EX-99.1 2 srg-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

Introduction

 

The following unaudited pro forma condensed consolidated financial statements of Seritage Growth Properties (the "Company") present the historical financial information of the Company and the adjustments to give effect for the sale of the Company's property located in Aventura, Florida (the "Property"). After completion of the sale, the Company used proceeds from the sale of the Property plus cash on hand to make a voluntary prepayment of $130.0 million toward its term loan facility reducing the outstanding balance of the term loan facility to $70.0 million as of November 25, 2025.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2025, presents the historical balance sheet of the Company as of September 30, 2025 and the adjustments for the sale of the Property as of September 30, 2025, on a pro forma basis as if the sale had been completed on September 30, 2025.

The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2025 presents the historical statements of operations of the Company for the nine months ended September 30, 2025 and the adjustments to operations for the sale of the Property for the nine months ended September 30, 2025 on a pro forma basis as if the sale had been completed on January 1, 2024, the beginning of the earliest period presented.

 

The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2024 presents the historical statements of operations of the Company for the year ended December 31, 2024 and the adjustments to operations for the sale of the Property for the year ended December 31, 2024 on a pro forma basis as if the sale had been completed on January 1, 2024, the beginning of the earliest period presented.

The unaudited pro forma condensed consolidated financial information has been presented for illustrative purposes only and does not necessarily reflect what the Company's financial condition or results of operations would have been had the sale of the Property occurred on the dates indicated.

Further, the unaudited pro forma condensed consolidated financial information may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited transaction accounting adjustments represent management's estimates based on information available as of the date of this unaudited pro forma condensed consolidated financial information and are subject to change as additional information becomes available and analyses are performed. The Company believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the sale of the Property based on information available to management at this time. The Company also believes that the transaction accounting adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed consolidated financial information.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERITAGE GROWTH PROPERTIES

UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2025

(amounts in thousands, except share and per share amounts)

 

 

 

 

Historical (A)

 

 

Transaction Accounting Adjustments

 

 

 

 

Seritage Growth Properties Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investment in real estate

 

 

 

 

 

 

 

 

 

 

 

Land

 

$

31,258

 

 

$

—

 

 

 

 

$

31,258

 

Buildings and improvements

 

 

152,611

 

 

 

—

 

 

 

 

 

152,611

 

Accumulated depreciation

 

 

(21,328

)

 

 

—

 

 

 

 

 

(21,328

)

 

 

 

162,541

 

 

 

—

 

 

 

 

 

162,541

 

Construction in progress

 

 

2,093

 

 

 

—

 

 

 

 

 

2,093

 

Net investment in real estate

 

 

164,634

 

 

 

—

 

 

 

 

 

164,634

 

Real estate held for sale

 

 

141,447

 

 

 

(128,750

)

 

B

 

 

12,697

 

Investment in unconsolidated entities

 

 

164,463

 

 

 

—

 

 

 

 

 

164,463

 

Cash and cash equivalents

 

 

51,540

 

 

 

121,774

 

 

C

 

 

173,314

 

Restricted cash

 

 

8,332

 

 

 

—

 

 

 

 

 

8,332

 

Tenant and other receivables, net

 

 

7,167

 

 

 

—

 

 

 

 

 

7,167

 

Lease intangible assets, net

 

 

901

 

 

 

—

 

 

 

 

 

901

 

Prepaid expenses, deferred expenses and other assets, net

 

 

20,126

 

 

 

—

 

 

 

 

 

20,126

 

Total assets (1)

 

$

558,610

 

 

$

(6,976

)

 

 

 

$

551,634

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Term loan facility, net

 

$

196,668

 

 

 

—

 

 

 

 

$

196,668

 

Accounts payable, accrued expenses and other liabilities

 

 

22,852

 

 

 

(7,680

)

 

D

 

 

15,172

 

Total liabilities (1)

 

 

219,520

 

 

 

(7,680

)

 

 

 

 

211,840

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Class A common shares $0.01 par value; 100,000,000 shares authorized;
   56,324,607 shares issued and outstanding as of September 30, 2025

 

 

562

 

 

 

—

 

 

 

 

 

562

 

Series A preferred shares $0.01 par value; 10,000,000 shares authorized; 2,800,000 shares issued and outstanding as of September 30, 2025; liquidation preference of $70,000

 

 

28

 

 

 

—

 

 

 

 

 

28

 

Additional paid-in capital

 

 

1,362,718

 

 

 

—

 

 

 

 

 

1,362,718

 

Accumulated deficit

 

 

(1,025,583

)

 

 

704

 

 

E

 

 

(1,024,879

)

Total shareholders' equity

 

 

337,725

 

 

 

704

 

 

 

 

 

338,429

 

Non-controlling interests

 

 

1,365

 

 

 

—

 

 

 

 

 

1,365

 

Total equity

 

 

339,090

 

 

 

704

 

 

 

 

 

339,794

 

Total liabilities and equity

 

$

558,610

 

 

$

(6,976

)

 

 

 

$

551,634

 

(1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheet, as of September 30, 2025, includes the following amounts related to our consolidated VIEs: $8.5 million included in real estate held for sale and $64.0 thousand of cash and $62.6 thousand of accounts payable, accrued expenses and other liabilities.

