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What changed in Seritage Growth Properties's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Seritage Growth Properties's 2022 and 2023 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 2023 report.

+249 added−335 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-14)

Top changes in Seritage Growth Properties's 2023 10-K

249 paragraphs added · 335 removed · 193 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

27 edited+8 added−18 removed32 unchanged
Biggest changeRisk Factors—Risks Related to Our Business and Operations—There can be no assurance that our review of strategic alternatives will result in any transaction or any strategic change at this time.” Market Update Over the last several months, the Company, along with the commercial real estate market as a whole, has experienced and continues to experience progressively more challenging market conditions as a result of, among other things, the continued 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), and slowing rent growth expectations due to potential recession concerns.
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.
We also may be liable under certain of these laws for damage that occurred prior to our ownership of a property or at a site where we sent wastes for disposal. The failure to properly remediate a property may also adversely affect our ability to lease, sell or rent the property or to borrow funds using the property as collateral.
We also may be liable under certain of these laws for damage that occurred prior to our ownership of a property or at a site where we sent waste for disposal. The failure to properly remediate a property may also adversely affect our ability to lease, sell or rent the property or to borrow funds using the property as collateral.
Our website also contains copies of our corporate governance guidelines and code of business conduct and ethics as well as the charters of our audit, compensation and nominating and corporate governance committees. The information on our website is not part of this or any other report we file with or furnish to the SEC. - 5 -
Our website also contains copies of our corporate governance guidelines and code of business conduct and ethics as well as the charters of our audit, compensation and nominating and corporate governance committees. The information on our website is not part of this or any other report we file with or furnish to the SEC. - 4 -
Environmental Matters Our properties are subject to environmental laws regulating, among other things, air emissions, wastewater discharges and the handling and disposal of wastes. Certain of the 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 routinely installed in residential and commercial structures.
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. 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.
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.
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.
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.
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.
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.
Lampert was also the Chairman of Seritage prior to his retirement, effective March 1, 2022, and controlled each of the tenant entities that was a party to the Holdco Master Lease prior to their respective terminations. Board of Trustees Matters On March 1, 2022, the Company announced that Mr.
Lampert was also the Chairman of Seritage prior to his retirement, effective March 1, 2022, and controlled each of the tenant entities that was a party to the Holdco Master Lease prior to their respective terminations.
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. Human Capital We believe that our employees are our most important asset.
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.
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.
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.
See Note 1 – Organization of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information about the Plan of Sale. The strategic review process remains ongoing as the Company executes the Plan of Sale.
See Note 1 – Organization of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information about the Plan of Sale.
In order to achieve its objective, the Company intends to execute the following strategies: • Multi-tenant Retail: Our portfolio of 31 multi-tenant retail assets provides positive cash flow and are primarily leased to a variety of national credit tenants. As of December 31, 2022, this portfolio was 81.0% leased with a pipeline of 0.1 million square feet.
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.
As of December 31, 2022, the Company did not have any remaining properties leased to Holdco or Sears Holdings after giving effect to the termination of the remaining Consolidated Properties. Edward S. Lampert is the Chairman and Chief Executive Officer of ESL Investments, Inc, which owns Holdco. Mr.
Since March 2021, the Company has not leased any properties to Sears Holdings or its successors after giving effect to the termination of the remaining Consolidated Properties. Edward S. Lampert is the Chairman and Chief Executive Officer of ESL Investments, Inc, which owns Holdco. Mr.
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.
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.
As of December 31, 2022, the Company’s portfolio consisted of interests in 97 properties comprised of approximately 13.5 million square feet of gross leasable area (“GLA”) or build-to-suit leased area, approximately 157 acres held for or under development and approximately 6.1 million square feet or approximately 498 acres to be disposed of.
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.
Subsequent to December 31, 2022 we have sold 17 multi-tenant retail assets. • 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.
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.
David Fawer and Mr. Thomas Steinberg from the Board of Trustees. 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. The Special Committee retained Barclays Capital, Inc.
An operator’s failure to comply could result in fines and penalties or the requirement to undertake corrective actions which may result in significant costs to the operator and thus adversely affect their ability to meet their obligations to us. - 3 - Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner or operator of real property may be required to investigate, remove and/or remediate a release of hazardous substances or other regulated materials at, or emanating from, such property.
Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner or operator of real property may be required to investigate, remove and/or remediate a release of hazardous substances or other regulated materials at, or emanating from, such property.
This means that bringing your authentic self to work every day is seen as an asset. We have focused our diversity and inclusion efforts on employee recruitment, employee engagement, consulting engagements, community outreach and partnering with like-minded organizations. As of December 31, 2022, our organization was comprised of 41% women and 31% people of color.
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.
These conditions have applied and continue to apply downward pricing pressure on all of our assets. The assets we have sold to date have been those generally less impacted by these adverse market trends.
These conditions have applied and continue to apply downward pricing pressure on all of our assets.
Our management team, which is defined as Senior Vice Presidents and above, including consultants who hold roles in those positions, was comprised of 44% women. We had four diverse members of our Board of Trustees. We also take diversity into consideration when evaluating vendor selection.
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.
As of December 31, 2022, the Company has one tenant that comprises 14% of annualized base rent, with no other tenants exceeding 10% of annualized base rent. The Company's portfolio of 80 Consolidated Properties and 17 Unconsolidated Properties was diversified by location across 28 states.
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.
The portfolio consists of approximately 10.8 million square feet of GLA held by 80 wholly owned properties (such properties, the “Consolidated Properties”) and 2.6 million square feet of GLA held by 17 unconsolidated entities (such properties, the “Unconsolidated Properties”). The Company’s mission is to maximize value for our shareholders in accordance with the Plan of Sale.
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”).
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 cannot assure you that the competitive pressures we face will not have a material adverse effect on our business.
We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business.
To the extent that we believe it will be accretive to shareholder value we will look to entitle and/or execute on further densification opportunities by converting vacant land to pad sites. • Premier/Master Planned Mixed Use and Residential: As of December 31, 2022, our full portfolio included approximately 1,314 acres of land, or an average of 13.5 acres per site, and our most significant geographic concentrations were in higher growth markets in California, Florida, Texas, and the Northeast.
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.
The average acreage per site is 11.5. • Non-core Assets for Monetization: We continue to assess the best use for all sites within our portfolio, including residential, retail, and converting excess land area to pad sites. The non-core assets are those assets where we believe we will maximize value by selling in its current state.
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.
As of December 31, 2022, we had 32 full-time employees, all of whom are located in the United States, with the majority located in New York. We strive to retain our top talent, and we believe that our business offers a unique opportunity for individuals to grow and learn.
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.
Removed
Lampert retired as its Chairman and resigned from the Board of Trustees effective March 1, 2022. On March 30, 2022, the Company elected Mr. Adam Metz to the Board of Trustees. On April 26, 2022, the Company elected Mr. Mitchell Sabshon, Ms. Talya Nevo-Hacohen and Mr. Mark Wilsmann to the Board of Trustees and announced the resignation of Mr.
Added
The Company’s mission is to maximize value for our shareholders in accordance with the Plan of Sale.
Removed
The Board of Trustees created a special committee of the Board of Trustees (the “Special Committee”) to oversee the process. The Special Committee has retained Barclays Capital, Inc. (“Barclays”) as its financial advisor.
Added
(“Barclays”) as its financial advisor from March 2022 through August 2023 to assist with the strategic review.
Removed
A majority of our leases are effectively NNN based on the structure of our leases, providing an important inflation hedge. This portfolio also affords numerous further densification opportunities through the addition of pads on excess parking areas. We are working to maximize value of these assets and position them for sale.
Added
The strategic review process remains ongoing as the Company executes the Plan of Sale, and the Company remains open minded to pursuing value maximizing alternatives, including a potential sale of the Company.
Removed
We believe these land holdings will provide meaningful opportunities to create value through relevant investments and developments. Three sites have been identified as potential residential developments.
Added
Risk Factors—Risks Related to Our Business and Operations—There can be no assurance that our review of strategic alternatives will result in any transaction or any strategic change at this time.” The Board of Trustees is currently overseeing the Plan of Sale.
Removed
The Company sought a shareholder vote to approve the Plan of Sale. The 2022 Annual Meeting of Shareholders occurred on October 24, 2022, following our filing of a final proxy statement with the SEC on September 14, 2022.
Added
A majority of our leases are subject to collect recoveries from tenants based on the structure of our leases, providing an important inflation hedge.
Removed
During the meeting, the Plan of Sale was approved by the shareholders. - 2 - COVID-19 Pandemic The COVID-19 pandemic has caused and continues to cause significant impacts on the real estate industry in the United States, including the Company’s properties.
Added
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.
Removed
As a result of the fluidity surrounding this situation, the Company expects that these conditions may change, potentially significantly, in future periods and results for the year ended December 31, 2022 may not be indicative of the impact of the COVID-19 pandemic on the Company’s business for future periods.
Added
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.
Removed
As such, the Company cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows over the foreseeable future. As of December 31, 2022, the Company had collected 99.6% of rental income for the year ended December 31, 2022.
Added
An operator’s failure to comply could result in fines and penalties or the requirement to undertake corrective actions which may result in significant costs to the operator and thus adversely affect their ability to meet their obligations to us.
Removed
While the Company intends to enforce its contractual rights under its leases, there can be no assurance that tenants will meet their future obligations or that additional rental modification agreements will not be necessary. Significant Tenants Management believes the Company’s portfolio is reasonably diversified and does not contain any significant concentrations of credit risk.
Removed
Under the Holdco Master Lease, Holdco was required to indemnify us from certain environmental liabilities at the Consolidated Properties before or during the period in which any such Consolidated Property was leased to Holdco, including removal and remediation of all affected facilities and equipment constituting the automotive care center facilities.
Removed
In addition, an environmental reserve was funded concurrently with the formation of the Company in the amount of approximately $12.0 million. As of December 31, 2021, the balance of the environmental reserve was approximately $9.5 million and was included in the accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.
Removed
As a result of settling the litigation referenced in Item 3, the Company was released from any obligation to reimburse Holdco for remediation work performed and the Company is no longer required to maintain the environmental reserve.
Removed
The extinguishment of the $9.5 million liability has been recorded to miscellaneous income during the year ended December 31, 2022 and the liability was $0 as of December 31, 2022.
Removed
Insurance We have comprehensive liability, property and rental loss insurance with respect to our portfolio of properties. We believe that such insurance provides adequate coverage.
Removed
During 2022, our number one priority was the health and safety of our team, our families and loved ones, our communities and our partners, including our tenants, contractors, and other stakeholders.
Removed
We understand the importance of the mental, physical and social health and well-being of our employees and take actions to promote good health such as providing mental health days off. - 4 - Our core principles guide how we conduct ourselves and approach the challenges and opportunities that we face.
Removed
Our core principles are: • Maintain a diverse and inclusive culture based on respect • Build relationships for the long term • Create an environment of constant improvement • Be entrepreneurial and proactive • Inspire people and communities through our projects We believe that diversity and inclusion at all levels of our organization are imperative to our future successes.
Removed
We regularly review our compensation practices to ensure employees from underrepresented groups are not being underpaid relative to others doing the same or similar work. All employees receive training in the prevention and reporting of sexual harassment, discriminatory and abusive conduct in the workplace.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

78 edited+31 added−42 removed172 unchanged
Biggest changeRisks 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 Special Committee. • We have experienced progressively more challenging market conditions over the last several months. • 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. • We are dependent on the ability of our major tenants to successfully operate their businesses. • The future bankruptcy or insolvency of any of our tenants could result in the termination of such tenant’s lease and material losses to us. • We may not be able to renew leases or re-lease space at our properties and property vacancies could result in significant capital expenditures. • Real estate investments are relatively illiquid. • Both we and our tenants face a wide range of competition and related challenges that could affect our ability to operate profitably. • 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 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 may be subject to impairment charges. • 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. - 6 - • 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. • 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.
