Portfolio and Assets - As of December 31, 2022, the company's portfolio consisted of 97 properties with approximately 13.5 million square feet of GLA, including 80 consolidated properties and 17 unconsolidated properties[202]. - The company sold 65 wholly owned assets during the year ended December 31, 2022, generating gross proceeds of $650.3 million, with a recorded gain of $211.9 million[207][223]. - The company has 22 assets under contract to sell for total anticipated proceeds of $366.3 million as of March 6, 2023[207]. - As of March 6, 2023, the company had 17 assets under contract for sale with anticipated proceeds of $326.7 million and 5 assets under contract subject to due diligence for $39.6 million[233]. - The company has sold 148 Consolidated Properties since July 2017, generating approximately $1.6 billion in gross proceeds[236]. Financial Performance - Rental income for the year ended December 31, 2022, was $104.6 million, a decrease of 10% from $115.7 million in 2021, primarily due to property sales[215][216]. - The company recorded net operating cash outflows of $117.9 million for the year ended December 31, 2022, as property rental income did not fully fund obligations[231]. - The company generated net investing cash inflows of $586.1 million during the year ended December 31, 2022, driven by asset sales[231]. - The Company reported net cash used in operating activities of $117.9 million for the year ended December 31, 2022, an improvement of $18.1 million compared to 2021[261]. - Net cash provided by investing activities increased significantly to $586.1 million in 2022, up by $325.4 million from 2021[261]. Impairment and Losses - The company recognized $126.9 million in impairment losses for the year ended December 31, 2022, reflecting a 32% increase from the previous year's impairment of $95.8 million[205][226]. - The company experienced a 681% increase in equity in loss of unconsolidated entities, totaling $72.1 million for the year ended December 31, 2022, primarily due to impairment charges[228]. - The company recorded $35.6 million in other-than-temporary impairment losses in investments in unconsolidated entities for the year ended December 31, 2022, with no such losses recognized in 2021[277]. - The company recognized impairment losses of $126.9 million and $95.8 million for real estate assets for the years ended December 31, 2022, and 2021, respectively[276]. Expenses and Settlements - General and administrative expenses increased by $5.7 million to $47.6 million for the year ended December 31, 2022, driven by third-party consultants and retention bonuses[222]. - The company recorded a $35.5 million litigation settlement during the year ended December 31, 2022, which was approved by the court on September 2, 2022[220]. - The Company made a settlement payment of $35.5 million related to litigation, recorded as a litigation settlement in the consolidated statement of operations for the year ended December 31, 2022[272]. Debt and Financing - Interest expense decreased by $21.2 million for the year ended December 31, 2022, due to partial term loan pay-downs of $160 million in 2021 and $410 million in 2022[230]. - The company repaid $570 million against the principal of the Term Loan Facility, with an outstanding balance of $1.03 billion as of December 31, 2022, reduced to $800 million after a $230 million prepayment on March 6, 2023[239]. - The maturity date for the Term Loan Facility has been extended to July 31, 2025, due to the reduction of the principal balance[258]. - The Term Loan Facility includes a $400 million Incremental Funding Facility, which the company has not yet accessed due to not achieving the required rental income[236]. - The company incurred $2.1 million in debt issuance costs related to the Term Loan Facility, amortized over the term of the agreement[248]. Shareholder Value and Strategic Review - The strategic review process for enhancing shareholder value is ongoing, with no assurance of successful execution of the proposed plan of sale[204]. - As of December 31, 2022, the company was not in compliance with certain financial metrics, requiring consent from Berkshire Hathaway for asset disposals[247]. Operating Income and Metrics - Net Operating Income (NOI) for the year ended December 31, 2022, was $37.5 million, compared to $29.9 million in 2021, reflecting a year-over-year increase of approximately 25.7%[286]. - Total NOI for the year ended December 31, 2022, was $43.5 million, up from $35.5 million in 2021, indicating a growth of about 22.5%[286]. - The company believes that NOI and Total NOI provide useful insights into its financial performance, excluding variable and non-cash items[284]. - The company’s financial measures, including NOI and Total NOI, should be viewed as supplemental and not as alternatives to GAAP measures[285]. Compliance and Fair Value - The company assesses the collectability of tenant receivables, which can significantly impact rental revenue recognized in the consolidated statements of income[278]. - Management exercises judgment in estimating the fair value of real estate assets, considering factors such as expected future operating income and market conditions[276]. - As of December 31, 2022, the company had $1.03 billion of consolidated debt, all under a fixed-rate Term Loan Facility, mitigating exposure to interest rate fluctuations[288]. - The estimated fair value of the company's consolidated debt as of December 31, 2022, was $1.0 billion, calculated based on current market prices and discounted cash flows[289]. Shareholder Information - The Company has 2,800,000 Series A Preferred Shares outstanding, with a redemption price of $25.00 per share plus any accrued dividends[255]. - The Board of Trustees did not declare dividends on Class A common shares during 2022, with the last dividend declared on February 25, 2019[256]. - Total contractual obligations as of December 31, 2022, amount to $1.08 billion, including $1.07 billion in long-term debt and $8.7 million in operating leases[257].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to _______ Commission File Number 001-37420 SERITAGE GROWTH PROPERTIES (Exact name of registrant as specified in its charter) Maryland 38-3976287 (State of Incorpo ...

