Seritage Growth Properties

Previous wording

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “would,” “may,” "will," "continue to." "pro forma" or the opposite of these words and phrases or other similar words or phrases which are predictions of or indicate future events or trends and which do no relate solely to historical matters in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part 1 of this Quarterly Report.

Current wording

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “would,” “may,” “will,” “continue to,” “pro forma” or the opposite of these words and phrases or other similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part 1 of this Quarterly Report.

Previous wording

Prior to the adoption of the Company’s Plan of Sale (defined below), Seritage was principally engaged in the ownership, development, redevelopment, disposition, management and leasing of diversified retail and mixed-use properties throughout the United States. Seritage will continue to actively manage each remaining location until such time as each property is sold. As of June 30, 2024, the Company’s portfolio consisted of interests in 22 properties comprised of approximately 2.8 million square feet of gross leasable area (“GLA”) or build-to-suit leased area, and 352 acres of land. The portfolio consists of approximately 1.6 million square feet of GLA and 218 acres held by 13 consolidated properties (such properties, the “Consolidated Properties”) and 1.2 million square feet of GLA and 134 acres held by nine unconsolidated properties (such properties, the “Unconsolidated Properties”).

Current wording

Prior to the adoption of the Company’s Plan of Sale (defined below), Seritage was principally engaged in the ownership, development, redevelopment, disposition, management and leasing of diversified retail and mixed-use properties throughout the United States. Seritage will continue to actively manage each remaining location until such time as each property is sold. As of September 30, 2024, the Company’s portfolio consisted of interests in 21 properties comprised of approximately 2.7 million square feet of gross leasable area (“GLA”) or build-to-suit leased area, and 342 acres of land. The portfolio consists of approximately 1.5 million square feet of GLA and 208 acres held by 12 consolidated properties (such properties, the “Consolidated Properties”) and 1.2 million square feet of GLA and 134 acres held by nine unconsolidated properties (such properties, the “Unconsolidated Properties”).

Previous wording

During the three months ended June 30, 2024, we agreed to sell one asset that was below book value resulting in the recognition of impairment losses of $0.6 million, which is included in impairment of real estate assets within the consolidated statements of operations. Additionally, during the three months ended June 30, 2024, the Company recognized an impairment charge of $85.8 million on its development property in Aventura, FL due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment. During the six months ended June 30, 2024, we recorded impairment losses of $87.5 million primarily due to changes in discount rates and residual capitalization rates between June 2023 and June 2024. We did not recognize any other-than-temporary impairment losses on our investments in unconsolidated entities during the three months and six months ended June 30, 2024. We continue to evaluate our portfolio, including our development plans, hold periods and, if applicable, offers received, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities.

Current wording

There were no impairments recorded during the three months ended September 30, 2024. Due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment, and, in certain circumstances excluding Aventura, agreeing to sell below carrying value, we recorded impairment losses of $87.5 million for the nine months ended September 30, 2024 primarily due to changes in discount rates and residual capitalization rates between June 2023 and June 2024. We did not recognize any other-than-temporary impairment losses on our investments in unconsolidated entities during the three and nine months ended September 30, 2024. We continue to evaluate our portfolio, including our development plans, hold periods and, if applicable, offers received, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities.

Previous wording

The Company’s primary objective is to create value for its shareholders through the monetization of the Company's assets through the Plan of Sale, which can be suspended by the Board of Trustees. Additionally, we have identified various sites that we believe have the 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. We additionally look to further lease our built retail footprint and densify any excess parking land through the addition of triple net (“NNN”) pad sites, which are standalone sites upon which a customized space can be built or leased for a tenant, to the extent that we believe these actions would be accretive to shareholder value.

Current wording

The Company’s primary objective is to create value for its shareholders through the monetization of the Company's assets through the Plan of Sale, which can be suspended by the Board of Trustees. We look to enhance sale value through leasing our built footprint, densification of our sites, achievement of entitlements and modification of agreements that govern our properties. We continue to position all remaining assets for sale.