Biggest changeAs 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.
Our Declaration of Trust authorizes us to issue additional authorized but unissued common shares or preferred shares of beneficial interest. We have also issued 2,800,000 shares of Series A Preferred Shares that are senior to our common shares with respect to priority of dividend payments and rights upon liquidation, dissolution or winding up.
Our Declaration of Trust authorizes us to issue additional authorized but unissued common shares or preferred shares of beneficial interest. We have also issued 2,800,000 Series A Preferred Shares that are senior to our common shares with respect to priority of dividend payments and rights upon liquidation, dissolution or winding up.
This uncertainty may be exacerbated as a result of actual changes in economic conditions, including as a result of market dynamics, trends in consumer income, rising energy prices, rising interest rates, tariffs or trade disputes, and natural or manmade disasters, including epidemic or pandemic disease, or the impact of the fear of such changes on consumer behavior.
This uncertainty may be exacerbated as a result of actual changes in economic conditions, including as a result of market dynamics, trends in consumer income, rising energy prices, high interest rates, tariffs or trade disputes, and natural or manmade disasters, including epidemic or pandemic disease, or the impact of the fear of such changes on consumer behavior.
Increased future debt service obligations may limit our operational flexibility, including our ability to finance or refinance our properties, contribute properties to joint ventures or sell properties as needed. Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service, and the reinvestment in and redevelopment of our properties.
Increased future debt service obligations may limit our operational flexibility, including our ability to finance or refinance our properties, contribute properties to joint ventures or sell properties as needed. - 8 - Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service, and the reinvestment in and redevelopment of our properties.
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 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 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.
Lampert previously served as the Chairman of the Board of Directors and Chief Executive Officer of Sears Holdings, and was previously the Chairman of the Seritage Board of Trustees. In any matter affecting us, the interests of Mr. Lampert may differ or conflict with the interests of our other shareholders. - 19 - On March 1, 2022, Mr.
Lampert previously served as the Chairman of the Board of Directors and Chief Executive Officer of Sears Holdings and was previously the Chairman of the Seritage Board of Trustees. In any matter affecting us, the interests of Mr. Lampert may differ or conflict with the interests of our other shareholders. On March 1, 2022, Mr.
Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our own results of operations. Any economic slowdown, including a possible recession, could impair our ability to sell our properties.
Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our own results of operations. - 11 - Any economic slowdown, including a possible recession, could impair our ability to sell our properties.
In the event of any such transaction, the interests of Mr. Lampert and his affiliates, 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.
In the event of any such transaction, the interests of Mr. Lampert and his affiliates, may differ from or conflict with the interests of our other shareholders. - 17 - Our investments in or redevelopment of properties may be unsuccessful or fail to meet our expectations.
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. - 25 - 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. - 22 - Dividends on our preferred shares, including the Series A Preferred Shares, are discretionary.
We have substantial net operating and net capital loss carry forwards which we have used, and will continue to use, to offset our taxable income. - 22 - If we experience an ownership change, our income tax liability could materially increase.
We have substantial net operating and net capital loss carry forwards which we have used, and will continue to use, to offset our taxable income. If we experience an ownership change, our income tax liability could materially increase.
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. - 15 - 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 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.
As permitted by the Maryland’s Law, the Company’s Declaration of Trust limits the liability of its trustees and officers to Seritage and its shareholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated.
As permitted by Maryland Law, the Company’s Declaration of Trust limits the liability of its trustees and officers to Seritage and its shareholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated.
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. - 8 - 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.
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.
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, 2022.
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.
Decreases in consumer demand can have a direct impact on our tenants and the rents we receive. - 13 - Rising expenses could reduce cash flow.
Decreases in consumer demand can have a direct impact on our tenants and the rents we receive. Rising expenses could reduce cash flow.
As a result of any of the foregoing circumstances, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our results of operations and financial condition. - 14 - 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.
As a result of any of the foregoing circumstances, we could be required to expend funds to comply with the provisions of the ADA, which could adversely affect our results of operations and financial condition. - 12 - 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.
The result of these incidents may include disrupted operations, liability for loss or misappropriation of data, stolen assets or information, increased cybersecurity protection and insurance costs, increased compliance costs, litigation, regulatory enforcement actions and damage to our reputation or business relationships. - 16 - We may incur mortgage indebtedness and other borrowings, which may increase our business risks.
The result of these incidents may include disrupted operations, liability for loss or misappropriation of data, stolen assets or information, increased cybersecurity protection and insurance costs, increased compliance costs, litigation, regulatory enforcement actions and damage to our reputation or business relationships. - 14 - We may incur mortgage indebtedness and other borrowings, which may increase our business risks.
Economic conditions, higher 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 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.
These factors include, but are not limited to: • interest rates and credit spreads have increased significantly during 2022 and are expected to increase further, 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 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.
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. - 23 - 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. - 20 - Risks Related to Ownership of our Securities The market price and trading volume of our securities may be volatile.
While we do not currently have the liquid funds available to fully fund projected property and other expenses and planned development expenditures, we expect to fund these uses of cash with a combination of capital sources including, but not limited to, sales of Consolidated Properties, sales of interests in Unconsolidated Properties and potential credit and capital markets transactions, subject to compliance with certain conditions and/or the consent of our lender under our Term Loan Facility.
While we do not currently have the liquid funds available to fully fund projected property and other expenses and planned development expenditures, we expect to fund these uses of cash with 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 compliance with certain conditions and/or the consent of our lender under our Term Loan Facility.
As of December 31, 2022, 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, 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.
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. - 24 - 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. - 21 - The Series A Preferred Shares have not been rated.
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 COVID-19 pandemic has continued to, and the future outbreak of other 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.
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 our portfolio.
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.
Additionally, rising interest rates will make any planned financing for prospective buyers of our properties more expensive, which might diminish our ability to sell our properties and/or the prices at which we might sell our properties. Restricted lending practices may negatively impact our tenants’ ability to obtain credit.
Additionally, any rise in interest rates will make any planned financing for prospective buyers of our properties more expensive, which might diminish our ability to sell our properties and/or the prices at which we might sell our properties. Restricted lending practices may negatively impact our tenants’ ability to obtain credit.
We may incur mortgage debt and pledge all or some of our real properties as security for that debt to finance newly acquired properties or capital contributions to joint ventures, or to fund retenanting and redevelopment projects.
We may incur mortgage debt and pledge all or some of our real properties as security for that debt to finance newly acquired properties or capital contributions to joint ventures, or to fund re-tenanting and redevelopment projects.
Accordingly, in the event that actions taken by any of our trustees or officers are immune or exculpated from, or indemnified against, liability but which impede our performance, the Company and our shareholders’ ability to recover damages from that trustee or officer will be limited. - 17 - Our Declaration of Trust and bylaws and Maryland law contain provisions that may delay, defer or prevent an acquisition of Class A common shares or a change in control.
Accordingly, in the event that our trustees or officers are immune or exculpated from, or indemnified against, liability in connection with actions taken by any such trustees or officers, which actions impede our performance, the Company and our shareholders’ ability to recover damages from that trustee or officer will be limited. - 15 - Our Declaration of Trust and bylaws and Maryland law contain provisions that may delay, defer or prevent an acquisition of Class A common shares or a change in control.
Rising interest rates, beyond potentially reducing the market appetite for our properties, could lead to a potential recession that might impact the sale of our assets as contemplated in the Plan of Sale.
Any rise in interest rates, beyond potentially reducing the market appetite for our properties, could lead to a potential recession that might impact the sale of our assets as contemplated in the Plan of Sale.
We are susceptible to cybersecurity risks that include, among other things, theft, unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks; unauthorized access to relevant systems, compromises to networks or devices; or operational disruption or failures in the physical infrastructure or operating systems of our information systems.
We are susceptible to cybersecurity risks that include, among other things, theft, unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; malware, ransomware; denial of service attacks; phishing and other social engineering compromises; unauthorized access to relevant systems, compromises to networks or devices; or operational disruption or failures in the physical infrastructure or operating systems of our information systems.
Since the year ended December 31, 2019, we have been in breach of one or more of the financial metrics described above, as a result of which we were required to provide mortgages to the lender under the Term Loan Facility with respect to a majority of our portfolio.
Since the year ended December 31, 2019, we have been in breach of one or more of the financial metrics described above, therefore we were required to provide mortgages to the lender under the Term Loan Facility with respect to a majority of our portfolio.
During 2021, and continuing into 2022, 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.
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.
The interests of holders of Series A Preferred Shares could be diluted by transactions such as the issuance of additional preferred shares. • Dividends on our preferred shares, including the Series A Preferred Shares, are discretionary. • Holders of Series A Preferred Shares have limited voting rights. - 7 - 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 Special Committee.
The interests of holders of Series A Preferred Shares could be diluted by transactions such as the issuance of additional preferred shares. • Dividends on our preferred shares, including the Series A Preferred Shares, are discretionary. • Holders of Series A Preferred Shares have limited voting rights. - 6 - 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.
Deflationary pressure on retailers may diminish their ability to rent our space and decrease our ability to re-lease the space on favorable terms to us. The U.S. economy is currently experiencing and may continue to experience higher inflation than in prior periods. During inflationary periods, interest rates have historically increased.
Deflationary pressure on retailers may diminish their ability to rent our space and decrease our ability to re-lease the space on favorable terms to us. The U.S. economy has experienced and may continue to experience higher inflation than in prior periods. During inflationary periods, interest rates have historically increased.
These projects are subject to a number of risks including (but not limited to): • abandonment of redevelopment activities after expending resources to determine feasibility; • loss of rental income, as well as payments of maintenance, repair, real estate taxes and other charges; • restrictions or obligations imposed pursuant to other agreements; • construction and/or lease-up costs (including tenant improvements or allowances) and delays and cost overruns, including construction costs that exceed original estimates; • failure to achieve expected occupancy and/or rent levels within the projected time frame or at all; • failure to successfully manage, or find suitable third-party development partners for, the development of residential, office or other mixed-use properties; • inability to successfully integrate re-developed properties into existing operations; • difficulty obtaining financing on acceptable terms or paying operating expenses and debt service costs associated with redevelopment properties prior to sufficient occupancy and commencement of rental obligations under new leases; • changes in zoning, building and land-use laws, and conditions, restrictions or limitations of, and delays or failures to obtain, necessary zoning, building, occupancy, land-use and other governmental permits; • changes in local real-estate market conditions, including an oversupply of, or a reduction in demand for, retail space or retail goods, and the availability of current and prospective tenants; • negative perceptions by retailers or shoppers of the safety, convenience and attractiveness of the property; • exposure to fluctuations in the general economy due to the significant time lag between commencement and completion of redevelopment projects; and • vacancies or ability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options. - 20 - If any of these events occur at any time during the process with respect to any project, overall project costs may significantly exceed initial cost estimates, which could result in reduced returns or losses from such investments.
These projects are subject to a number of risks including (but not limited to): • abandonment of redevelopment activities after expending resources to determine feasibility; • loss of rental income, as well as payments of maintenance, repair, real estate taxes and other charges; • restrictions or obligations imposed pursuant to other agreements; • construction and/or lease-up costs (including tenant improvements or allowances) and delays and cost overruns, including construction costs that exceed original estimates; • failure to achieve expected occupancy and/or rent levels within the projected time frame or at all; • failure to successfully manage, or find suitable third-party development partners for, the development of residential, office or other mixed-use properties; • inability to successfully integrate re-developed properties into existing operations; • difficulty obtaining financing on acceptable terms or paying operating expenses and debt service costs associated with redevelopment properties prior to sufficient occupancy and commencement of rental obligations under new leases; • changes in zoning, building and land-use laws, and conditions, restrictions or limitations of, and delays or failures to obtain, necessary zoning, building, occupancy, land-use and other governmental permits; • changes in local real-estate market conditions, including an oversupply of, or a reduction in demand for, retail space or retail goods, and the availability of current and prospective tenants; • negative perceptions by retailers or shoppers of the safety, convenience and attractiveness of the property; • exposure to fluctuations in the general economy due to the significant time lag between commencement and completion of redevelopment projects; and • vacancies or ability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options.
