CORPORATE PROFILE
MARCH 2016 Forward-Looking Statements
This document contains forward-looking statements, which are based on the current beliefs and expectations of management and are subject to significant risks, assumptions and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: competition in the real estate and retail industries; our substantial dependence on Sears Holdings Corporation; Sears Holdings Corporation’s termination and other rights under its master lease with us; risks relating to our recapture and acquisition of properties and redevelopment activities; contingencies to the commencement of rent under leases; the terms of our indebtedness; restrictions with which we are required to comply in order to maintain REIT status and other legal requirements to which we are subject; and our lack of operating history. For additional discussion of these and other applicable risks, assumptions and uncertainties, see the “Risk Factors” and forward-looking statement disclosure contained in filings with the Securities and Exchange Commission. While we believe that our forecasts and assumptions are reasonable, we caution that actual results may differ materially. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.
2 Company Overview
Seritage Growth Properties (NYSE: SRG) is a fully integrated REIT and owner of 266 retail properties totaling over 42 million square feet across 49 states
Focused strategy and platform to create substantial value through re-leasing and redevelopment • Convert single-tenant buildings into first class, multi-tenant shopping centers at meaningfully higher rents • Maximize value of substantial land holdings through retail and mixed-use densification • Leverage joint venture relationships with three leading mall REITs
Right to recapture at least 50% of space at each property leased to Sears Holdings, totaling over 22 million SF • Take back ~$4.00 PSF space and re-lease at significantly higher rents while diversifying tenant base • Includes right to recapture164 freestanding and attached auto centers totaling 3.6 million SF • Includes right to recapture 100% of space at 21 identified properties totaling 3.9 million SF
Portfolio Rent and Square Footage(1) Portfolio Rent PSF(1)
Square Footage Annual Rent $24.00 $20.73 Sears Sears 91% 76% $18.00 $11.78 $12.00
$6.00 $4.30 3rd Party 3rd Party Tenants Tenants $0.00 24% 9% Sears Holdings 3rd Party Tenants 3rd Party Tenants (In Place) (SNO Leases) (2)
(1) Based on signed leases as of December 31, 2015. Includes proportional share of joint ventures. (2) Signed, not yet open tenants.
3 Highly Desirable Real Estate
Largest concentrations of asset value in high growth markets
Diverse real estate: ~50% attached to regional malls and ~50% freestanding or shopping center properties Strong demographics: average population density of 582,892(1) and average household income of $75,538(1)
Geographic Summary % of Annual (2) Base Rent California 19.7% Florida 11.4% New York 6.2% Texas 6.1% Illinois 4.5% Pennsylvania 4.1% New Jersey 3.5% Michigan 3.2% Virginia 3.2% Puerto Rico 3.1% AK HI PR
(1) Source: Scan/US,Inc. 10-mile radius; excludes Puerto Rico. (2) Based on signed leases as of December 31, 2015. Includes proportional share of joint ventures.
4 Investment Highlights
Unique value creation opportunity through retenanting and redevelopment
• Multiple strategies to significantly grow income and unlock value Significant Growth Potential • Opportunity to generate material spread to Sears Holdings master lease rent upon redevelopment
• Superior real estate locations reflect Sears' influence as leading anchor when malls and shopping High Quality centers were initially developed Portfolio • Substantial presence in high growth markets such as California, Florida and the Northeast
• Management team with extensive experience with retail real estate and repositioning strategies Fully Integrated Organization • In-house leasing, development and construction teams – recently completed seven projects; executing on eight in-process and five newly announced projects
(1) Strong Financial • Conservative leverage: total debt equals less than $30 PSF Position • Significant liquidity: $250 million of cash on hand and borrowing capacity(1)(2)
(1) As of December 31, 2015. (2) Includes cash and cash equivalents, restricted cash and borrowing capacity under future funding facility.
5 Summary of Results
Focused on built-in growth opportunity and driving shareholder returns
Financial Results (three months ended December 31, 2015) Funds from Operations (“FFO”) $31.3 million or $0.56 per diluted share Normalized FFO $32.9 million or $0.59 per diluted share Annualized Total NOI $199 million(1) Total occupancy 99.4%
Operational Highlights Square Feet Avg. Base Rent New leases signed through December 31, 2015 154,000 $30.03 PSF New leases signed through March 1, 2016(2) 370,000 $31.50 PSF Avg. base rent paid by Sears Holdings, same space basis(2) $6.15 PSF
Dividends Declared Period from July 7, 2015 to December 31, 2015 $0.50 per share First Quarter 2016 $0.25 per share
(1) Includes all signed leases and net of rent attributable to the associated space to be recaptured. (2) Refers to 370,000 square feet of space signed from inception through March 1, 2016.