Financial Performance - For the three months ended March 31, 2022, rental income decreased by $2.1 million to $29.1 million compared to $31.1 million in the same period of 2021, primarily due to a reduction in Sears/Kmart rental income [180][182]. - The company recorded a net operating cash outflow of $30.0 million for the three months ended March 31, 2022, as property rental income did not fully cover obligations incurred [194]. - For the three months ended March 31, 2022, the Company reported a net loss of $66,987 thousand, compared to a net loss of $10,933 thousand for the same period in 2021 [223]. - The Company's Net Operating Income (NOI) for Q1 2022 was $8,969 thousand, an increase from $7,908 thousand in Q1 2021, representing a growth of approximately 13.4% [223]. - Total NOI for Q1 2022 was $10,493 thousand, up from $9,433 thousand in Q1 2021, indicating an increase of about 11.2% [223]. - The Company incurred interest expense of $22,588 thousand in Q1 2022, down from $26,150 thousand in Q1 2021, reflecting a decrease of approximately 13.5% [223]. - General and administrative expenses decreased to $9,092 thousand in Q1 2022 from $11,232 thousand in Q1 2021, a reduction of about 19.1% [223]. - The Company reported an equity loss of $33,076 thousand from unconsolidated entities in Q1 2022, significantly higher than the $1,162 thousand loss in Q1 2021 [223]. - Depreciation and amortization expenses were $11,934 thousand in Q1 2022, slightly lower than $13,142 thousand in Q1 2021 [223]. - The Company recognized a gain of $1,015 thousand on the sale of real estate in Q1 2022, compared to a loss of $24,208 thousand in Q1 2021 [223]. Asset Management - As of March 31, 2022, the company's portfolio consisted of 161 properties with approximately 19.0 million square feet of gross leasable area (GLA) and 3.8 million square feet held by unconsolidated entities [166]. - The company collected 96% of rental income for the three months ended March 31, 2022, with no additional deferrals agreed upon [176]. - The company's multi-tenant retail portfolio was 82.7% leased as of March 31, 2022, with a pipeline of 0.2 million square feet [176]. - The company recognized $95.8 million of impairment losses during the year ended December 31, 2021, and $1.0 million during the three months ended March 31, 2022 [177]. - The company recognized $1.0 million in impairment on four real estate assets during the same period, reflecting a strategic decision to sell these properties [190]. - The loss from unconsolidated entities increased by $31.9 million, primarily due to a $61.1 million impairment charge in one investment, resulting in the company's share of this impairment being $30.6 million [191]. - The company sold one property for $9.0 million but recorded a loss of $1.0 million on the sale [189]. - As of March 31, 2022, the company had sold 91 consolidated properties since July 2017, generating approximately $995.8 million in gross proceeds [198]. - The company invested $22.5 million in consolidated development and operating properties and $7.6 million in unconsolidated joint ventures during the three months ended March 31, 2022 [208]. - The company had nine assets under contract for sale with anticipated proceeds of $85.0 million as of May 9, 2022 [195]. - The company is currently marketing assets with an estimated fair value of $636.3 million, which could help meet the $640 million principal pay down required for the Term Loan Facility [201]. Corporate Strategy - The company plans to terminate its REIT status and become a taxable C Corporation effective for the year ending December 31, 2022, allowing greater flexibility in using free cash flow [172]. - The company intends to execute a strategic review process to enhance shareholder value, overseen by a special committee of the Board of Trustees [171]. - The company expects ongoing impacts from the COVID-19 pandemic, which may significantly affect future financial results [175]. Debt and Financing - The outstanding balance of the Term Loan Facility as of March 31, 2022, was $1.44 billion, following a repayment of $160.0 million during the year ended December 31, 2021 [200]. - The company did not declare dividends on Class A common shares during the three months ended March 31, 2022, and 2021 [204]. Market Risk - There were no material changes in the quantitative and qualitative disclosures about market risk compared to the previous year [224].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 Commission file number 001-37420 SERITAGE GROWTH PROPERTIES (Exact name of registrant as specified in its charter) Maryland 38-3976287 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 500 Fifth Avenue, Suite 1530, New York, New York 10110 (Address ...

