Seaport Entertainment Group Inc.(SEG) - 2025 Q1 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements The report contains forward-looking statements subject to known and unknown risks and uncertainties - The report contains forward-looking statements regarding future operations, economic performance, capital requirements, technology impact, and development opportunities. These statements are subject to known and unknown risks and uncertainties[6][7] - Key risks include those related to the separation from Howard Hughes Holdings Inc. (HHH), macroeconomic conditions (volatility in capital markets, inflation, interest rates, recession), changes in consumer spending, real estate industry risks, ability to obtain capital, supply chain disruptions, concentration of properties in New York City and Las Vegas, extreme weather, cybersecurity, and ability to attract and retain key personnel[7][9] Part I Financial Information This section presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited consolidated and combined financial statements of Seaport Entertainment Group Inc., including the balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies, investments, debt, and other financial disclosures Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Total assets | $718,414 | $743,556 | | Total liabilities | $177,355 | $172,174 | | Total equity | $541,059 | $571,382 | - Total assets decreased by $25.1 million, primarily driven by a reduction in cash and cash equivalents. Total equity decreased by $30.3 million[12] Consolidated and Combined Statements of Operations This section details the company's revenues, expenses, and net loss over specific reporting periods Consolidated and Combined Statements of Operations Highlights (Three months ended March 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Total revenues | $16,069 | $14,511 | | Total expenses | $48,771 | $45,840 | | Operating loss | $(32,702) | $(31,321) | | Net loss | $(31,538) | $(44,078) | | Net loss attributable to common stockholders | $(31,888) | $(44,078) | | Basic EPS | $(2.51) | $(7.98) | | Diluted EPS | $(2.51) | $(7.98) | - Total revenues increased by $1.56 million (11%) year-over-year. Net loss decreased by $12.54 million (28%) year-over-year, and net loss attributable to common stockholders decreased by $12.19 million (28%). Basic and diluted EPS improved from $(7.98) to $(2.51)[14][174] Consolidated and Combined Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities Consolidated and Combined Statements of Cash Flows Highlights (Three months ended March 31, in thousands) | Activity | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Cash used in operating activities | $(20,478) | $(18,796) | | Cash used in investing activities | $(14,497) | $(28,578) | | Cash (used in) provided by financing activities | $(870) | $47,659 | | Net change in cash, cash equivalents and restricted cash | $(35,845) | $285 | | Cash, cash equivalents and restricted cash at end of period | $132,000 | $44,130 | - Cash used in operating activities increased by $1.7 million. Cash used in investing activities decreased by $14.1 million, primarily due to the consolidation of the Tin Building by Jean-Georges. Cash provided by financing activities decreased by $48.5 million, shifting to cash used, mainly due to the elimination of net transfers from HHH post-separation[199][200][201][202] Consolidated and Combined Statements of Shareholders' Equity This section presents changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Consolidated and Combined Statements of Shareholders' Equity Highlights (in thousands) | Metric | December 31, 2024 | March 31, 2025 | | :-------------------------------- | :---------------- | :------------- | | Common stock (shares) | 12,708 | 12,699 | | Common stock (amount) | $127 | $127 | | Additional paid in capital | $613,015 | $614,580 | | Accumulated deficit | $(51,660) | $(83,548) | | Total stockholders' equity | $561,482 | $531,159 | | Noncontrolling interest in subsidiary | $9,900 | $9,900 | | Total equity | $571,382 | $541,059 | - Total stockholders' equity decreased by $30.3 million, primarily due to a net loss of $31.89 million, partially offset by $2.09 million in stock compensation[18] Notes to Consolidated and Combined Financial Statements These notes provide comprehensive details on the company's accounting policies, the impact of its separation from HHH, specific financial instruments, and operational segments, offering context for the presented financial statements Note 1. Summary of Significant Accounting Policies This note outlines the company's formation as a spin-off from HHH, its three operating segments (Hospitality, Entertainment, Landlord Operations), and the basis of presentation for its financial statements, which transitioned from carve-out combined statements to standalone consolidated statements post-separation - Seaport Entertainment Group Inc. (SEG) was incorporated in 2024 and spun off from Howard Hughes Holdings