As of December 31, 2022, 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. As of December 31, 2022, at the request of the lender, all assets have mortgages.
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.
We have experienced progressively more challenging market conditions and there can be no assurances that these challenges will abate, which we expect will adversely impact the net Plan of Sale proceeds from our assets.
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.
Our real estate assets may be subject to impairment charges. On a periodic basis, we must assess whether there are any indicators that the value of our real estate assets and other investments may be impaired.
On a periodic basis, we must assess whether there are any indicators that the value of our real estate assets and other investments may be impaired.
While many of our existing leases require, and new lease agreements are expected to require, that comprehensive general insurance and hazard insurance be maintained by the tenants with respect to their premises, and we have obtained casualty insurance with respect to our properties, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, that may be uninsurable or not economically insurable.
While many of our existing leases require, and new lease agreements are expected to require, that comprehensive general insurance and hazard insurance be maintained by the tenants with respect to their premises, and we have obtained casualty insurance with respect to the vast majority of our properties other than certain vacant properties and development land sites, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, that may be uninsurable or not economically insurable.
The requirement that trustee nominees receive a vote of two-thirds of the votes cast of the Class A common shares and Class B non-economic shares (voting together as a single class) entitled to be cast in the election of trustees may have the effect of making it more difficult for shareholders to change the composition of the Board of Trustees.
The requirement that trustee nominees receive a vote of two-thirds of the votes cast by the holders of Class A common shares and Class B non-economic shares (voting together as a single class) may have the effect of making it more difficult for shareholders to change the composition of the Board of Trustees.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) applicable to Maryland REITs may have the effect of inhibiting a third party from acquiring us or of impeding a change of control of the Company under circumstances that otherwise could provide Class A common shareholders with the opportunity to realize a premium over the then-prevailing market price of such shares or otherwise be in the best interest of shareholders, including: o “business combination” provisions that, subject to certain exceptions and limitations, prohibit certain business combinations between a Maryland REIT and an “interested shareholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the Company’s outstanding voting shares or an affiliate or associate of the Maryland REIT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of the Company) or an affiliate of any interested shareholder and the Maryland REIT for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes two supermajority shareholder voting requirements on these combinations; - 18 - o “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of our company (defined as voting shares that, if aggregated with all other shares owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights with respect to the control shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares; and o Additionally, Title 3, Subtitle 8 of the MGCL permits the Board of Trustees, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or bylaws, to implement certain takeover defenses.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) applicable to Maryland REITs may have the effect of inhibiting a third party from acquiring us or of impeding a change of control of the Company under circumstances that otherwise could provide Class A common shareholders with the opportunity to realize a premium over the then-prevailing market price of such shares or otherwise be in the best interest of shareholders, including: o “business combination” provisions that, subject to certain exceptions and limitations, prohibit certain business combinations between a Maryland REIT and an “interested shareholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the Company’s outstanding voting shares or an affiliate or associate of the Maryland REIT who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding shares of the Company) or an affiliate of any interested shareholder and the Maryland REIT for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes two supermajority shareholder voting requirements on these combinations; o “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of our company (defined as voting shares that, if aggregated with all other shares owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights with respect to the control shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares; and o Additionally, Title 3, Subtitle 8 of the MGCL permits the Board of Trustees, without shareholder approval and notwithstanding any contrary provisions in our Declaration of Trust or bylaws, to implement certain takeover defenses. - 16 - The Board of Trustees has, by resolution, exempted from the provisions of the Maryland Business Combination Act all business combinations (a) between us and (i) Sears Holdings or its affiliates or (ii) ESL Investments, Inc. or Fairholme Capital Management L.L.C.
As of December 31, 2022, the Company has not yet achieved the requirements to access the Incremental Funding Facility. Subsequent to December 31, 2022, 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, 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.
Although some leases may permit us to pass through such tax increases to the tenants for payment, there is no assurance that renewal leases or future leases will be negotiated on the same basis.
Although some leases may permit us to pass through such tax increases to the tenants for payment, there is no assurance that renewal leases or future leases will be negotiated on the same basis. Increases not passed through to tenants will reduce our income.
In accordance with the Company’s By-laws, in both contested and uncontested elections at any Annual Meeting of Shareholders, trustees are elected by the vote of two-thirds of the votes cast of the Class A common shares and Class B non-economic common shares (voting together as a single class) entitled to be cast in the election of trustees.
In accordance with the Company’s bylaws, in both contested and uncontested elections at any Annual Meeting of Shareholders, trustees are elected by the vote of two-thirds of the votes cast by the holders of Class A common shares and Class B non-economic common shares (voting together as a single class).
Our Term Loan Facility includes certain financial metrics to govern certain collateral and covenant exceptions set forth in the agreement, including: (i) a total fixed charge coverage ratio of not less than 1.00 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending December 31, 2022, and not less than 1.20 to 1.00 for each fiscal quarter thereafter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.05 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending December 31, 2022, and not less than 1.30 to 1.00 for each fiscal quarter thereafter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion.
Our Term Loan Facility includes certain financial metrics to govern certain collateral and covenant exceptions set forth in the agreement, including: (i) a total fixed charge coverage ratio of not less than 1.20 to 1.00 for each fiscal quarter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.30 to 1.00 for each fiscal quarter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion.
Over the last several months, we, along with the commercial real estate market as a whole, have experienced and continue to experience progressively more challenging market conditions, as a result of, among other things, the continued 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) and slowing rent growth expectations due to potential recession concerns.
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.
In addition, due to our interconnectivity with third-party service providers and other entities with which we conduct business, we could be adversely impacted if any of them is subject to a successful cyber incident.
In addition, due to our interconnectivity with third-party service providers and other entities with which we conduct business, we could be adversely impacted if such entities are subject to a successful cyber incident.
As of December 31, 2022, our total indebtedness was $1.03 billion. 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, 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.
Our tenants may also be negatively impacted if the outbreak of COVID-19 occurs within their workforce or otherwise disrupts their management. - 21 - The COVID-19 pandemic, or a future pandemic, could also 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 the COVID-19 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.
A 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.
If we are unable to restore a property to its prior use after a substantial casualty loss or are required to comply with more stringent building or zoning codes and regulations, we may be unable to re-lease the space at a comparable effective rent or sell the property at an acceptable price, which may materially and adversely affect us.
If we are unable to restore a property to its prior use after a substantial casualty loss or are required to comply with more stringent building or zoning codes and regulations, we may be unable to re-lease the space at a comparable effective rent or sell the property at an acceptable price, which may materially and adversely affect us. - 9 - Our real estate assets and equity method investments may be subject to impairment charges.
As of March 6, 2023, the Company has assets under contract for anticipated proceeds of $366.3 million and has accepted offers and is currently negotiating definitive purchase and sale agreements of approximately $98.0 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 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 December 31, 2022, we had aggregate outstanding indebtedness of $1.03 billion. Our existing debt could require a substantial portion of our cash flow to make interest and principal payments.
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.
Supply chain constraints have impacted the cost, availability, and timing of certain materials deliveries. 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.
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.
Increases not passed through to tenants will reduce our income. - 11 - Changes in building and/or zoning laws may require us to update a property or prevent us from fully restoring a property in the event of a substantial casualty loss and/or require us to meet additional or more stringent construction requirements.
Changes in building and/or zoning laws may require us to update a property or prevent us from fully restoring a property in the event of a substantial casualty loss and/or require us to meet additional or more stringent construction requirements.
Lampert may exert substantial influence over us, and his interests may differ from or conflict with the interests of our other shareholders. Mr. Lampert owns approximately 27.6% 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, 2023, Mr. Lampert owned approximately 25% of our outstanding Class A common shares. Mr.
Moreover, any such legislation and regulations could impose substantial costs on our tenants, thereby impacting the financial condition of our tenants and their ability to meet their lease obligations and to lease or re-lease our properties. Possible acts of war, terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.
Moreover, any such legislation and regulations could impose substantial costs on our tenants, thereby impacting the financial condition of our tenants and their ability to meet their lease obligations and to lease or re-lease our properties.
Subsequent to December 31, 2022, we made a $230.0 million voluntary prepayment on the Term Loan Facility, reducing our outstanding balance to $800 million. 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.
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.
Accordingly, we only own a long-term leasehold in the land underlying this property, and we own the improvements thereon only during the term of the ground lease. If we are found to be in breach of a ground lease, we could lose the right to use the property and could also be liable to the ground lessor for damages.
If we are found to be in breach of a ground lease, we could lose the right to use the property and could also be liable to the ground lessor for damages.
This requirement that trustee nominees receive a vote of two-thirds of the votes cast of the common shares entitled to be cast in the election of trustees may also have the effect of making it more difficult for shareholders to elect trustee nominees that do not receive the votes of shares of our largest shareholder, Mr.
The requirement that trustee nominees receive a vote of two-thirds of the votes cast by the holders of the Class A common shares and Class B non-economic shares (voting together as a single class) may also have the effect of making it more difficult for shareholders to elect trustee nominees that do not receive the votes of shares of our largest shareholder, Mr.
As a result, our tenants may delay lease commencements, decline to extend or renew leases upon expiration, fail to make rental payments when due, close a number of locations or declare bankruptcy.
As a result, our tenants may delay lease commencements, decline to extend or renew leases upon expiration, fail to make rental payments when due, close a number of locations or declare bankruptcy. Such issues could negatively impact buyers view of the properties and result in lower than expected sales prices.
The net proceeds that will be distributed to our Class A shareholders over time (directly or through a liquidating trust or other liquidating entity) from the Plan of Sale will be based on a number of factors including: (a) the actual proceeds from the sale of our assets; (b) the repayment of our Term Loan Facility, (c) the redemption of the Company’s outstanding Series A Preferred Shares, (d) the settlement of certain financial obligations, (e) the debt service and dividends on Series A Preferred Shares prior to repayment and redemption, (f) the fees and expenses incurred in connection with the sale of our assets, (g) the expenses and capital expenditures to be incurred and revenue to be generated from our properties prior to disposition and estimates of the general administrative expenses, (h) the wind-down costs of the Company and (i) the Company’s taxes and other liabilities.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 net proceeds that will be distributed to our Class A shareholders over time (directly or through a liquidating trust or other liquidating entity) from the Plan of Sale will be based on a number of factors including: (a) the actual proceeds from the sale of our assets; (b) the repayment of our Term Loan Facility, (c) the redemption of the Company’s outstanding Series A Preferred Shares, (d) the settlement of certain financial obligations, (e) the debt service and dividends on Series A Preferred Shares prior to repayment and redemption, (f) the fees and expenses incurred in connection with the sale of our assets, (g) the expenses and capital expenditures to be incurred and revenue to be generated from our properties prior to disposition and estimates of the general administrative expenses, (h) the wind-down costs of the Company and (i) the Company’s taxes and other liabilities.
Our information systems are essential to the operation of our business and our ability to perform day-to-day operations, including for the secure processing, storage and transmission of confidential and personal information. We must continuously monitor and develop our systems to protect our technology infrastructure and data from misappropriation, corruption and disruption.
Our information systems are essential to the operation of our business and our ability to perform day-to-day operations, including for the secure processing, storage and transmission of confidential and personal information.
If we were to lose the right to use a property due to a breach or non-renewal or final expiration of the ground lease, we would be unable to derive income from such property, which could materially and adversely affect our business, financial conditions or results of operations. - 12 - 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.
If we were to lose the right to use a property due to a breach or non-renewal or final expiration of the ground lease, we would be unable to derive income from such property, which could materially and adversely affect our business, financial conditions or results of operations.
Furthermore, we may not be able to renew our ground lease upon its expiration (after the exercise of all renewal options).
Furthermore, we may not be able to renew our ground lease upon its expiration (after the exercise of all renewal options). We are currently in litigation with the ground lessor as to whether we were in breach at the time we exercised our renewal option.
