If You Invested in Seritage Growth Pptys (SRG)

Seritage Growth Properties Class A common shares of beneficial interest, par value $0.01 (NYSE: SRG), represent equity in Seritage Growth Properties, a real estate company in the Lessors of Other Real Estate Property industry within the Real Estate and Rental and Leasing sector. According to company disclosures, Seritage has been a national owner and developer of retail, residential and mixed-use properties in the United States and is executing a shareholder-approved Plan of Sale focused on monetizing its remaining real estate portfolio and reducing debt.

Company communications describe Seritage as being engaged in the ownership, development, redevelopment, disposition, management and leasing of diversified retail and mixed-use properties throughout the United States. As the Plan of Sale progresses, Seritage reports that it will continue to actively manage each remaining location until each property is sold. Over time, the portfolio has been reduced from a much larger base of assets to a smaller group of remaining properties, with sales proceeds used in part to prepay a senior secured term loan facility.

Business model and property portfolio

Seritage’s business model centers on real estate ownership and leasing. The company’s portfolio has included:

• Multi-tenant retail properties with signed leases and additional space available for lease.
• Premier mixed-use assets that include retail and office space, with a mix of in-place leases and signed-not-opened leases.
• Residential-related acreage reported as part of planned usage alongside retail components.
• Non-core assets that the company has previously designated for sale.
• Consolidated properties held directly by the company.
• Unconsolidated entities and joint ventures in which Seritage holds interests.

Company updates provide snapshots of the portfolio at various dates. For example, Seritage has reported portfolios consisting of interests in dozens of properties, with total gross leasable area measured in the millions of square feet and hundreds of acres of land. Within this portfolio, Seritage discloses occupancy metrics, leased square footage, and space available for lease across multi-tenant retail and premier mixed-use categories.

Plan of Sale and capital structure

At the company’s 2022 Annual Meeting of Shareholders, Seritage shareholders approved a Plan of Sale. Company releases state that the strategic review process remains ongoing as Seritage executes this plan and remains open to value-maximizing alternatives, which may include a potential sale of the company. As part of this process, Seritage has highlighted the reduction of its asset base and the use of sale proceeds to reduce debt.

Seritage has a senior secured term loan facility provided by Berkshire Hathaway Life Insurance Company of Nebraska. Public disclosures note that the company has made multiple voluntary prepayments toward this term loan facility, repaying a substantial portion of the original balance since late 2021. The company has also disclosed the exercise of an option to extend the maturity date of the term loan by one year in exchange for an extension fee and an incremental facility fee, while keeping other loan terms unchanged during the extension period.

Seritage has Class A common shares of beneficial interest and 7.00% Series A cumulative redeemable preferred shares of beneficial interest registered on the New York Stock Exchange. The company’s SEC filings describe periodic preferred dividends declared on the Series A preferred shares.

Operating focus and leasing activity

Within its remaining portfolio, Seritage provides detailed information on leasing activity and occupancy. Company reports describe:

• Multi-tenant retail properties with in-place leases, signed-not-opened leases, leased gross leasable area, and percentage occupancy.
• Premier mixed-use assets with in-place retail and office leases, signed-not-opened retail leases, and associated base rent and rent per square foot metrics.
• Residential-related acreage associated with ancillary retail space and broader mixed-use plans.

Seritage has also highlighted specific projects, such as a premier mixed-use development in Aventura, Florida, where it reported progress on office and retail leasing and disclosed the percentage of space leased and remaining space available for lease before ultimately entering into and closing a purchase and sale agreement for that property.

Asset sales and disposition strategy

As part of the Plan of Sale, Seritage regularly reports on asset sales and properties under contract or in purchase and sale agreement negotiations. Company disclosures describe:

• Sales of income-producing assets, premier properties, vacant or non-income-producing assets, and interests in unconsolidated entities.
• Assets under contract with and without due diligence contingencies, with anticipated gross proceeds subject to customary closing conditions.
• Assets being marketed or expected to be marketed based on market conditions, with estimated ranges of gross sale proceeds by asset and market category (gateway, primary, and secondary markets).

These sales and dispositions are presented as part of the company’s effort to repay its term loan facility and, subject to conditions and outcomes, to make distributions to shareholders in connection with the Plan of Sale. Company communications emphasize that projections of gross sale proceeds and timing are based on internal forecasts and assumptions and may differ materially from actual results.

Financial reporting and litigation disclosures

Seritage provides quarterly and annual operating results, including net loss attributable to common shareholders and net operating income on a cash basis at share. The company also discloses its cash position, investments in consolidated and unconsolidated properties, distributions received from unconsolidated properties, impairment charges on real estate, and principal repayments on its term loan facility.

In addition, Seritage has reported a class action lawsuit alleging violations of federal securities laws related to disclosures about internal controls and projected gross proceeds of certain real estate assets, as well as multiple derivative actions asserting breach of fiduciary duty and related claims against certain officers and current and former members of the Board of Trustees. The company states that it intends to defend itself against these allegations and describes requested remedies in these actions, including compensatory damages, governance changes, and other relief.

Dividends and governance developments

Seritage’s Board of Trustees has periodically declared preferred stock dividends on the 7.00% Series A cumulative redeemable preferred shares, with payment dates and record dates disclosed in company announcements. The company has also reported changes in senior leadership, including a CEO transition in which the Board and the then-serving Chief Executive Officer agreed on her stepping down and the appointment of the Board Chairman as Interim CEO and President. Additional SEC filings describe amendments to employment arrangements for certain executives and retention and compensation structures as the company continues to execute its Plan of Sale.

Stock information

The Class A common shares of beneficial interest of Seritage Growth Properties, par value $0.01 per share, trade on the New York Stock Exchange under the ticker symbol SRG. The 7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share, trade on the New York Stock Exchange under the symbol SRG-PA. These listings are disclosed in the company’s SEC filings under the section covering securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934.

Use of information

Investors reviewing SRG stock often examine Seritage’s real estate portfolio composition, progress under the Plan of Sale, term loan repayment activity, leasing metrics, and ongoing legal matters as disclosed in the company’s news releases and SEC filings. Because the company’s strategy involves active asset sales and debt reduction, the mix of properties, lease status, and outstanding loan balance can change over time, and the company cautions that projections and expectations may differ from actual outcomes.