Inc. (HHH) on July 31, 2024, becoming an independent, publicly traded company[20] - The company operates through three segments: Hospitality, Entertainment, and Landlord Operations, primarily focused on entertainment and real estate assets in New York City and Las Vegas[21][40] - Financial statements for periods until July 31, 2024, are combined carve-out statements from HHH, while periods from August 1, 2024, onwards are standalone consolidated statements[24] Note 2. Investments in Unconsolidated Ventures This note details the company's equity method investments, including The Lawn Club and Jean-Georges Restaurants. It highlights the significant change in the Tin Building by Jean-Georges, which was consolidated into the company's financial statements as of January 1, 2025, due to SEG becoming its primary beneficiary Investments in Unconsolidated Ventures (in thousands, except percentages) | Investment | Ownership Interest (March 31, 2025) | Carrying Value (March 31, 2025) | Share of Earnings (Losses) (Three months ended March 31, 2025) | | :------------------------ | :---------------------------------- | :------------------------------ | :----------------------------------------------------------- | | The Lawn Club | 50% | $4,658 | $(157) | | Tin Building by Jean-Georges | 0% (Consolidated Jan 1, 2025) | $0 | $0 | | Jean-Georges Restaurants | 25% | $14,803 | $327 | | Total | | $19,461 | $170 | - As of January 1, 2025, the Tin Building by Jean-Georges was consolidated into the company's financial statements, as SEG became its primary beneficiary, leading to a preliminary allocation of $7.75 million in net assets assumed[76][79] - The company holds a 25% interest in Jean-Georges Restaurants, acquired in March 2022 for $45.0 million, and has a warrant to acquire an additional 20% interest[82][83] Note 3. Other Assets and Liabilities This note provides a breakdown of the significant components comprising 'Other assets, net' and 'Accounts payable and other liabilities' on the consolidated balance sheets Other Assets, Net (in thousands) | Component | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Intangibles | $16,590 | $17,379 | | Security and other deposits | $11,015 | $11,116 | | Food and beverage and merchandise inventory | $2,909 | $1,875 | | Prepaid expenses | $3,351 | $4,862 | | Other assets, net | $34,060 | $35,801 | Accounts Payable and Other Liabilities (in thousands) | Component | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Deferred income | $13,894 | $3,946 | | Accounts payable and accrued expenses | $9,149 | $10,998 | | Accrued payroll and other employee liabilities | $2,178 | $5,961 | | Accrued interest | $1,188 | $84 | | Total accounts payable and other liabilities | $28,442 | $23,111 | Note 4. Mortgages Payable, Net This note summarizes the company's mortgage obligations, distinguishing between fixed-rate and variable-rate debt, and provides details on interest rates, maturity dates, and collateral Mortgages Payable, Net (in thousands) | Type of Debt | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Fixed-rate debt | $41,087 | $41,087 | | Variable-rate debt | $61,300 | $61,300 | | Unamortized deferred financing costs | $(782) | $(794) | | Mortgages payable, net | $101,605 | $101,593 | Secured Mortgages Payable Details (March 31, 2025, in thousands) | Type of Debt | Principal | Interest Rate | Maturity Date | | :-------------------------- | :-------- | :------------ | :------------ | | Fixed rate | $41,087 | 4.92% | December 15, 2038 | | Variable rate | $61,300 | 11.33% | July 1, 2029 | - The variable-rate debt on 250 Water Street was amended on January 1, 2025, increasing the margin from 5.0% to 7.0%, but a total return swap with the lender results in no change in cash flows to the company, maintaining an assumed rate of SOFR + 4.5%[92][93] Note 5. Fair Value This note presents the fair value measurement hierarchy for the company's financial instruments, categorizing inputs into Level 1, 2, or 3 based on observability, and explains the valuation methods used for debt Fair Value Measurement Hierarchy (March 31, 2025, in thousands) | Instrument | Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | | :-------------------------- | :------------------- | :-------------- | :------------------- | | Cash and Restricted cash | Level 1 | $132,000 | $132,000 | | Accounts receivable, net | Level 3 | $11,336 | $11,336 | | Fixed-rate debt | Level 2 | $41,087 | $40,131 | | Variable-rate debt | Level 2 | $61,300 | $61,300 | - The fair value of fixed-rate debt is estimated using a discounted future cash payment model, while variable-rate debt approximates fair value due to its adjustable interest rate[97][98] Note 6. Commitments and Contingencies This note addresses the company's involvement in legal proceedings and its operating lease commitments, stating that no material adverse effects are expected from current litigation - Management believes that liabilities from normal course of business legal actions are