Seritage Growth Properties

Previous wording

In July 2025, we accepted an offer to sell an asset below book value resulting in the recognition of an impairment loss of $18.0 million for the three months ended June 30, 2025, which is included in impairment of real estate assets within the consolidated statements of operations. We recognized $8.5 million in other-than-temporary impairment losses on our investments in unconsolidated entities during the six months ended June 30, 2025, which is included in equity in income (loss) of unconsolidated entities within the consolidated statements of operations. 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

We recorded an impairment loss of $0.8 million during the three months ended September 30, 2025 as a result of transferring the Aventura, FL property to held for sale which requires the asset be carried at the lower of book value or fair value less costs to sell. For the nine months ended September 30, 2025, we recognized a total of $18.8 million of impairment losses, mostly due to accepting an offer to sell below carrying value, which are included in impairment of real estate assets within the consolidated statements of operations. In addition, we recognized $8.5 million in other-than-temporary impairment losses on our investments in unconsolidated entities during the nine months ended September 30, 2025, which is included in equity in income (loss) of unconsolidated entities within the consolidated statements of operations. 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

-28 - shareholders, which provides the Company with greater flexibility to use its free cash flow. Effective January 1, 2022, the Company is subject to federal and state income taxes on its taxable income at applicable tax rates and is no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT for the 2021 tax year and prior tax years, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place through December 31, 2021. Refer to Note 7 – Income Taxes of the Notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

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. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its shareholders, which provides the Company with greater flexibility to use its free cash flow. Effective January 1, 2022, the Company is subject to federal and state income taxes on its taxable income at applicable tax rates and is no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT for the 2021 tax year and prior tax years, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place through December 31, 2021. Refer to Note 7 – Income Taxes of the Notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

The Company continues to face challenging market conditions such as elevated interest rates and the availability of debt and equity capital and continues to assess other potential macroeconomic impacts including supply chain issues and international conflicts associated with tariffs as well as potential labor issues. These conditions could apply downward pricing pressures on our remaining assets. In making decisions regarding whether and when to transact on each of the Company’s remaining assets, the Company considers various factors including, but not limited to, the breadth of the buyer universe, macroeconomic conditions, the availability and cost of financing, as well as corporate, operating and other capital expenses required to carry the asset. If these challenging market conditions persist, then we expect that they will continue to adversely impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to shareholders.

Current wording

The Company continues to face challenging market conditions such as elevated interest rates and the availability of debt and equity capital and continues to assess other potential macroeconomic impacts including supply chain issues and international conflicts associated with tariffs as well as potential labor issues. While interest rates have begun to come down, they remain high relative to 2022. Additionally, raising equity capital for land development deals remains challenging. These conditions could apply downward pricing pressures on our remaining assets. In making decisions regarding whether and when to transact on each of the Company’s remaining assets, the Company considers various factors including, but not limited to, the breadth of the buyer universe, macroeconomic conditions, the availability and cost of financing, as well as corporate, operating and other capital expenses required to carry the asset. If these challenging market conditions persist, then we expect that they will continue to adversely impact the Plan of Sale proceeds from our assets and the amounts and timing of distributions to shareholders.

Previous wording

Rental income increased $0.4 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to an increase in rental income from the Aventura, FL property. The increase was partially offset by property sales of two income producing properties throughout 2024 and one income producing property in the first quarter of 2025.

Current wording

Rental income increased by $1.7 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to an increase in rental income from the Aventura, FL property. The increase was partially offset by property sales of one income producing properties during the third quarter of 2024 and one income producing property in the first quarter of 2025.

Previous wording

The decrease of $0.9 million in property operating expense for the three months ended June 30, 2025 was primarily due to a decrease in common area maintenance expense of $0.7 million.

Current wording

The decrease of $0.6 million in property operating expense for the three months ended September 30, 2025 was primarily due to a decrease in insurance expense of $0.6 million and a decrease in common area maintenance expense of $0.2 million offset by an increase in utility expense of $0.2 million primarily as a result of non-recoverable utility deposits related to sold properties.

Previous wording

Real estate taxes decreased by $0.2 million related to sold properties and by $0.3 million related to prior year’s tax refunds.

Current wording

Real estate taxes decreased by $0.1 million related to sold properties and by $0.3 million related to prior year’s tax refunds.

Previous wording

The decrease of $0.7 million for the three months ended June 30, 2025 reflects an overall decrease in costs including share based compensation, consulting expense and personnel costs.

Current wording

The decrease of $2.3 million for the three months ended September 30, 2025 reflects an overall decrease in costs including employee bonuses, share based compensation, consulting expense and personnel costs primarily as a result of decreased staffing.

Previous wording

During the three months ended June 30, 2025, the Company sold one property for $23.0 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 for net proceeds of $24.0 million and recorded a net 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 increase in equity in income for the three months ended June 30, 2025 was driven by an increase in income $0.7 million from the Company’s investment in the UTC JV and a decrease of losses of $0.6 million related to the Company’s other investments.