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Seritage Growth Properties' unaudited condensed consolidated financial statements and notes for the periods ended September 30, 2021, are presented [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets decreased to $2.49 billion, liabilities slightly to $1.74 billion, and equity significantly to $751.7 million Condensed Consolidated Balance Sheets (in thousands) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total assets** | **$2,494,706** | **$2,648,943** | | Net investment in real estate | $1,746,927 | $1,910,872 | | Cash and cash equivalents | $153,378 | $143,728 | | **Total liabilities** | **$1,743,017** | **$1,766,216** | | Term Loan Facility, net | $1,599,226 | $1,598,909 | | **Total equity** | **$751,689** | **$882,727** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue for Q3 2021 decreased to $29.0 million, with net loss narrowing to $21.8 million, while the nine-month net loss widened to $104.8 million Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | **$29,003** | **$33,707** | **$88,158** | **$88,843** | | Gain / (loss) on sale of real estate, net | $22,774 | $(14,706) | $65,079 | $59,959 | | Impairment of real estate assets | $(3,814) | $(14,594) | $(70,053) | $(16,407) | | **Net loss** | **$(26,349)** | **$(72,401)** | **$(132,586)** | **$(103,272)** | | Net loss attributable to Seritage common shareholders | $(21,759) | $(51,278) | $(104,769) | $(74,320) | | **Net loss per share - Basic & Diluted** | **$(0.50)** | **$(1.33)** | **$(2.50)** | **$(1.95)** | [Condensed Consolidated Statements of Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity decreased from $882.7 million to $751.7 million as of September 30, 2021, primarily due to a $132.6 million net loss Changes in Total Equity (in thousands) | | Nine Months Ended Sep 30, 2021 | | :--- | :--- | | **Balance at January 1, 2021** | **$882,727** | | Net loss | $(132,586) | | Preferred dividends declared | $(3,675) | | **Balance at September 30, 2021** | **$751,689** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $85.6 million, while investing activities provided $95.8 million, primarily from real estate sales, for the nine months ended September 30, 2021 Condensed Consolidated Statements of Cash Flows (in thousands) | | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Net cash (used in) operating activities** | **$(85,566)** | **$(25,300)** | | **Net cash provided by (used in) investing activities** | **$95,820** | **$(9,697)** | | Net proceeds from sale of real estate | $195,183 | $234,777 | | Development of real estate | $(77,554) | $(194,964) | | **Net cash provided by financing activities** | **$20** | **$16,656** | | **Net increase / (decrease) in cash** | **$10,274** | **$(18,341)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's organization, accounting policies, debt, leases, and contingencies, including Sears lease termination, asset sales for liquidity, term loan non-compliance, and a Sears Holdings lawsuit - As of September 30, 2021, the company's portfolio consisted of interests in **170 properties** with approximately **10.0 million square feet of GLA**[24](index=24&type=chunk) - The company's obligations are projected to exceed rental income, and it plans to fund these costs with cash on hand and sales of properties; management believes this plan is probable to be effectively implemented[31](index=31&type=chunk) - The company is a defendant in a lawsuit filed by Sears Holdings, which alleges the 2015 spin-off transaction was a fraudulent transfer and real estate was undervalued by at least **$649 to $749 million**; the company believes the claims are without merit[116](index=116&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) - As of September 30, 2021, the company was not in compliance with certain financial metrics of its **$1.6 billion Term Loan Facility**, requiring it to obtain consent from the lender (Berkshire Hathaway) for asset sales[98](index=98&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting the impact of COVID-19, restructuring, and portfolio review, noting declining rental income, significant impairment charges, and reliance on asset sales for liquidity - The company is repositioning its portfolio into three business lines: residential developments, premier mixed-use assets, and multi-tenant retail destinations[150](index=150&type=chunk) - A portfolio review led to a modification of plans for certain assets, resulting in **$70.1 million** of impairment losses in the nine months ended September 30, 2021[154](index=154&type=chunk)[181](index=181&type=chunk) - The company's primary source of operating cash flow, property rental income, did not fully fund its obligations during the first nine months of 2021, resulting in net operating cash outflows of **$85.6 million**[183](index=183&type=chunk) - The company plans to fund its obligations and development expenditures with cash on hand and capital from sources like sales of consolidated properties, sales of interests in unconsolidated properties, and creating new joint