If any properties are foreclosed upon due to a default, our ability to pay cash distributions to our shareholders may be adversely affected. 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.
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.
Notwithstanding, the loss of services of one or more members of our management team, or our failure to retain talented employees generally could harm our business and our prospects and could adversely affect the Plan of Sale The COVID-19 pandemic has continued to, and the future outbreak of other highly infectious or contagious diseases may, materially and adversely impact the business of our tenants and materially or adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations.
The future outbreak of highly infectious or contagious diseases may, materially and adversely impact the business of our tenants and materially or adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations.
In addition, transactional fees and expenses or unknown liabilities, if any, may adversely impact the net Plan of Sale proceeds from our assets. We are dependent on the ability of our major tenants, to successfully operate their businesses.
In addition, transactional fees and expenses or unknown liabilities, if any, may adversely impact the net Plan of Sale proceeds from our assets. Additionally, our ability to sell our Unconsolidated Properties or interests in unconsolidated entities are subject to certain limitations in the governing documents of these unconsolidated entities.
In addition, we may not have sufficient liquidity to fund such projects, and delays in the completion of a development project may provide various tenants the rights to withdraw from a property.
In addition, we may not have sufficient liquidity to fund such projects, and delays in the completion of a development project may provide various tenants the rights to withdraw from a property. - 18 - 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.
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. Our business depends, to a meaningful extent, upon the continued services of our management team and, more broadly, our employees generally. Our executives have substantial experience in our industry.
Our business depends, to a meaningful extent, upon the continued services of our management team and, more broadly, our employees generally. Our executives have substantial experience in our industry. During 2023, in an effort to continue to incentivize and retain our management team, we amended the employment agreement with Ms.
The retention agreements are structured to incentivize the executives and employees to remain employed until the end of the retention period, but each of these executives could elect to terminate their respective agreements at any time.
Andrea Olshan and extended and revised the retention agreements with Mr. Matthew Fernand and Mr. Eric Dinenberg. The amended agreements are structured generally to incentivize the executives to remain employed until the Plan of Sale has been fully, or nearly fully, completed, but each of these executives could elect to terminate their respective agreements at any time.
The Term Loan Facility also provides for a $400 million incremental facility (the “Incremental Funding Facility”).
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”).
Other than in limited circumstances, holders of Series A Preferred Shares will not have any voting rights.
Other than in limited circumstances, holders of Series A Preferred Shares will not have any voting rights. ITEM 1B. UNRESOLV ED STAFF COMMENTS There are no unresolved comments from the staff of the SEC as of the date of this Annual Report.
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. In that case, we could lose the property securing the loan that is in default. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.
In that case, we could lose the property securing the loan that is in default. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. If any properties are foreclosed upon due to a default, our ability to pay cash distributions to our shareholders may be adversely affected.
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 currently have one property in our consolidated portfolio that is on land subject to a ground lease.
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.
Price surges on construction materials may result in corresponding increases in our overall construction costs as our projects undergo construction.
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.
These challenging market conditions have applied and continue to apply downward pricing pressure on all of our assets. Although the assets that we have sold to date in connection with the Plan of Sale have been those assets that have been generally less impacted by these adverse market trends, there can be no assurances that these challenges will abate.
These challenging market conditions have applied and may continue to apply downward pricing pressure on all of our assets.
In addition, our bylaws contain a provision opting out of the Maryland control share acquisition act. • Certain Provisions of Maryland Law May Limit the Ability of a Third Party to Acquire Control of Us .
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 .
If our tenants are unsuccessful in adapting their businesses, and, as a result terminate, default on, or fail to renew their leases with us, our results of operations and financial condition could be materially adversely affected. - 10 - We have ongoing capital needs and may not be able to obtain additional financing or other sources of funding on acceptable terms.
In addition, we compete with other retail property companies for tenants. Any inability to lease newly developed space or re-lease vacant space can negatively impact our ability to sell our assets and monetize them in line with expectations. We have ongoing capital needs and may not be able to obtain additional financing or other sources of funding on acceptable terms.
Removed
Edward Lampert, our former Chairman, entered into a Voting and Support Agreement under which he exchanged his equity interest in the Operating Partnership for Class A common shares and agreed to vote his shares in favor of the Plan of Sale. As of January 4, 2023, after giving effect to the exchange of his operating partnership interests, Mr.
Added
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.

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Item 2. Properties

Properties — owned and leased real estate

7 edited+1 added−11 removed0 unchanged
Biggest changePaul MN Non-Core 201,900 100 201,800 17 n/a 0.1 % 68 Las Vegas NV Non-Core 132,600 42,500 90,100 11 Round One Entertainment 32.0 % 69 Reno NV Non-Core 174,900 59,300 115,600 3 Round One Entertainment 33.9 % 70 Rochester NY Non-Core 139,600 — 139,600 14 n/a 0.0 % 71 Yorktown Heights NY Non-Core 153,200 38,500 114,600 12 24 Hour Fitness 25.2 % 72 Dayton OH Non-Core 13,400 13,400 — 5 Outback Steakhouse 100.0 % 73 Mentor OH Non-Core 215,300 — 215,300 20 n/a 0.0 % 74 Middleburg Heights OH Non-Core 369,500 — 369,500 19 n/a 0.0 % 75 Oklahoma City OK Non-Core 147,500 — 147,500 14 n/a 0.0 % 76 Happy Valley OR Non-Core 139,800 45,000 94,800 12 Dick's Sporting Goods 32.2 % 77 Cordova TN Non-Core 160,600 — 160,600 12 n/a 0.0 % 78 Houston TX Non-Core 201,600 — 201,600 12 n/a 0.0 % 79 Ingram TX Non-Core 169,900 — 169,900 12 n/a 0.0 % 80 Irving(5) TX Non-Core 107,400 12,500 94,900 18 CareNow, Chick-fil-A 11.6 % Total - Consolidated Properties 10,829,300 4,200,000 6,629,300 1,060 38.8 % Average - Consolidated Properties 135,400 52,500 82,900 13 38.8 % - 28 - Unconsolidated Properties GLA (1) City State Planned Usage (3) Total Leased Not Leased Joint Venture Land Acres Significant Tenants (1) Leased (1) 1 Santa Monica CA Premier 51,500 — 51,500 Mark 302 JV 3 n/a 0.0 % 2 San Diego CA Premier 106,200 106,200 — UTC JV 13 CB2 100.0 % 3 Alexandria VA Premier — — — Foulger Pratt / Howard Hughes 41 n/a 0.0 % 4 Altamonte Springs FL Other Unconsolidated Properties 93,500 4,700 88,800 GGP II JV 17 n/a 5.0 % 5 Naples FL Other Unconsolidated Properties 36,300 36,300 — GGP II JV 12 CMX Cinebistro, Uncle Julio’s 100.0 % 6 Wayne NJ Other Unconsolidated Properties 132,700 105,200 27,500 GGP II JV 41 Cinemark, Dave & Busters, Yardhouse, BJ's Wholesale 79.3 % 7 Frisco TX Other Unconsolidated Properties 87,500 6,000 81,500 GGP I JV 11 n/a 6.9 % 8 Santa Rosa CA Other Unconsolidated Properties 82,700 — 82,700 Simon JV 7 n/a 0.0 % 9 Nanuet NY Other Unconsolidated Properties 110,700 — 110,700 Simon JV 14 n/a 0.0 % 10 Austin TX Other Unconsolidated Properties 82,300 — 82,300 Simon JV 16 n/a 0.0 % 11 Chandler AZ Other Unconsolidated Properties 70,300 37,500 32,800 Macerich JV 10 Firestone 53.3 % 12 Cerritos CA Other Unconsolidated Properties 138,800 — 138,800 Macerich JV 20 n/a 0.0 % 13 Danbury CT Other Unconsolidated Properties 88,000 88,000 — Macerich JV 12 Primark, Target 100.0 % 14 Freehold NJ Other Unconsolidated Properties 68,800 32,700 36,100 Macerich JV 10 Primark, Bob's Discount Furniture 47.5 % 15 Portland OR Other Unconsolidated Properties 114,300 — 114,300 Macerich JV 4 n/a 0.0 % 16 Austin TX Other Unconsolidated Properties — — — RD Development JV 11 n/a 0.0 % 17 Lynnwood WA Residential 48,600 30,400 18,200 GGP I JV 12 Dave & Busters, Cheesecake Factory 62.6 % Total - Unconsolidated Properties 1,312,200 447,000 865,200 254 34.1 % Average - Unconsolidated Properties 77,200 26,300 50,900 15 34.1 % (1) Based on signed leases as of December 31, 2022, including SNO Leases.
Biggest changeMyers 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.
(2) Property subject to a lease or ground lease. (3) Planned usage may be subject to entitlements. (4) Asset sold subsequent to December 31, 2022. (5) Asset with a partial sale subsequent to December 31, 2022.
(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.
PR OPERTIES As of December 31, 2022, the Company’s portfolio consisted of interests in 97 properties comprised of approximately 13.5 million square feet of GLA or build-to-suit leased area, approximately 2.6 million square feet of which consists of Unconsolidated Properties, approximately 157 acres held for or under development and approximately 6.1 million square feet or approximately 498 acres to be disposed of.
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.
(2) Based on signed leases at December 31, 2022. (3) Square footage represents built ancillary retail space whereas acreage represents both retail and residential acreage. (4) Represents assets the Company previously designated for sale.
(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.
Acreage / Site Consolidated Properties Multi-tenant Retail 31 4,422 sf / 429 acres 3,581 13.8 Residential (3) 4 44 sf / 35 acres 44 8.6 Premier Mixed Use 5 235 sf / 99 acres 156 19.7 Non-core (4) 40 6,127 sf / 498 acres 420 12.5 Unconsolidated Properties Other Entities 13 1,106 sf / 185 acres 311 14.2 Residential (3) 1 49 sf / 12 acres 30 11.7 Premier Mixed Use 3 158 sf / 57 acres 106 19.0 (1) Square footage is presented at the Company’s proportional share.
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.
Grand Total - All Properties 12,141,500 4,647,000 7,494,500 38.3 % Grand Total - All Properties (at share) 11,485,400 4,423,500 7,061,900 38.5 % - 29 - Planned Usage Total Built SF / Acreage (1) Leased SF (1)(2) Avg.
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.
The following tables set forth certain information regarding our Consolidated Properties and Unconsolidated Properties based on signed leases as of December 31, 2022, including signed but not yet open leases (“SNO” or “SNO Leases”): GLA (1) City State Planned Usage (3) Total Leased Not Leased Land Acres Significant Tenants (1) Leased (1) 1 Phoenix(4) AZ Multi-Tenant Retail 151,200 151,200 — 11 At Home 100.0 % 2 El Cajon CA Multi-Tenant Retail 227,300 184,400 43,000 20 Ashley Furniture, Bob's Discount Furniture, Burlington Stores, Extra Space Storage 81.1 % 3 Temecula CA Multi-Tenant Retail 126,500 120,700 5,800 10 Round One Entertainment, Dick's Sporting Goods 95.4 % 4 Thousand Oaks CA Multi-Tenant Retail 172,000 113,700 58,300 11 Dave & Busters, DSW, Nordstrom Rack 66.1 % 5 Clearwater FL Multi-Tenant Retail 212,900 75,500 137,300 14 Whole Foods, Nordstrom Rack 35.5 % 6 Orlando FL Multi-Tenant Retail 107,600 96,600 11,000 13 Floor & Décor, Aspen Dental 89.8 % 7 St.
The 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.
Removed
Petersburg FL Multi-Tenant Retail 125,700 125,700 — 13 Dick's Sporting Goods, Five Below, PetSmart, Verizon 100.0 % 8 Lombard(4) IL Multi-Tenant Retail 139,300 139,300 — 8 The Dump 100.0 % 9 North Riverside(4) IL Multi-Tenant Retail 214,700 183,600 31,100 13 Round One Entertainment, Aldi, Blink Fitness, Amita Health 85.5 % 10 Springfield(4) IL Multi-Tenant Retail 119,400 119,400 — 5 Binny's Beverage Depot, Burlington Stores, Marshalls 100.0 % 11 Ft.