Current wording

The increase in equity in income for the three months ended September 30, 2025 was driven by a decrease of losses of $0.5 million related to the sold interests unconsolidated entities and a decrease of losses of $0.2 million related to the Company’s other investments offset by a decrease in income of $0.2 million from the Company’s investment in the UTC JV.

Previous wording

The decrease of $1.1 million in interest expense for the three months ended June 30, 2025 was driven by partial Term Loan Facility pay downs during the second half 2024.

Current wording

The decrease of $0.8 million in interest expense for the three months ended September 30, 2025 was driven by partial Term Loan Facility pay downs since the end of the third quarter 2024 offset by the increase of amortization of deferred financing costs.

Previous wording

Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024

Current wording

Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

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, 2025, as compared to the six months ended June 30, 2024 (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, 2025, as compared to the nine months ended September 30, 2024 (in thousands):

Previous wording

Rental income decreased $0.9 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The decrease is primarily driven by the sales of four income producing properties. The decrease is offset by in increase of rental income from the Aventura, FL property as well as a decrease in bad debt expense.

Current wording

Rental income increased by $0.8 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase is primarily driven by the increase of rental income from the Aventura, FL property and a decrease in bad debt expense offset by the sales of four income producing properties.

Previous wording

The decrease of $1.7 million in property operating expense for the six months ended June 30, 2025 was primarily due to a decrease in common area expenses of $0.8 million and a decrease in insurance of $0.7 million primarily as a result of sold properties.

Current wording

The decrease of $2.3 million in property operating expense for the nine months ended September 30, 2025 was primarily due to a decrease in common area expenses of $1.0 million and insurance expense of $1.3 million related to sold properties.

Previous wording

Real estate taxes decreased by $0.8 million related to sold properties and by $0.1 million related to prior year’s tax refunds.

Current wording

Real estate taxes decreased by $0.9 million related to sold properties and by $0.5 million related to prior year’s tax refunds.

Previous wording

The increase of $0.8 million in depreciation and amortization expenses for the three months ended June 30, 2025 was primarily due to a $1.2 million increase in depreciation related to Aventura tenant improvements partially offset by a $0.6 million decrease in depreciation related to properties sold.

Current wording

The decrease of $5.0 million in depreciation and amortization expenses for the nine months ended September 30, 2025 was primarily due to property sales, $1.6 million of catch up depreciation as a result of moving a property out of held for sale in 2024 and an acceleration of $0.8 million of depreciation due to the ultimate demolition of on property and was partially offset by an increase in depreciation related to Aventura tenant improvements.

Previous wording

The increase for the six months ended June 30, 2025 was primarily due to the recognition of severance expense of $6.5 million. The increase was partially offset by a decrease in overall costs including accounting fees and consulting expense.

Current wording

The increase for the nine months ended September 30, 2025 was primarily due to the recognition of severance expense of $6.5 million. The increase was partially offset by a decrease in overall costs including employee bonuses, share based compensation, accounting fees and consulting expense.

Previous wording

During the six months ended June 30, 2025, the Company sold two properties for $52.6 million and recorded a gain totaling $8.9 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, 2025, the Company sold two properties for $52.6 million and recorded a gain totaling $8.9 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 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 ten 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 three months ended June 30, 2025, the Company sold its remaining interest in the SPS Portfolio Holdings II LLC joint venture to an affiliate of its joint venture partner and recognized a loss of $1.4 million on the sale.

Current wording

During the nine months ended September 30, 2025, the Company sold its remaining interest in the SPS Portfolio Holdings II LLC joint venture to an affiliate of its joint venture partner and recognized a loss of $1.4 million on the sale.

Previous wording

During the three months ended June 30, 2025, the Company recognized an $18.0 million impairment of real estate assets as a result of the Company agreeing to sell one property at an amount below book value.

Current wording

During the nine months ended September 30, 2025, the Company recognized an $18.8 million impairment of real estate assets as a result of the Company agreeing to sell one property at an amount below book value.

Previous wording

During the six months ended June 30, 2024, the Company recognized a $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.

Current wording

During the nine months ended September 30, 2024, the Company recognized a $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.

Previous wording

The increase in loss for the six months ended June 30, 2025 is driven by the recognition of $8.5 million of other-than-temporary impairment losses which was partially offset by an increase in income of $0.9 million from the Company’s investment in the UTC JV and a decrease of losses of $0.6 million related the Company’s other investments.

Current wording

The increase in loss for the nine months ended September 30, 2025 is driven by the recognition of $8.5 million of other-than-temporary impairment losses which was partially offset by an increase in income of $0.7 million from the Company’s investment in the UTC JV and a decrease of losses of $1.4 million related the Company’s other investments, primarily due to the sale of two interests in unconsolidated entities.

Previous wording

Interest and Other Income

Current wording

Interest and Other Income (Expense), Net

Previous wording

The decrease of $2.9 million in interest expense for the six months ended June 30, 2025 was driven by partial Term Loan Facility pay downs during 2024.