ventures[184](index=184&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Rental income decreased in Q3 2021 due to Sears lease termination, while nine-month rental income saw a smaller decline; impairment charges significantly increased to **$70.1 million** Rental Income Breakdown (in thousands) | | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | $ Change | | :--- | :--- | :--- | :--- | | Sears/Kmart | $0 | $5,997 | $(5,997) | | In-place diversified, non-Sears leases | $27,812 | $24,654 | $3,158 | | **Total rental income** | **$28,819** | **$33,966** | **$(5,147)** | Key Expense Changes (Nine Months Ended Sep 30, $ in thousands) | Expense Item | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | Depreciation and amortization | $39,629 | $81,446 | $(41,817) | | Impairment of real estate assets | $70,053 | $16,407 | $53,646 | | Interest expense | $81,847 | $66,400 | $15,447 | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow was negative **$85.6 million**, with liquidity primarily managed through **$195.2 million** in asset sales, while development expenditures totaled **$77.6 million** on consolidated properties and **$31.7 million** in joint ventures Cash Flow Summary (Nine Months Ended Sep 30, $ in thousands) | | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | Net cash (used in) operating activities | $(85,566) | $(25,300) | $(60,266) | | Net cash provided by (used in) investing activities | $95,820 | $(9,697) | $105,517 | - During the nine months ended September 30, 2021, the company invested **$77.6 million** in its consolidated development and operating properties and an additional **$31.7 million** into its unconsolidated joint ventures[194](index=194&type=chunk) [Non-GAAP Supplemental Financial Measures and Definitions](index=41&type=section&id=Non-GAAP%20Supplemental%20Financial%20Measures%20and%20Definitions) The company uses non-GAAP measures like NOI and FFO; Q3 2021 Company FFO was negative **$24.9 million**, and Total NOI was **$8.1 million** Reconciliation of Net Loss to Company FFO (in thousands) | | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net loss | $(26,349) | $(72,401) | | FFO attributable to common shareholders | $(27,696) | $(19,898) | | **Company FFO attributable to common shareholders** | **$(24,909)** | **$(25,093)** | Reconciliation of Net Loss to Total NOI (in thousands) | | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net loss | $(26,349) | $(72,401) | | NOI | $7,356 | $4,710 | | **Total NOI** | **$8,075** | **$5,979** | [Quantitative and Qualitative Disclosure about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company states that there were no material changes in its market risk disclosures from those set forth in its 2020 Annual Report on Form 10-K - There were no material changes in the Quantitative and Qualitative Disclosures about Market Risk set forth in the 2020 Annual Report on Form 10-K[217](index=217&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2021; no material changes to internal control over financial reporting occurred during the quarter - Based on an evaluation conducted by management, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[218](index=218&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[219](index=219&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the information on legal proceedings detailed in Note 9 of the condensed consolidated financial statements; the key legal matter is the ongoing litigation with Sears Holdings - Information regarding legal proceedings is incorporated by reference from Note 9 of the condensed consolidated financial statements[221](index=221&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes from 2020 Annual Report risk factors, but updates include potential adverse effects of inflation, rising interest rates, and increased costs and delays for construction projects due to supply chain disruptions - The U.S. economy is experiencing higher inflation, which may increase interest expenses, general and administrative costs, and could adversely affect tenant leases and consumer spending[224](index=224&type=chunk) - The company faces increased risks from volatility in commodity and labor prices, as well as supply chain disruptions, which may adversely affect construction projects[226](index=226&type=chunk) - Significant price increases for construction materials like steel, lumber, and copper, along with major supply chain backlogs at U.S. ports, could result in project delays and increased costs[228](index=228&type=chunk)[229](index=229&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[230](index=230&type=chunk) [Defaults upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[231](index=231&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[232](index=232&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - None[233](index=233&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under the Sarbanes-Oxley Act and Inline XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101 series)[235](index=235&type=chunk) [Signatures](index=48&type=section&id=SIGNATURES)

