on retail activity; • the actual and perceived state of the real estate and retail markets and public capital markets in general; • unemployment rates, both nationwide and within the primary markets in which we operate; and • macroeconomic uncertainty, in the U.S. and/or globally, including trade wars or tariffs and the possibility of a recession.
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to remediate the control deficiencies that led to these material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. - 10 - Properties in our portfolio may be subject to ground leases; if we are found to be in breach of these ground leases or are unable to renew them, we could be materially and adversely affected.
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will prevent or avoid potential future material weaknesses. - 10 - Properties in our portfolio may be subject to ground leases; if we are found to be in breach of these ground leases or are unable to renew them, we could be materially and adversely affected.
As of December 31, 2023, at the request of the lender, nearly all Consolidated Properties have mortgages. The Term Loan Facility also provides for a $400 million incremental facility (the “Incremental Funding Facility”).
Since 2020, at the request of the lender, nearly all Consolidated Properties have mortgages. The Term Loan Facility also provides for a $400 million incremental facility (the “Incremental Funding Facility”).
In the course of preparing our financial statements, we identified material weaknesses in our internal control over financial reporting that existed due to deficiencies in the design and operating effectiveness of our controls over the impairment of investments in real estate and other than temporary impairment of equity method investments. The deficiencies related to the identification of impairment indicators.
In the course of preparing our financial statements for the year ended December 31, 2023, we identified material weaknesses in our internal control over financial reporting that existed due to deficiencies in the design and operating effectiveness of our controls over the impairment of investments in real estate and other than temporary impairment of equity method investments.
As a result, the actual amount of shareholder distributions may be less than we initially estimated and/or may be paid later than we predicted. - 7 - We also note that, if our liabilities (including, without limitation, tax liabilities and compliance costs) are greater than we currently expect or if the sales prices of our assets are less than we expect, shareholders will receive less distributions for each common share that they currently own than we initially estimated.
We also note that, if our liabilities (including, without limitation, tax liabilities and compliance costs) are greater than we currently expect or if the sales prices of our assets are less than we expect, shareholders will receive less distributions for each common share - 7 - that they currently own than we initially estimated.
We may take impairment charges in the future related to the impairment of our assets, and any future impairment could have a material adverse effect on our results of operations in the period in which the impairment charge is taken.
We may take impairment charges in the future related to the impairment of our assets, and any future impairment could have a material adverse effect on our results of operations in the period in which the impairment charge is taken. We have previously identified material weaknesses in our internal control over financial reporting, which we have since remediated.
As of December 31, 2023, we were not in compliance with certain financial metrics applicable to us under the agreements governing our term loan facility. Additionally, the lender had the right to request mortgages against our assets pursuant to the mortgage and collateral requirement.
Since 2019, we have not been in compliance with certain financial metrics applicable to us under the agreements governing our term loan facility. As a result of the non-compliance, the lender had the right to request mortgages against our assets pursuant to the mortgage and collateral requirement.
No assurance can be made that additional material weaknesses or significant deficiencies will not occur in the future. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
However, in the future we might identify additional material weaknesses or significant deficiencies or fail to maintain an effective system of internal controls, which may cause us to not be able to accurately report our financial results or prevent fraud.
Subsequent to February 2, 2023, the Company made additional aggregate principal prepayments of $470 million on the Term Loan Facility, reducing the outstanding Term Loan Facility balance to $330 million as of March 22, 2024. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions.
During the year ended December 31, 2024, the Company made aggregate principal prepayments of $120.0 million on the Term Loan Facility, reducing the Term Loan Facility balance to $240.0 million as of December 31, 2024. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions.
Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us.
Department of the Treasury. The 119th Congress and President Trump have announced plans to make significant changes to the Code. Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us.
If we are unable to remediate successfully our existing material weaknesses or if any other material weaknesses or other deficiencies arise in the future, we may be unable to accurately report our financial results, which could cause our financial results to be materially misstated and require restatement.
There can be no assurance that similar control issues will not be identified in the future. If any other material weaknesses or other deficiencies arise in the future, we may be unable to accurately report our financial results, which could cause our financial results to be materially misstated and require restatement.
For these transactions, management did not possess the adequate technical capabilities to appropriately assess these non-routine transactions to ensure compliance with accounting principles generally accepted in the United States. This deficiency contributed to the potential for there to be material errors in our financial statements. These areas are described in more detail in Item 9A. Controls and Procedures.
For these transactions, management did not possess the adequate technical capabilities to appropriately assess these non-routine transactions to ensure compliance with accounting principles generally accepted in the United States. This deficiency contributed to the potential for there to be material errors in our financial statements. Since identifying these material weaknesses, we have completed the process of remediating them.
In addition, geographic concentrations of certain of our properties in areas such as California and Florida may further expose us to certain of these risks more than if we had a smaller concentration of our properties in such areas. Possible acts of war, terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.
In addition, geographic concentrations of certain of our properties in areas such as California, Florida and Texas may further expose us to certain of these risks more than if we had a smaller concentration of our properties in such areas.
As of March 22, 2024, the Company has assets under contract for anticipated proceeds of $53.6 million and has accepted offers and is currently negotiating definitive purchase and sale agreements of approximately $15.2 million. The Company continues to use the proceeds from sold assets to further reduce the outstanding balance of the Term Loan Facility.
As of March 31, 2025, the Company has one asset owned by our consolidated joint venture under contract for anticipated proceeds of $14.0 million and is currently negotiating definitive purchase and sale agreements of approximately $70.0 million. The Company continues to use the proceeds from sold assets to further reduce the outstanding balance of the Term Loan Facility.
We may be forced to seek new third-party suppliers or contractors, who we have not worked with in the past.
We may be forced to seek new third-party suppliers or contractors, who we have not worked with in the past. Compliance with the Americans with Disabilities Act may require us to make expenditures that adversely affect our cash flows.
As a result of a decrease in occupancy levels due to our recapture of space for redevelopment purposes and the execution of termination rights under the Original Master Lease and Holdco Master Lease, our property rental income, which is a source of operating cash flow, did not fully fund property operating and other expenses incurred during the year ended December 31, 2023.
As a result of a decrease in property rental income, primarily due to sales, operating cash flow did not fully fund property operating and other expenses incurred during the year ended December 31, 2024. In the near term, our asset sales are our principal source of cash flow.
Since the latter months of 2022, we, along with the commercial real estate market as a whole, have experienced and continue to experience more challenging market conditions, as a result of, among other things, the rise in interest rates, increases to required return hurdles for institutional buyers, availability of debt capital (including the willingness of commercial banks to lend in light of potential recession risks and balance sheet constraints), continued inflation resulting in higher construction and labor costs for development (which has had the effect of, among other things, making cost estimates in development proformas more challenging), decreased demand for office development (with concerns about long term demand for office space including, but not limited to, continued work-from-home trends), slowing rent growth expectations due to potential recession concerns, political and election uncertainty in the United States and the possibility of geopolitical conflict spreading to other regions.
Since the latter months of 2022, we, along with the commercial real estate market as a whole, have experienced and continues to experience challenging market conditions as a result of, among other things, elevated interest rates, increases to required return hurdles for institutional buyers, availability of debt capital, continued inflation, decreased demand for office properties, the threat of tariffs and trade wars, political uncertainty in the United States and the possibility of geopolitical conflict spreading to other regions.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock.
However, in the future we might identify additional material weaknesses or significant deficiencies or fail to maintain an effective system of internal controls, which may cause us to not be able to accurately report our financial results or prevent fraud.
As of December 31, 2023, the Company has not yet achieved the requirements to access the Incremental Funding Facility. On February 2, 2023, the Company made a $230 million voluntary prepayment on the Term Loan Facility. This prepayment brought the outstanding balance on the Term Loan Facility to $800 million.
As of December 31, 2024, the Company has not yet achieved the requirements to access the Incremental Funding Facility.
Removed
Our asset sales are our principal source of cash flow. Property operating and other expenses are projected to continue to exceed property rental income until such time as additional tenants commence paying rent, and we plan to incur additional development expenditures as we continue to invest in the redevelopment of certain assets.
Added
As a result, the actual amount of shareholder distributions may be less than we initially estimated and/or may be paid later than we predicted.
Removed
Pursuant to the terms of the Term Loan Facility, by reducing our outstanding principal balance to $800 million, the maturity date for the Term Loan Facility was extended for two years to July 31, 2025.
Added
Property operating and other expenses are projected to continue to exceed property rental income.
Removed
Subsequent to February 2, 2023, the Company made additional aggregate principal prepayments of $470 million on the Term Loan Facility, reducing the Term Loan Facility balance to $330 million as of March 22, 2024.
Added
On November 20, 2024, the Operating Partnership, the Company, and Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”) entered into an amendment to the Term Loan Agreement pursuant to which the Operating Partnership, the Company and Berkshire Hathaway mutually agreed that the Term Loan Facility may, at the Operating Partnership’s election, be extended for one year from July 31, 2025 (the “Maturity Date”) to July 31, 2026 if the Operating Partnership pays a two percent (2%) extension fee on the then outstanding principal amount as of the Maturity Date.
Removed
We have identified material weaknesses in our internal control over financial reporting and such material weaknesses have not yet been fully remediated. No assurance can be made that additional material weaknesses or significant deficiencies will not occur in the future.
Added
If the Operating Partnership exercises the extension option, all other terms under the Term Loan Agreement shall remain unchanged during the extension period including the interest rate and the incremental facility fee in accordance with the Term Loan Agreement.
Removed
Since identifying these material weaknesses, we have been, and are currently in the process of, remediating them. While progress has been made to remediate the material weaknesses we have not yet fully remediated these material weaknesses because additional time is needed to complete the remediation and allow for the internal controls to be tested by management.
Added
As a result, our shareholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common shares.
Removed
Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting. For further discussion of our remedial efforts, see Item 9A. Controls and Procedures. There can be no assurance that similar control issues will not be identified in the future.
Added
Possible acts of war, terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.