6 Redevelopment Update
Progress to date exemplifies magnitude of opportunity to grow NOI and create value
Delivered seven of 15 projects that were in various stages of development when acquired by the Company Remaining eight projects are under development with $21.7 million remaining to be spent(1)
Recent Openings Thousand Oaks, CA DSW, Nordstrom Rack Anchorage, AK Nordstrom Rack Clearwater, FL Nordstrom Rack, Whole Foods North Miami, FL Aldi Salem, NH Dick’s Sporting Goods King of Prussia, PA Dick’s Sporting Goods, Primark
Announced five new, wholly owned projects, including three 100% recaptures of Sears full-line stores and two auto centers Expected incremental unlevered returns in excess of 12% Redevelopment Pipeline Braintree, MA Nordstrom Rack, Saks Off 5th Longs Drugs (CVS), PetSmart Honolulu, HI Ross Dress for Less Memphis, TN Nordstrom Rack King of Prussia, PA Yard House (auto center) Outback Steakhouse San Antonio, TX(2) Orvis (auto center) Jared’s Jeweler (1) As of December 31, 2015. (2) Recapture notice submitted subsequent to December 31, 2015.
7 Tenant Activity
New third-party tenants expected to provide substantial revenue growth
SNO leases total over $12.9 million of annual rental income at an average of $20.73 PSF(1) Additional $4.9 million of annual rental income related to recent store openings(1)
SNO Lease Summary(1)
(In thousands) Square Annual Annual Base Tenant Property Location Feet Base Rent Rent PSF Nordstrom Rack Pembroke Mall Virginia Beach, VA 33,400 The Fresh Market Pembroke Mall Virginia Beach, VA 25,800 DSW Pembroke Mall Virginia Beach, VA 17,400 REI Pembroke Mall Virginia Beach, VA 27,300 Outback King of Prussia Mall (auto center) King of Prussia, PA 8,000 Yard House King of Prussia Mall (auto center) King of Prussia, PA 12,300 Nordstrom Rack The Marketplace at Braintree Braintree, MA 36,500 Nordstrom Rack Freestanding Memphis, TN 33,200 Orvis (auto center) San Antonio, TX 5,000 PetSmart Freestanding Honolulu, HI 19,600 Long's Drugstore (CVS) Freestanding Honolulu, HI 23,800 Williams-Sonoma Westfield UTC San Diego, CA 16,300 Hobby Lobby Woodland Village Shopping Center Tulsa, OK 84,200 Forever 21 Westland Mall Hialeah, FL 13,000 Multiple Southbay Pavilion (auto center) Carson, CA 14,000 Other Various (wholly owned properties) Various 102,000 Other Various (JV properties) (3) Various 153,900 Total 623,800 $12,936 $20.73
(1) As of December 31, 2015. Includes proportional share of joint ventures. Note: rent commencement is subject to specific contingencies, as well as build-out and tenant improvement obligations..
8 Recently Completed
Thousand Oaks, CA: prime freestanding location in close proximity to “A” mall
Regional Mall Thousand Oaks, CA
Clearwater, FL: redevelopment of full-line Sears and auto center for premier retailers
Regional Mall Auto Center Clearwater, FL Clearwater, FL
9 Under Construction: Virginia Beach, VA Pembroke Mall
Four first-to-market retailers at front of regional mall
BEFORE: INDEPENDENCE BOULEVARD
MARKET STREET Pembro ke Mall CENTRAL
PARK AVENUE
US US
BEACH BEACH
STREET
COLUMB
VIRGINIA VIRGINIA BOULEVARD
CONSTITUTION DRIVE
RENDERING OF NEW PROJECT:
10 Under Construction: Carson, CA Southbay Pavilion
Repurpose of auto center located on highly trafficked corridor
BEFORE:
LEAPWOOD AVE.
Southbay Pavilion
RENDERING OF NEW PROJECT:
11 New Redevelopment: Honolulu, HI
100% recapture, create multi-tenant shopping center in freestanding location
Project Details
Total Project Square Feet 79,000
Total Estimated Development Cost(1) $8.5 million N Nimitz Hwy Nimitz N
Total Estimated Project Costs(1) $19.7 million
Estimated Construction Start Q1 2016
Estimated Substantial Completion Q2 2017
(1) Total estimated development costs exclude, and total estimated project costs include, termination fee to recapture 100% of the property.