not expected to have a material effect on the company's financial statements or liquidity[99] Contractual Rental Expense (in thousands) | Period | Contractual Rental Expense | | :-------------------------- | :------------------------- | | Three months ended March 31, 2025 | $1,600 | | Three months ended March 31, 2024 | $2,100 | Note 7. Income Taxes This note explains the company's income tax provision for interim periods, noting that no income tax benefit was recognized due to operating losses - The company recognized zero income tax benefit for the three months ended March 31, 2025, and 2024, due to operating losses and an assessment of available evidence[102] Note 8. Revenues This note disaggregates the company's revenues by source, detailing amounts from contracts with customers and lease-related revenues, and provides information on contract liabilities and remaining performance obligations Revenues Disaggregated by Source (Three months ended March 31, in thousands) | Revenue Source | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Hospitality revenue | $7,735 | $4,077 | | Entertainment revenue | $4,209 | $3,564 | | Other revenue | $336 | $333 | | Total revenues from contracts with customers | $12,280 | $7,974 | | Rental revenue | $3,789 | $6,537 | | Total revenues | $16,069 | $14,511 | Contract Liabilities (in thousands) | Period | Contract Liabilities | | :-------------------------- | :------------------- | | Balance at December 31, 2024 | $3,940 | | Consideration received during the period | $12,946 | | Consideration earned during the period | $(2,992) | | Balance at March 31, 2025 | $13,894 | - The aggregate amount of transaction price allocated to remaining unsatisfied performance obligations as of March 31, 2025, is $22.85 million, expected to be recognized over less than 1 year ($15.60 million), 1-2 years ($2.41 million), and 3+ years ($4.84 million)[106] Note 9. Leases This note details the company's lessee and lessor arrangements, including operating lease right-of-use assets, lease obligations, and future minimum lease payments for both roles Leased Assets and Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets, net | $38,078 | $38,682 | | Operating lease obligations | $47,308 | $47,470 | Future Minimum Lease Payments (Lessee) as of March 31, 2025 (in thousands) | Period | Operating Leases | | :-------------------------- | :--------------- | | Remainder of 2025 | $3,296 | | 2026 | $3,427 | | 2027 | $2,760 | | 2028 | $2,819 | | 2029 | $2,880 | | Thereafter | $222,847 | | Total lease payments | $238,029 | | Less: imputed interest | $(190,721) | | Present value of lease liabilities | $47,308 | Total Future Minimum Rents (Lessor) as of March 31, 2025 (in thousands) | Period | Total Minimum Rent | | :-------------------------- | :----------------- | | Remainder of 2025 | $8,454 | | 2026 | $8,799 | | 2027 | $8,910 | | 2028 | $9,000 | | 2029 | $9,131 | | Thereafter | $55,400 | | Total | $99,694 | Note 10. Equity This note details the calculation of earnings per share (EPS) and provides information on the noncontrolling interest in a subsidiary, including preferred distributions Net Loss Per Share Attributable to Common Stockholders (Three months ended March 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------------------ | :----- | :----- | | Net loss attributable to common stockholders | $(31,888) | $(44,078) | | Weighted average shares outstanding - basic and diluted | 12,694 | 5,522 | | Net loss per share attributable to common stockholders - basic and diluted | $(2.51) | $(7.98) | - On July 31, 2024, a subsidiary issued 10,000 shares of 14.000% Series A preferred stock with an aggregate liquidation preference of $10.0 million, recorded as Noncontrolling interest in subsidiary[117] - Preferred distributions to noncontrolling interest in subsidiary amounted to $(350) thousand for the three months ended March 31, 2025[14][117] Note 11. Segments This note presents financial information by the company's three reportable operating segments: Hospitality, Entertainment, and Landlord Operations, using Adjusted EBITDA as the key performance metric - The company's three reportable operating segments are Hospitality, Entertainment, and Landlord Operations, with performance evaluated using Adjusted EBITDA[118][124] Segment Adjusted EBITDA (Three months ended March 31, in thousands) | Segment | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Hospitality | $(12,523) | $(13,947) | | Entertainment | $(2,868) | $(2,815) | | Landlord Operations | $721 | $(142) | | Total Segment Adjusted EBITDA | $(14,659) | $(16,904) | Total Segment Assets (in thousands) | Segment | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Hospitality | $56,136 | $54,020 | | Entertainment | $130,258 | $125,207 | | Landlord Operations | $410,543 | $397,584 | | Total segment assets | $596,937 | $576,811 | Note 12. Related-Party Transactions This note details transactions with related parties, including the former parent HHH, Creative