Seritage(US:SRG)2025-08-14 20:33Financial Performance - Rental income for the three months ended June 30, 2025, increased by $0.4 million to $4.5 million compared to $4.2 million in the same period in 2024, primarily due to an increase from the Aventura, FL property [171][172]. - For the six months ended June 30, 2025, rental income decreased by $0.9 million to $8.98 million compared to $9.89 million in the same period in 2024, primarily driven by the sales of four income-producing properties [185][186]. - The Company reported a net loss of $28,506,000 for the three months ended June 30, 2025, compared to a net loss of $101,227,000 for the same period in 2024 [232]. - Net Operating Income (NOI) on a cash basis was $607,000 for the three months ended June 30, 2025, compared to a loss of $1,015,000 for the same period in 2024 [232]. - NOI-cash basis at share was $2,582,000 for the three months ended June 30, 2025, compared to a loss of $137,000 for the same period in 2024 [232]. Asset Sales and Impairments - The company recognized an impairment loss of $18.0 million for the three months ended June 30, 2025, due to selling an asset below book value [164][180]. - The company recognized an $18.0 million impairment of real estate assets due to agreeing to sell one property below book value during the six months ended June 30, 2025 [195]. - The company sold one property for $23.0 million during the three months ended June 30, 2025, recording a gain of $2.0 million [177]. - The company sold two properties for $52.6 million during the six months ended June 30, 2025, resulting in a gain of $8.9 million [191]. - The company recognized a gain on the sale of real estate of $8.9 million for the six months ended June 30, 2025, compared to a gain of $3.2 million in the same period in 2024 [185]. Expenses and Cash Flow - General and administrative expenses decreased by $0.7 million for the three months ended June 30, 2025, reflecting a reduction in costs including share-based compensation and consulting expenses [176]. - General and administrative expenses increased by $6.5 million for the six months ended June 30, 2025, primarily due to severance expenses [190]. - Property operating expenses decreased by $1.7 million for the six months ended June 30, 2025, primarily due to reductions in common area expenses and insurance costs [187]. - The company recorded a net operating cash outflow of $21.2 million for the six months ended June 30, 2025, compared to an outflow of $24.2 million for the same period in 2024 [200]. - The company generated net investing cash inflows of $46.1 million during the six months ended June 30, 2025, driven by asset sales [200]. Debt and Financing - Interest expense decreased by $1.1 million for the three months ended June 30, 2025, due to partial paydowns of the Term Loan Facility [183]. - The company repaid $40.0 million against the principal of the Term Loan Facility, with an outstanding balance of $200.0 million as of June 30, 2025 [207]. Legal Matters - A class action lawsuit was filed against the Company alleging violations of federal securities laws related to internal controls and impairment indicators for real estate investments [222]. - The Company intends to vigorously defend itself against the allegations in the lawsuits filed by purported shareholders [222]. - Management believes that the resolution of ordinary course legal proceedings will not have a material effect on the Company's financial position [224]. - The Company is involved in various legal proceedings that arise in the ordinary course of business [223]. Market Conditions - The company continues to face challenging market conditions, including elevated interest rates and potential downward pricing pressures on remaining assets [167]. - The Company has not experienced material changes in market risk disclosures since the 2024 Annual Report [234]. Portfolio Overview - As of June 30, 2025, the company's portfolio consisted of 13 properties with approximately 1.3 million square feet of gross leasable area (GLA) and 198 acres of land [161]. - The company generated approximately $1.1 billion in gross proceeds from the sale of 91 consolidated properties from October 24, 2022, through June 30, 2025 [202]. - The company sold its remaining interest in the SPS Portfolio Holdings II LLC joint venture, recognizing a loss of $1.4 million on the sale [194]. - The company invested $17.9 million in consolidated properties during the six months ended June 30, 2025 [219]. - The company did not declare dividends on its Class A common shares during the six months ended June 30, 2025 [213].