 

 

 

 

 

2

 

 

 

 

 

SERITAGE GROWTH PROPERTIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2025

 

 

 

 

(A) Historical unaudited condensed consolidated balance sheet data derived from Seritage Growth Properties' Quarterly Report on Form 10-Q as of September 30, 2025.

(B) Reflects adjustments to reduce Investments in real estate considered held for sale for the sale of the Property.

(C) Reflects adjustment to increase cash for net proceeds, net of liabilities paid, received from the sale of the Property.

(D) Reflects adjustments to reduce accrued expenses and other liabilities paid from sale proceeds during the completion of the sale, including accrued real estate taxes and accrued tenant improvements at September 30, 2025.

(E) Reflects adjustments related to the gain on sale of the Property.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

SERITAGE GROWTH PROPERTIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025

(amounts in thousands, except per share amounts)

 

 

 

Historical (A)

 

 

Transaction Accounting Adjustments

 

 

 

 

Seritage Growth Properties Pro Forma

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

13,586

 

 

$

(6,160

)

 

 B

 

$

7,426

 

Management and other fee income

 

 

451

 

 

 

—

 

 

 

 

 

451

 

Total revenue

 

 

14,037

 

 

 

(6,160

)

 

 

 

 

7,877

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

9,770

 

 

 

(4,651

)

 

 C

 

 

5,119

 

Real estate taxes

 

 

2,252

 

 

 

(1,413

)

 

 D

 

 

839

 

Depreciation and amortization

 

 

5,813

 

 

 

(3,775

)

 

 E

 

 

2,038

 

General and administrative

 

 

26,787

 

 

 

(251

)

 

 F

 

 

26,536

 

Total expenses

 

 

44,622

 

 

 

(10,090

)

 

 

 

 

34,532

 

Gain on sale of real estate, net

 

 

8,903

 

 

 

—

 

 

 

 

 

8,903

 

Loss on sale of interests in unconsolidated entities

 

 

(1,417

)

 

 

—

 

 

 

 

 

(1,417

)

Impairment of real estate assets

 

 

(18,800

)

 

 

—

 

 

 

 

 

(18,800

)

Equity in loss of unconsolidated entities

 

 

(6,528

)

 

 

—

 

 

 

 

 

(6,528

)

Interest and other income (expense), net

 

 

956

 

 

 

1,470

 

 

 G

 

 

2,426

 

Interest expense

 

 

(15,659

)

 

 

—

 

 

 

 

 

(15,659

)

Income (loss) before income taxes

 

 

(63,130

)

 

 

5,400

 

 

 

 

 

(57,730

)

Benefit for income taxes

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Net income (loss)

 

 

(63,130

)

 

 

5,400

 

 

 

 

 

(57,730

)

Preferred dividends

 

 

(3,675

)

 

 

—

 

 

 

 

 

(3,675

)

Net income (loss) attributable to Seritage common shareholders

 

$

(66,805

)

 

$

5,400

 

 

 

 

$

(61,405

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to Seritage Class A
   common shareholders - Basic

 

$

(1.19

)

 

$

0.10

 

 

 

 

$

(1.09

)

Net income (loss) per share attributable to Seritage Class A
   common shareholders - Diluted

 

$

(1.19

)

 

$

0.10

 

 

 

 

$

(1.09

)

Weighted-average Class A common shares
   outstanding - Basic

 

 

56,311

 

 

 

56,311

 

 

 

 

 

56,311

 

Weighted-average Class A common shares
   outstanding - Diluted

 

 

56,311

 

 

 

56,311

 

 

 

 

 

56,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

SERITAGE GROWTH PROPERTIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025

 

 

 

 

(A) Historical unaudited condensed consolidated statement of operations data derived from Seritage Growth Properties' Quarterly Report on Form 10-Q for the nine months ended September 30, 2025.

(B) Reflects adjustments to eliminate rental income generated from leases at the sold Property.

(C) Reflects adjustments to eliminate property operating expenses incurred at the sold Property.