Removed
Beginning in 2021 and continuing through the present, industry prices for certain construction materials experienced significant increases as a result of low inventories; surging demand fueled by the U.S. economy rebounding from the effects of COVID-19; tariffs imposed on imports of foreign steel, including on products from key competitors in the European Union and China; and significant changes in the U.S. steel production landscape stemming from the consolidation of certain steel-producing companies.
Added
We are involved in legal proceedings related to various matters, including securities and derivative litigation, and may become involved in other legal proceedings that arise from time to time in the future.
Removed
Price surges on construction materials may result in corresponding increases in our overall construction costs as our projects undergo construction. In addition, as of December 31, 2023, the U.S. continues to be experiencing supply chain backlogs. Supply chain constraints have impacted the cost, availability, and timing of certain materials deliveries.
Added
For example, as discussed further in Note 9 – Commitments and Contingencies to consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K, (a) on July 1, 2024, a purported shareholder of the Company filed a class action lawsuit alleging that the Company, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer violated the federal securities laws by issuing false, misleading, and/or omissive disclosures concerning the Company’s alleged lack of effective internal controls regarding the identification and review of impairment indicators for investments in real estate and the Company’s value and projected gross proceeds of certain real estate assets, and (b) on or around January 15, 2025 and January 20, 2025, two derivative lawsuits alleging the same or similar claimed acts and omissions was filed against the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and current and former members of the Company’s Board of Trustees.
Removed
If not resolved, these backlogs and related logistics issues could result in project delays and increased costs for our construction activities and the US economy generally. Compliance with the Americans with Disabilities Act may require us to make expenditures that adversely affect our cash flows.
Added
The securities complaint seeks compensatory damages in an unspecified amount to be proven at trial, an award of reasonable costs and expenses to the plaintiff and class counsel, and such other and further relief as the court may deem just and proper.
Removed
On February 2, 2023, the Company made a $230.0 million voluntary prepayment on the Term Loan Facility. This prepayment brought the outstanding balance on the Term Loan Facility to $800 million.
Added
Each of the derivative complaints seeks compensatory damages in an unspecified amount to be proven at trial, an order directing the Company and the individual defendants to reform and improve the Company’s corporate governance and internal procedures, restitution from the individual defendants, an award of costs and expenses to the plaintiff and reasonable attorneys’ and experts’ fees, costs, and expenses, and such other and further relief as the court may deem just and proper.
Removed
Pursuant to the terms of the Term Loan Facility, by reducing our outstanding principal balance to $800 million, the maturity date for the Term Loan Facility was extended for two years to July 31, 2025.
Added
The Company intends to vigorously defend itself against the allegations in these lawsuits but there can be no assurance as to the outcomes of these proceedings. An unfavorable outcome in these lawsuits or in other legal proceedings may have a material effect on the consolidated financial position, results of operations, cash flows or liquidity of the Company.
Added
Risks Related to Our Tax Status If we experience an “ownership change” for purposes of Section 382 of the Code, our ability to utilize our net operating loss and net capital loss carryforwards and certain built-in losses to reduce our future taxable income could be limited, potentially increasing the net taxable income on which we must pay corporate-level taxes, and potentially adversely affecting our liquidity, and our desire to preserve our net operating losses and net capital loss carryforwards may cause us to forgo otherwise attractive opportunities.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed9 unchanged
Biggest changeFor additional information regarding risks from cybersecurity threats, refer to Item 1A, “Risk Factors”, in this Annual Report on Form 10-K. - 23 - Governance Our Board of Directors (the “Board”) considers cybersecurity risk as part of its risk oversight function. In February 2024, the Board delegated to its Audit Committee oversight of cybersecurity and other information technology risks.
Biggest changeFor additional information regarding risks from cybersecurity threats, refer to Item 1A, “Risk Factors”, in this Annual Report on Form 10-K. - 24 - Governance Our Board of Trustees considers cybersecurity risk as part of its risk oversight function. In February 2024, the Board delegated to its Audit Committee oversight of cybersecurity and other information technology risks.
We maintain cybersecurity insurance coverage intended to mitigate our financial exposure to certain cybersecurity threats, and we consult with external advisors regarding opportunities and enhancements to strengthen our cybersecurity processes and practices. We are subject to risks from cybersecurity threats and incidents.
We maintain insurance coverage intended to mitigate our financial exposure to certain cybersecurity threats, and we consult with external advisors regarding opportunities and enhancements to strengthen our cybersecurity processes and practices. We are subject to risks from cybersecurity threats and incidents.
Garilli and other members of our executive management team with any network issues on a weekly basis and make recommendations for security upgrades as needed. The Interim Chief Financial Officer or the Chief Legal Officer will update the Audit Committee quarterly, or more frequently in the case of a significant cybersecurity incident impacting our information systems. - 24 -
Garilli and other members of our executive management team with any network issues on a weekly basis and make recommendations for security upgrades as needed. The Interim Chief Financial Officer or the Chief Legal Officer will update the Audit Committee quarterly, or more frequently in the case of a significant cybersecurity incident impacting our information systems. - 25 -
As of December 31, 2023, we do not believe such risks have materially affected or are reasonably likely to materially affect the Company, including the Company’s business strategy, results of operations or financial condition. However, there can be no assurance that the Company will not be materially affected by such risks in the future.
As of December 31, 2024 , we do not believe such risks have materially affected or are reasonably likely to materially affect the Company, including the Company’s business strategy, results of operations or financial condition. However, there can be no assurance that the Company will not be materially affected by such risks in the future.

Item 2. Properties

Properties — owned and leased real estate

2 edited+3 added−6 removed0 unchanged
Biggest changeThe following tables set forth certain information regarding our Consolidated Properties and Unconsolidated Properties based on signed leases as of December 31, 2023, including signed but not yet open leases (“SNO” or “SNO Leases”): GLA (1) Land City State Planned Usage (3) Total Leased Not Leased Acres Significant Tenants (1) Leased 1 Temecula CA Multi-Tenant Retail 126,500 126,500 - 10 Round One Entertainment, Dick's Sporting Goods, Texas Roadhouse 100.0 % 2 Braintree MA Multi-Tenant Retail 85,100 85,100 - 34 Nordstrom Rack, Ulta Beauty, Amazon 100.0 % 3 Watchung (4) NJ Multi-Tenant Retail 87,300 87,300 - 7 HomeGoods, Sierra Trading Post, Ulta Beauty, Chick-fil-A , City MD, Starbucks 100.0 % 4 King of Prussia (2) PA Multi-Tenant Retail 208,700 174,500 34,200 14 Dick's Sporting Goods, Primark,Yardhouse 83.6 % 5 Clearwater FL Multi-Tenant Retail 212,900 75,500 137,400 14 Whole Foods, Nordstrom Rack 35.5 % 6 Albany NY Multi-Tenant Retail 242,800 141,100 101,700 21 Whole Foods, Ethan Allen 58.1 % 7 Aventura FL Premier 216,100 149,400 66,700 13 CCRM, Industrious, Pinstripes 69.1 % 8 Boca Raton FL Premier 4,200 4,200 - 19 n/a 100.0 % 9 Dallas TX Premier - - - 23 n/a 0.0 % 10 Redmond WA Premier 7,500 7,500 - 15 n/a 100.0 % 11 Riverside - Resi CA Residential - - - 14 n/a 0.0 % 12 Riverside - Retail CA Residential 33,200 33,200 - 5 Bank of America, Aldi 100.0 % 13 North Little Rock - Outparcel AR Non-Core Properties 16,800 13,000 3,800 13 Aspen Dental, Longhorn Steakhouse 77.4 % 14 North Little Rock - Box (4) AR Non-Core Properties 160,500 - 160,500 2 n/a 0.0 % 15 Yuma (4) AZ Non-Core Properties 90,100 - 90,100 15 n/a 0.0 % 16 Doral FL Non-Core Properties 195,600 - 195,600 13 n/a 0.0 % 17 Panama City FL Non-Core Properties 134,300 - 134,300 15 n/a 0.0 % 18 Cedar Rapids (4) IA Non-Core Properties 146,300 - 146,300 12 n/a 0.0 % 19 Plantation FL Non-Core Properties 204,100 - 204,100 18 n/a 0.0 % 20 Mesa AZ Non-Core Properties 136,000 - 136,000 5 n/a 0.0 % 21 San Bernardino CA Non-Core Properties 264,700 - 264,700 20 n/a 0.0 % 22 Ft.
Biggest changeThe following tables set forth certain information regarding our Consolidated Properties and Unconsolidated Properties based on signed leases as of December 31, 2024, including signed but not yet open leases (“SNO” or “SNO Leases”): City State Total GLA Leased (1) Not Leased Land Acres Significant Tenants (1) Leased 1 Braintree (2) MA 85,100 85,100 - 34 Nordstrom Rack, Ulta Beauty, Amazon 100.0 % 2 King of Prussia (3) PA 208,700 174,500 34,200 14 Dick's Sporting Goods, Primark 83.6 % 3 Clearwater FL 212,900 75,500 137,400 14 Whole Foods, Nordstrom Rack 35.5 % 4 Aventura FL 216,100 170,100 46,000 13 CCRM, Industrious, Pinstripes, Anatomy Fitness 78.7 % 5 Boca Raton FL 4,200 4,200 - 19 JP Morgan Chase 100.0 % 6 Dallas TX - - - 23 n/a 0.0 % 7 Redmond WA 7,500 7,500 - 15 Red Robin 100.0 % 8 Riverside - Resi CA - - - 14 n/a 0.0 % 9 Riverside - Retail CA 33,200 33,200 - 5 Bank of America, Aldi 100.0 % 10 Panama City FL 134,300 - 134,300 15 n/a 0.0 % Total - Consolidated Properties 902,000 550,100 351,900 166 61.0 % City State Total GLA Leased (1) Not Leased Joint Venture Land Acres Significant Tenants (1) Leased 1 Santa Monica CA 103,000 - 103,000 Mark 302 JV 3 n/a 0.0 % 2 San Diego CA 212,500 212,500 - UTC JV 13 Amazon 100.0 % 3 Alexandria VA - - - Foulger Pratt / Howard Hughes 41 n/a 0.0 % 4 Altamonte Springs FL 186,900 9,500 177,400 GGP II JV 17 Darden 5.1 % 5 Santa Rosa CA 165,400 - 165,400 Simon JV 7 n/a 0.0 % 6 Austin TX 164,600 - 164,600 Simon JV 16 n/a 0.0 % 7 Austin TX - - - RD Development JV 11 n/a 0.0 % Total - Unconsolidated Properties 832,400 222,000 610,400 108 26.7 % Grand Total - All Properties 1,734,400 772,100 962,300 274 44.5 % Grand Total - All Properties (at Share) 1,318,200 661,100 657,100 220 50.2 % (1) Based on signed leases as of December 31, 2024, including SNO Leases.