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The unaudited condensed consolidated financial statements detail the company's financial position, operations, and cash flows, showing decreased assets, a significant net loss, and negative operating cash flow funded by asset sales [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$2.50 billion** by June 30, 2021, from **$2.65 billion** at year-end 2020, driven by reduced real estate investment, while equity declined due to net loss Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$2,502,533** | **$2,648,943** | | Net investment in real estate | $1,745,572 | $1,910,872 | | Cash and cash equivalents | $140,058 | $143,728 | | **Total Liabilities** | **$1,727,644** | **$1,766,216** | | Term Loan Facility, net | $1,599,121 | $1,598,909 | | **Total Equity** | **$774,889** | **$882,727** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a **net loss of $95.3 million** for Q2 2021, primarily due to a **$64.5 million impairment charge**, with a **$106.2 million** loss for the six-month period Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $27,874 | $21,819 | $59,155 | $55,136 | | Gain on sale of real estate, net | $18,097 | $53,877 | $42,305 | $74,665 | | Impairment of real estate assets | $(64,539) | $(1,813) | $(66,239) | $(1,813) | | Net Income / (Loss) | $(95,304) | $104 | $(106,237) | $(30,871) | | Net Loss Attributable to Seritage | $(72,840) | $72 | $(80,560) | $(20,592) | | Net Loss Per Share - Diluted | $(1.73) | $(0.03) | $(2.02) | $(0.61) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to **$56.6 million** for the first half of 2021, offset by **$56.1 million** from investing activities, primarily real estate sales Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(56,616) | $(18,345) | | Net cash provided by (used in) investing activities | $56,099 | $(36,705) | | Net cash used in financing activities | $(2,529) | $(2,535) | | **Net decrease in cash** | **$(3,046)** | **$(57,585)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes disclose the company's organization, accounting policies, liquidity challenges, reliance on asset sales, significant debt, and ongoing litigation with Sears Holdings - As of June 30, 2021, the company's portfolio consisted of interests in **172 properties** totaling approximately **24.9 million square feet of GLA**[24](index=24&type=chunk) - The company's primary source of operating cash flow, property rental income, did not fully fund its obligations during the first six months of 2021, resulting in a **net operating cash outflow of $56.6 million**[30](index=30&type=chunk)[31](index=31&type=chunk) - The company recorded significant impairment losses of **$64.5 million for Q2 2021** and **$66.2 million for the first six months of 2021**, triggered by organizational restructuring and a modified strategic plan for certain assets[107](index=107&type=chunk) - Seritage is a defendant in a lawsuit filed by Sears Holdings, alleging the 2015 transaction creating Seritage was a fraudulent transfer, claiming the real estate was undervalued by at least **$649 million to $749 million** and seeking rescission or damages[116](index=116&type=chunk)[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, liquidity, and strategy, highlighting increased net losses from impairment charges and reliance on asset sales to fund operating shortfalls [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2021 saw increased rental income offset by a **$62.7 million** rise in impairment charges and decreased real estate sale gains, leading to higher net losses Key Changes in Operations - Q2 2021 vs Q2 2020 (in thousands) | Account | $ Change | | :--- | :--- | | Rental income | $5,947 | | Depreciation and amortization | $(10,374) | | General and administrative | $3,346 | | Gain on sale of real estate, net | $(35,780) | | Impairment of real estate assets | $(62,726) | - The increase in General and Administrative expenses in Q2 2021 was driven by severance, restructuring costs, D&O insurance, and salary expenses[162](index=162&type=chunk) - The decrease in depreciation and amortization for both the three and six-month periods was primarily due to accelerated expenses recorded in 2020 related to Holdco lease terminations and lower expense from property sales[160](index=160&type=chunk)[172](index=172&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Rental income is insufficient to cover obligations, leading to a **$56.6 million** operating cash outflow, with liquidity heavily reliant on asset sales and an undrawn **$400 million** facility contingent on unmet targets - The company's obligations are projected to continue to exceed property rental income, requiring funding from cash on hand and capital sources like asset sales[179](index=179&type=chunk) - Access to the **$400.0 million** Incremental Funding Facility is contingent on achieving at least **$200.0 million** in annualized rental income from non-Sears tenants, a target which has not yet been achieved[182](index=182&type=chunk) Capital Recycling Program Proceeds (Since July 2017, in millions) | Source | Gross