Seritage Growth Properties
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
SRG$1.71+1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0000950170-24-039550
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0000950170-25-047860
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 138 current paragraphs.
81 unchanged; 41 reworded; 16 added; 12 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Appointment of New Chief Executive Officer and President
Current report
On March 28, 2025, we announced that our Board of Trustees and Andrea L. Olshan have agreed that Ms. Olshan will step down as the Company’s Chief Executive Officer and President (“CEO”) and as a member of the Board effective as of April 11, 2025 (the “Separation Date”). Also on March 28, 2025, we announced that our Board of Trustees appointed Board Chairman Adam Metz as Interim CEO as of the Separation Date. In his role as Interim CEO, Mr. Metz will serve as the principal executive officer of the Company until his successor is duly appointed and qualified, or until his earlier termination or removal, and will receive a monthly salary of $80,000. Mr. Metz will also continue to serve as Board Chairman, and the Board has appointed Mitchell Sabshon to serve as Lead Independent Director as of the Separation Date.
Current report
Property Operating Expenses
Current report
The decrease of $4.9 million in property operating expense for the year ended December 31, 2024 was due primarily to decreases of $7.5 million of operating expenses related to asset sales which was partially offset by increases of demolition costs of $0.6 million and $1.5 million in insurance expense.
Current report
Abandoned project costs
Current report
During the year ended December 31, 2024, the Company expensed costs that were previously capitalized in construction in progress on account of a tenant that defaulted on its lease prior to opening and predevelopment costs on a property which the Company is not currently pursuing entitlements.
Current report
Real Estate Taxes
Current report
Real estate taxes decreased by approximately $5.0 million due to property sales. The decrease was partially offset by an increase of $1.0 million in Aventura, FL real estate taxes and a reduction of capitalized real estate taxes of approximately $1.3 million.
Current report
The decrease of $16.0 million for the year ended December 31, 2024 was primarily driven by a decrease of $14.2 million related to third-party consulting fees utilized to execute the Plan of Sale as well as a decrease of $2.8 million in personnel costs.
Current report
During the year ended December 31, 2024, the Company sold its interest in one unconsolidated property and recorded a gain of $2.0 million.
Current report
The decrease of $14.5 million in interest and other income is primarily due to the receipt of $11.6 million in settlement proceeds during the year ended December 31, 2023.
Current report
On November 20, 2024, the Operating Partnership, the Company and Berkshire Hathaway entered into an amendment (the “Fourth Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership, the Company and Berkshire Hathaway pursuant to which the Operating Partnership, the Company and Berkshire Hathaway mutually agreed that the Term Loan Agreement may, at the Operating Partnership’s election, be extended for one year from the Maturity Date to July 31, 2026 if the Operating Partnership pays a 2% extension fee on the then outstanding principal balance as of the Maturity Date.
Current report
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. On or around January 15, 2025, another purported shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the District of Maryland, captioned Paul Sidhu v. Seritage Growth Properties, Case No. 1:25-cv-00152. On or around January 20, 2025, another purported shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the District of Maryland, captioned James Wallen v. Seritage Growth Properties, Case No. 1:25-cv-00190. The Derivative Actions allege the same or similar claimed acts and omissions underlying the Securities Action, assert breach of fiduciary duty and other claims against the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and current and former members of the Company’s Board of Trustees, and name the Company as a nominal defendant. The complaint in each of the Derivative Actions seeks compensatory
Current report
-41 - damages in an unspecified amount to be proven at trial, an order directing the Company and the individual defendants to reform and improve the Company’s corporate governance and internal procedures, restitution from the individual defendants, an award of costs and expenses to the plaintiff and reasonable attorneys’ and experts’ fees, costs, and expenses, and such other and further relief as the court may deem just and proper. On February 13, 2025, the parties to the Derivative Actions filed a stipulation and proposed order seeking to consolidate the Derivative Actions and appoint lead counsel. The Company intends to vigorously defend itself against the allegations in these lawsuits.
Current report
Net Operating Income (Loss)-cash basis (“NOI”-cash basis) and Net Operating Income (Loss)-cash basis at share (“NOI-cash basis at share”)
Current report
Unconsolidated Properties that are accounted for under GAAP using the equity method. The operating agreements of the Unconsolidated Properties generally allow each investor to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.
Removed paragraphs (12)
Previous report
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.
Previous report
Property Operating Expenses and Real Estate Taxes
Previous report
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.
Previous report
Litigation Settlement
Previous report
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. No such payments were made during the year ended December 31, 2023.
Previous report
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.
Previous report
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.
Previous report
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. This decrease is partially offset by greater interest received on the Company’s cash accounts during the year ended December 31, 2023 and refunds of fees and deposits previously held in escrow.
Previous report
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.