Current wording

The decrease of $3.7 million in interest expense for the nine months ended September 30, 2025 was driven by partial Term Loan Facility pay downs since the third quarter of 2024, offset by an increase in amortization expense of deferred financing costs.

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, 2025 and the Company recorded net operating cash outflows of $21.2 million. Additionally, the Company generated net investing cash inflows of $46.1 million during the six months ended June 30, 2025, which were driven by asset sales and partially offset by development expenditures.

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 nine months ended September 30, 2025 and the Company recorded net operating cash outflows of $33.7 million. Additionally, the Company generated net investing cash inflows of $43.6 million during the nine months ended September 30, 2025, which were driven by asset sales and partially offset by development expenditures.

Previous wording

As of August 14, 2025, we had three assets under contract for sale for total anticipated proceeds of $109.8 million. One asset is a development asset and is subject to a pursuit of a master plan amendment and customary due diligence. All are subject to closing conditions.

Current wording

As of November 13, 2025, we had four assets under contract for sale for total anticipated proceeds of $240.8 million. One asset is a development asset and is subject to a pursuit of a master plan amendment and customary due diligence. All are subject to closing conditions.

Previous wording

During the six months ended June 30, 2025, we repaid $40.0 million against the principal of the Term Loan Facility. Our outstanding balance as of June 30, 2025, is $200.0 million.

Current wording

During the nine months ended September 30, 2025, we repaid $40.0 million against the principal of the Term Loan Facility. Our outstanding balance as of September 30, 2025, is $200.0 million.

Previous wording

Cash Flows for the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Current wording

Cash Flows for the Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Previous wording

The following table summarizes the Company’s cash flow activities for the six months ended June 30, 2025 and 2024, respectively (in thousands):

Current wording

The following table summarizes the Company’s cash flow activities for the nine months ended September 30, 2025 and 2024, respectively (in thousands):

Previous wording

In 2025, $51.6 million of net proceeds from the sale of real estate, $8.1 million of net proceeds from the sale of interests in unconsolidated entities and $4.9 of distributions from unconsolidated entities offset by development of real estate of ($18.0) million; and

Current wording

In 2025, $51.6 million of net proceeds from the sale of real estate, $8.1 million of net proceeds from the sale of interests in unconsolidated entities and $6.0 of distributions from unconsolidated entities offset by development of real estate of ($21.8) million and investments in unconsolidated entities of ($0.4) million; and

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.

Current wording

In 2024, $106.5 million of net proceeds from the sale of real estate, offset by development of real estate of ($25.7) million and investments in unconsolidated entities of ($9.0) million.

Previous wording

In 2025, ($40.0) million cash repayment of Term Loan Facility principal and cash payments of preferred dividends of ($2.5) million; and

Current wording

In 2025, ($40.0) million cash repayment of Term Loan Facility principal, payment of deferred financing costs of ($4.0) million and cash payments of preferred dividends of ($3.7) million; and

Previous wording

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

Current wording

In 2024, ($80.0) million cash repayment of Term Loan Facility principal and cash payments of preferred dividends of ($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, 2025 and 2024, respectively. 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.

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, 2025 and 2024, respectively. 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.

Previous wording

During the three and six months ended June 30, 2025, the Company invested $4.6 million and $17.9 million, respectively, in our consolidated properties. The Company also invested $0.4 million in our unconsolidated joint ventures during the three and six months ended June 30, 2025.

Current wording

During the three and nine months ended September 30, 2025, the Company invested $3.8 million and $21.8 million, respectively, in our consolidated properties. The Company did not make any investments in its unconsolidated joint ventures during the three months ended September 30, 2025. The Company invested $0.4 million in its unconsolidated joint ventures during the nine months ended September 30, 2025.

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 properties and an additional $0.3 million and $3.2 million, respectively, in our unconsolidated joint ventures.

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 properties and an additional $5.8 million and $9.0 million, respectively, in 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. 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. On or around May 8, 2025, another purported shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the Southern District of New York, captioned Derrick Cheroti v. Seritage Growth Properties, Case No. 1:25-vc-00152. 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 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. The complaint in the Cheroti Derivative Action also seeks an award of punitive damages, an order directing the individual defendants to account for all damages caused by them and all profits and speci…

Excerpt shortened here; the source contains the full paragraph.

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 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. On or around May 8, 2025, another purported shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the Southern District of New York, captioned Derrick Cheroti v. Seritage Growth Properties, Case No. 1:25-vc-00152. 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 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. The complaint in the Cheroti Derivative Action also seeks an award of punitive damages, an order directing the individual defendants to account for all damages caused by them and all profits and speci…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, the final outcome of such ordinary course legal proceedings and claims will not have a material effect on the

Current wording

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. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, the final outcome of such ordinary course legal proceedings and claims will not have a material effect on the condensed consolidated financial position, results of operations or liquidity of the Company.

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, 2024 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the six months ended June 30, 2025, 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, 2024 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the nine months ended September 30, 2025, there were no material changes to these policies.