Added
(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 -
Removed
Wayne(4) IN Multi-Tenant Retail 84,100 82,900 1,200 19 Five Below, HomeGoods, Bob's Discount Furniture 98.5 % 12 Merrillville(4) IN Multi-Tenant Retail 171,300 164,600 6,800 9 At Home, Dollar Tree 96.1 % 13 Braintree MA Multi-Tenant Retail 85,100 85,100 — 34 Nordstrom Rack, Ulta Beauty 100.0 % 14 Kearney(4) NE Multi-Tenant Retail 64,900 64,900 — 8 Ross Dress for Less, Five Below, Marshall's 100.0 % 15 Manchester NH Multi-Tenant Retail 105,700 80,400 25,300 11 Dick's Sporting Goods, Dave & Buster's 76.1 % 16 Watchung NJ Multi-Tenant Retail 124,900 124,900 — 12 Cinemark, HomeGoods, Sierra Trading Post, Ulta Beauty, Chick-fil-A , City MD 100.0 % 17 Albany NY Multi-Tenant Retail 232,500 59,600 172,900 21 Whole Foods, Ethan Allen 25.6 % 18 East Northport(4) NY Multi-Tenant Retail 179,800 167,600 12,100 18 24 Hour Fitness, AMC, At Home 93.2 % 19 Canton(4) OH Multi-Tenant Retail 192,300 138,300 54,000 19 Dick's Sporting Goods, Dave & Busters 71.9 % 20 King of Prussia(2)(5) PA Multi-Tenant Retail 208,700 174,500 34,200 14 Dick's Sporting Goods, Primark, Outback Steakhouse, Yardhouse 83.6 % 21 Charleston SC Multi-Tenant Retail 106,200 52,900 53,400 15 Burlington Stores 49.8 % 22 Memphis(4) TN Multi-Tenant Retail 116,000 110,000 6,000 11 LA Fitness, Hopdoddy, Nordstrom Rack, Ulta Beauty 94.8 % 23 Austin(4) TX Multi-Tenant Retail 52,700 45,000 7,700 13 AMC 85.4 % 24 El Paso(4) TX Multi-Tenant Retail 107,800 99,100 8,700 11 dd's Discount, Ross Dress for Less, Five Below, Burlington Stores 91.9 % 25 Houston(4) TX Multi-Tenant Retail 134,000 134,000 — 11 At Home 100.0 % 26 San Antonio(4) TX Multi-Tenant Retail 164,600 158,200 6,400 17 Tru Fit, Bed Bath & Beyond, Buy Buy Baby 96.1 % 27 Layton UT Multi-Tenant Retail 82,700 67,500 15,200 7 Vasa Fitness 81.6 % 28 Fairfax VA Multi-Tenant Retail 212,700 154,400 58,300 15 Dave & Busters, Dick's Sporting Goods 72.6 % 29 Warrenton VA Multi-Tenant Retail 71,500 62,400 9,100 9 HomeGoods, Ulta, Five Below 87.3 % 30 Greendale(4) WI Multi-Tenant Retail 217,600 133,700 83,900 19 Dick's Sporting Goods, Round One Entertainment, TJ Maxx 61.4 % 31 Madison(4) WI Multi-Tenant Retail 110,600 110,600 — 17 Dave & Busters, Total Wine & More, Hobby Lobby 100.0 % 32 Aventura FL Premier 216,100 136,200 79,900 13 Pinstripes, Industrious 63.0 % 33 Boca Raton FL Premier 4,200 4,200 — 19 Chase 100.0 % 34 Hicksville NY Premier 7,600 7,600 — 30 Chipotle 100.0 % 35 Dallas TX Premier — — — 23 n/a 0.0 % 36 Redmond WA Premier 7,500 7,500 — 15 n/a 100.0 % 37 Riverside - Retail CA Residential 33,200 33,200 — 5 Bank of America, Aldi 100.0 % 38 West Covina - Retail CA Residential 11,000 11,000 — 7 VinFast 100.0 % 39 Riverside - Resi CA Residential — — — 14 n/a 0.0 % 40 West Covina - Resi CA Residential — — — 8 n/a 0.0 % - 27 - City State Planned Usage (3) Total Leased Not Leased Land Acres Significant Tenants (1) Leased (1) 41 North Little Rock AR Non-Core 177,300 13,000 164,200 15 Aspen Dental, Longhorn Steakhouse 7.4 % 42 Glendale AZ Non-Core 125,000 — 125,000 9 n/a 0.0 % 43 Mesa AZ Non-Core 136,000 — 136,000 5 n/a 0.0 % 44 Phoenix AZ Non-Core 144,500 — 144,500 5 n/a 0.0 % 45 Yuma AZ Non-Core 90,100 — 90,100 15 n/a 0.0 % 46 El Centro CA Non-Core 9,700 9,700 — 1 n/a 100.0 % 47 Fresno CA Non-Core 201,800 43,400 158,400 13 Ross Dress for Less, dd's Discounts 21.5 % 48 Merced CA Non-Core 92,700 5,600 87,100 9 Chilis 6.1 % 49 San Bernardino CA Non-Core 264,700 — 264,700 20 n/a 0.0 % 50 Thornton CO Non-Core 193,700 61,700 132,000 23 Vasa Fitness 31.9 % 51 Waterford CT Non-Core 149,200 — 149,200 11 n/a 0.0 % 52 Doral FL Non-Core 195,600 — 195,600 13 n/a 0.0 % 53 Ft.
Removed
Myers FL Non-Core 146,800 — 146,800 12 n/a 0.0 % 54 Hialeah FL Non-Core 153,200 — 153,200 15 n/a 0.0 % 55 Lakeland FL Non-Core 156,200 — 156,200 12 n/a 0.0 % 56 Panama City FL Non-Core 134,300 — 134,300 15 n/a 0.0 % 57 Pensacola FL Non-Core 7,900 7,900 — 14 Bubba's 33 100.0 % 58 Plantation FL Non-Core 204,100 49,800 154,300 18 n/a 24.4 % 59 Cedar Rapids IA Non-Core 146,300 — 146,300 12 n/a 0.0 % 60 Chicago IL Non-Core 175,900 17,200 158,800 9 Chuck E Cheese 9.8 % 61 Orland Park(4) IL Non-Core 202,800 — 202,800 16 n/a 0.0 % 62 Steger IL Non-Core 101,700 — 101,700 3 n/a 0.0 % 63 Bowie MD Non-Core 126,400 — 126,400 11 n/a 0.0 % 64 Edgewater MD Non-Core 122,000 — 122,000 14 n/a 0.0 % 65 Burnsville MN Non-Core 167,300 — 167,300 15 n/a 0.0 % 66 Maplewood MN Non-Core 175,000 — 175,000 14 n/a 0.0 % 67 St.
Removed
Multi-Tenant Retail Portfolio Geographic Diversification The following table sets forth information regarding the geographic diversification of the multi-tenant retail portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and after giving effect to the pending termination: State Number of Properties Annual Rent % of Total Annual Rent Rent PSF California 3 $ 7,474 12.3 % $ 17.85 Florida 3 6,389 10.5 % 21.45 Illinois 3 5,252 8.6 % 11.88 Texas 4 4,974 8.2 % 11.40 Pennsylvania 1 4,890 8.0 % 28.02 New York 2 4,679 7.7 % 20.59 Virginia 2 4,614 7.6 % 21.28 Wisconsin 2 3,882 6.4 % 15.89 New Jersey 1 3,846 6.3 % 30.78 Tennessee 1 3,187 5.2 % 28.98 Total Top 10 22 $ 49,187 80.8 % $ 18.27 Other (1) 9 11,678 19.2 % 13.15 Total 31 $ 60,865 100.0 % $ 17.00 (1) Includes 8 states. - 30 - Tenant Overview The following table provides a summary of annual base rent for the multi-tenant retail portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and after giving effect to the pending termination: (in thousands except number of leases and PSF data) Number of Leased % of Gross Annual % of Total Gross Annual Tenant Leases GLA Total GLA Base Rent Annual Rent Rent PSF In-place leases 137 3,439 77.8 % $ 57,510 94.5 % $ 16.72 SNO leases (1) 15 141 3.2 % 3,355 5.5 % 23.79 Total 152 3,580 81.0 % $ 60,865 100.0 % $ 17.00 (1) SNO = signed not yet opened leases.
Removed
Top Tenants The following table lists the top tenants in our multi-tenant retail portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and giving effect to the pending termination: (dollars in thousands) Tenant Number of Leases Annual Rent % of Total Annual Rent Concepts/Brands Dick's Sporting Goods 7 $ 8,335 13.7 % Dave & Buster's 5 5,017 8.2 % Nordstrom Rack 4 3,280 5.4 % Round One Entertainment 3 2,889 4.7 % AMC 2 2,803 4.6 % At Home 4 2,692 4.4 % Burlington Stores 4 2,138 3.5 % TJX 7 1,981 3.3 % TJ Maxx, Marshalls, HomeGoods, HomeSense, Sierra Trading Post Primark 1 1,837 3.0 % Floor & Décor 1 1,520 2.5 % Whole Foods 2 1,258 2.1 % Amazon 1 1,215 2.0 % Cinemark 1 1,204 2.0 % Ulta Salon 4 1,200 2.0 % Bob's Discount Furniture 2 1,115 1.8 % The Dump 1 1,114 1.8 % Bed Bath & Beyond 2 852 1.4 % Bed Bath & Beyond, BuyBuyBaby, Cost Plus World Market, andThat!
Removed
Five Below 5 838 1.4 % LA Fitness 1 816 1.3 % PetSmart 2 789 1.3 % - 31 - Lease Expirations The following table sets forth a summary schedule of lease expirations for signed leases, including SNO leases, of our multi-tenant portfolio as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and giving effect to the pending termination.
Removed
The information set forth in the table assumes that no other tenants exercise renewal options or early termination rights: (in thousands except number of leases) Year Number of Leases Leased GLA % of Total Leased GLA Annual Rent % of Total Annual Rent Month-to-Month 3 16 0.5 % $ 201 0.3 % 2023 6 173 4.8 % 2,135 3.5 % 2024 6 179 5.0 % 770 1.3 % 2025 4 84 2.3 % 1,754 2.9 % 2026 8 211 5.9 % 2,676 4.4 % 2027 5 157 4.4 % 1,652 2.7 % 2028 16 328 9.2 % 7,951 13.1 % 2029 25 556 15.5 % 10,438 17.1 % 2030 9 167 4.7 % 2,113 3.5 % 2031 15 534 14.9 % 8,299 13.6 % 2032 19 430 12.0 % 5,740 9.4 % Thereafter 21 604 16.9 % 13,781 22.7 % SNO Leases 15 141 3.9 % 3,355 5.5 % Total 152 3,580 100.0 % $ 60,865 100.0 % Premier Portfolio Geographic Diversification The following table sets forth information regarding the geographic diversification of the premier portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and after giving effect to the pending termination: (in thousands except property count and PSF data) State Number of Properties Annual Rent % of Total Annual Rent Rent PSF Florida 2 $ 9,380 53.6 % $ 66.78 California 2 7,404 42.3 % 69.69 New York 1 527 3.0 % 69.27 Washington 1 190 1.1 % 25.33 Virginia 1 — 0.0 % — Texas 1 — 0.0 % — Total 8 $ 17,501 100.0 % $ 66.80 - 32 - Tenant Overview The following table provides a summary of annual base rent for the premier portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and after giving effect to the pending termination: (in thousands except number of leases and PSF data) Number of Leased % of Gross Annual % of Total Gross Annual Tenant Leases GLA Total GLA Rent Annual Rent Rent PSF In-place leases 16 43 10.9 % $ 2,561 14.6 % $ 59.56 SNO retail leases (1) 27 111 28.2 % 8,612 49.2 % 77.59 SNO office leases (1) 4 108 27.4 % 6,328 36.2 % 58.59 Total 47 262 66.5 % $ 17,501 100.0 % $ 66.80 (1) SNO = signed not yet opened leases.