Previous wording

The decrease of $3.6 million in straight-line rental expense for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to write off of deferred rents related to property sales during the three months ended June 30, 2023.

Current wording

The decrease of $1.5 million in straight-line rental expense for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to write off of deferred rents related to property sales during the three months ended September 30, 2023.

Previous wording

General and administrative expenses consist of personnel costs, including amortization of costs associated with share-based compensation awarded in prior years, professional fees, office expenses and overhead expenses.

Current wording

General and administrative expenses consist of personnel costs, including the amortization of costs associated with share-based compensation awarded in prior years, consulting expenses, professional fees, office expenses and overhead expenses.

Previous wording

The decrease of $6.3 million in general and administrative expenses for the six months ended June 30, 2024 was driven by a decrease in employee compensation due to reduced headcount and a reduction in consulting services.

Current wording

The decrease of $0.9 million in general administrative expenses is driven by decreased compensation due to decrease in employee headcount as well as a decrease in consulting related expenses utilized to execute the plan of sale.

Previous wording

During the three months ended June 30, 2024, the Company sold four properties for aggregate consideration of $40.4 million and recorded a gain totaling $2.0 million, which is included in gain on sale of real estate, net within the condensed consolidated statements of operations.

Current wording

During the three months ended September 30, 2024, the Company sold one property resulting in a gain of $4.2 million, which is included in gain on sale of real estate, net within the condensed consolidated statements of operations.

Previous wording

The decrease of $9.1 million of interest and other income for the three months ended June 30, 2024 is driven by the recognition of $7.8 million of income related to the settlement with the D&O insurers for the three months ended June 30, 2023.

Current wording

The decrease of $2.9 million of interest and other income (expense), net for the three months ended September 30, 2024 is driven by the recognition of $1.8 million of settlement expense to a subcontractor at one of the Company’s properties in 2024. In addition, during the three months ended September 30, 2023, $0.5 million of previously escrowed funds related to a sold property were received.

Previous wording

The decrease of $6.2 million in interest expense for the three months ended June 30, 2024 was driven by partial Term Loan Facility pay downs between July 1, 2023 and June 30, 2024.

Current wording

The decrease of $3.7 million in interest expense for the three months ended September 30, 2024 was driven by partial Term Loan Facility pay downs.

Previous wording

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Current wording

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Previous wording

The following table presents selected data on comparative results from the Company's condensed consolidated statements of operations for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 (in thousands):

Current wording

The following table presents selected data on comparative results from the Company's condensed consolidated statements of operations for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 (in thousands):

Previous wording

The following table presents the results for rental income for the six months ended June 30, 2024, as compared to the corresponding period in 2023 (in thousands):

Current wording

The following table presents the results for rental income for the nine months ended September 30, 2024, as compared to the corresponding period in 2023 (in thousands):

Previous wording

The decrease of $14.4 million in straight-line rental expense for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to write off of deferred rents related to property sales during the six months ended June 30, 2023.

Current wording

The decrease of $15.9 million in straight-line rental expense for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to write off of deferred rents related to property sales during the nine months ended September 30, 2023.

Previous wording

The decrease of $5.5 million in property operating expense for the six months ended June 30, 2024 was due primarily to asset sales offset by insurance refunds for sold properties that were less than the estimated receivables.

Current wording

The decrease of $5.9 million in property operating expense for the nine months ended September 30, 2024 was due primarily to asset sales offset by insurance refunds for sold properties that were less than the estimated receivables.

Previous wording

The decrease of $3.2 million in general and administrative expenses for the three months ended June 30, 2024 was driven by a decrease in employee compensation due to reduced headcount and a reduction in consulting services.

Current wording

The decrease of $7.1 million in general and administrative expenses for the nine months ended September 30, 2024 was driven by a decrease in employee compensation due to reduced headcount and a reduction in consulting services.

Previous wording

During the six months ended June 30, 2024, the Company sold nine properties for aggregate consideration of $87.7 million and recorded a gain totaling $3.2 million, which is included in gain on sale of real estate, net within the condensed consolidated statements of operations.