PR OPERTIES As of December 31, 2023, the Company’s portfolio consisted of interests in 32 properties comprised of approximately 4.1 million square feet of GLA or build-to-suit leased area, approximately 1.2 million square feet of which consists of Unconsolidated Properties, approximately 126 acres held for or under development until time of sale and approximately 1.6 million square feet or approximately 138 acres to be disposed of in its current state.
ITEM 2. PR OPERTIES As of December 31, 2024, the Company’s portfolio consisted of interests in 17 properties comprised of approximately 1.7 million square feet of GLA or build-to-suit leased area and 274 acres of land.
Removed
Myers FL Non-Core Properties 146,800 - 146,800 12 n/a 0.0 % 23 Edgewater (4) MD Non-Core Properties 122,000 - 122,000 14 n/a 0.0 % Total - Consolidated Properties 2,841,500 897,300 1,944,200 328 31.6 % Average - Consolidated Properties 123,543 39,013 84,530 14 31.6 % - 25 - GLA (1) Land City State Planned Usage (3) Total Leased Not Leased Joint Venture Acres Significant Tenants (1) Leased 1 Santa Monica CA Premier 103,000 - 103,000 Mark 302 JV 3 n/a 0.0 % 2 San Diego CA Premier 212,500 212,500 - UTC JV 13 Amazon, Williams-Sonoma, Rejuvenation 100.0 % 3 Alexandria VA Premier - - - Foulger Pratt / Howard Hughes 41 n/a 0.0 % 4 Altamonte Springs FL Other Unconsolidated Properties 186,900 9,500 177,400 GGP II JV 17 n/a 5.1 % 5 Frisco TX Other Unconsolidated Properties 174,900 12,000 162,900 GGP I JV 11 n/a 6.9 % 6 Santa Rosa CA Other Unconsolidated Properties 165,400 - 165,400 Simon JV 7 n/a 0.0 % 7 Nanuet NY Other Unconsolidated Properties 221,400 - 221,400 Simon JV 14 n/a 0.0 % 8 Austin TX Other Unconsolidated Properties 164,600 - 164,600 Simon JV 16 n/a 0.0 % 9 Austin TX Other Unconsolidated Properties - - - RD Development JV 11 n/a 0.0 % Total - Unconsolidated Properties 1,228,700 234,000 994,700 133 19.0 % Average - Unconsolidated Properties 136,522 26,000 110,522 15 19.0 % (1) Based on signed leases as of December 31, 2023, including SNO Leases.
Added
The portfolio consists of approximately 0.9 million square feet of GLA and 166 acres held by 10 Consolidated Properties and 0.8 million square feet of GLA and 108 acres held by seven Unconsolidated Properties.
Removed
(2) Property subject to a lease or ground lease. (3) Planned usage may be subject to entitlements. (4) Asset sold subsequent to December 31, 2023.
Added
(2) Asset sold subsequent to December 31, 2024.
Removed
Grand Total - All Properties 4,070,200 1,131,300 2,938,900 461 27.8 % Grand Total - All Properties (at Share) 3,455,850 1,014,300 2,441,550 395 29.4 % Planned Usage Total Built SF / Acreage(2) Leased SF (2) (3) Avg.
Added
(3) Property subject to a lease or ground lease. - 26 - Consolidated Properties Geographic Diversification The following table sets forth information regarding the geographic diversification of the portfolio based on signed leases as of December 31, 2024: State Number of Properties Annual Rent % of Annual Rent PSF Florida 4 $ 13,874,000 64.2 % $ 55.52 Pennsylvania 1 4,901,000 22.7 % 28.08 Massachusetts 1 2,421,000 11.2 % 28.44 California 2 236,000 1.1 % 7.10 Washington 1 190,000 0.9 % 25.33 Texas 1 - 0.0 % - Total 10 $ 21,622,000 100.0 % $ 39.31 Tenant Overview The following table provides a summary of annual base rent for the portfolio based on signed leases as of December 31, 2024: Tenant Number of Leases Leased GLA % of Total Leasable GLA Gross Annual Base Rent ("ABR") % of Total Annual Rent Gross Annual Rent PSF ("ABR PSF") In-place leases 30 484,000 53.7 % $ 17,973,000 83.1 % $ 37.13 SNO leases (1) 11 66,000 7.3 % 3,649,000 16.9 % 55.29 Total 41 550,000 61.0 % $ 21,622,000 100.0 % $ 39.31 (1) SNO = Signed not yet opened leases Unconsolidated Properties Geographic Diversification The following table sets forth information regarding the geographic diversification of the Unconsolidated Properties based on signed leases as of December 31, 2024: State Number of Properties Annual Rent % of Annual Rent PSF California 3 $ 15,276,000 98.8 % $ 71.89 Florida 1 186,000 1.2 % 19.72 Texas 2 - 0.0 % - Virginia 1 - 0.0 % - Total 7 $ 15,462,000 100.0 % $ 69.67 - 27 - Tenant Overview The following table provides a summary of annual base rent for the Unconsolidated Properties based on signed leases as of December 31, 2024: Tenant Number of Leases Leased GLA % of Total Leasable GLA Gross Annual Base Rent ("ABR") % of Total Annual Rent Gross Annual Rent PSF ("ABR PSF") In-place leases 27 222,000 26.7 % $ 15,462,000 100.0 % $ 69.65 Total 27 222,000 26.7 % $ 15,462,000 100.0 % $ 69.65 - 28 -
Removed
Acreage / Site Consolidated Multi-Tenant Retail 6 963 sf / 100 acres 690 16.7 Residential (3) 2 33 sf / 19 acres 33 9.5 Premier 4 228 sf / 69 acres 161 17.2 Non-Core(4) 11 1,617 sf / 138 acres 13 12.5 Unconsolidated Other Entities 6 457 sf / 77 acres 11 12.8 Premier 3 158 sf / 57 acres 106 19.0 (1) Square footage is presented at the Company’s proportional share.
Removed
(2) Based on signed leases at December 31, 2023. (3) Square footage represents built ancillary retail space whereas acreage represents both retail and residential acreage.
Removed
(4) Represents assets the Company previously designated for sale. - 26 - Consolidated Properties Geographic Diversification The following table sets forth information regarding the geographic diversification of the portfolio based on signed leases as of December 31, 2023: Number of Annual % of Total Rent State Properties Rent Annual Rent PSF Florida 7 $ 12,049 43.1 % $ 52.58 California 4 2,910 10.4 % 18.22 Pennsylvania 1 4,897 17.5 % 28.06 New Jersey 1 2,643 9.5 % 30.27 New York 1 2,454 8.8 % 17.39 Massachusetts 1 2,421 8.7 % 28.44 Arkansas 2 347 1.2 % 26.65 Washington 1 190 0.7 % 25.33 Texas 1 13 0.0 % - Arizona 2 - 0.0 % - Iowa 1 - 0.0 % - Maryland 1 - 0.0 % - Total 23 $ 27,924 100.0 % $ 31.13 Tenant Overview The following table provides a summary of annual base rent for the portfolio based on signed leases as of December 31, 2023: Number of Leased % of Total Gross Annual Base % of Total Gross Annual Tenant Leases GLA Leasable GLA Rent ("ABR") Annual Rent Rent PSF ("ABR PSF") In-place leases 41 733 25.8 % $ 20,530 73.5 % $ 28.01 SNO leases (1) 24 165 5.8 % 7,394 26.5 % 44.81 Total 65 897 31.6 % $ 27,924 100.0 % $ 31.13 (1) SNO = Signed not yet opened leases - 27 - Top Tenants The following table lists the top tenants in our portfolio based on rental income as of December 31, 2023: Number of Total % of Total Tenant Leases SF Rent Rent Concepts / Brands Dick's Sporting Goods 2 137,020 $ 3,223,480 15.7 % Round One Entertainment 1 48,658 1,179,957 5.7 % Nordstrom Rack 2 74,668 1,758,604 8.6 % Primark 1 65,747 1,643,675 8.0 % Pinstripes 1 26,515 1,482,139 7.2 % Industrious 1 26,501 1,431,054 7.0 % Whole Foods 2 71,235 1,257,772 6.1 % CCRM 1 18,230 1,002,650 4.9 % TJX 2 41,926 838,520 4.1 % HomeGoods, Sierra Trading Post Joey 1 8,150 733,500 3.6 % Ulta Salon 2 21,498 686,485 3.3 % Darden 2 18,661 581,658 2.8 % Longhorn Steakhouse, Yardhouse Floor & Décor 1 57,204 514,836 2.5 % One Medical 1 4,093 429,765 2.1 % North Italia 1 6,883 378,565 1.8 % BJ's Restaurants & Brewhouse 1 7,807 343,508 1.7 % CityMD 1 4,225 295,750 1.4 % David's Bridal 1 7,802 284,773 1.4 % Ethan Allen 1 8,000 256,000 1.2 % Unconsolidated Properties Geographic Diversification The following table sets forth information regarding the geographic diversification of the Unconsolidated Properties based on signed leases as of December 31, 2023: Number of Annual % of Total Rent State Properties Rent Annual Rent PSF California 3 $ 14,921 97.2 % $ 140.44 Texas 3 240 1.6 % 40.00 Florida 1 186 1.2 % 39.44 New York 1 - 0.0 % - Virginia 1 - 0.0 % - Total 9 $ 15,347 100.0 % $ 131.21 - 28 - Tenant Overview The following table provides a summary of annual base rent for the Unconsolidated Properties based on signed leases as of December 31, 2023: Number of Leased % of Total Gross Annual Base % of Total Gross Annual Tenant Leases GLA Leasable GLA Rent ("ABR") Annual Rent Rent PSF ("ABR PSF") In-place leases 28 234 19.0 % $ 15,347 100.0 % $ 65.59 SNO leases (1) 0 - 0.0 % - 0.0 % - Total 28 234 19.0 % $ 15,347 100.0 % $ 65.59 (1) SNO = Signed not yet opened leases Top Tenants The following table lists the top tenants in our Unconsolidated Properties based on signed leases as of December 31, 2023: Number of Total % of Total Tenant Leases SF Rent Rent Concepts / Brands Amazon 1 123,386 $ 8,439,602 55.0 % Williams-Sonoma 1 16,315 734,139 4.8 % Amalfi Llama 1 7,138 571,040 3.7 % CB2 1 9,688 494,088 3.2 % Rejuvenation 1 9,608 480,400 3.1 % Natuzzi 1 6,324 399,993 2.6 % Purple Innovation 1 3,863 397,889 2.6 % Pacific Catch 1 4,724 363,748 2.4 % Sweetgreen 1 2,963 325,000 2.1 % Westfield 1 - 303,298 2.0 % P.volve Fitness 1 3,157 260,453 1.7 % 4 Wheel Parts 1 12,000 240,000 1.6 % Feast California Café 1 3,693 223,427 1.5 % Brilliant Earth 1 1,983 204,923 1.3 % Ideal Image 1 2,403 204,255 1.3 % Darden 1 9,450 186,340 1.2 % Seasons 52 Pilates Republic 1 2,169 162,675 1.1 % Menya Ultra 1 1,842 154,728 1.0 % Smashburger 1 1,921 149,838 1.0 % Board & Brew 1 1,729 138,364 0.9 % - 29 -

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThis settlement payment was partially offset by payments made by our D&O insurers, which we received during the years ended December 31, 2023 and 2022. Details of the litigation and these payments are described in Note 9 to our consolidated financial statements. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. - 30 - PART II
Biggest changeAs of December 31, 2024, and 2023, the Company did not record any amounts for litigation or other matters aside from payments made by our D&O insurers, which we received during the year ended December 31, 2023. Details of the litigation and these payments are described in Note 9 to our consolidated financial statements.