(D) Reflects adjustments to eliminate real estate tax expense incurred at the sold Property.

(E) Reflects adjustments to eliminate depreciation and amortization related to the sold Property.

(F) Reflects adjustments to eliminate direct general and administrative costs incurred related to the sold Property.

(G) Reflects adjustments to eliminate miscellaneous expense related to settlement expense, net of miscellaneous income earned related to the sold Property.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

SERITAGE GROWTH PROPERTIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2024

(amounts in thousands, except for per share amounts)

 

 

 

Historical (A)

 

 

Transaction Accounting Adjustments

 

 

 

 

Seritage Growth Properties Pro Forma

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

17,055

 

 

$

(5,224

)

 

 B

 

$

11,831

 

Management and other fee income

 

 

567

 

 

 

—

 

 

 

 

 

567

 

Total revenue

 

 

17,622

 

 

 

(5,224

)

 

 

 

 

12,398

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

16,339

 

 

 

(5,065

)

 

 C

 

 

11,274

 

Abandoned project costs

 

 

5,732

 

 

 

(649

)

 

 D

 

 

5,083

 

Real estate taxes

 

 

3,935

 

 

 

(1,608

)

 

 E

 

 

2,327

 

Depreciation and amortization

 

 

13,118

 

 

 

(5,698

)

 

 F

 

 

7,420

 

General and administrative

 

 

30,021

 

 

 

(295

)

 

 G

 

 

29,726

 

Total expenses

 

 

69,145

 

 

 

(13,315

)

 

 

 

 

55,830

 

Gain on sale of real estate, net

 

 

10,678

 

 

 

704

 

 

 H

 

 

11,382

 

Loss on sale of interests in unconsolidated entities

 

 

2,042

 

 

 

—

 

 

 

 

 

2,042

 

Impairment of real estate assets

 

 

(87,536

)

 

 

—

 

 

 

 

 

(87,536

)

Equity in loss of unconsolidated entities

 

 

(3,154

)

 

 

—

 

 

 

 

 

(3,154

)

Interest and other income (expense), net

 

 

2,513

 

 

 

1,775

 

 

 J

 

 

4,288

 

Interest expense

 

 

(24,972

)

 

 

—

 

 

 

 

 

(24,972

)

Income (loss) before income taxes

 

 

(151,952

)

 

 

10,570

 

 

 

 

 

(141,382

)

Benefit for income taxes

 

 

(1,584

)

 

 

—

 

 

 

 

 

(1,584

)

Net income (loss)

 

 

(153,536

)

 

 

10,570

 

 

 

 

 

(142,966

)

Preferred dividends

 

 

(4,900

)

 

 

—

 

 

 

 

 

(4,900

)

Net income (loss) attributable to Seritage common shareholders

 

$

(158,436

)

 

$

10,570

 

 

 

 

$

(147,866

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to Seritage Class A
   common shareholders - Basic

 

$

(2.82

)

 

$

0.19

 

 

 

 

$

(2.63

)

Net income (loss) per share attributable to Seritage Class A
   common shareholders - Diluted

 

$

(2.82

)

 

$

0.19

 

 

 

 

$

(2.63

)

Weighted-average Class A common shares
   outstanding - Basic

 

 

56,255

 

 

 

56,255

 

 

 

 

 

56,255

 

Weighted-average Class A common shares
   outstanding - Diluted

 

 

56,255

 

 

 

56,255

 

 

 

 

 

56,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

SERITAGE GROWTH PROPERTIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2024

 

 

 

 

 

(A) Historical unaudited condensed consolidated statement of operations data derived from Seritage Growth Properties' Annual Report on Form 10-K for the year ended December 31, 2024.

(B) Reflects adjustments to eliminate rental income generated from leases at the sold Property.

(C) Reflects adjustments to eliminate property operating expenses incurred related to the sold Property.

(D) Reflects adjustments to eliminate expense of previously capitalized costs for a tenant at the property that defaulted on its lease prior to opening.

(E) Reflects adjustments to eliminate real estate tax expense incurred related to the sold Property.

(F) Reflects adjustments to eliminate depreciation and amortization related to the sold Property.

(G) Reflects adjustments to eliminate direct general and administrative costs incurred related to the sold Property.

(H) Reflects adjustment for gain arising from the transaction on November 25, 2025 on sale of the sold Property. The 2024 impairment of $85.8 million and the 2025 impairment of $18.8 million are considered in the $0.7 million gain presented.

(J) Reflects adjustments to eliminate miscellaneous income earned related to the sold Property net of expenses related to a tenant termination at the sold Property.

 

 

 

 

 

7