Current wording

During the nine months ended September 30, 2024, the Company sold 10 properties for aggregate consideration of $111.7 million and recorded a gain totaling $7.4 million, which is included in gain on sale of real estate, net within the condensed consolidated statements of operations.

Previous wording

During the six months ended June 30, 2024, the Company recognized $1.7 million impairment of real estate assets as a result of the Company accepting offers below book value on three properties and an $85.8 million impairment of real estate assets on the Company's development property in Aventura, FL due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment. The Company determined the fair value of this property by applying a discount to projected cash flows over the estimated hold period. During the six months ended June 30, 2023, the Company recognized $107.0 million of impairment losses as a result of recognizing an impairment on the Company's development property in Aventura, FL, which is included within the condensed consolidated statements of operations.

Current wording

During the nine months ended September 30, 2024, the Company recognized $1.7 million impairment of real estate assets as a result of the Company accepting offers below book value on three properties and an $85.8 million impairment of real estate assets on the Company's development property in Aventura, FL due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment. The Company determined the fair value of this property by applying a discount to projected cash flows over the estimated hold period. During the nine months ended September 30, 2023, the Company recognized $107.0 million of impairment losses as a result of recognizing an impairment on the Company's development property in Aventura, FL, which is included within the condensed consolidated statements of operations.

Previous wording

The decrease of $49.9 million in loss of unconsolidated entities for the six months ended June 30, 2024 was driven by a $70.8 million impairment charge recorded by one unconsolidated entity during the six months ended June, 2023. The Company's share of the impairment was $35.4 million and was included in the equity in loss of consolidated entities on the consolidated statements of operations. An other-than-temporary loss of $12.7 million was also recorded for the six months ended June 30, 2023.

Current wording

The decrease of $49.0 million in loss of unconsolidated entities for the nine months ended September 30, 2024 was driven by a $70.8 million impairment charge recorded by one unconsolidated entity during the nine months ended September 30, 2023. The Company's share of the impairment was $35.4 million and was included in the equity in loss of consolidated entities on the consolidated statements of operations. An other-than-temporary loss of $12.7 million was also recorded for the nine months ended September 30, 2023.

Previous wording

The decrease of $13.3 million of interest and other income for the six months ended June 30, 2024 is driven by the recognition of $11.6 million of income related to the settlement with the D&O insurers for the six months ended June 30, 2023.

Current wording

The decrease of $16.2 million of interest and other income (expense), net for the nine months ended September 30, 2024 is driven by the recognition of $11.6 million of income related to the settlement with the D&O insurers for the nine months ended September 30, 2023. In addition, during the nine months ended September 30, 2024, a settlement expense of $1.8 million to a subcontractor at one of the Company’s properties was recorded.

Previous wording

The decrease of $14.4 million in interest expense for the six months ended June 30, 2024 was driven by partial Term Loan Facility pay downs between July 1, 2023 and June 30, 2024.

Current wording

The decrease of $18.1 million in interest expense for the nine months ended September 30, 2024 was driven by partial Term Loan Facility pay downs.

Previous wording

Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures. Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund obligations incurred during the six months ended June 30, 2024 and the Company recorded net operating cash outflows of $24.2 million. Additionally, the Company generated investing cash inflows of $57.4 million during the six months ended June 30, 2024, which were driven by asset sales and partially offset by development expenditures.

Current wording

-31 - primary source of operating cash flow, did not fully fund obligations incurred during the nine months ended September 30, 2024 and the Company recorded net operating cash outflows of $39.6 million. Additionally, the Company generated investing cash inflows of $71.7 million during the nine months ended September 30, 2024, which were driven by asset sales and partially offset by development expenditures.

Previous wording

From the approval of the Plan of Sale on October 24, 2022 through June 30, 2024, we sold 85 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $945.7 million of gross proceeds.

Current wording

From the approval of the Plan of Sale on October 24, 2022 through September 30, 2024, we sold 86 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $968.2 million of gross proceeds.

