Seritage(US:SRG)2025-11-14 22:02Financial Performance - Rental income for the three months ended September 30, 2025, increased by $1.7 million to $4.6 million compared to $2.9 million for the same period in 2024 [170]. - Rental income increased by $0.8 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by the Aventura, FL property [182]. - The Company reported a net loss of $12.4 million for the three months ended September 30, 2025, compared to a net loss of $22.0 million for the same period in 2024 [230]. - For the nine months ended September 30, 2025, the net loss was $63.1 million, down from $142.2 million in the same period of 2024 [230]. - Net Operating Income (NOI) on a cash basis for the three months ended September 30, 2025, was $235,000, compared to a loss of $2.3 million in 2024 [230]. - NOI-cash basis at share for the nine months ended September 30, 2025, was $6.8 million, compared to $1.0 million in 2024 [230]. Asset Management - As of September 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 [158]. - The company recorded a gain of $8.9 million from the sale of two properties for $52.6 million during the nine months ended September 30, 2025 [188]. - The company sold 91 consolidated properties from October 24, 2022, through September 30, 2025, generating approximately $1.1 billion in gross proceeds [200]. - The company had four assets under contract for sale as of November 13, 2025, with total anticipated proceeds of $240.8 million [201]. - The company is currently executing a Plan of Sale approved by shareholders, which allows for the sale of all assets and distribution of net proceeds [160]. Expenses and Impairments - The company recorded an impairment loss of $0.8 million for the three months ended September 30, 2025, and a total of $18.8 million for the nine months ended September 30, 2025 [161][181]. - The company recorded $8.5 million in other-than-temporary impairment losses on investments in unconsolidated entities during the nine months ended September 30, 2025 [161]. - An impairment of real estate assets of $18.8 million was recognized due to the agreement to sell one property below book value during the nine months ended September 30, 2025 [191]. - General and administrative expenses decreased by $2.3 million for the three months ended September 30, 2025, primarily due to reduced staffing and lower employee bonuses [176]. - Property operating expenses decreased by $2.3 million for the nine months ended September 30, 2025, mainly due to a $1.0 million reduction in common area expenses and a $1.3 million decrease in insurance expenses related to sold properties [183]. Debt and Cash Flow - As of September 30, 2025, the company had outstanding debt of $200.0 million after repaying $40.0 million against the principal of the Term Loan Facility [205]. - Net operating cash outflows amounted to $33.7 million for the nine months ended September 30, 2025, as rental income did not fully cover obligations [197]. - The company generated net investing cash inflows of $43.6 million during the nine months ended September 30, 2025, driven by asset sales [197]. - Interest expense decreased by $0.8 million for the three months ended September 30, 2025, due to partial pay downs of the Term Loan Facility [180]. Legal Matters - The Company is currently involved in multiple derivative lawsuits alleging breaches of fiduciary duty against its executives and board members [220][221]. - The Company intends to vigorously defend itself against the allegations in these lawsuits [221]. - Management believes that the resolution of ordinary course legal proceedings will not have a material effect on the Company's financial position [222]. Strategic Initiatives - The strategic review process for enhancing shareholder value remains ongoing, with the Board of Trustees overseeing the Plan of Sale [159]. - The company faces challenging market conditions, including elevated interest rates and limited availability of debt and equity capital, which may impact asset pricing [164]. Investment Activities - The Company invested $3.8 million and $21.8 million in consolidated properties during the three and nine months ended September 30, 2025, respectively [217]. - For the same periods in 2024, the Company invested $3.3 million and $25.7 million in consolidated properties, along with $5.8 million and $9.0 million in unconsolidated joint ventures [218]. Dividends - The company did not declare dividends on Class A common shares during the nine months ended September 30, 2025, with the last dividend declared on February 25, 2019 [211].