Removed
As of December 31, 2023, and December 31, 2022, the Company did not record any amounts for litigation or other matters aside from the settlement payment of $35.5 million made during the year ended December 31, 2022.
Added
On July 1, 2024, a purported shareholder of the Company filed a class action lawsuit in the U.S. District Court for the Southern District of New York, captioned Zhengxu He, Trustee of the He & Fang 2005 Revocable Living Trust v.
Added
Seritage Growth Properties, Case No. 1:24:CV:05007, alleging that the Company, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer violated the federal securities laws (the “Securities Action”). The complaint seeks to bring a class action on behalf of all persons and entities that purchased or otherwise acquired Company securities between July 7, 2022 and May 10, 2024.
Added
The complaint alleges that the defendants violated federal securities laws by issuing false, misleading, and/or omissive disclosures concerning the Company’s alleged lack of effective internal controls regarding the identification and review of impairment indicators for investments in real estate and the Company’s value and projected gross proceeds of certain real estate assets.
Added
The complaint seeks compensatory damages in an unspecified amount to be proven at trial, an award of reasonable costs and expenses to the plaintiff and class counsel, and such other and further relief as the court may deem just and proper. On or around January 15, 2025, another purported shareholder of the Company filed a derivative lawsuit in the U.S.
Added
District Court for the District of Maryland, captioned Paul Sidhu v. Seritage Growth Properties, Case No. 1:25-cv-00152 (the “Sidhu Derivative Action”). On or around January 20, 2025, another purported shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the District of Maryland, captioned James Wallen v.
Added
Seritage Growth Properties, Case No. 1:25-cv-00190 (the “Wallen Derivative Action” and, together with the Sidhu Derivative Action, the “Derivative Actions”).
Added
The Derivative Actions allege the same or similar claimed acts and omissions underlying the Securities Action, assert breach of fiduciary duty and other claims against the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and current and former members of the Company’s Board of Trustees, and name the Company as a nominal defendant.
Added
The complaint in each of the Derivative Actions seeks compensatory damages in an unspecified amount to be proven at trial, an order directing the Company and the individual defendants to reform and improve the Company’s corporate governance and internal procedures, restitution from the individual defendants, an award of costs and expenses to the plaintiff and reasonable attorneys’ and experts’ fees, costs, and expenses, and such other and further relief as the court may deem just and proper.
Added
On February 13, 2025, the parties to the Derivative Actions filed a stipulation and proposed order seeking to consolidate the Derivative Actions and appoint lead counsel. The Company intends to vigorously defend itself against the allegations in these lawsuits. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. - 29 - PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−3 removed5 unchanged
Biggest changeAs of March 28, 2024, no outstanding Operating Partnership units (“OP Units”) were held by limited partners other than the Company. The OP Units were generally exchangeable into shares of Class A common stock on a one-for-one basis. Seritage, and its consolidating subsidiaries, is the sole owner of all outstanding Operating Partnership interests.
Biggest changeThe number of shareholders of record does not reflect persons or entities that held their shares in nominee or “street” name. As of March 27, 2025, no outstanding Operating Partnership units (“OP Units”) were held by limited partners other than the Company. Seritage, and its consolidating subsidiaries, own all outstanding Operating Partnership interests.
The Company operated as a REIT for the 2021 tax year and prior years, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place through December 31, 2021.
The Company operated as a REIT for the 2021 tax year and prior years, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place through December 31, - 30 - 2021.
As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders, which provides the Company with greater flexibility to use its free cash flow.
As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its shareholders, which provides the Company with greater flexibility to use its free cash flow.
Refer to Note 7 – Income Taxes of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. - 32 - ITEM 6. RESERVED - 33 -
Refer to Note 7 – Income Taxes of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. - 31 - ITEM 6. RESERVED - 32 -
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s Class A common stock is listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “SRG”.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s Class A common shares are listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “SRG”.
(2) Weighted average exercise price does not apply to restricted stock units (“RSU”). (3) Shares remaining available for future issuance under the Seritage Growth Properties 2015 Share Plan, taking into account 84,216 shares of restricted stock previously granted and 985,222 shares subject to grants of RSUs previously granted (including those that remain unvested reported in column (a)).
(2) Weighted average exercise price does not apply to restricted stock units (“RSU”). (3) Shares remaining available for future issuance under the Seritage Growth Properties 2015 Share Plan, taking into account 84,216 shares of restricted stock previously granted and 1,117,197 shares subject to grants of RSUs previously granted (including those that remain unvested reported in column (a)).
Upon any transfer of a Class C non-voting common share to any person other than an affiliate of the holder of such share, such share shall automatically convert into one Class A common share. As of March 28, 2024, there are no Class B non-economic common shares outstanding and there are no Class C non-voting common shares outstanding.
Upon any transfer of a Class C non-voting common share to any person other than an affiliate of the holder of such share, such share shall automatically convert into one Class A common share. As of March 31, 2025, there are no Class B non-economic common shares outstanding and there are no Class C non-voting common shares outstanding.
Share-Based Compensation The following table provides information with respect to the Company’s equity compensation plan as of December 31, 2023: Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 535,650 (1) n/a (2) 2,180,562 (3) Total 535,650 — 2,180,562 (1) Represents restricted stock awards and units previously granted and that remain unvested as of December 31, 2023.
Share-Based Compensation The following table provides information with respect to the Company’s equity compensation plan as of December 31, 2024: Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 87,899 (1) n/a (2) 2,048,587 (3) Total 87,899 — 2,048,587 (1) Represents restricted stock awards and units previously granted and that remain unvested as of December 31, 2024.
Removed
The following graph provides a comparison, from December 31, 2018 through December 31, 2023, of the cumulative total shareholder return (assuming reinvestment of dividends) on $100 invested in each of Class A shares of the Company, the Standard & Poor's ("S&P") 500 Index and the MSCI US REIT Index, an industry index of publicly-traded REITs.
Added
Common Shares and Operating Partnership Units On March 27, 2025, the reported closing sale price per share of our Class A common shares on the NYSE was $3.30. As of March 27, 2025, there were 56,324,607 Class A common shares issued and outstanding which were held by approximately 120 shareholders of record.
Removed
Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Seritage Growth Properties Cumulative$ 100 124 45 41 37 29 Return % 24 (55 ) (59 ) (63 ) (71 ) S&P 500 Cumulative$ 100 129 150 190 153 190 Return % 29 50 90 53 90 MSCI US REIT Index Cumulative$ 100 121 108 149 108 118 Return % 21 8 49 8 18 - 31 - Common Shares and Operating Partnership Units On March 28, 2024, the reported closing sale price per share of our Class A common stock on the NYSE was $9.65.