Previous wording

As of August 14, 2024, we had two assets under contract for sale with no due diligence contingencies for total anticipated proceeds of $51.9 million and three assets under contract for sale subject to customary due diligence for total anticipated proceeds of $86.7 million. All five assets are subject to closing conditions.

Current wording

As of November 12, 2024, we had two assets under contract for sale with no due diligence contingencies for total anticipated proceeds of $33.7 million and three assets under contract for sale subject to customary due diligence for total anticipated proceeds of $54.2 million at share. All five assets are subject to closing conditions.

Previous wording

As previously disclosed, 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. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). 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). In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the $400.0 million incremental funding facility under the Term Loan Agreement (the “Incremental Funding Facility”).

Current wording

As previously disclosed, 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. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). 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). In addition, repayment

Previous wording

During the six months ended June 30, 2024, we have repaid $80.0 million against the principal of the Term Loan Facility. Our outstanding balance as of June 30, 2024, is $280.0 million.

Current wording

During the nine months ended September 30, 2024, we have repaid $80.0 million against the principal of the Term Loan Facility. Our outstanding balance as of September 30, 2024, is $280.0 million. Subsequent to September 30, 2024, the Company made an additional principal payment of $25.0 million, reducing the balance of the Term Loan Facility to $255.0 million as of November 12, 2024.

Previous wording

Cash Flows for the Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Current wording

Cash Flows for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Previous wording

The following table summarizes the Company’s cash flow activities for the six months ended June 30, 2024 and 2023, respectively (in thousands):

Current wording

The following table summarizes the Company’s cash flow activities for the nine months ended September 30, 2024 and 2023, respectively (in thousands):

Previous wording

In 2024, a decrease in rental income and a decrease to accounts payable, accrued expenses and other liabilities, partially offset by a decrease to tenant and other receivables and receipt of distributions from and unconsolidated entity.

Current wording

In 2024, a decrease in rental income and a decrease to accounts payable, accrued expenses and other liabilities, partially offset by a decrease to tenant and other receivables and receipt of distributions from an unconsolidated entity.

Previous wording

In 2024, $83.0 million of net proceeds from the sale of real estate, offset by development of real estate of ($22.4) million and investments in unconsolidated entities of ($3.2) million; and

Current wording

In 2024, $106.5 million of net proceeds from the sale of real estate, offset by development of real estate of ($25.4) million and investments in unconsolidated entities of ($9.0) million; and

Previous wording

In 2023, $518.4 million of net proceeds from the sale of real estate and net proceeds for the disposition of interests in unconsolidated entities of $ $49.4 million offset by development of real estate of ($49.9) million and investments in unconsolidated entities of ($11.1) million.

Current wording

In 2023, $719.1 million of net proceeds from the sale of real estate and interests in unconsolidated entities offset by development of real estate of ($61.6) million and investments in unconsolidated entities of ($11.9) million.

Previous wording

In 2024, ($80.0) million cash repayment of Term Loan Facility principal and cash payments of preferred dividends, ($2.5) million; and

Current wording

In 2024, ($80.0) million cash repayment of Term Loan Facility principal and cash payments of preferred dividends, ($3.7) million; and

Previous wording

In 2023, ($480.0) million cash repayment of Term Loan Facility principal and cash payments of preferred dividends, ($2.5) million.

Current wording

In 2023, ($630.0) million cash repayment of Term Loan Facility principal and cash payments of preferred dividends, ($3.7) million.

Previous wording

The Company’s Board of Trustees did not declare dividends on the Company’s Class A common shares during the six months ended June 30, 2024 and 2023, respectively.

Current wording

The Company’s Board of Trustees did not declare dividends on the Company’s Class A common shares during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

During the three and six months ended June 30, 2024, the Company invested $9.9 million and $22.4 million, respectively in our consolidated development and operating properties and an additional $0.3 million and $3.2 million, respectively into our unconsolidated joint ventures, as we continue to advance our business plans, including our previously announced projects.