Culinary Management Company (CCMC), and equity method investees, covering expense allocations, management fees, and rental revenues - Prior to the Separation, HHH provided centralized support functions and employee benefits, with $3.6 million in allocated expenses to the company for the three months ended March 31, 2024[128][129] - Related-party management fees due to CCMC (a subsidiary of Jean-Georges Restaurants) amounted to $1.1 million for the three months ended March 31, 2025, an increase from $0.5 million in the prior-year period, partly due to the consolidation of Tin Building by Jean-Georges[135][137] - The company recorded $0.3 million in rental revenue from related parties (primarily The Lawn Club) for the three months ended March 31, 2025, a significant decrease from $2.9 million in the prior-year period due to the consolidation of Tin Building by Jean-Georges[140][142] Note 13. Subsequent Events This note states that the company has evaluated subsequent events through the financial statement issuance date and found no events requiring recognition or disclosure - No subsequent events requiring recognition or disclosure have occurred through the date of issuance of these financial statements[144] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, discussing key factors affecting the business, significant items impacting comparability, and detailed segment performance, along with liquidity and critical accounting estimates Overview This section introduces the company's business model, operating segments, strategic focus, and the transition in its financial reporting post-spin-off - The company was formed to own, operate, and develop assets at the intersection of entertainment and real estate, with a portfolio including live concerts, dining, sports, and retail[148] - Operating segments are Hospitality, Entertainment, and Landlord Operations, with a focus on dedicated management, partnership expansion, strategic acquisitions, and development projects[148] - The company's financial statements transitioned from carve-out combined statements (pre-July 31, 2024) to standalone consolidated statements (post-August 1, 2024) following its spin-off from HHH[155][157] Key Factors Affecting Our Business This section discusses the primary internal and external factors influencing the company's operations, financial performance, and strategic decisions - As a standalone public company, SEG expects ongoing costs for support functions to differ from, and potentially exceed, historical allocated amounts from HHH, including incremental labor and corporate governance costs[161] - The consolidation of Tin Building by Jean-Georges as of January 1, 2025, significantly impacts Hospitality segment results, with the company now recognizing 100% of its operating income or losses[162][163] - Operations are highly seasonal, with higher revenues from May to October due to outdoor concerts and baseball games, and lower revenues in fall and winter. Weather conditions can significantly impact results[164][165] - As of March 31, 2025, real estate assets at the Seaport were 83% leased or programmed, with a new lease signed with Meow Wolf for 74,000 square feet in Pier 17[167][168] - Inflationary pressures and other macroeconomic trends, such as slower economic growth or tariffs, could adversely affect the company, its tenants, and consumers, impacting profitability and costs[169][170] Significant Items Impacting Comparability This section highlights specific events and accounting changes that affect the period-over-period comparability of the company's financial results - The company incurred $9.2 million in pre-tax separation costs for the three months ended March 31, 2024, with no such costs in 2025[171] - Shared service costs allocated from HHH amounted to $3.6 million for the three months ended March 31, 2024[172] - The consolidation of Tin Building by Jean-Georges as of January 1, 2025, significantly impacts period-over-period comparability, as it was previously accounted for under the equity method[173] Results of Operations This section analyzes the company's overall financial performance, detailing changes in revenues, expenses, and net loss Key Operating Results (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :----- | :----- | :--------- | :--------- | | Total revenues | $16,069 | $14,511 | $1,558 | 11% | | Total expenses | $48,771 | $45,840 | $2,931 | 6% | | Operating loss | $(32,702) | $(31,321) | $(1,381) | (4)% | | Net loss attributable to common stockholders | $(31,888) | $(44,078) | $12,190 | 28% | | General and administrative expenses | $9,782 | $16,554 | $(6,772) | (41)% | | Interest income (expense) | $994 | $(2,546) | $3,540 | 139% | | Equity in earnings (losses) from unconsolidated ventures | $170 | $(10,211) | $10,381 | 102% | - The decrease in net loss attributable to common stockholders was primarily driven by a $6.8 million decrease in general and administrative expenses (due to lower separation costs) and a $3.5 million increase in interest income[174][178][179] - The decrease in equity in losses from unconsolidated ventures and changes in hospitality/rental revenues and costs are primarily due to the consolidation of the Tin Building by Jean-Georges as of January 1, 2025[175] Segment Operating Results This section provides a detailed analysis of the financial performance for each of the company's operating segments: Hospitality, Entertainment, and Landlord Operations, highlighting key revenue and cost drivers and their impact on Adjusted EBITDA Hospitality Segment This section details the financial performance of the Hospitality segment, including revenue, costs, and Adjusted EBITDA Hospitality Segment Adjusted EBITDA (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :------- | :------- | :--------- | :--------- | | Hospitality revenue | $7,735 | $4,077 | $3,658 | 90% | | Hospitality costs | $(20,428) | $(7,815) | $(12,613) | (161)% | | Equity in earnings (losses) from unconsolidated ventures | $170 | $(10,211) | $10,381 | 102% | | Adjusted EBITDA | $(12,523) | $(13,947) | $1,424 | 10% | - Hospitality Adjusted EBITDA increased by $1.4 million, primarily due to a $4.5 million increase in revenue and a $9.6 million decrease in losses from unconsolidated ventures, both driven by the consolidation of Tin Building by Jean-Georges as of January 1, 2025[182][183][184] Entertainment Segment This section details the financial performance of the Entertainment segment, including revenue, costs, and Adjusted EBITDA Entertainment Segment Adjusted EBITDA (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Entertainment revenue | $4,209 | $3,564 | $645 | 18% | | Entertainment costs | $(7,077) | $(6,381) | $(696) | (11)% | | Adjusted EBITDA | $(2,868) | $(2,815) | $(53) | (2)% | - Entertainment revenue increased by $0.6 million, driven by a $0.4 million increase in Aviators ticket revenue and a $0.2 million increase in concert series sponsorship revenue[186] - Entertainment costs increased by $0.7 million, primarily due to a $0.5 million increase in breakdown and removal costs for the Winterland Skating concept and higher costs at Las Vegas Ballpark[187] Landlord Operations Segment This section details the financial performance of the Landlord Operations segment, including rental revenue, operating costs, and Adjusted EBITDA Landlord Operations Segment Adjusted EBITDA (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Rental revenue | $8,464 | $8,084 | $380 | 5% | | Operating costs | $(8,079) | $(8,563) | $484 | 6% | | Adjusted EBITDA | $721 | $(142) | $863 | 608% | - Landlord Operations Adjusted EBITDA increased by $0.9 million, driven by a $0.4 million increase in rental revenue from rent escalations and variable-rent leases, and a $0.5 million decrease in operating costs due to lower payroll and marketing expenses[190][191] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations and development projects Cash and Restricted Cash (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $129,921 | $165,667 | | Restricted cash | $2,079 | $2,178 | | Total | $132,000 | $167,845 | - The company's capital structure and liquidity sources changed significantly post-separation from HHH, which no longer finances its operations and development projects[196] - Management believes existing cash balances, restricted cash, and access to capital markets provide adequate liquidity for current and long-term obligations, capital expenditures, and development projects[197] Summary of Cash Flows (Three months ended March 31, in thousands) | Activity | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Cash used in operating activities | $(20,478) | $(18,796) | | Cash used in investing activities | $(14,497) | $(28,578) | | Cash (used in) provided by financing activities | $(870) | $47,659 | Critical Accounting Estimates This section discusses the critical accounting estimates that require significant management judgment and can materially impact the company's financial results, including impairments, variable interest entities, investments in unconsolidated ventures, and capitalization of development costs Impairments This section explains the company's policy and judgments involved in assessing long-lived assets for impairment - The company reviews long-lived assets for impairment when indicators suggest the carrying amount may not be recoverable, recognizing a loss if the carrying amount exceeds fair value[208] - Cash flow estimates for recoverability and fair value are highly subjective, relying on assumptions about future economic conditions, occupancy, rental rates, and development costs, which could differ materially from actual results[209] Variable Interest Entities This section discusses the significant judgments involved in identifying and consolidating variable interest entities - The determination of whether an entity is a VIE and if the company is the primary beneficiary involves significant judgment regarding control over economic