12 New Redevelopment: King of Prussia, PA
Complete redevelopment of premier mall asset with addition of high volume restaurants
MALL BLVD. Project Details(1)
Total Project Square Feet 29,100
Total Estimated Development Cost(2) $3.9 million
Total Estimated Project Costs(2) $3.9 million
NORTH Estimated Construction Start Q1 2016 GULPH ROAD Estimated Substantial Completion Q4 2016
(1) Auto center only (2) Total estimated development costs exclude, and total estimated project costs include, termination fees to recapture 100% of the property.
13 New Redevelopment: Braintree, MA
100% recapture, create multi-tenant shopping center in freestanding location
Project Details
Total Project Square Feet 90,000
Total Estimated Development Cost(1) $11.7 million
Pearl Plaza Total Estimated Project Costs(1) $12.1 million
Estimated Construction Start Q1 2016
Estimated Substantial Completion Q4 2016
(1) Total estimated development costs exclude, and total estimated project costs include, termination fee to recapture 100% of the property.
14 Value Creation Through Redevelopment
New redevelopment projects are representative of opportunity to unlock built-in growth
Projected incremental rent of nearly $8.0 million drives potential total value creation of over $135 million across five new, wholly-owned redevelopment projects(1) Estimated incremental yield on cost of 12-13% assuming total estimated project costs of $64.2 million
Estimated Annual Base Rent for 5 New Redevelopments Illustrative Value Creation from 5 New Redevelopments
$12.0 $200.0
$9.0 $150.0
Total Value $6.0 $100.0 Creation
$3.0 $50.0
$0.0 $0.0 In-place Rent Projected Rent (2) Acquisition Value Est. Value at Stabilization
Sears Holdings 3rd Party Cost Basis Project Costs (3) Net Value Creation
(1) Includes redevelopment projects in Braintree, MA, Honolulu, HI, Memphis, TN, King of Prussia, PA and San Antonio, TX. (2) Projected annual base rent includes assumptions on stabilized rents to be achieved for space under redevelopment. There can be no assurance that stabilized rent targets will be achieved. (3) Total estimated project costs include termination fees to recapture 100% of the property.
15 Larger Scale Development Opportunities
Maximize value of overall site through additional retail and mixed uses
Fee ownership and control over buildings, parking lots and outparcels enable development initiatives • Average site of ~13 acres, over 3,000 acres across wholly owned portfolio, drives property densification potential • Right to recapture 100% of 21 properties will facilitate certain larger scale development projects
100% Recapture Properties
Square Square Property Location Feet Acres Property Location Feet Acres The Mall at Sears Anchorage, AK 257,940 26 Oglethorpe Mall Savannah, GA 155,684 15 Inland Center San Bernardino, CA 264,682 22 Freestanding(1) Honolulu, HI 77,452 4 Freestanding Santa Monica, CA 117,801 3 Braintree Marketplace(1) Braintree, MA 113,442 34 Westminster Mall Westminster, CA 197,904 14 Freestanding St. Clair Shores, MI 122,137 11 Corbin’s Corner West Hartford, CT 194,385 13 Freestanding St. Paul, MN 217,930 17 Town Center at Boca Raton Boca Raton, FL 174,333 19 Freestanding Middletown, NJ 184,540 23 Aventura Mall Miami, FL 173,322 12 Freestanding Watchung, NJ 262,902 19 Southland Mall Miami, FL 170,122 15 Freestanding Hicksville, NY 340,434 30 Freestanding North Miami, FL 106,305 11 Freestanding(1) Memphis, TN 196,564 11 Orlando Fashion Square Orlando, FL 202,000 18 Valley View Center Valley View, TX 229,227 23 Tyrone Square Mall St. Petersburg, FL 187,000 14 TOTAL 3,946,106 354
(1) 100% recapture rights have been exercised at this property.