Removed
As of March 28, 2024, there were 56,262,944 Class A common shares issued and outstanding which were held by approximately 127 shareholders of record. The number of shareholders of record does not reflect persons or entities that held their shares in nominee or “street” name.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+26 added−20 removed45 unchanged
Biggest changeThe following table reconciles NOI and Total NOI to GAAP net loss for the years ended December 31, 2023, 2022 and 2021 (in thousands): Year Ended December 31, NOI and Total NOI 2023 2022 2021 Net loss $ (154,911 ) $ (120,097 ) $ (38,985 ) Termination fee income — (369 ) (3,378 ) Management and other fee income (5,719 ) (2,446 ) (1,032 ) Depreciation and amortization 14,471 41,114 51,199 General and administrative expenses 45,988 47,634 41,949 Litigation settlement — 35,533 — Equity in loss of unconsolidated entities 55,857 72,080 9,226 (Gain) loss on sale of interest in unconsolidated entities (6,407 ) 677 — Gain on sale of real estate, net (96,214 ) (211,936 ) (221,681 ) Impairment of real estate assets 107,043 126,887 95,826 Interest and other income, net (17,067 ) (37,753 ) (9,285 ) Interest expense 44,571 86,730 107,975 Provision for income taxes 38 466 196 Straight-line rent 16,874 (1,271 ) (2,269 ) Above/below market rental expense 176 223 176 NOI $ 4,700 $ 37,472 $ 29,917 Unconsolidated entities (1) Net operating income of unconsolidated entities (2) 8,384 7,785 6,942 Straight-line rent (4,512 ) (1,017 ) (885 ) Above/below market rental expense 28 24 131 Termination fee income — (787 ) (588 ) Total NOI $ 8,600 $ 43,477 $ 35,517 (1) Activity represents the Company's proportionate share of unconsolidated entity activity.
Biggest changeReconciliations of these measures to the respective GAAP measures we deem most comparable are presented below on a comparative basis for all periods. - 43 - The following table reconciles NOI-cash basis and NOI-cash basis at share to GAAP net loss for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, NOI-cash basis and NOI-cash basis at share 2024 2023 Net loss $ (153,536 ) $ (154,911 ) Management and other fee income (567 ) (5,719 ) Abandoned project costs 5,732 — Depreciation and amortization 13,118 14,471 General and administrative expenses 30,021 45,988 Equity in loss of unconsolidated entities 3,154 55,857 Gain on sale of interest in unconsolidated entities (2,042 ) (6,407 ) Gain on sale of real estate, net (10,678 ) (96,214 ) Impairment of real estate assets 87,536 107,043 Interest and other income (expense), net (2,513 ) (17,067 ) Interest expense 24,972 44,571 Provision for income taxes 1,584 38 Straight-line rent 917 16,874 Above/below market rental expense 189 176 NOI-cash basis $ (2,113 ) $ 4,700 Unconsolidated entities (1) Net operating income of unconsolidated entities (2) 5,315 8,384 Straight-line rent (578 ) (4,512 ) Above/below market rental expense (36 ) 28 NOI-cash basis at share $ 2,588 $ 8,600 (1) Activity represents the Company's proportionate share of unconsolidated entity activity.
Property operating expenses include: real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense is on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities.
Property operating expenses include: real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities.
Overview Prior to our adoption of the Plan for Sale, we were principally engaged in the ownership, development, redevelopment, management, sale and leasing of diversified retail and mixed-use properties throughout the United States.
Overview Prior to our adoption of the Plan of Sale, we were principally engaged in the ownership, development, redevelopment, management, sale and leasing of diversified retail and mixed-use properties throughout the United States.
Obligations are projected to continue to exceed property rental income and we expect to fund such Obligations and any development expenditures with cash on hand and a combination of capital sources including, but not limited to, sales of Consolidates Properties, sales of interests in Unconsolidated Properties and potential financing transactions, subject to any approvals that may be required under the Term Loan Agreement.
Obligations are projected to continue to exceed property rental income and we expect to fund such Obligations and any development expenditures with cash on hand and a combination of capital sources including, but not limited to, sales of Consolidated Properties, sales of interests in Unconsolidated Properties and potential financing transactions, subject to any approvals that may be required under the Term Loan Agreement.
As of December 31, 2023, we had contributed interests in 12 properties to unconsolidated entities, which generated approximately $242.4 million of gross proceeds since July 2017. In addition to generating liquidity upon closing, these entities also reduce our development expenditures by the amount of our partners’ interests in the unconsolidated entities.
As of December 31, 2024, we had contributed interests in 12 properties to unconsolidated entities, which generated approximately $242.4 million of gross proceeds since July 2017. In addition to generating liquidity upon closing, these entities also reduce our development expenditures by the amount of our partners’ interests in the unconsolidated entities.
Preferred Shares As of December 31, 2023, we had 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) outstanding. As of December 14, 2022, we may redeem any or all of the Series A Preferred Shares at $25.00 per share plus any accrued and unpaid dividends.
Preferred Shares As of December 31, 2024, we had 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) outstanding. As of December 14, 2022, we may redeem any or all of the Series A Preferred Shares at $25.00 per share plus any accrued and unpaid dividends.
As of December 31, 2023, the Company has not yet achieved the requirements to access the Incremental Funding Facility. The Term Loan Facility is guaranteed by the Company and, subject to certain exceptions, is required to be guaranteed by all existing and future subsidiaries of the Operating Partnership.
As of December 31, 2024, the Company has not yet achieved the requirements to access the Incremental Funding Facility. The Term Loan Facility is guaranteed by the Company and, subject to certain exceptions, is required to be guaranteed by all existing and future subsidiaries of the Operating Partnership.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures Neither NOI nor 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.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures Neither NOI-cash basis nor NOI-cash basis at share 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.
As of December 31, 2023 the Company's debt issuance costs were fully amortized and as of December 31, 2022, the unamortized balance of the Company’s debt issuance costs were $0.2 million. - 39 - On May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment (the “Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million.
As of December 31, 2023 the Company's debt issuance costs were fully amortized. - 38 - On May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment (the “Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million.
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.
The Company believes NOI-cash basis 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 NOI-cash basis at share, which includes its proportional share of Unconsolidated Properties.
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.
The Company also considers NOI-cash basis and NOI-cash basis at share 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.
Dividends and Distributions The Company’s Board of Trustees did not declare dividends on the Company’s Class A common shares during 2023.
Dividends and Distributions The Company’s Board of Trustees did not declare dividends on the Company’s Class A common shares during 2024.
As of December 31, 2023, the Company was not in compliance with certain of the financial metrics described above.
As of December 31, 2024, the Company was not in compliance with certain of the financial metrics described above.
Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations incurred during the year ended December 31, 2023 and the Company recorded net operating cash outflows of $53.1 million.
Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations incurred during the year ended December 31, 2024 and the Company recorded net operating cash outflows of $53.5 million.
Certain of our unconsolidated entity agreements also include rights that allow us to sell our interests in select Unconsolidated Properties to our partners at fair market value. o We sold our interests in 15 Unconsolidated Properties and generated approximately $278.1 million of gross proceeds from the beginning of our capital recycling program in July 2017 through the date our REIT status terminated on December 31, 2021; o We sold our interests in 8 Unconsolidated Properties and generated approximately $84.8 million of gross proceeds since we terminated our REIT status on December 31, 2021, through the approval of the Plan of Sale on October 24, 2022; o From the approval of the Plan of Sale on October 24, 2022 through December 31, 2023, we sold our interests in eight Unconsolidated Properties and generated approximately $140.7 million of gross proceeds. • Unconsolidated Properties.
Certain of our unconsolidated entity agreements also include rights that allow us to sell our interests in select Unconsolidated Properties to our partners at fair market value. o We sold our interests in 15 Unconsolidated Properties and generated approximately $278.1 million of gross proceeds from the beginning of our capital recycling program in July 2017 through the date our REIT status terminated on December 31, 2021; o We sold our interests in 8 Unconsolidated Properties and generated approximately $84.8 million of gross proceeds since we terminated our REIT status on December 31, 2021, through the approval of the Plan of Sale on October 24, 2022; o From the approval of the Plan of Sale on October 24, 2022 through December 31, 2024, we sold our interests in 10 Unconsolidated Properties and generated approximately $151.5 million of gross proceeds. • Unconsolidated Properties.
The last dividend on the Company’s Class A and C common shares that the Board of Trustees declared was on February 25, 2019, which was paid on April 11, 2019 to shareholders of record on March 29, 2019. - 40 - The Company’s Board of Trustees also declared the following dividends on Company’s Series A Preferred Shares during 2024, 2023, 2022 and 2021: Series A Declaration Date Record Date Payment Date Preferred Share 2024 February 29 March 29 April 15 $ 0.43750 2023 October 30 December 29 January 16, 2024 $ 0.43750 July 25 September 29 October 13 0.43750 April 27 June 30 July 14 0.43750 February 15 March 31 April 17 0.43750 2022 November 1 December 30 January 16, 2023 $ 0.43750 July 26 September 30 October 17 0.43750 April 26 June 30 July 15 0.43750 February 16 March 31 April 15 0.43750 2021 October 26 December 31 January 14, 2022 $ 0.43750 July 27 September 30 October 15 0.43750 April 27 June 30 July 15 0.43750 February 23 March 31 April 15 0.43750 Our Board of Trustees will continue to assess the Company’s investment opportunities and its expectations of taxable income in its determination of future distributions, if any.
The last dividend on the Company’s Class A and C common shares that the Board of Trustees declared was on February 25, 2019, which was paid on April 11, 2019 to shareholders of record on March 29, 2019. - 39 - The Company’s Board of Trustees also declared the following dividends on Company’s Series A Preferred Shares during 2025, 2024 and 2023: Series A Declaration Date Record Date Payment Date Preferred Share 2025 February 26 March 31 April 15 $ 0.43750 2024 October 28 December 31 January 15, 2025 $ 0.43750 July 31 September 30 October 15 0.43750 May 2 June 28 July 15 0.43750 February 29 March 29 April 15 0.43750 2023 October 30 December 29 January 16, 2024 $ 0.43750 July 25 September 29 October 13 0.43750 April 27 June 30 July 14 0.43750 February 15 March 31 April 17 0.43750 Our Board of Trustees will continue to assess the Company’s investment opportunities and its expectations of taxable income in its determination of future distributions, if any.
If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value. The Company recognized $107.0 million and $126.9 million in impairment losses for the years ended December 31, 2023 and 2022, respectively.
If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value. The Company recognized $87.5 million and $107.0 million in impairment losses for the years ended December 31, 2024 and 2023, respectively.