Proceeds | | :--- | :--- | | Sales of Wholly Owned Properties | ~$718.3 | | Sales of interests in Unconsolidated Properties | ~$278.1 | | Contributions to new Unconsolidated Entities | ~$212.4 | [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliations for non-GAAP measures show **Total NOI at $7.6 million** for Q2 2021 and a **Company FFO loss of $29.3 million** for the same period Non-GAAP Performance Summary (in thousands) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | NOI | $6,112 | $6,222 | $14,020 | $21,420 | | Total NOI | $7,553 | $7,285 | $16,986 | $23,132 | | FFO | $(33,911) | $(27,387) | $(52,655) | $(44,944) | | Company FFO | $(29,305) | $(27,150) | $(51,296) | $(45,591) | [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) No material changes were reported in the company's quantitative and qualitative disclosures regarding market risk compared to the 2020 Annual Report - No material changes in Quantitative and Qualitative Disclosures about Market Risk were reported for the period[215](index=215&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[216](index=216&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[217](index=217&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings, primarily concerning significant litigation with Sears Holdings, are incorporated by reference from Note 9 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 9 of the condensed consolidated financial statements[219](index=219&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported from the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K - No material changes from the risk factors disclosed in the 2020 Annual Report on Form 10-K were reported[220](index=220&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as well as Inline XBRL documents[226](index=226&type=chunk)

N a r e i t R E I T w o r l d 2 0 2 1 A n n u a l C o n f e r e n c e J u n e 8 - 1 0 , 2 0 2 1 Seritage Growth Properties | Forward Looking Statements This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statem ...

SERITAGE GROWTH PROPERTIES (Exact name of registrant as specified in its charter) or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to _______ Commission File Number 001-37420 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021 Maryland 38-3976287 (State of Incorp ...

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) The company is a REIT focused on redeveloping and leasing a diversified portfolio of retail and mixed-use properties Portfolio Overview as of December 31, 2020 | Portfolio Type | Number of Properties | Total GLA (million sq ft) | |---|---|---| | Wholly Owned Properties | 158 | 24.5 | | Unconsolidated Properties | 25 | 1.9 | | **Total** | **183** | **26.5** | - The company's primary business strategies include maximizing the value of its **~2,400 acres of land** through densification, converting single-tenant buildings into multi-tenant properties at higher rents, and leveraging joint venture relationships[24](index=24&type=chunk)[29](index=29&type=chunk) - Following the Sears Holdings bankruptcy, Seritage executed a new master lease with Transform Holdco LLC (Holdco), and as of March 2021, **no properties remained leased to Holdco or Sears**[18](index=18&type=chunk)[19](index=19&type=chunk) - The COVID-19 pandemic had a significant impact, though the company collected **93% of rental income for Q4 2020** and is cautiously managing cash to preserve asset value[20](index=20&type=chunk)[21](index=21&type=chunk) - As of December 31, 2020, the company had 61 full-time employees, with an organization comprised of **33% women and 23% people of color**[38](index=38&type=chunk)[40](index=40&type=chunk) [Item 1A. Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, Sears bankruptcy litigation, and ongoing capital needs - The **COVID-19 pandemic** is expected to materially and adversely impact tenants' businesses, affecting the company's income, cash flow, and liquidity[52](index=52&type=chunk) - The company is a defendant in litigation from the Sears Holdings bankruptcy, which alleges the 2015 spin-off was a **fraudulent conveyance** seeking recovery of property or damages[71](index=71&type=chunk)[74](index=74&type=chunk) - The company has ongoing capital needs and must obtain lender consent for asset sales due to **non-compliance with certain financial metrics** in its Term Loan Facility[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - **ESL Investments, Inc.** exerts substantial influence, beneficially owning approximately 30.4% of Operating Partnership units and 6.5% of Class A common shares[142](index=142&type=chunk)[144](index=144&type=chunk) - Failure to maintain REIT qualification would subject the company to U.S. federal income tax, which could result in a **substantial tax liability** and reduce cash available for distribution[146](index=146&type=chunk) [Item 1B. Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the staff of the SEC as of the date of this Annual Report - There are **no unresolved comments** from the staff of the SEC[178](index=178&type=chunk) [Item 2. Properties](index=33&type=section&id=Item%202.