Current wording

During the three and nine months ended September 30, 2024, the Company invested $3.3 million and $25.7 million, respectively in our consolidated development and operating properties and an additional $5.8 million and $9.0 million, respectively into our unconsolidated joint ventures, as we continue to advance our business plans, including our previously announced projects.

Previous wording

During the three and six months ended June 30, 2023, the Company invested $17.9 million and $49.9 million, respectively in our consolidated development and operating properties and an additional $3.5 million and $11.1 million, respectively into our unconsolidated joint ventures.

Current wording

During the three and nine months ended September 30, 2023, the Company invested $11.7 million and $61.6 million, respectively in our consolidated development and operating properties and an additional $0.8 million and $11.9 million, respectively into our unconsolidated joint ventures.

Previous wording

On July 1, 2024, a purported shareholder of the Company filed a class action lawsuit in the U.S. District Court for the Southern District of New York, captioned Zhengxu He, Trustee of the He & Fang 2005 Revocable Living Trust v. Seritage Growth Properties, Case No. 1:24:CV:05007, alleging that the Company, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer violated the federal securities laws. The complaint seeks to bring a class action on behalf of all persons and entities that purchased or otherwise acquired Company securities between July 7, 2022 and May 10, 2024. The complaint alleges that the defendants violated federal securities laws by issuing false, misleading, and/or omissive disclosures concerning the Company’s alleged lack of effective internal controls regarding the identification and review of impairment indicators for investments in real estate and the Company’s value and projected gross proceeds of certain real estate assets. The complaint seeks compensatory damages in an unspecified amount to be proven at trial, an award of reasonable costs and expenses to the plaintiff and class counsel, and such other and further relief as the court may deem just and proper. The Company intends to vigorously defend itself against the allegations.

Current wording

On July 1, 2024, a purported shareholder of the Company filed a class action lawsuit in the U.S. District Court for the Southern District of New York, captioned Zhengxu He, Trustee of the He & Fang 2005 Revocable Living Trust v. Seritage Growth Properties, Case No. 1:24:CV:05007, alleging that the Company, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer violated the federal securities laws. The complaint seeks to bring a class action on behalf of all persons and entities that purchased or otherwise acquired Company securities between July 7, 2022 and May 10, 2024. The complaint alleges that the defendants violated federal securities laws by issuing false, misleading, and/or omissive disclosures concerning the Company’s alleged lack of effective internal controls regarding the identification and review of impairment indicators for investments in real estate and the Company’s value and projected gross proceeds of certain real estate assets. The complaint seeks compensatory damages in an unspecified amount to be

Previous wording

On March 2, 2021, we 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”). Our lawsuit sought, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the litigation related to the bankruptcy of Sears Holdings (the "Litigation"). The Litigation was settled in 2022 and the Litigation was dismissed. Any amounts received from the insurers will offset the Seritage Defendants’ contribution. 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. In 2023, we reached settlement agreements with the other two D&O Insurers for gross proceeds of $11.6 million. We received $11.6 million during the six months ended June 30, 2023, which is recorded in interest and other income in the consolidated statements of operations.

Current wording

On March 2, 2021, we 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”). Our lawsuit sought, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the litigation related to the bankruptcy of Sears Holdings (the “Litigation”). The Litigation was settled in 2022 and the Litigation was dismissed. Any amounts received from the insurers will offset the Seritage Defendants’ contribution. 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 (expense), net in the consolidated statements of operations during the year ended December 31, 2022. In 2023, we reached settlement agreements with the other two D&O Insurers for gross proceeds of $11.6 million. We received $11.6 million during the nine months ended September 30, 2023, which is recorded in interest and other income (expense), net in the consolidated statements of operations.

Previous wording

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2023 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the six months ended June 30, 2024, there were no material changes to these policies.

Current wording

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2023 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the nine months ended September 30, 2024, there were no material changes to these policies.

Previous wording

The following table reconciles NOI-cash basis and NOI-cash basis at share to GAAP net loss for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table reconciles NOI-cash basis and NOI-cash basis at share to GAAP net loss for the three and nine months ended September 30, 2024 and 2023 (in thousands):