On October 24, 2022, we received shareholder approval of the Plan of Sale. o We sold 90 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $986.8 million of gross proceeds from the beginning of our capital recycling program in July 2017 through the date our REIT status terminated on December 31, 2021; o We sold 40 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $438.1 million of gross proceeds from December 31, 2021, the date we terminated our REIT status, through the approval of the Plan of Sale on October 24, 2022; o From the approval of the Plan of Sale on October 24, 2022 through December 31, 2023, we sold 76 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $856.5 million of gross proceeds. • Sales of interests in Unconsolidated Properties.
On October 24, 2022, we received shareholder approval of the Plan of Sale. o We sold 90 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $986.8 million of gross proceeds from the beginning of our capital recycling program in July 2017 through the date our REIT status terminated on December 31, 2021; o We sold 40 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $438.1 million of gross proceeds from December 31, 2021, the date we terminated our REIT status, through the approval of the Plan of Sale on October 24, 2022; o From the approval of the Plan of Sale on October 24, 2022 through December 31, 2024, we sold 89 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $1.0 billion of gross proceeds. • Sales of interests in Unconsolidated Properties.
The Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of Unconsolidated Properties that are accounted for under GAAP using the equity method.
We have included this adjustment because the Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of Unconsolidated Properties that are accounted for under GAAP using the equity method.
We reached settlement agreements with two of the D&O Insurers for gross proceeds of $12.7 million which is recorded in interest and other income in the consolidated statements of operations during the year ended December 31, 2022. During the year ended December 31, 2023, we reached settlement agreements with the other two D&O Insurers for gross proceeds of $11.6 million.
In 2023, we reached settlement agreements with the other two D&O Insurers for gross proceeds of $11.6 million. We received $11.6 million during the year ended December 31, 2023, which is recorded in interest and other income (expense), net in the consolidated statements of operations.
Additionally, the Company generated net investing cash inflows of $732.9 million during the year ended December 31, 2023, which were driven by asset sales and partially offset by development expenditures and recorded financing cash outflows of $675.1 million, primarily due to partial repayments of the Term Loan Facility.
Additionally, the Company generated net investing cash inflows of $126.9 million during the year ended December 31, 2024, which were driven by asset sales and partially offset by development expenditures and recorded financing cash outflows of $125.3 million, primarily due to partial repayments of the Term Loan Facility.
All references to numbered Notes are to specific footnotes to our Consolidated Financial Statements included in this Annual Report. You should read this discussion in conjunction with our Consolidated Financial Statements, the notes thereto and other financial information included elsewhere in this Annual Report.
See “Cautionary Statement Regarding Forward-Looking Statements.” All references to numbered Notes are to specific footnotes to our Consolidated Financial Statements included in this Annual Report. You should read this discussion in conjunction with our Consolidated Financial Statements, the notes thereto and other financial information included elsewhere in this Annual Report.
Due to the adjustments noted, NOI and Total NOI should only be used as an alternative measure of the Company's financial performance.
Due to the adjustments noted, NOI-cash basis and NOI-cash basis at share should only be used as an alternative measure of the Company’s financial performance.
(2) NOI of Unconsolidated Properties excludes depreciation and amortization, gains, losses and impairments and management and administrative costs. - 44 -
(2) Net operating income of unconsolidated properties excludes depreciation and amortization, gains, losses and impairments and management and administrative costs. - 44 -
As of December 31, 2023, the Company has paid down $1.24 billion towards the Term Loan’s unpaid principal balance. The aggregate principal amount outstanding under the Term Loan Facility as of December 31, 2023 was $360 million.
As of December 31, 2024, the Company has paid down $1.36 billion towards the Term Loan’s unpaid principal balance. The aggregate principal amount outstanding under the Term Loan Facility as of December 31, 2024 was $240.0 million.
Cash Flows from Investing Activities Significant components of net cash provided by investing activities include: − In 2023, $673.5 million of net proceeds from the sale of real estate and $152.6 million of distributions and proceeds from the disposition of interests in unconsolidated entities offset by development of real estate of ($79.7) million and investments in unconsolidated entities of ($13.4) million; and − In 2022, $643.3 million of net proceeds from the sale of real estate and $67.6 million of distributions and proceeds from the disposition of interests in unconsolidated entities offset by development of real estate of ($99.3) million and investments in unconsolidated entities of ($25.5) million.
Cash Flows from Investing Activities Significant components of net cash provided by investing activities include: − In 2024, $155.7 million of net proceeds from the sale of real estate and $8.0 million of distributions and proceeds from the disposition of interests in unconsolidated entities offset by development of real estate of ($27.5) million and investments in unconsolidated entities of ($9.3) million; and − In 2023, $673.5 million of net proceeds from the sale of real estate and $152.6 million of distributions and proceeds from the disposition of interests in unconsolidated entities offset by development of real estate of ($79.7) million and investments in unconsolidated entities of ($13.4) million.
As a result of changes to weather patterns caused by climate change, our properties could experience increased storm intensity and other natural disasters in future periods and, as such, we cannot provide assurance that natural disasters will not have a material impact on our financial condition, results of operations or cash flows over the foreseeable future. - 35 - Results of Operations We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties.
As a result of changes to weather patterns caused by climate change, our properties could experience increased storm intensity and other natural disasters in future periods and, as such, we cannot provide assurance that natural disasters will not have a material impact on our financial condition, results of operations or cash flows over the foreseeable future.
During year ended December 31, 2022, the Company invested $99.3 million in our consolidated development and operating properties and an additional $25.5 million into our unconsolidated joint ventures.
Capital Expenditures During the year ended December 31, 2024 the Company invested $27.5 million in our consolidated development and operating properties and an additional $9.3 million into our unconsolidated joint ventures.
Cash Flows from Financing Activities Significant components of net cash used in financing activities include: − In 2023, ($670.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends; and − In 2022, ($410.0) million cash repayment of Term Loan Facility principal, ($22.1) million cash repayment to terminate sale-leaseback financing obligation, and ($4.9) million cash payment of preferred dividends.
Cash Flows from Financing Activities Significant components of net cash used in financing activities include: − In 2024, ($120.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends; and − In 2023, ($670.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends.
Gain/Loss on Sale of Interests in Unconsolidated Entities During the year ended December 31, 2023, the Company sold its interest in eight unconsolidated properties, and recorded a gain totaling $6.4 million, which is included in gain on sale of interest in unconsolidated entities within the consolidated statements of operations.
Gain/Loss on Sale of Interests in Unconsolidated Entities During the year ended December 31, 2024, the Company sold its interest in one unconsolidated property and recorded a gain of $2.0 million. During the year ended December 31, 2023, the Company sold its interest in eight unconsolidated properties, and recorded a gain totaling $6.4 million.
The Board of Trustees created a special committee of the Board of Trustees (the “Special Committee”) to oversee the process. The Special Committee retained Barclays as its financial advisor from March 2022 to August 2023 to assist with the strategic review.
The Special Committee retained Barclays as its financial advisor from March 2022 to August 2023 to assist with the strategic review.
Gain on Sale of Real Estate During the year ended December 31, 2023, the Company sold 60 properties, for aggregate consideration of $702.0 million and recorded a gain totaling $96.2 million, which is included in gain on sale of real estate within the consolidated statements of operations.
Gain on Sale of Real Estate During the year ended December 31, 2024, the Company sold 13 properties for aggregate consideration of $163.5 million and recorded a gain totaling $10.7 million. During the year ended December 31, 2023, the Company sold 60 properties, for aggregate consideration of $702.0 million and recorded a gain totaling $96.2 million.
The Company made additional voluntary prepayments aggregating $440 million during the final three quarters of 2023, reducing the unpaid principal balance to $360 million at December 31, 2023.
The Company made additional voluntary prepayments aggregating $440 million during the remainder of 2023 and additional voluntary prepayments aggregating $120.0 million during 2024, reducing the unpaid principal balance to $240.0 million at December 31, 2024.
During the year ended December 31, 2023, impairment charges of $70.8 million and $41.9 million were recorded on two underlying investments resulting in the Company picking up its share of this impairment of $35.4 million and $5.5 million, respectively, and an $11.7 million other-than-temporary impairment charge recorded against three other investments.
During the year ended December 31, 2023, the Company recorded $55.9 million of loss from investments in unconsolidated entities primarily due to impairment charges of $70.8 million and $41.9 million recorded on two underlying investments resulting in the Company picking up its share of these impairments of $35.4 million and $5.5 million, respectively, and an $11.7 million other-than-temporary impairment charge recorded against three other investments. - 36 - Interest and Other Income The decrease of $14.5 million in interest and other income is primarily due to the receipt of $11.6 million in settlement proceeds during the year ended December 31, 2023.
Due to increasing development and construction costs, deteriorating market conditions and, in certain instances excluding Aventura, FL, agreeing to sell below carrying value, we have recognized $107.0 million of impairment losses during the year ended December 31, 2023, which is included in impairment on real estate assets within the consolidated statements of operations.
Due to increasing development and construction costs, deteriorating market conditions and, in certain instances excluding Aventura, FL, agreeing to sell below carrying value, we recognized $107.0 million of impairment losses during the year ended December 31, 2023. We recognized $11.7 million of other-than-temporary impairment losses on our investments in unconsolidated entities during the year ended December 31, 2023.
Management exercises judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available information about the financial condition of the tenant, and other factors. Our assessment of the collectability of tenant receivables can have a significant impact on the rental revenue recognized in our consolidated statements of income.
Management exercises judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available information about the financial condition of the tenant, and other factors.
Information concerning our obligations and commitments to make future payments under contracts for these loan and lease agreements as of December 31, 2023 is aggregated in the following table (in thousands): Payments due by Period Within After Minimum Cash Requirements Total 1 year 2 - 3 years 4 -5 years 5 years Long-term debt (1)(2) $ 401,580 $ 25,620 $ 375,960 $ — $ — Operating leases 7,599 1,151 2,368 2,055 2,025 Total $ 409,179 $ 26,771 $ 378,328 $ 2,055 $ 2,025 (1) Includes expected interest payments.