Previous report
Beginning in 2019, the Company had been engaged in litigation related to the bankruptcy of Sears Holding (the “Litigation”). 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.
Previous report
We made a settlement payment of $35.5 million based on our contributions 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.
Previous report
Net Operating Income (“NOI”) and Total NOI
Reworded paragraphs (41)
Previous wording
Prior to our adoption of the Plan for Sale, we were principally engaged in the ownership, development, redevelopment, management, sale and leasing of diversified retail and mixed-use properties throughout the United States. 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. 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.
Current wording
Prior to our adoption of the Plan of Sale, we were principally engaged in the ownership, development, redevelopment, management, sale and leasing of diversified retail and mixed-use properties throughout the United States. As of December 31, 2024, our portfolio consisted of interests in 17 properties comprised of approximately 1.7 million square feet of GLA or build-to-suit leased area and 274 acres of land. The portfolio encompasses 10 wholly owned properties consisting of approximately 0.9 million square feet of GLA and 166 acres and seven unconsolidated entities consisting of approximately 0.8 million square feet of GLA and 108 acres.
Previous wording
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. 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. 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. 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. 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.
Current wording
Due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipmentwas triggered. We also agreed to sell certain assets below carrying value. As such, we recorded impairment losses of $87.5 million for the year ended December 31, 2024, primarily due to changes in discount rates and residual capitalization rates between June 2023 and June 2024. We did not recognize any other-than-temporary impairment losses on our investments in unconsolidated entities during the year ended December 31, 2024. Due to increasing development and construction costs, deteriorating market conditions and, in certain instances excluding Aventura, FL, agreeing to sell below carrying value, we recognized $107.0 million of impairment losses during the year ended December 31, 2023. We recognized $11.7 million of other-than-temporary impairment losses on our investments in unconsolidated entities during the year ended December 31, 2023. 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
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.
Current wording
During the year ended December 31, 2024, the Company sold 13 wholly owned assets, generating gross proceeds of $163.5 million and monetized two unconsolidated properties for an additional $14.9 million, or $10.8 million at share, of gross proceeds.
Previous wording
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.
Current wording
As of March 31, 2025, we had one asset owned by our consolidated joint venture under contract to sell for total anticipated proceeds of $14.0 million, subject to buyer diligence and closing conditions.
Previous wording
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. The Company did not experience interruptions in rental payments related to natural disasters nor has it incurred material capital expenditures to repair any property damage. 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.
Current wording
The Company assessed the impact of the natural disasters that occurred during the year ended December 31, 2024 and determined that natural disasters did not have a material impact on our operating results or financial position. The wildfires in Los Angeles, CA that occurred in January 2025 did not have a material impact on our operating results or financial condition but could create a delay in our ability to sell the Santa Monica asset. The Company did not experience interruptions in rental payments related to natural disasters nor has it incurred material capital expenditures to repair any property damage. 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.
Previous wording
Our primary cash expenses consist of our property operating expenses, general and administrative expenses, interest expense, and construction and development related costs. Property operating expenses include: real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense is on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities.
Current wording
Our primary cash expenses consist of our property operating expenses, general and administrative expenses, interest expense, and construction and development related costs. Property operating expenses include: real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities.
Previous wording
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):
Current wording
The following table presents the results for rental income for the year ended December 31, 2024, as compared to the corresponding year ended December 31, 2023 (in thousands):
Previous wording
The decrease of $71.5 million in in-place retail tenants rental income during 2023 was primarily due to property sales.
Current wording
In-place retail tenants rental income decreased $13.9 million during 2024 primarily due to property sales. The decrease was partially offset by an increase of $2.3 million in rental income from the Aventura, FL property.
Previous wording
The decrease of $18.1 million in straight-line rental income during 2022 was due primarily to property sales.
Current wording
The decrease of $16.0 million in straight-line rental expense during 2024 was due primarily to the decrease in property sales of tenanted properties in 2024, decreasing the amount of straight-line rental income reversals.
Previous wording
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.
Current wording
The decrease of $1.4 million in depreciation and amortization expenses for the year ended December 31, 2024 was due primarily to a $3.9 million decrease due to property sales which was partially offset by $1.5 million in depreciation related to moving a property out of held for sale.
Previous wording
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.
Current wording
During the year ended December 31, 2024, the Company sold 13 properties for aggregate consideration of $163.5 million and recorded a gain totaling $10.7 million.
Previous wording
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.
Current wording
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.
Previous wording
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.
Current wording
During the year ended December 31, 2023, the Company sold its interest in eight unconsolidated properties, and recorded a gain totaling $6.4 million.
Previous wording
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. 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 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.