Removed
Residential Portfolio Geographic Diversification The following table sets forth information regarding the geographic diversification of the residential portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and after giving effect to the pending termination: State Number of Properties Annual Rent % of Total Annual Rent Total Acreage Washington 1 $ 1,193 72.1 % 12 California 4 461 27.9 % 35 Total 5 $ 1,654 100.0 % 47 - 33 - Non-Core Portfolio Geographic Diversification The following table sets forth information regarding the geographic diversification of the non-core portfolio based on signed leases as of December 31, 2022, including Unconsolidated Properties presented at the Company’s proportional share and after giving effect to the pending termination: State Number of Properties Annual Rent % of Total Annual Rent Rent PSF Nevada 2 $ 1,926 26.2 % $ 18.92 Florida 7 1,146 15.6 % 19.87 Oregon 1 765 10.4 % 17.00 Colorado 1 699 9.5 % 11.31 California 4 682 9.3 % 11.62 New York 2 648 8.8 % 16.80 Ohio 3 382 5.2 % 28.60 Arkansas 1 346 4.7 % 26.56 Texas 3 270 3.7 % 21.61 Illinois 3 255 3.5 % 14.83 Total Top 10 27 $ 7,119 96.9 % $ 16.97 Other (1) 13 229 3.1 % N/A Total 40 $ 7,348 100.0 % $ 17.51 (1) Includes 7 states.
Removed
Other Unconsolidated Properties Geographic Diversification The following table sets forth information regarding the geographic diversification of the other consolidated properties based on signed leases as of December 31, 2022, presented at the Company’s proportional share and after giving effect to the pending termination: State Number of Properties Annual Rent % of Total Annual Rent Rent PSF New Jersey 2 $ 3,331 54.6 % $ 24.14 Florida 2 1,156 18.9 % 28.15 Connecticut 1 918 15.0 % 10.43 Arizona 1 554 9.1 % 14.77 Texas 3 120 2.0 % 20.00 California 2 25 0.4 % — New York 1 — 0.0 % — Oregon 1 — 0.0 % — Total 13 $ 6,104 100.0 % $ 19.63 - 34 - Tenant Overview The following table provides a summary of annual base rent for the other unconsolidated properties based on signed leases as of December 31, 2022, presented at the Company’s proportional share and after giving effect to the pending termination: (in thousands except number of leases and PSF data) Number of Leased % of Total Annual % of Total Annual Tenant Leases GLA Leased GLA Rent Annual Rent Rent PSF In-place leases 16 207 18.7 % $ 5,057 82.8 % $ 24.43 SNO retail leases (1) 4 104 9.4 % 1,047 17.2 % 10.07 Total 20 311 28.1 % $ 6,104 100.0 % $ 19.63 (1) SNO = signed not yet opened leases.
Removed
Lease Expirations The following table sets forth a summary schedule of lease expirations for signed leases, including SNO leases, of our other unconsolidated properties as of December 31, 2022, presented at the Company’s proportional share and giving effect to the pending termination.
Removed
The information set forth in the table assumes that no other tenants exercise renewal options or early termination rights: (in thousands except number of leases) Year Number of Leases Leased GLA % of Total Leased GLA Annual Rent % of Total Annual Rent Month-to-Month — — 0.0 % $ — 0.0 % 2023 — — 0.0 % — 0.0 % 2024 — — 0.0 % — 0.0 % 2025 1 5 1.5 % 93 1.5 % 2026 2 50 16.1 % 1,292 21.2 % 2027 1 8 2.4 % 43 0.7 % 2028 — — 0.0 % — 0.0 % 2029 1 5 1.6 % 75 1.2 % 2030 2 2 0.5 % 113 1.8 % 2031 3 15 4.9 % 407 6.7 % 2032 1 2 0.7 % 70 1.1 % Thereafter 5 120 38.8 % 2,964 48.6 % SNO Leases 4 104 33.4 % 1,047 17.2 % Total 20 311 100.0 % $ 6,104 100.0 % - 35 -

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−25 removed1 unchanged
Biggest changeAs of December 31, 2022, and December 31, 2021, the Company did not record any amounts for litigation or other matters aside from the settlement payment of $35.5 million noted above. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. - 37 - PART II
Biggest changeAs 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.
In addition to the litigation described above, the Company is 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.
ITEM 3. LEGAL PROCEEDINGS The Company is 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.
Removed
LEGAL PROCEEDINGS On April 18, 2019, at the direction of the Restructuring Sub-Committee of the Restructuring Committee of the Board of Directors of Sears Holdings, Sears Holdings, Sears, Roebuck & Co., Sears Development Co., Kmart Corporation, and Kmart of Washington, LLC filed a lawsuit (the “Litigation”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) against, among others, Edward S.
Added
This 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
Removed
Lampert, ESL Investments, Inc. and certain of its affiliates and investors, Fairholme Capital Management, L.L.C., certain members of the Sears Holdings board of directors, and the Company, the Operating Partnership, and certain of our affiliates and subsidiaries (the Company, the Operating Partnership, and certain of our affiliates and subsidiaries collectively, the “Seritage Defendants”).
Removed
The Litigation is dual captioned as In re: Sears Holdings Corporation, et al., Case No. 18-23538 (RDD) and Sears Holdings Corporation et al., v. Lampert et al., Case No. 19-08250 (RDD). The Litigation alleged, among other things, that certain transactions undertaken by Sears Holdings since 2011 constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings.
Removed
The challenged transactions include the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings.
Removed
The Litigation alleged, among other things, that the real estate acquired by Seritage from Sears Holdings in July 2015 was worth at least $649 to $749 million more than the purchase price paid.
Removed
The Litigation sought as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers and either (i) rescission of the transfers of real estate from Sears Holdings to Seritage in 2015 and return of the proceeds of the transactions between Sears Holdings and Seritage, or, in the alternative, (ii) payment by Seritage to Sears Holdings of damages at least equal to the value of the transferred property.
Removed
On October 15, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Modified Second Amended Joint Chapter 11 Plan of Sears Holdings and its affiliated debtors (the “Chapter 11 Plan”).
Removed
Pursuant to the terms of the Confirmation Order, upon the effective date of the Chapter Plan, a liquidating trust would be formed, and the Litigation would vest in the liquidating trust.
Removed
The Confirmation Order further provides that, prior to the effective date of the Chapter 11 Plan and the formation of the liquidating trust, the Litigation would be controlled by five litigation designees selected by Sears Holdings and the Unsecured Creditors’ Committee (the “UCC”).
Removed
For further information, refer to the Chapter 11 Plan, Confirmation Order and liquidating trust agreement, each of which has been publicly filed with the Bankruptcy Court.
Removed
On November 25, 2019, the Creditors’ Committee filed a first amended complaint (the “Amended Complaint”) in the Bankruptcy Court naming us and certain of our affiliates, as well as affiliates of ESL and Sears Holdings, and certain other third parties, as defendants.
Removed
The Amended Complaint alleged, among other things, that certain transactions undertaken by Sears Holdings since 2011 (including the July 2015 transactions giving rise to Seritage, the execution of the Master Lease with Sears Holdings (the “Original Master Lease”), and the acquisition of real estate from Sears Holdings) constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings and that the real estate acquired by Seritage from Sears Holdings in July 2015 was worth hundreds of millions of dollars more than the purchase price paid.
Removed
The Amended Complaint further alleged that certain releases provided to Seritage and certain other defendants in connection with the Sears Holdings derivative litigation in the Delaware Court of Chancery in 2017 should be avoided and/or declared null and void as an actual and/or constructive fraudulent conveyance.
Removed
The Amended Complaint sought as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers, disgorgement, recovery of the property fraudulently transferred or, in the alternative, compensatory damages in an unspecified amount to be determined at trial, equitable subordination and disallowance of defendants’ claims as creditors, punitive and exemplary damages for any intentional wrongdoing, and reasonable attorneys’ fees, costs, and expenses.
Removed
On February 21, 2020, the Seritage defendants filed a partial motion to dismiss seeking dismissal of the claims in the operative complaint in the Litigation relating to the release received in the Sears Holdings derivative litigation, unjust enrichment, and equitable subordination. On March 15, 2021, the Court consolidated the Litigation with a case captioned Sears Holding Corp. et al. v.
Removed
Andrew H. Tisch, et al., Case No. 20-07007 (RDD) (the “Shareholder Litigation,” and, together with the Litigation, the “Consolidated Litigation”). The Shareholder Litigation was brought by the UCC, Sears Holdings Corporation, and Sears, Roebuck and Co., against certain shareholders of Sears Holdings or its related companies.
Removed
Seritage was not named as a defendant in the Shareholder Litigation, which alleges, among other things, that certain transactions undertaken by Sears Holdings since 2014 (including the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings) constituted actual and/or constructive fraudulent transfers and/or illegal dividends.
Removed
On April 6, 2022, the Court entered an order in the Consolidated Litigation, upon the agreement of the parties thereto, providing for a mediation of the litigation.
Removed
The parties and the Court extended the mediation several times, through August, and up until the settlement described below was reached. - 36 - On August 9, 2022, following the mediation, all of the parties to the Litigation and certain of the parties to the Shareholder Litigation (to which Seritage is not a defendant) entered into a settlement agreement pursuant to which the defendants paid to the Sears estate $175 million (of which the Seritage Defendants contributed approximately $35.0 million) in exchange for dismissal of the Consolidated Litigation and for the full and final satisfaction and release of all claims in the Consolidated Litigation (including, in the case of the Seritage Defendants, any and all claims between the Seritage Defendants and the Sears estate in the Sears bankruptcy proceeding).
Removed
On September 2, 2022, the United States Bankruptcy Court for the Southern District of New York entered an order approving the settlement and, on October 18, 2022, the Litigation was dismissed.
Removed
While the Company believes that the claims against the Seritage Defendants in the Litigation were without merit, the Company entered into the settlement, without admitting any fault or wrongdoing, in order to avoid the continued imposition of legal defense costs, distraction, and the uncertainty and risk inherent in any litigation.
Removed
The Company made a settlement payment of $35.5 million based on the Company’s contribution to the settlement of the Litigation. This payment is recorded as litigation settlement in the consolidated statements of operations during the year ended December 31, 2022.
Removed
On March 2, 2021, the Company brought a lawsuit in Delaware state court against QBE Insurance Corporation, Endurance American Insurance Company, Allianz Global Risks US Insurance Company and Continental Casualty Company, each of which are D&O insurance providers of the Company (the “D&O Insurers”).
Removed
The Company’s lawsuit is seeking, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the Litigation discussed above. Any amounts received from the insurers will offset the Seritage Defendants’ contribution.
Removed
The Company reached settlement agreements with two of the D&O Insurers for gross proceeds of $12.7 million. Subsequent to December 31, 2022, the Company reached a settlement agreement with the other two D&O Insurers for gross proceeds of $11.6 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed8 unchanged
Biggest changeIndex 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Seritage Growth Properties Cumulative$ 100 80 99 36 33 29 Return % (20 ) (1 ) (64 ) (67 ) (71 ) S&P 500 Cumulative$ 100 94 121 140 178 144 Return % (6 ) 21 40 78 44 MSCI US REIT Index Cumulative$ 100 91 110 98 136 99 Return % (9 ) 10 (2 ) 36 (1 ) - 38 - Common Shares and Operating Partnership Units On March 6, 2023, the reported closing sale price per share of our Class A common stock on the NYSE was $10.78.
Biggest changeIndex 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Seritage Growth Properties Cumulative$ 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.
(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 972,946 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 985,222 shares subject to grants of RSUs previously granted (including those that remain unvested reported in column (a)).