performance and the obligation to absorb losses or right to receive benefits[212] - The Tin Building by Jean-Georges, previously a VIE, was consolidated as of January 1, 2025, after the company became its primary beneficiary by directing operating activities and employing management personnel[213] Investments in Unconsolidated Ventures This section details the accounting treatment and judgments for investments where the company exerts significant influence but does not consolidate - Equity method investments are accounted for when the company can exert significant influence, with the investment adjusted for its allocable share of earnings or losses[214] - For certain equity method investments, the company's economic interest and recognition of income or loss may differ from its stated ownership due to specific provisions in joint venture agreements regarding cash flow distributions, profit/loss allocations, and preferred returns[217][219] Capitalization of Development Costs This section outlines the company's policy and judgments regarding the capitalization of costs associated with development projects - Development costs, including planning, design, materials, labor, real estate taxes, interest, and certain employee costs, are capitalized as part of the property being developed until the project is completed or put on hold[220] - The capitalization of development costs requires judgment and can directly impact operating expenses and subsequent depreciation, with $2.3 million capitalized for the three months ended March 31, 2025[221] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to market risks, primarily focusing on interest rate risk associated with its variable-rate and fixed-rate mortgage payables - The company is subject to interest rate risk from its variable-rate mortgage payable; a 1% increase in short-term interest rates would have increased interest expense by approximately $0.2 million for the three months ended March 31, 2025[222][223] - As of March 31, 2025, the company had $41.1 million in fixed-rate indebtedness with a weighted average interest rate of 4.92% per annum[223] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and confirms that there have been no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[226] - There have been no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[227] Part II Other Information This section provides additional disclosures not covered in Part I, including legal proceedings, risk factors, equity sales, and other miscellaneous information Item 1. Legal Proceedings This section states that the company is involved in routine legal proceedings but does not anticipate any material adverse effects on its business, results of operations, or financial condition - Management believes there are no pending lawsuits or claims that, individually or in aggregate, could have a material adverse effect on the company's business, results of operations, or financial condition as of March 31, 2025[229] Item 1A. Risk Factors This section refers readers to the company's Annual Report on Form 10-K for a comprehensive discussion of risk factors and confirms that no material changes to these risks have occurred during the quarter - There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024[230] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on the completion of a rights offering in October 2024, which generated significant net proceeds, and confirms the continued intended use of these proceeds for general corporate purposes - The company completed a rights offering on October 17, 2024, generating approximately $166.8 million in net proceeds[231][232] - The proceeds from the rights offering are intended for general operating, working capital, and other corporate purposes, with no material change in their use[233] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reported period - None[234] Item 4. Mine Safety Disclosures This section indicates that the disclosure requirements for mine safety are not applicable to the company - Not applicable[235] Item 5. Other Information This section discloses that no directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the fiscal quarter - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2025[236] Item 6. Exhibits This section provides a comprehensive list of all exhibits filed as part of the Form 10-Q, including various agreements, certifications, and XBRL documents - Key exhibits include the Separation Agreement with HHH, Amended and Restated Certificate of Incorporation and Bylaws, Investor Rights Agreement, Services Agreement, and certifications from the CEO and CFO[237][238] Signatures This section confirms the official signing of the report by the company's authorized financial officers - The report is duly signed on behalf of Seaport Entertainment Group Inc. by Matthew M. Partridge, Executive Vice President, Chief Financial Officer and Treasurer, and Lenah J. Elaiwat, Senior Vice President and Chief Accounting Officer[241][243]