Information concerning our obligations and commitments to make future payments under contracts for these loan and lease agreements as of December 31, 2024 is aggregated in the following table (in thousands): Payments due by Period Within After Minimum Cash Requirements Total 1 year 2 - 3 years 4 -5 years 5 years Long-term debt (1) $ 250,640 $ 250,640 $ — $ — $ — Operating leases 2,765 605 90 90 1,980 Total $ 253,405 $ 251,245 $ 90 $ 90 $ 1,980 (1) Includes expected interest payments.
The Company recorded $11.7 million and $35.6 million in other-than-temporary impairment losses in investments in unconsolidated entities for the years ended December 31, 2023 and December 31, 2022, respectively.
The Company did not record any other-than-temporary impairment losses for the year December 31, 2024. The Company recorded $11.7 million in other-than-temporary impairment losses in investments in unconsolidated entities for the year ended December 31, 2023.
Our lawsuit sought, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the Litigation. Any amounts received from the insurers will offset the Seritage Defendants’ contribution.
Our lawsuit sought, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the litigation related to the bankruptcy of Sears Holdings (the “Litigation”). The Litigation was settled in 2022 and the Litigation was dismissed.
No such payments were made during the year ended December 31, 2023. General and Administrative Expenses General and administrative expenses consist of personnel costs, including share-based compensation, professional fees, office expenses and overhead expenses.
General and Administrative Expenses General and administrative expenses consist of personnel costs, including share-based compensation, professional fees, office expenses and overhead expenses.
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.
Other real estate companies may use different methodologies for calculating NOI-cash basis, and accordingly the Company’s depiction of NOI-cash basis may not be comparable to other real estate companies.
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 The following table presents selected data on comparative results from the Company’s consolidated statements of operations for the year ended December 31, 2023, as compared to the year ended December 31, 2022 (in thousands): Year Ended December 31, 2023 2022 $ Change Revenue Rental income $ 15,060 $ 104,609 $ (89,549 ) Expenses Property operating (21,282 ) (41,770 ) 20,488 Real estate taxes (6,128 ) (23,950 ) 17,822 Depreciation and amortization (14,471 ) (41,114 ) 26,643 General and administrative (45,988 ) (47,634 ) 1,646 Litigation settlement — (35,533 ) 35,533 Gain on sale of real estate, net 96,214 211,936 (115,722 ) Gain (loss) on sale of interest in unconsolidated entities 6,407 (677 ) 7,084 Impairment of real estate assets (107,043 ) (126,887 ) 19,844 Equity in loss of unconsolidated entities (55,857 ) (72,080 ) 16,223 Interest and other income 17,067 37,753 (20,686 ) Interest expense (44,571 ) (86,730 ) 42,159 Rental Income The following table presents the results for rental income for the year ended December 31, 2023, as compared to the corresponding period in 2022 (in thousands): Year Ended December 31, Year Ended December 31, 2023 2022 Rental Income % of Total Rental Income Rental Income % of Total Rental Income $ Change In-place retail leases $ 31,904 211.8 % $ 103,356 98.8 % $ (71,452 ) Straight-line rent (expense) income (16,872 ) -112.0 % 1,271 1.2 % (18,143 ) Amortization of above/below market leases 28 0.2 % (18 ) 0.0 % 46 Total rental income $ 15,060 100.0 % $ 104,609 100.0 % $ (89,549 ) The decrease of $71.5 million in in-place retail tenants rental income during 2023 was primarily due to property sales.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 The following table presents selected data on comparative results from the Company’s consolidated statements of operations for the year ended December 31, 2024, as compared to the year ended December 31, 2023 (in thousands): Year Ended December 31, 2024 2023 $ Change Revenue Rental income $ 17,055 $ 15,060 $ 1,995 Expenses Property operating (16,339 ) (21,282 ) 4,943 Abandoned project cots (5,732 ) - (5,732 ) Real estate taxes (3,935 ) (6,128 ) 2,193 Depreciation and amortization (13,118 ) (14,471 ) 1,353 General and administrative (30,021 ) (45,988 ) 15,967 Gain on sale of real estate, net 10,678 96,214 (85,536 ) Gain on sale of interest in unconsolidated entities 2,042 6,407 (4,365 ) Impairment of real estate assets (87,536 ) (107,043 ) 19,507 Equity in loss of unconsolidated entities (3,154 ) (55,857 ) 52,703 Interest and other income (expense), net 2,513 17,067 (14,554 ) Interest expense (24,972 ) (44,571 ) 19,599 Rental Income The following table presents the results for rental income for the year ended December 31, 2024, as compared to the corresponding year ended December 31, 2023 (in thousands): Year Ended December 31, Year Ended December 31, 2024 2023 Rental Income % of Total Rental Income Rental Income % of Total Rental Income $ Change In-place retail leases $ 17,957 105.3 % $ 31,904 211.8 % $ (13,947 ) Straight-line rent expense (917 ) -5.4 % (16,872 ) -112.0 % 15,955 Amortization of above/below market leases 15 0.1 % 28 0.2 % (13 ) Total rental income $ 17,055 100.0 % $ 15,060 100.0 % $ 1,995 In-place retail tenants rental income decreased $13.9 million during 2024 primarily due to property sales.
We received $11.6 million during the year ended December 31, 2023, which is recorded in interest and other income in the consolidated statements of operations. - 42 - We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business and due to the current environment.
We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business and due to the current environment.
As of December 31, 2023, our portfolio consisted of interests in 32 properties comprised of approximately 4.1 million square feet of GLA or build-to-suit leased area, approximately 126 acres held for or under development until time of sale and approximately 1.6 million square feet or approximately 138 acres to be disposed of in its current state.
As of December 31, 2024, our portfolio consisted of interests in 17 properties comprised of approximately 1.7 million square feet of GLA or build-to-suit leased area and 274 acres of land.
The portfolio consists of approximately 2.8 million square feet of GLA held by 23 Consolidated Properties and 1.2 million square feet of GLA held by nine Unconsolidated Properties. Review of Strategic Alternatives On March 1, 2022, the Company announced that its Board of Trustees has commenced a process to review a broad range of strategic alternatives to enhance shareholder value.
Review of Strategic Alternatives On March 1, 2022, the Company announced that its Board of Trustees has commenced a process to review a broad range of strategic alternatives to enhance shareholder value. The Board of Trustees created a special committee of the Board of Trustees (the “Special Committee”) to oversee the process.
Additionally, we currently have two assets in active auction processes with aggregate reserve prices of $10.0 million. - 38 - Term Loan Facility On July 31, 2018, the Operating Partnership, as borrower, and the Company, as guarantor, entered into a Senior Secured Term Loan Agreement (as amended, the “Term Loan Agreement”) providing for a $2.0 billion term loan facility (the “Term Loan Facility”) with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”) as lender and Berkshire Hathaway as administrative agent.
As of March 31, 2025, we had one asset owned by our consolidated joint venture under contract for sale subject to customary due diligence for total anticipated proceeds of $14.0 million and is subject to closing conditions. - 37 - Term Loan Facility On July 31, 2018, the Operating Partnership, as borrower, and the Company, as guarantor, entered into a Senior Secured Term Loan Agreement (as amended, the “Term Loan Agreement”) providing for a $2.0 billion term loan facility (the “Term Loan Facility”) with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”) as lender and Berkshire Hathaway as administrative agent.
During the years ended December 31, 2023 and December 31, 2022, we incurred no maintenance capital expenditures that were not associated with retenanting and redevelopment projects. - 41 - Cash Flows for the Year Ended December 31, 2023 Compared to December 31, 2022 The following table summarizes the Company’s cash flow activities for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 $ Change Net cash used in operating activities $ (53,061 ) $ (117,923 ) $ 64,862 Net cash provided by investing activities 732,911 586,079 146,832 Net cash used in financing activities (675,089 ) (436,970 ) (238,119 ) Cash Flows from Operating Activities Significant components of net cash used in operating activities include: − In 2023, a decrease in rental income and gain on sale of real estate assets and a decrease in accounts payable, accrued expenses and other liabilities. − In 2022, a decrease in rental income and a decrease in accounts payable, accrued expenses and other liabilities.
During the year ended December 31, 2023 the Company invested $79.7 million in our consolidated development and operating properties and an additional $13.4 million into our unconsolidated joint ventures. - 40 - Cash Flows for the Year Ended December 31, 2024 Compared to December 31, 2023 The following table summarizes the Company’s cash flow activities for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 $ Change Net cash used in operating activities $ (53,548 ) $ (53,061 ) $ (487 ) Net cash provided by investing activities 126,870 732,911 (606,041 ) Net cash used in financing activities (125,313 ) (675,089 ) 549,776 Cash Flows from Operating Activities Significant components of net cash used in operating activities include: − In 2024, a decrease in rental income and gain on sale of real estate assets and a decrease in accounts payable, accrued expenses and other liabilities; and − In 2023, a decrease in rental income and gain on sale of real estate assets and a decrease in accounts payable, accrued expenses and other liabilities.
Recent Accounting Pronouncements Refer to Note 2 of the consolidated financial statements for recently issued accounting pronouncements. - 43 - Non-GAAP Supplemental Financial Measures and Definitions The Company makes reference to NOI and Total NOI which are financial measures that include adjustments to GAAP.
Non-GAAP Supplemental Financial Measures and Definitions The Company makes reference to NOI-cash basis and NOI-cash basis at share which are financial measures that include adjustments to GAAP.
Effects of Natural Disasters The Company assessed the impact of the natural disasters that occurred during the year ended December 31, 2023 and determined that natural disasters did not have a material impact on our operating results or financial position.
As of March 31, 2025, we had one asset owned by our consolidated joint venture under contract to sell for total anticipated proceeds of $14.0 million, subject to buyer diligence and closing conditions. - 33 - Effects of Natural Disasters The Company assessed the impact of the natural disasters that occurred during the year ended December 31, 2024 and determined that natural disasters did not have a material impact on our operating results or financial position.