%20Properties) The portfolio consists of 183 properties with a 32.4% lease rate, concentrated in Florida and California Portfolio Summary (at share) as of Dec 31, 2020 | Metric | Value | |---|---| | Total Properties | 183 | | Total GLA (million sq ft) | 26.5 | | Leased GLA (million sq ft) | 8.6 | | Leased Percentage | 32.4% | Top 5 States by Annual Rent | State | % of Total Annual Rent | |---|---| | Florida | 19.5% | | California | 16.2% | | New York | 7.0% | | New Jersey | 5.2% | | Texas | 4.7% | Top 5 Tenants by Annual Rent | Tenant | % of Total Annual Rent | |---|---| | Dick's Sporting Goods | 8.3% | | Dave & Buster's | 6.1% | | Round One Entertainment | 4.8% | | Burlington Stores | 4.5% | | At Home | 4.5% | - Signed-but-not-yet-open (SNO) leases represent a significant portion of future income, accounting for **36.2% of total annualized rent** from signed leases[194](index=194&type=chunk) [Item 3. Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) The company is defending a significant lawsuit from Sears Holdings alleging fraudulent transfer of real estate assets - The primary legal proceeding is a lawsuit from Sears Holdings alleging the 2015 spin-off transaction was an **actual and/or constructive fraudulent transfer**[195](index=195&type=chunk) - The lawsuit alleges the real estate was undervalued by **$649 to $749 million** and seeks remedies including rescission or compensatory damages[195](index=195&type=chunk)[197](index=197&type=chunk) - Seritage filed a partial motion to dismiss certain claims in February 2020 and believes the claims against it are **without merit**[198](index=198&type=chunk) - In March 2021, Seritage sued its D&O insurance providers for **refusing to pay defense costs** related to the Sears litigation[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[202](index=202&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock significantly underperformed in 2020, and common share dividends have been suspended since Q1 2019 Cumulative Total Shareholder Return (2015-2020) | Index | 12/31/2015 | 12/31/2020 | % Return in 2020 | |---|---|---|---| | Seritage Growth Properties | $100 | $39 | -61% | | S&P 500 | $100 | $203 | +18.4% (calculated) | | SNL US REIT Equity | $100 | $137 | -5.5% (calculated) | - The company has **not declared dividends** on its Class A and Class C common shares since Q1 2019, but may satisfy REIT requirements via preferred share dividends[214](index=214&type=chunk) [Item 6. Selected Financial Data](index=44&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable as per the report - None[217](index=217&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Declining rental income from Sears lease terminations drove a wider net loss in 2020, with liquidity dependent on asset sales Comparison of Operations (Year Ended Dec 31) | (in thousands) | 2020 | 2019 | |---|---|---| | Rental Income | $116,202 | $167,035 | | Gain on sale of real estate | $88,555 | $71,104 | | Impairment on real estate assets | $(64,108) | $0 | | Net Loss | $(152,964) | $(90,603) | - The **$50.8 million decrease in rental income** was driven by a $36.5 million reduction in rent from Sears/Kmart due to lease terminations[237](index=237&type=chunk)[238](index=238&type=chunk) - The company's primary source of liquidity is asset sales, generating **gross proceeds of $333.4 million** in 2020[229](index=229&type=chunk)[230](index=230&type=chunk) Cash Flow Summary (Year Ended Dec 31) | (in thousands) | 2020 | 2019 | |---|---|---| | Net cash used in operating activities | $(47,314) | $(57,660) | | Net cash provided by (used in) investing activities | $42,868 | $(299,490) | | Net cash provided by (used in) financing activities | $15,440 | $(36,447) | Non-GAAP Performance Measures (Year Ended Dec 31) | (in thousands) | 2020 | 2019 | |---|---|---| | Total NOI | $37,757 | $72,667 | | Company FFO | $(88,583) | $(33,896) | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is minimal as its entire $1.6 billion of consolidated debt is at a fixed interest rate - The company's **$1.6 billion of consolidated debt is fixed-rate**, therefore it is not subject to interest rate fluctuations[333](index=333&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the detailed consolidated financial statements and schedules beginning on page F-1 of the report [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=60&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[336](index=336&type=chunk) [Item 9A. Controls and Procedures](index=60&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, and the auditor issued an unqualified opinion - Management concluded that **disclosure controls and procedures were effective** as of December 31, 2020[338](index=338&type=chunk) - The independent registered public accounting firm, Deloitte & Touche LLP, issued an **unqualified opinion** on the company's internal control over financial reporting[340](index=340&type=chunk) [Item 9B. Other Information](index=61&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - None[342](index=342&type=chunk) Part III [Item 10. Directors, Executive Officers, and Corporate Governance](index=61&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's 2021 Annual Meeting proxy statement [Item 11. Executive Compensation](index=61&type=section&id=Item%2011.