Current wording
During the year ended December 31, 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 year ended December 31, 2023, the Company recognized $107.0 million of impairment losses as a result of recognizing an impairment on the Company's development property in Aventura, FL, which is included within the condensed consolidated statements of operations
Previous wording
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. During the year ended December 31, 2023, impairment charges of $70.8 million and $41.9 million were recorded on two underlying investments resulting in the Company picking up its share of this impairment of $35.4 million and $5.5 million, respectively, and an $11.7 million other-than-temporary impairment charge recorded against three other investments. 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. These other-than-temporary impairments arose from the Company’s impairment analysis pursuant to ASC 323, Equity Method and Joint Ventures. 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.
Current wording
During the year ended December 31, 2024, the Company recorded $3.2 million of loss from investments in unconsolidated entities primarily due to $2.6 million of loss on the sale of one of the underlying properties. During the year ended December 31, 2023, the Company recorded $55.9 million of loss from investments in unconsolidated entities primarily due to impairment charges of $70.8 million and $41.9 million recorded on two underlying investments resulting in the Company picking up its share of these impairments of $35.4 million and $5.5 million, respectively, and an $11.7 million other-than-temporary impairment charge recorded against three other investments.
Previous wording
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.
Current wording
The decrease of $19.6 million in interest expense for the year ended December 31, 2024 was driven by partial Term Loan Facility pay downs.
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 the reinvestment in and redevelopment of our properties (“development expenditures”). 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. 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.
Current 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 year ended December 31, 2024 and the Company recorded net operating cash outflows of $53.5 million. Additionally, the Company generated net investing cash inflows of $126.9 million during the year ended December 31, 2024, which were driven by asset sales and partially offset by development expenditures and recorded financing cash outflows of $125.3 million, primarily due to partial repayments of the Term Loan Facility.
Previous wording
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. Below is our sales activity since we began our capital recycling program:
Current wording
Obligations are projected to continue to exceed property rental income and we expect to fund such Obligations and any development expenditures with cash on hand and a combination of capital sources including, but not limited to, sales of Consolidated Properties, sales of interests in Unconsolidated Properties and potential financing transactions, subject to any approvals that may be required under the Term Loan Agreement. Below is our sales activity since we began our capital recycling program:
Previous wording
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.
Current wording
From the approval of the Plan of Sale on October 24, 2022 through December 31, 2024, we sold 89 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $1.0 billion of gross proceeds.
Previous wording
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.
Current wording
From the approval of the Plan of Sale on October 24, 2022 through December 31, 2024, we sold our interests in 10 Unconsolidated Properties and generated approximately $151.5 million of gross proceeds.
Previous wording
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. All asset sales are subject to closing conditions. Additionally, we currently have two assets in active auction processes with aggregate reserve prices of $10.0 million.
Current wording
Subsequent to December 31, 2024, we sold one asset for gross proceeds of $29.9 million. As of March 31, 2025, we had one asset owned by our consolidated joint venture under contract for sale subject to customary due diligence for total anticipated proceeds of $14.0 million and is subject to closing conditions.
Previous wording
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. 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. 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 additional voluntary prepayments aggregating $440 million during the final three quarters of 2023, reducing the unpaid principal balance to $360 million at December 31, 2023.
Current wording
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. 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. 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 additional voluntary prepayments aggregating $440 million during the remainder of 2023 and additional voluntary prepayments aggregating $120.0 million during 2024, reducing the unpaid principal balance to $240.0 million at December 31, 2024.
Previous wording
The Company incurred $2.1 million of debt issuance costs related to the Term Loan Facility which are recorded as a direct deduction from the carrying amount of the Term Loan Facility and amortized over the term of the Term Loan Agreement. 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.
Current wording
The Company incurred $2.1 million of debt issuance costs related to the Term Loan Facility which are recorded as a direct deduction from the carrying amount of the Term Loan Facility and amortized over the term of the Term Loan Agreement. As of December 31, 2023 the Company's debt issuance costs were fully amortized.
Previous wording
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. Subsequent to December 31, 2023, the Company paid down an additional $30 million on the Term Loan Facility, reducing the unpaid principal balance to $330 million as of March 22, 2024.
Current wording
As of December 31, 2024, the Company has paid down $1.36 billion towards the Term Loan’s unpaid principal balance. The aggregate principal amount outstanding under the Term Loan Facility as of December 31, 2024 was $240.0 million.
Previous wording
During year ended December 31, 2022, the Company invested $99.3 million in our consolidated development and operating properties and an additional $25.5 million into our unconsolidated joint ventures.
Current wording
During the year ended December 31, 2024 the Company invested $27.5 million in our consolidated development and operating properties and an additional $9.3 million into our unconsolidated joint ventures.
Previous wording
In 2022, a decrease in rental income and a decrease in accounts payable, accrued expenses and other liabilities.
Current wording
In 2024, a decrease in rental income and gain on sale of real estate assets and a decrease in accounts payable, accrued expenses and other liabilities; and
Previous wording
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.