Share-Based Compensation The following table provides information with respect to the Company’s equity compensation plan as of December 31, 2022: 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) 2,192,838 (3) Total 535,650 — 2,192,838 (1) Represents restricted stock awards and units previously granted and that remain unvested as of December 31, 2022.
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.
As of March 6, 2023, 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.
As 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.
The following graph provides a comparison, from December 31, 2017 through December 31, 2022, 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.
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.
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 6, 2023, 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 28, 2024, there are no Class B non-economic common shares outstanding and there are no Class C non-voting common shares outstanding.
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. - 39 - ITEM 6. RESERVED - 40 -
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 -
As of March 6, 2023, there were 56,059,530 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.
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

69 edited+15 added−46 removed40 unchanged
Biggest changeComparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 The following table presents selected data on comparative results from the Company’s consolidated statements of operations for the year ended December 31, 2022, as compared to the year ended December 31, 2021 (in thousands): Year Ended December 31, 2022 2021 $ Change % Change Revenue Rental income $ 104,609 $ 115,651 $ (11,042 ) -10 % Expenses Property operating $ 41,770 $ 45,007 $ (3,237 ) -7 % Real estate taxes 23,950 35,256 (11,306 ) -32 % Depreciation and amortization 41,114 51,199 (10,085 ) -20 % General and administrative 47,634 41,949 5,685 14 % Litigation settlement 35,533 — 35,533 100 % Gain on sale of real estate 211,936 221,681 (9,745 ) -4 % Loss on sale of interests in unconsolidated entities (677 ) — (677 ) 100 % Impairment on real estate assets (126,887 ) (95,826 ) (31,061 ) 32 % Equity in loss of unconsolidated entities (72,080 ) (9,226 ) (62,854 ) 681 % Interest and other income 37,753 9,285 28,468 307 % Interest expense (86,730 ) (107,975 ) 21,245 -20 % Rental Income The following table presents the results for rental income for the year ended December 31, 2022, as compared to the corresponding period in 2021 (in thousands): Year Ended December 31, 2022 2021 Rental Income % of Total Rental Income Rental Income % of Total Rental Income $ Change Diversified tenants $ 103,356 99 % $ 108,845 94 % $ (5,489 ) Sears/Kmart — 0 % 4,510 4 % (4,510 ) Straight-line rent 1,271 1 % 2,269 2 % (998 ) Amortization of above/below market leases (18 ) 0 % 27 0 % (45 ) Total rental income $ 104,609 100 % $ 115,651 100 % $ (11,042 ) The decrease of $4.5 million in Sears or Kmart rental income is due to a reduction in the number of properties leased to Sears or Kmart under the Holdco Master Lease, as a result of terminations.
Biggest changeComparison 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.
Gain on Sale of Real Estate 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.
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.
Loss on Sale of Interests in Unconsolidated Entities 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.
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.
Refer to the discussion of our accounting policies included in Note 2 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report. Real Estate Investments The Company on a periodic basis, assesses whether there are indicators, including macroeconomic conditions, that the value of the real estate assets may be impaired.
Refer to the discussion of our accounting policies included in Note 2 to the consolidated financial statements in Part II, Item 8 of this Annual Report. Real Estate Investments The Company on a periodic basis, assesses whether there are indicators, including macroeconomic conditions, that the value of the real estate assets may be impaired.
On November 24, 2021, the Operating Partnership, the Company and Berkshire Hathaway entered into an amendment (the “Second Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership, the Company and Berkshire Hathaway to which the Operating Partnership, the Company and Berkshire Hathaway mutually agreed that (i) the “make whole” provision in the Senior Secured Term Loan Agreement shall not be applicable to prepayments of principal ; and (ii) the Senior Secured Term Loan Agreement, as amended for (i) above, may at the Operating Partnership's election be extended for two years from July 31, 2023 to July 31, 2025 (the “Maturity Date”) if its principal has been reduced to $800 million by the Maturity Date.
On November 24, 2021, the Operating Partnership, the Company and Berkshire Hathaway entered into an amendment (the “Second Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership, the Company and Berkshire Hathaway to which the Operating Partnership, the Company and Berkshire Hathaway mutually agreed that (i) the “make whole” provision in the Senior Secured Term Loan Agreement shall not be applicable to prepayments of principal ; and (ii) the Senior Secured Term Loan Agreement, as amended for (i) above, may at the Operating Partnership's election be extended for two years from July 31, 2023 to July 31, 2025 (the “Maturity Date”) if its principal has been reduced to $800 million by July 31, 2023.
As a result, the Company was previously required to receive the consent of Berkshire Hathaway to dispose of assets via sale or contribution to another entity and, as of June 16, 2022, Berkshire Hathaway had provided such consent for all such transactions submitted for approval. The Third Term Loan Amendment (defined below) executed on June 16, 2022 eliminates this requirement.
The Company was previously required to receive the consent of Berkshire Hathaway to dispose of assets via sale or contribution to another entity and, as of June 16, 2022, Berkshire Hathaway had provided such consent for all such transactions submitted for approval. The Third Term Loan Amendment (defined below) executed on June 16, 2022 eliminates this requirement.
As of December 31, 2022, 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, 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.
Recent Accounting Pronouncements Refer to Note 2 of the consolidated financial statements for recently issued accounting pronouncements. - 51 - 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.
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.
Effects of Natural Disasters The Company assessed the impact of the natural disasters that occurred during the year ended December 31, 2022 and determined that natural disasters did not have a material impact on our operating results or financial position.
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.
Litigation Settlement During the year ended December 31, 2022, the Company recorded a $35.5 million litigation settlement related to the settlement of the Litigation, which the Court approved on September 2, 2022, and which Litigation was settled on October 18, 2022. We paid the settlement amount described above in October 2022. See Note 9 – Commitments and Contingencies.
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.
See “Cautionary Statement Regarding Forward-Looking Statements.” For discussion of 2020 items and year-over-year comparisons between 2021 and 2020 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, 2021, that was filed with the Securities and Exchange Commission on March 16, 2022.
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.
Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on July 31, 2023; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed to by the administrative agent under the Term Loan Agreement in its sole discretion).
Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on the maturity date of the Term Loan; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed to by the administrative agent under the Term Loan Agreement in its sole discretion).
As of December 31, 2022, the Company was not in compliance with certain of the financial metrics described above.
As of December 31, 2023, the Company was not in compliance with certain of the financial metrics described above.
(2) NOI of Unconsolidated Properties excludes depreciation and amortization, gains, losses and impairments and management and administrative costs. - 52 -
(2) NOI of Unconsolidated Properties excludes depreciation and amortization, gains, losses and impairments and management and administrative costs. - 44 -
The portfolio consists of approximately 10.8 million square feet of GLA held by 80 Consolidated Properties and 2.6 million square feet of GLA held by 17 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.
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.
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 the following, subject to any approvals that may be required under the Term Loan Agreement. • Sales of interests in Consolidated Properties.
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.
Litigation and Other Matters In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or discloses the fact that such a range of loss cannot be estimated.
Litigation and Other Matters In accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or disclose the fact that such a range of loss cannot be estimated.
The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
We do not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
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 $126.9 million and $95.8 million in impairment losses for the years ended December 31, 2022 and 2021.
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.
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, 2022 and the Company recorded net operating cash outflows of $117.9 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, 2023 and the Company recorded net operating cash outflows of $53.1 million.
The Company’s lawsuit is seeking, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the Litigation discussed above. Any amounts received from the insurers will offset the Seritage Defendants’ contribution.
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.
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 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.
Cash Flows from Investing Activities Significant components of net cash provided by investing activities include: − 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; and − In 2021, $381.4 million of net proceeds from the sale of real estate offset by development of real estate of ($105.7) million and investments in unconsolidated entities of ($38.6) 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.
As of December 31, 2022, we have 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 in proportion to our partners’ interests in the unconsolidated entities; and • Unconsolidated entities debt.
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 March 6, 2023, we had 22 assets under contract to sell for total anticipated proceeds of $366.3 million, subject to buyer diligence and closing conditions.
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.
(1) Due to the reduction of the Term Loan Facility to $800 million as of February 2, 2023, the maturity date was extended to July 31, 2025. - 48 - Capital Expenditures During the 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.
(2) Due to the reduction of the Term Loan Facility to $800 million as of February 2, 2023, the maturity date was extended to July 31, 2025. Capital Expenditures 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.
See Note 1 – Organization of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information about the Plan of Sale. The strategic review process remains ongoing as the Company executes the Plan of Sale.
See Note 1 – Organization of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information about the Plan of Sale.
The Company’s Board of Trustees also declared the following dividends on Company’s Series A Preferred Shares during 2023, 2022 and 2021: Declaration Date Record Date Payment Date Preferred Share 2023 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. - 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.
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.
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.
Additionally, the Company generated net investing cash inflows of $586.1 million during the year ended December 31, 2022, which were driven by asset sales and partially offset by development expenditures and recorded financing cash outflows of $437.0 million, primarily due to repayment of the Term Loan Facility.
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.
Cash Flows from Financing Activities Significant components of net cash used in financing activities include: − 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; and − In 2021, ($160.0) million cash repayment of Term Loan Facility principal, and ($4.9) million cash payment of preferred dividends, partially offset by $4.0 million contributions from noncontrolling interest in other partnerships.
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.
The following table reconciles NOI and Total NOI to GAAP net loss for the years ended December 31, 2022, 2021 and 2020 (in thousands): Year Ended December 31, NOI and Total NOI 2022 2021 2020 Net loss $ (120,097 ) $ (38,985 ) $ (152,964 ) Termination fee income (369 ) (3,378 ) (7,604 ) Management and other fee income (2,446 ) (1,032 ) (293 ) Depreciation and amortization 41,114 51,199 95,997 General and administrative expenses 47,634 41,949 28,849 Litigation settlement 35,533 — - Equity in loss of Unconsolidated Properties 72,080 9,226 4,712 Loss (gain) on sale of interests in Unconsolidated Properties 677 — (1,758 ) Gain on sale of real estate (211,936 ) (221,681 ) (88,555 ) Impairment of real estate assets 126,887 95,826 64,108 Interest and other income (37,753 ) (9,285 ) (3,394 ) Interest expense 86,730 107,975 91,316 Income taxes 466 196 252 Straight-line rent adjustment (1,271 ) (2,269 ) 4,983 Above/below market rental income/expense 223 176 (1,793 ) NOI $ 37,472 $ 29,917 $ 33,856 Unconsolidated entities (1) NOI of Unconsolidated Properties (2) 7,785 6,942 6,122 Straight-line rent (1,017 ) (885 ) (681 ) Above/below market rental income/expense 24 131 (713 ) Termination fee income (787 ) (588 ) (827 ) Total NOI $ 43,477 $ 35,517 $ 37,757 (1) Activity represents the Company's proportionate share of unconsolidated entity activity.
The 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.
On September 2, 2022, the United States Bankruptcy Court for the Southern District of New York entered an order approving the settlement and, on October 18, 2022, the Litigation was dismissed.
On September 2, 2022, the United States Bankruptcy Court for the Southern District of New York entered an order approving a settlement amongst the parties to the Litigation and, on October 18, 2022, the Litigation was dismissed. We made a settlement payment of $35.5 million based on our contributions to the settlement of the Litigation.
The Board of Trustees created a special committee of the Board of Trustees (the “Special Committee”) to oversee the process. The Special Committee has retained Barclays as its financial advisor.
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.
As of December 31, 2022, our portfolio consisted of interests in 97 properties comprised of approximately 13.5 million square feet of GLA or build-to-suit leased area, approximately 157 acres held for or under development and approximately 6.1 million square feet or approximately 498 acres to be disposed of.
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.
During the year ended December 31, 2021, the Company sold 21 properties, including outparcels, for aggregate consideration of $395.4 million and recorded gains totaling $197.0 million, which are 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, 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.