In such cases, we disclose the nature of the material contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made. Beginning in 2019, the Company had been engaged in litigation related to the bankruptcy of Sears Holding (the “Litigation”).
In such cases, we disclose the nature of the material contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made. On July 1, 2024, a purported shareholder of the Company filed a class action lawsuit in the U.S.
Liquidity and Capital Resources Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and the reinvestment in and redevelopment of our properties (“development expenditures”).
Interest Expense The decrease of $19.6 million in interest expense for the year ended December 31, 2024 was driven by partial Term Loan Facility pay downs. Liquidity and Capital Resources Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures.
Property Operating Expenses and Real Estate Taxes The decrease of $20.5 million in property operating expense and the decrease of $17.8 million in real estate taxes for the year ended December 31, 2023 was due primarily to asset sales and partially offset by a decrease in amounts capitalized due to a decrease in development. - 36 - Depreciation and Amortization Expenses The decrease of $26.6 million in depreciation and amortization expenses for the year ended December 31, 2023 was due primarily to a decrease of $27.8 million net scheduled depreciation due to sales and partially offset by $1.2 million in depreciation related to placing development assets into service.
Depreciation and Amortization Expenses The decrease of $1.4 million in depreciation and amortization expenses for the year ended December 31, 2024 was due primarily to a $3.9 million decrease due to property sales which was partially offset by $1.5 million in depreciation related to moving a property out of held for sale.
We continue to evaluate our portfolio, including our development plans and offers received, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities. - 34 - Asset Sales and Sales of Unconsolidated Properties During the year ended December 31, 2023, the Company sold 60 wholly owned assets, generating gross proceeds of $702.0 million and monetized eight unconsolidated properties for an additional $140.7 million of gross proceeds.
We continue to evaluate our portfolio, including our development plans, hold periods and, if applicable, offers received, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities.
The decrease of $18.1 million in straight-line rental income during 2022 was due primarily to property sales.
The decrease was partially offset by an increase of $2.3 million in rental income from the Aventura, FL property. The decrease of $16.0 million in straight-line rental expense during 2024 was due primarily to the decrease in property sales of tenanted properties in 2024, decreasing the amount of straight-line rental income reversals.
We recognized $11.7 million and $35.6 million of other-than-temporary impairment losses on our investments in unconsolidated entities during the years ended December 31, 2023 and 2022, respectively.
As such, we recorded impairment losses of $87.5 million for the year ended December 31, 2024, primarily due to changes in discount rates and residual capitalization rates between June 2023 and June 2024. We did not recognize any other-than-temporary impairment losses on our investments in unconsolidated entities during the year ended December 31, 2024.
The decrease of $1.6 million for the year ended December 31, 2023 was primarily driven by a decrease in legal expenses primarily due to settling the outstanding litigation in 2022 and lower compensation expenses due to a decrease in employee headcount. This was partially offset by an increase in third-party consultants utilized to execute the Plan of Sale.
The decrease of $16.0 million for the year ended December 31, 2024 was primarily driven by a decrease of $14.2 million related to third-party consulting fees utilized to execute the Plan of Sale as well as a decrease of $2.8 million in personnel costs.
Impairment of Real Estate Assets During the year ended December 31, 2023, the Company recognized $107.0 million in impairment of real estate assets, which is included within the consolidated statements of operations.
During the year ended December 31, 2023, the Company recognized $107.0 million of impairment losses as a result of recognizing an impairment on the Company's development property in Aventura, FL, which is included within the condensed consolidated statements of operations Equity in Loss of Unconsolidated Entities During the year ended December 31, 2024, the Company recorded $3.2 million of loss from investments in unconsolidated entities primarily due to $2.6 million of loss on the sale of one of the underlying properties.
The Company determined the fair value of this property by applying a discount to projected cash flows. During the year ended December 31, 2022, the Company recognized $126.9 million in impairment of 42 real estate assets, as a result of the Company's plan to pursue the Plan of Sale.
The Company determined the fair value of this property by applying a discount to projected cash flows over the estimated hold period.
Subsequent to December 31, 2023, we sold five assets for gross proceeds of $48.8 million. As of March 22, 2024, we had one asset under contract for sale with no due diligence contingencies for total anticipated proceeds of $3.9 million and three assets under contract for sale subject to customary due diligence for total anticipated proceeds of $49.7 million.
Subsequent to December 31, 2024, we sold one asset for gross proceeds of $29.9 million.
Removed
See “Cautionary Statement Regarding Forward-Looking Statements.” For discussion of 2021 items and year-over-year comparisons between 2022 and 2021 that are not included in this Annual Report, refer to “Item 7. – Management Discussion and Analysis of Financial Condition and Results of Operations” found in our Annual Report for the fiscal year ended December 31, 2022, that was filed with the Securities and Exchange Commission on March 14, 2023.
Added
The portfolio encompasses 10 wholly owned properties consisting of approximately 0.9 million square feet of GLA and 166 acres and seven unconsolidated entities consisting of approximately 0.8 million square feet of GLA and 108 acres.
Removed
Impairment of real estate assets and investments in unconsolidated entities In the first quarter of 2022, we announced a review of strategic alternatives and during the second quarter the Company filed a preliminary proxy to seek approval for the Plan of Sale to maximize shareholder value.
Added
Impairment of real estate assets and investments in unconsolidated entities Due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment was triggered. We also agreed to sell certain assets below carrying value.
Removed
As a result of the foregoing, the Company’s anticipated holding periods with respect to certain assets has changed. This affected our view of recoverability of the carrying value of those assets over their respective holding periods and during the year ended December 31, 2022, $126.9 million of impairment was recorded.
Added
Asset Sales and Sales of Unconsolidated Properties During the year ended December 31, 2024, the Company sold 13 wholly owned assets, generating gross proceeds of $163.5 million and monetized two unconsolidated properties for an additional $14.9 million, or $10.8 million at share, of gross proceeds.
Removed
As of March 22, 2024, we had four assets under contract to sell for total anticipated proceeds of $53.6 million, subject to buyer diligence and closing conditions.
Added
The wildfires in Los Angeles, CA that occurred in January 2025 did not have a material impact on our operating results or financial condition but could create a delay in our ability to sell the Santa Monica asset.
Removed
Litigation Settlement During the year ended December 31, 2022, the Company recorded a $35.5 million litigation settlement related to the settlement of our litigation described further below, which the Court approved on September 2, 2022, and was settled on October 18, 2022. We paid the settlement amount described above in October 2022. See Note 9 – Commitments and Contingencies.
Added
Appointment of New Chief Executive Officer and President On March 28, 2025, we announced that our Board of Trustees and Andrea L. Olshan have agreed that Ms. Olshan will step down as the Company’s Chief Executive Officer and President (“CEO”) and as a member of the Board effective as of April 11, 2025 (the “Separation Date”).
Removed
During the year ended December 31, 2022, the Company sold 65 properties, for aggregate consideration of $650.3 million and recorded a gain totaling $211.9 million, which is included in gain on sale of real estate within the consolidated statements of operations.
Added
Also on March 28, 2025, we announced that our Board of Trustees appointed Board Chairman Adam Metz as Interim CEO as of the Separation Date. In his role as Interim CEO, Mr.
Removed
During the year ended December 31, 2022, the Company sold interests in three unconsolidated entities, and recorded a loss totaling $0.7 million, which is included in loss on sale of interests in unconsolidated entities, net within the consolidated statement of operations.
Added
Metz will serve as the principal executive officer of the Company until his successor is duly appointed and qualified, or until his earlier termination or removal, and will receive a monthly salary of $80,000. Mr.
Removed
This impairment arose primarily from recognizing $101.5 million of impairment on the Company's development property in Aventura, FL due to continued increasing development and construction costs and deteriorating market conditions, which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment.
Added
Metz will also continue to serve as Board Chairman, and the Board has appointed Mitchell Sabshon to serve as Lead Independent Director as of the Separation Date. - 34 - Results of Operations We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties.
Removed
Equity in Loss of Unconsolidated Entities The decrease of $16.2 million in loss in the unconsolidated entities for the year ended December 31, 2023 was primarily driven by a impairment charges recorded at the joint venture level of our unconsolidated entities.
Added
Property Operating Expenses The decrease of $4.9 million in property operating expense for the year ended December 31, 2024 was due primarily to decreases of $7.5 million of operating expenses related to asset sales which was partially offset by increases of demolition costs of $0.6 million and $1.5 million in insurance expense. - 35 - Abandoned project costs During the year ended December 31, 2024, the Company expensed costs that were previously capitalized in construction in progress on account of a tenant that defaulted on its lease prior to opening and predevelopment costs on a property which the Company is not currently pursuing entitlements.
Removed
This is compared with an aggregate $61.1 million of impairment charges recorded in two underlying properties during the year ended December 31, 2022, resulting in the Company picking up its share of impairment totaling $30.6 million plus the Company recording other-than-temporary impairment of $35.6 million.
Added
Real Estate Taxes Real estate taxes decreased by approximately $5.0 million due to property sales. The decrease was partially offset by an increase of $1.0 million in Aventura, FL real estate taxes and a reduction of capitalized real estate taxes of approximately $1.3 million.
Removed
These other-than-temporary impairments arose from the Company’s impairment analysis pursuant to ASC 323, Equity Method and Joint Ventures.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2023, we had $360 million of consolidated debt, all of which is borrowed under our fixed-rate Term Loan Facility which is based on a fixed term and imputed interest rate and therefore, neither are subject to interest rate fluctuations.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2024, we had $240.0 million of consolidated debt, all of which is borrowed under our fixed-rate Term Loan Facility which is based on a fixed term and imputed interest rate and therefore, neither are subject to interest rate fluctuations.
As of December 31, 2023, the estimated fair value of our consolidated debt was $349.5 million. The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt.
As of December 31, 2024, the estimated fair value of our consolidated debt was $235.7 million. The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt.

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