16 Joint Venture Partnerships
50% interests in 31 properties through joint ventures with leading regional mall REITS
Initial investment of $429 million (50% of total joint venture purchase price)
Opportunity to leverage joint venture partners’ leasing and redevelopment platforms • Joint venture partners focused on driving value at top malls in their portfolios through recapturing and re-leasing space • Seritage is 50-50 partner and participates in 50% of all net value created
Regional Mall Location Regional Mall Location Regional Mall Location Alderwood Lynnwood, WA Barton Creek Square Austin, TX Arrowhead Town Center Glendale, AZ Coronado Center(1) Albuquerque, NM Brea Mall Brea, CA Chandler Fashion Center Chandler, AZ Natick Collection Natick, MA Briarwood Ann Arbor, MI Danbury Fair Danbury, CT Oakbrook Center Oak Brook, IL Burlington Mall Burlington, MA Deptford Mall Deptford, NJ Paramus Park Paramus, NJ Midland Park Mall Midland, TX Freehold Raceway Mall Freehold, NJ Pembroke Lakes Mall(1) Pembroke Pines, FL Ocean County Mall Toms River, NJ Los Cerritos Center Cerritos, CA
Ridgedale Center Minnetonka, MN Ross Park Mall Pittsburgh, PA South Plains Mall Lubbock, TX Sooner Mall Norman, OK Santa Rosa Plaza Santa Rosa, CA Vintage Faire Mall Modesto, CA Staten Island Mall(1) Staten Island, NY The Shops at Nanuet Nanuet, NY Washington Square Mall Portland, OR Stonebriar Centre Frisco, TX Woodland Hills Mall Tulsa, OK
The Mall at Columbia Columbia, MD Valley Plaza Mall(1) Bakersfield, CA
(1) A recapture notice has been submitted for a portion of the space at this property.
17 Fully Integrated Real Estate Platform
Expertise unlocking real estate value through redevelopment and retenanting
BENJAMIN SCHALL BRIAN DICKMAN MATTHEW FERNAND MARY ROTTLER JAMES BRY President Exec. Vice President Exec. Vice President EVP, Leasing and EVP, Development and Chief Executive Officer Chief Financial Officer General Counsel Operations Construction
Previously served as Chief Previously served as Previously served as Previously served as Vice Previously served as Operating Officer of Rouse Chief Financial Officer at partner in Sidley Austin President of Real Estate Senior Vice President, Properties (NYSE: RSE). Agree Realty (NYSE: LLP’s Real Estate Group at Wal-Mart (NYSE: Development at Vornado Prior to that role, was ADC), a growth-oriented focusing on real estate joint WMT). Prior to that role, Realty Trust (NYSE: VNO) Senior Vice President with retail REIT. Prior to that ventures and partnerships was Vice President for leading development and Vornado Realty Trust role, was an investment and the financing, Realty Supplier construction for the Retail (NYSE: VNO) leading the banker covering the REIT development, acquisition Management and Division. suburban retail shopping industry. and disposition of Compliance. She joined center business. commercial properties. Wal-Mart in 2001.
Management team with extensive public company and retail real estate experience
Experienced team of 30 full-time development, construction, leasing, legal, finance and accounting professionals
Assembled national network of leasing brokers and engaged with leading real estate services firm to provide property management and certain property accounting functions
18 Current Financial Position
Conservative leverage levels and significant liquidity to support capital needs
Capital Structure Summary(1) Current Liquidity Summary(1)
($ in millions) Total Market Capitalization: ($ millions) $3,500 $3.40 billion Cash & Cash Equivalents $62.9 $3,000 Restricted Cash(3) 92.5 Total Debt Future Funding Facility 100.0 $2,500 $1.16 billion Total Liquidity $255.4
$2,000
Estimated Annual Cash from Operations(1)(4) $1,500 Market Value of Equity(2) ($ millions) $1,000 $2.24 billion Net Operating Income $199.0 G&A expenses (15.0) $500 EBITDA $184.0 Interest expense (58.0) $0 Cash from Operations $126.0 Leverage Ratios(1) Total debt to total market capitalization: 34.1% Total debt PSF: $29
(1) As of December 31, 2015 (2) Market Value of Equity assumes conversion of Operating Partnership units and is based on share price of $40.22 as of 12/31/15. (3) Restricted cash includes $28.7mm of capital project reserves, $22.6mm of deferred/environmental maintenance reserves and $41.2mm of property carry costs in lender reserves. (4) Represents management estimate of annual operating cash flow based on signed leases as of December 31, 2015 (including signed, not yet open (“SNO”) tenants), current estimates of annual overhead costs and estimated annual interest expense based on current borrowings and interest rates.
19 Seritage Growth Properties 489 Fifth Avenue | New York, NY 10017 212-355-7800 | www.seritage.com