The Term Loan Facility is secured on a first lien basis by a pledge of the capital stock of the direct subsidiaries of the Operating Partnership and the guarantors, including its joint venture interests, except as prohibited by the organizational documents of such entities or any joint venture agreements applicable to such entities. - 46 - The Term Loan Facility includes certain financial metrics to govern springing collateral requirements and certain covenant exceptions set forth in the Term Loan Agreement, including: (i) a total fixed charge coverage ratio of not less than 1.20 to 1.00 for each fiscal quarter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.30 to 1.00 for each fiscal quarter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion.
The Term Loan Facility includes certain financial metrics to govern springing collateral requirements and certain covenant exceptions set forth in the Term Loan Agreement, including: (i) a total fixed charge coverage ratio of not less than 1.20 to 1.00 for each fiscal quarter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.30 to 1.00 for each fiscal quarter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion.
The Term Loan Facility provided for an initial funding of $1.6 billion at closing (the “Initial Funding”) and includes a $400 million incremental funding facility (the “Incremental Funding Facility”). The Term Loan Facility matures on July 31, 2023, with the ability to extend based on meeting certain criteria.
The Term Loan Facility provided for an initial funding of $1.6 billion at closing (the “Initial Funding”) and includes a $400 million incremental funding facility (the “Incremental Funding Facility”) subject to certain conditions described below.
Property Operating Expenses and Real Estate Taxes The decrease of $3.2 million in property operating expense and the decrease of $11.3 million in real estate taxes for the year ended December 31, 2022 was due primarily to asset sales and partially offset by a decrease in amounts capitalized. - 43 - Depreciation and Amortization Expenses The decrease of $10.1 million in depreciation and amortization expenses for the year ended December 31, 2022 was due primarily to a decrease of $9.1 million net scheduled depreciation due to sales.
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.
There were no such transactions during the year ended December 31, 2021. Impairment of Real Estate Assets During the year ended December 31, 2022, the Company recognized $126.9 million in impairment of 42 real estate assets, which is included within the consolidated statements of operations.
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.
The Company recorded $35.6 million in other-than-temporary impairment losses in investments in unconsolidated entities for the year ended December 31, 2022. No such impairment losses were recognized for the year ended December 31, 2021.
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.
Information concerning our obligations and commitments to make future payments under contracts for these loan and lease agreements as of December 31, 2022 is aggregated in the following table (in thousands): Payments due by Period Within After Minimum Cash Requirements Total 1 year 1 - 3 years 3 -5 years 5 years Long-term debt (1)(2) $ 1,075,745 $ 1,075,745 $ — $ — $ — Operating leases 8,687 1,089 3,518 2,100 1,980 Total $ 1,084,432 $ 1,076,834 $ 3,518 $ 2,100 $ 1,980 (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, 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.
In such cases, we disclose the nature of the contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made.
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”).
General and Administrative Expenses General and administrative expenses consist of personnel costs, including share-based compensation, professional fees, office expenses and overhead expenses.
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.
The aggregate principal amount outstanding under the Term Loan Facility as of December 31, 2022 was $1.03 billion. Subsequent to December 31, 2022, the Company paid down an additional $230.0 million on the Term Loan Facility, reducing the unpaid principal balance to $800 million.
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 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. Dividends and Distributions The Company’s Board of Trustees did not declare dividends on the Company’s Class A common shares during 2022.
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.
The Company reached settlement agreements with two of the D&O Insurers for gross proceeds of $12.7 million. Subsequent to December 31, 2022, the Company reached a settlement agreement with the other two D&O Insurers for gross proceeds of $11.6 million.
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.
Risk Factors—Risks Related to Our Business and Operations—There can be no assurance that our review of strategic alternatives will result in any transaction or any strategic change at this time.” Impairment of real estate assets and investments in unconsolidated entities In the first quarter of 2022, we announced a review of strategic alternatives, following which it was determined that the best course to maximize shareholder value was to seek approval for a plan of sale.
Risk Factors—Risks Related to Our Business and Operations—There can be no assurance that our review of strategic alternatives will result in any transaction or any strategic change at this time.” The Board of Trustees is currently overseeing the Plan of Sale.
As of March 15, 2021, Sears no longer occupies space at any properties. The decrease of $5.5 million in diversified tenants rental income during 2022 was primarily due to property sales. The decrease of $1.0 million in straight-line rental income during 2022 was due primarily to property sales.
The decrease of $18.1 million in straight-line rental income during 2022 was due primarily to property sales.
As of December 31, 2022, we have sold our interests in 23 Unconsolidated Properties and generated approximately $362.9 million of gross proceeds since July 2017. 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; • New unconsolidated entities.
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.
This increase is partially offset by $8.0 million of insurance proceeds received during the year ended December 31, 2021. - 44 - Interest Expense The decrease of $21.2 million in interest expense for the year ended December 31, 2022, which was a result of the partial Term Loan pay-downs totaling $160 million during the year ended December 31, 2021 and $410 million during the year ended December 31, 2022.
Interest Expense The decrease of $42.2 million in interest expense for the year ended December 31, 2023 was a result of the partial Term Loan pay-downs totaling $670 million during the year ended December 31, 2023.
As of March 6, 2023, we had 17 assets under contract for sale with no due diligence contingencies for total anticipated proceeds of $326.7 million and 5 assets under contract for sale subject to customary due diligence for total anticipated proceeds of $39.6 million. All asset sales are subject to closing conditions.
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.
The increase of $5.7 million for the year ended December 31, 2022 was primarily driven by an increase in third-party consultants utilized to execute the Plan of Sale and the implementation of retention bonuses in order to retain employees as a result of the Plan of Sale.
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.
Cash Flows for the Year Ended December 31, 2022 Compared to December 31, 2021 The following table summarizes the Company’s cash flow activities for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 $ Change Net cash used in operating activities $ (117,923 ) $ (135,996 ) $ 18,073 Net cash provided by investing activities 586,079 260,707 325,372 Net cash used in financing activities (436,970 ) (161,212 ) (275,758 ) Cash Flows from Operating Activities Significant components of net cash used in operating activities include: − In 2022, a decrease in rental income and a decrease in accounts payable, accrued expenses and other liabilities; and − In 2021, a decrease in rental income and a decrease in accounts payable, accrued expenses and other liabilities, partially offset by a decrease in tenant and other receivables.
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.
As a result of the foregoing, our intent, anticipated holding periods and/or projected cash flows with respect to certain assets evolved. This triggered a recoverability analysis of the carrying value of those assets over their respective holding periods.
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.
The availability of liquidity from the above sources or initiatives is subject to a range of risks and uncertainties, including those discussed under “Risk Factors—We have ongoing capital needs and may not be able to obtain additional financing or other sources of funding on acceptable terms.” 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.
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.
Equity in Loss of Unconsolidated Entities The increase of $62.9 million in equity in loss of unconsolidated entities for the year ended December 31, 2022 was driven by $65.7 million impairment charges recorded on three underlying properties, resulting in the Company picking up its share of impairment totaling $32.9 million plus other-than-temporary impairment recorded to our investments of $35.6 million.
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.
The Company currently anticipates it will continue to use sales of Consolidated Properties as the primary source of capital to repay principal on the Term Loan and its obligations. Preferred Shares As of December 31, 2022, we had 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) outstanding.
The Company currently anticipates it will continue to use cash on hand together with sales of Consolidated Properties, sales of interests in Unconsolidated Properties and potential financing transactions as the primary source of capital to repay principal on the Term Loan and its obligations.
As of December 31, 2022, we have sold 148 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $1.6 billion of gross proceeds since we began our capital recycling program in July 2017; • 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, 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.
These impairments arose from the Company’s plan to sell these properties resulting in a reduction to the holding periods of all its investments in unconsolidated entities, which triggered the need for an impairment analysis pursuant to ASC 323, Equity Method and Joint Ventures.
These other-than-temporary impairments arose from the Company’s impairment analysis pursuant to ASC 323, Equity Method and Joint Ventures.
These impairments arose from the Company’s plan to sell these properties resulting in a reduction to the holding periods of all properties, which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment.
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.
The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business.
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.
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.
On February 2, 2023, the Company made a $230 million voluntary prepayment, reducing the unpaid principal balance to $800 million, and the debt maturity was extended for two years to July 31, 2025.
The Company made a settlement payment of $35.5 million based on the Company’s contributions to the settlement of the Litigation. This payment is recorded as litigation settlement in the consolidated statement of operations during the year ended December 31, 2022. - 50 - On March 2, 2021, the Company brought a lawsuit in Delaware state court against the D&O Insurers.
This payment is recorded as litigation settlement in the consolidated statements of operations during the year ended December 31, 2022.
The Company also contributed its property located in Alexandria, VA to an unconsolidated entity for a contribution value of $30.0 million and recorded a gain of $22.6 million which is included in gain on sale of real estate within the consolidated statements of operations.
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.
We have recognized $126.9 million of impairment losses in the year ended December 31, 2022, which are included in impairment on real estate assets within the consolidated statements of operations, in part as a result of this portfolio review.
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.
Thomas Steinberg from the Board of Trustees. - 41 - Asset Sales and Unconsolidated Properties During the year ended December 31, 2022, the Company sold 65 wholly owned assets, generating gross proceeds of $650.3 million and also monetized eight unconsolidated properties for an additional $69.3 million of gross proceeds.
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.
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.
The outstanding principal balance was reduced to $800 million on February 2, 2023, and the Maturity Date has been extended to July 31, 2025. In all other respects, the Senior Secured Term Loan Agreement remains unchanged.
Interest and Other Income The increase of $28.5 million in interest and other income is due to the extinguishments of $13.9 million of historical Sears liabilities and $9.5 million of environmental reserve plus $12.3 million of net insurance proceeds relating to our D&O litigation during the year ended December 31, 2022.
The impairments recorded at the investment entities arose from the Unconsolidated Entity's impairment analysis of the underlying properties pursuant to ASC 360, Property, Plant and Equipment due to agreeing to sell these assets for less than their carrying value. - 37 - Interest and Other Income The decrease of $20.7 million in interest and other income is primarily due to the extinguishments of $13.9 million of historical Sears liabilities and $9.5 million of environmental reserve during the year ended December 31, 2022.
Removed
We continue to evaluate our portfolio, including our development plans and holding periods, which may result in additional impairments in future periods on our Consolidated Properties and investments in unconsolidated entities. Board of Trustees Matters On March 1, 2022, the Company announced that Mr. Lampert retired as its Chairman and resigned from the Board of Trustees effective March 1, 2022.
Added
The strategic review process remains ongoing as the Company executes the Plan of Sale, and the Company remains open minded to pursuing value maximizing alternatives, including a potential sale of the Company.
Removed
On March 30, 2022, the Company elected Mr. Adam Metz to the Board of Trustees. On April 26, 2022, the Company elected Mr. Mitchell Sabshon, Ms. Talya Nevo-Hacohen and Mr. Mark Wilsmann to the Board of Trustees and announced the resignation of Mr. David Fawer and Mr.
Added
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.
Removed
COVID-19 Pandemic The COVID-19 pandemic has caused and continues to cause significant impacts on the real estate industry in the United States, including the Company’s properties.
Added
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.
Removed
As a result of the development, fluidity and uncertainty surrounding this situation, the Company expects that these conditions may change, potentially significantly, in future periods and results for the year ended December 31, 2022 may not be indicative of the impact of the COVID-19 pandemic on the Company’s business for future periods.
Added
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.
Removed
As such, the Company cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows over the foreseeable future. As of December 31, 2022, we had collected 99.6% of rental income for the year ended December 31, 2022.
Added
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.
Removed
While the Company intends to enforce its contractual rights under its leases, there can be no assurance that tenants will meet their future obligations or that additional rental modification agreements will not be necessary. - 42 - Results of Operations We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties.

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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, 2022, we had $1.03 billion 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, 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.
As of December 31, 2022, the estimated fair value of our consolidated debt was $1.0 billion. 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, 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.

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