Debt and Financial Flexibility - The Refinanced 250 Water Street Term Loan was established to reduce outstanding indebtedness and provide greater financial flexibility[139]. - The company faces restrictions under its debt agreements that may limit operational capabilities and increase refinancing costs[141]. - The company has entered into interest rate hedging contracts to mitigate exposure to interest rate volatility, which carries additional risks[149]. - The company is subject to interest rate risk, particularly with its variable-rate mortgage, which could impact future refinancing efforts[356]. Revenue and Financial Performance - Total revenues for 2024 were $111,136,000, a decrease of 3.5% from $115,678,000 in 2023[372]. - Net loss for 2024 was $152,625,000, compared to a net loss of $838,065,000 in 2023, indicating a significant improvement[372]. - Operating income loss for 2024 was $(101,740,000), an improvement from $(756,406,000) in 2023[372]. - Cash used in operating activities was $(52,700,000) in 2024, slightly higher than $(50,780,000) in 2023[375]. - Total expenses rose to $219,605,000 in 2024, up from $199,625,000 in 2023, primarily due to increased general and administrative costs[372]. - The company reported a basic loss per share of $(16.82) for 2024, compared to $(151.77) for 2023[372]. Assets and Liabilities - Total assets increased to $743.6 million as of December 31, 2024, compared to $616.8 million in 2023, reflecting a growth of approximately 20.5%[369]. - Mortgages payable decreased to $101.6 million in 2024 from $155.6 million in 2023, a reduction of approximately 34.7%[369]. - Total liabilities decreased from $142.5 million to $125.6 million[468]. Compliance and Regulatory Risks - The company is subject to environmental compliance costs, including a requirement for a Remedial Action Work Plan at the 250 Water Street site[158]. - Tax changes and challenges from tax authorities could adversely impact financial results and operational conditions[161]. - The company may face increased compliance costs due to new energy efficiency regulations, particularly in New York City[156]. - Compliance with the Americans with Disabilities Act (ADA) may impose significant costs, potentially affecting the company's financial condition and results of operations[164]. Corporate Structure and Governance - As of December 31, 2024, Pershing Square owns approximately 39.5% of the company's outstanding common stock, which could impact stock price if shares are sold[171]. - The Investor Rights Agreement with Pershing Square allows it to nominate individuals to the board as long as it owns at least 10% of the outstanding shares[206]. - The company is classified as an emerging growth company, which may result in different reporting requirements compared to other public companies[195]. Separation and Transition Costs - The separation from HHH may result in increased costs for corporate functions previously performed by HHH, impacting cash flows and profitability[181]. - The transition of information technology systems from HHH is expected to be complex and costly, with risks of data loss during the process[185]. - Following the Spin-Off, the company is dependent on HHH for critical transition services, which may lead to increased costs or difficulties in finding replacements after the agreement expires[186]. Investments and Impairments - The Company recognized an impairment of $5.0 million related to the Ssäm Bar investment in the year ended December 31, 2023[456]. - The Company recorded a $709.5 million impairment charge in 2023 related to Seaport properties and investments in the Hospitality segment due to decreased future cash flow estimates[472]. - An impairment charge of $10.0 million was recorded in 2024 related to the warrant agreement with Jean-Georges for acquiring an additional 20% interest[473]. Development and Growth - The potential development at 250 Water Street has received approvals for 547,000 zoning square feet of mixed-use space, but further challenges may arise[150]. - Total developments increased to $146.461 million in 2024 from $102.874 million in 2023, representing a 42.3% growth[412]. - Development costs rose significantly to $94.743 million in 2024, up from $51.156 million in 2023, indicating an increase of 85%[412]. Cash Flow and Financing Activities - Cash and cash equivalents significantly increased to $165.7 million in 2024 from $1.8 million in 2023, representing a growth of over 9,000%[369]. - Cash provided by financing activities increased to $279,581,000 in 2024 from $136,214,000 in 2023[375]. - The Company completed a Rights Offering on October 17, 2024, issuing 7.0 million shares at a subscription price of $25.00 per share, generating total gross proceeds of $175.0 million[386].
Seaport Entertainment Group Inc.(SEG) - 2024 Q4 - Annual Report