%20Executive%20Compensation) Required information is incorporated by reference from the company's 2021 Annual Meeting proxy statement [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=61&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Required information is incorporated by reference from the company's 2021 Annual Meeting proxy statement [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=61&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Required information is incorporated by reference from the company's 2021 Annual Meeting proxy statement [Item 14. Principal Accounting Fees and Services](index=61&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Required information is incorporated by reference from the company's 2021 Annual Meeting proxy statement Part IV [Item 15. Exhibits and Financial Statement Schedule](index=62&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedule) This section lists all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K Financial Statements and Supplementary Data [Consolidated Financial Statements](index=72&type=section&id=Consolidated%20Financial%20Statements) The company's net loss widened to $153.0 million in 2020, with total assets declining to $2.65 billion Consolidated Balance Sheet Data (as of Dec 31) | (in thousands) | 2020 | 2019 | |---|---|---| | Net investment in real estate | $1,910,872 | $1,970,633 | | Total Assets | $2,648,943 | $2,750,612 | | Term loan facility, net | $1,598,909 | $1,598,487 | | Total Liabilities | $1,766,216 | $1,707,242 | | Total Equity | $882,727 | $1,043,370 | Consolidated Statement of Operations Data (Year Ended Dec 31) | (in thousands) | 2020 | 2019 | |---|---|---| | Total Revenue | $116,495 | $168,633 | | Total Expenses | $202,778 | $224,455 | | Gain on sale of real estate | $88,555 | $71,104 | | Impairment of real estate assets | $(64,108) | $0 | | Net Loss | $(152,964) | $(90,603) | [Notes to Consolidated Financial Statements](index=79&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail liquidity challenges, reliance on asset sales, debt covenants, and significant litigation and impairments - Management has determined it is probable that its plans to fund obligations through **cash on hand and asset sales** will be effectively implemented[418](index=418&type=chunk) - A real estate **impairment loss of $64.1 million** was recognized in 2020, primarily related to vacant properties and assets leased to struggling theater and fitness tenants[428](index=428&type=chunk)[429](index=429&type=chunk) Sears/Holdco Master Lease Termination Activity Summary | Year of Notice | Number of Properties Terminated | |---|---| | 2020 | 17 | | 2019 | 29 | | 2018 | 22 | | 2017 | 39 | | 2016 | 17 | | **Total** | **124** (excluding 9 rejected in bankruptcy) | - The company's **$1.6 billion Term Loan Facility** with Berkshire Hathaway has a fixed 7.0% interest rate, but access to an additional $400 million is contingent on a performance threshold not yet met[507](index=507&type=chunk)[509](index=509&type=chunk)[512](index=512&type=chunk)

Company Overview and Strategy - Seritage owns 199 properties encompassing 316 million square feet across 44 states[2] - The company aims to revitalize shopping, dining, entertainment, and mixed-use destinations[2] - The company focuses on re-leasing existing space, densifying sites with mixed-use development, and transforming retail real estate[3] - The company has raised over $860 million from the sale or joint venture of interests in 78 properties and several outparcels[3] Portfolio and Demographics - The portfolio includes 111 properties attached to regional malls and 88 freestanding or shopping center properties[7] - The average population density within a 10-mile radius of the properties is 653000, with an average household income of $88000[7] - Top states for investment include California (228%), Florida (171%), and New York (61%)[9] COVID-19 Impact and Response - As of August 4, 2020, 93% of tenants were open or partially open[12] - The company collected 66% of cash rents in Q2 2020 and executed deferral agreements for 21%[12] - Year-to-date asset sales totaled $1663 million, including $986 million in Q2 2020[12] Tenant Activity and Rent Collection - 93% of in-place tenants are open and/or operating, representing 92% of leased GLA and 86% of annual ABR[16] - In Q2 2020, the company collected 66% of rental income and deferred an additional 21%[18] - In July 2020, the company collected 74% of rental income and deferred an additional 7%[18] Capital Resources and Allocation - Year-to-date, the company sold 13 assets and five outparcels, generating $166 million in cash proceeds[21] - Since July 2017, the company has monetized 78 assets and several outparcels, generating $860 million in cash proceeds[21] - The company has $915 million of assets under contract for sale as of August 4, 2020[22]