Current wording
In 2024, $155.7 million of net proceeds from the sale of real estate and $8.0 million of distributions and proceeds from the disposition of interests in unconsolidated entities offset by development of real estate of ($27.5) million and investments in unconsolidated entities of ($9.3) million; and
Previous wording
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
Current wording
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.
Previous wording
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.
Current wording
In 2024, ($120.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends; and
Previous wording
In 2023, ($670.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends; and
Current wording
In 2023, ($670.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends.
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. 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. 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. 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.
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 year ended December 31, 2023, which is recorded in interest and other income (expense), net in the consolidated statements of operations.
Previous wording
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. If an indicator is identified, management will estimate the real estate asset recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real asset. In estimating the fair value of an asset, various factors are considered, including expected future operating income, trends and leasing prospects including the effects of demand, competition, and other economic factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. 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.
Current wording
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. If an indicator is identified, management will estimate the real estate asset recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real asset. In estimating the fair value of an asset, various factors are considered, including expected future operating income, trends and leasing prospects including the effects of demand, competition, and other economic factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value. The Company recognized $87.5 million and $107.0 million in impairment losses for the years ended December 31, 2024 and 2023, respectively.
Previous wording
On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions that the value of the Company’s investments in unconsolidated entities may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. 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.
Current wording
On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions that the value of the Company’s investments in unconsolidated entities may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. The Company did not record any other-than-temporary impairment losses for the year December 31, 2024. The Company recorded $11.7 million in other-than-temporary impairment losses in investments in unconsolidated entities for the year ended December 31, 2023.
Previous wording
The Company makes reference to NOI and Total NOI which are financial measures that include adjustments to GAAP.
Current wording
The Company makes reference to NOI-cash basis and NOI-cash basis at share which are financial measures that include adjustments to GAAP.
Previous wording
NOI is defined as income from property operations less property operating expenses. Other real estate companies may use different methodologies for calculating NOI, and accordingly, the Company's depiction of NOI may not be comparable to other real estate companies. The Company believes NOI provides useful information regarding Seritage, its financial condition, and results of operations because it reflects only those income and expense items that are incurred at the property level.
Current wording
NOI - cash basis is defined as income from property operations less property operating expenses, adjusted for variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles. Other real estate companies may use different methodologies for calculating NOI-cash basis, and accordingly the Company’s depiction of NOI-cash basis may not be comparable to other real estate companies. The Company believes NOI-cash basis provides useful information regarding Seritage, its financial condition, and results of operations because it reflects only those income and expense items that are incurred at the property level.
Previous wording
The Company also uses Total NOI, which includes its proportional share of Unconsolidated Properties. The Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of Unconsolidated Properties that are accounted for under GAAP using the equity method.
Current wording
The Company also uses NOI-cash basis at share, which includes its proportional share of Unconsolidated Properties. The Company does not control any of the joint ventures constituting such properties and NOI-cash basis at share does not reflect our legal claim with respect to the economic activity of such joint ventures. We have included this adjustment because the Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of
Previous wording
The Company also considers NOI and Total NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles.
Current wording
The Company also considers NOI-cash basis and NOI-cash basis at share to be a helpful supplemental measure of its operating performance because it excludes from NOI variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles.
Previous wording
Due to the adjustments noted, NOI and Total NOI should only be used as an alternative measure of the Company's financial performance.
Current wording
Due to the adjustments noted, NOI-cash basis and NOI-cash basis at share should only be used as an alternative measure of the Company’s financial performance.
Previous wording
Neither NOI nor Total NOI are measures that (i) represent cash flow from operations as defined by GAAP; (ii) are indicative of cash available to fund all cash flow needs, including the ability to make distributions; (iii) are alternatives to cash flow as a measure of liquidity; or (iv) should be considered alternatives to net income (which is determined in accordance with GAAP) for purposes of evaluating the Company’s operating performance. Reconciliations of these measures to the respective GAAP measures we deem most comparable are presented below on a comparative basis for all periods.
Current wording
Neither NOI-cash basis nor NOI-cash basis at share are measures that (i) represent cash flow from operations as defined by GAAP; (ii) are indicative of cash available to fund all cash flow needs, including the ability to make distributions; (iii) are alternatives to cash flow as a measure of liquidity; or (iv) should be considered alternatives to net income (which is determined in accordance with GAAP) for purposes of evaluating the Company’s operating performance. Reconciliations of these measures to the respective GAAP measures we deem most comparable are presented below on a comparative basis for all periods.
Previous wording
The following table reconciles NOI and Total NOI to GAAP net loss for the years ended December 31, 2023, 2022 and 2021 (in thousands):
Current wording
The following table reconciles NOI-cash basis and NOI-cash basis at share to GAAP net loss for the years ended December 31, 2024 and 2023 (in thousands):
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