SERITAGE GROWTH PROPERTIES (Exact Name of Registrant As Specified in Its Charter)
Total Page:16
File Type:pdf, Size:1020Kb
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 5, 2020 SERITAGE GROWTH PROPERTIES (Exact Name of Registrant as Specified in Its Charter) Maryland 001-37420 38-3976287 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 500 Fifth Avenue, Suite 1530 New York, New York 10110 (Address of principal executive offices) (Zip code) Registrant’s telephone number, including area code: (212) 355-7800 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbols Name of each exchange on which registered Class A common shares of beneficial interest, par value $0.01 per SRG New York Stock Exchange share 7.00% Series A cumulative redeemable preferred shares of beneficial SRG-PA New York Stock Exchange interest, par value $0.01 per share Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Item 2.02 Results of Operations and Financial Condition. On November 5, 2020, the Company issued a press release regarding its financial results for the three and nine months ended September 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report. In addition, on November 5, 2020, the Company published certain supplementary financial information relating to the three and nine months ended September 30, 2020. Such information is furnished as Exhibit 99.2 to this report. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 7.01 Regulation FD. On November 5, 2020, the Company posted to its website (www.seritage.com) a presentation that includes updates related to the effects of the COVID-19 pandemic on the Company’s business operations. A copy of the presentation is furnished as Exhibit 99.3 to this report. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.3, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description 99.1 Press release dated November 5, 2020. 99.2 Supplementary Financial Information dated November 5, 2020. 99.3 Presentation dated November 5, 2020. 104 Cover Page Interactive Data File (embedded within Inline XBRL document) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SERITAGE GROWTH PROPERTIES By: /s/ Matthew Fernand Matthew Fernand Executive Vice President, General Counsel & Secretary Date: November 5, 2020 Exhibit 99.1 Seritage Growth Properties Reports Third Quarter 2020 Operating Results New York, NY – November 5, 2020 – Seritage Growth Properties (NYSE: SRG) (the “Company”), a national owner of 195 retail and mixed-use properties totaling approximately 30.4 million square feet of gross leasable area (“GLA”), today reported financial and operating results for the three and nine months ended September 30, 2020, and provided a business update in light of the ongoing COVID-19 pandemic. Summary Financial Results For the three months ended September 30, 2020: • Net loss attributable to common shareholders of $51.3 million, or $1.33 per share • Total Net Operating Income (“Total NOI”) of $6.0 million • Funds from Operations (“FFO”) of ($19.9) million, or ($0.36) per share • Company FFO of ($25.1) million, or ($0.45) per share For the nine months ended September 30, 2020: • Net loss attributable to common shareholders of $74.3 million, or $1.95 per share • Total NOI of $29.1 million • FFO of ($64.8) million, or ($1.16) per share • Company FFO of ($70.7) million, or ($1.27) per share COVID-19 Business Update As of October 30, 2020: • Approximately 95% of in-place tenants (representing 97% of leased GLA and 95% of annual base rent) were open and/or operating, including 265 stores that were fully open and five stores that were open for pick-up and/or delivery; • Rental income collections were: – Q2 2020: collected 70% and agreed to defer an additional 25%; – Q3 2020: collected 86% and agreed to defer an additional 10%; – October 2020: collected 86% and agreed to defer an additional 8% ; • Generated $284.4 million of gross proceeds through monetization activity year to date, including $113.6 million during the three months ended September 30, 2020 and $11.8 million subsequent to the end of the third quarter; and • Had asset sales under contract for anticipated gross proceeds of $62.5 million, subject to buyer diligence and closing conditions. “We continue to benefit from the breadth of our asset base including the diversity of our tenant roster and our geographic diversity. Our tenants are now 95% open, with rent collections in the third quarter of 96%, including 86% collected in cash and 10% addressed per signed deferral agreements. We made strong progress on monetizing assets with proceeds of $113.6 million generated from transactions in the third quarter. Year to date, we have monetized assets totaling $284 million, of which $166.7 million were income producing assets sold at an average cap rate of 5.9%. Since inception, we have reduced the portfolio to a more focused group of 195 assets from 266 assets and raised approximately $985 million in proceeds from asset monetization activity, allowing us to focus our human and capital resources on our top redevelopment opportunities,” said Benjamin Schall, President and Chief Executive Officer. 1 Mr. Schall continued, “We continue to be prudent with respect to development capital expenditures, with a prioritization on continuing projects where we can generate near-term income from stronger national tenants. We are also advancing master planning, entitlement and site infrastructure on our multi-family portfolio, having partnered with well-established apartment developers on over 5,500 apartment units. These partners share our view on the significant value creation opportunities to convert our land parcels into differentiated residential communities, with an emphasis on walkability, services, amenities and greenspace. These priorities are consistent with our efforts to work through this period of disruption and uncertainty while preserving the value of our platform and portfolio over the medium and long term.” Portfolio Update (as of September 30, 2020) Premier and Larger Scale Includes 34 assets totaling 6.5 million square feet (5.7 million at share) of existing retail space that the Company believes can be expanded and densified by integrating retail, residential, office and other uses. Allowing for the risk and extended timeframes inherent in the entitlement process, the Company believes that the density on these sites could ultimately evolve to include a total of 6,500 to 7,500 residential units and over 5.0 million square feet of mixed-use commercial space. Suburban Retail Includes 136 assets totaling 21.2 million square feet (19.5 million at share) of existing space that the Company has redeveloped, or believes can be redeveloped, into first-class, multi-tenant retail centers or repurposed for alternate, non-retail uses. Smaller Market Includes 25 assets totaling 2.8 million square feet of existing space that the Company will continue to market for sale, subject to achieving appropriate value relative to any potential redevelopment opportunities. Operating Results Transactions During the three months ended September 30, 2020, the Company monetized six properties and nine outparcels totaling 1.4 million square feet and generated $113.6 million of gross proceeds, including one new joint venture and one sale-leaseback transaction. Total monetization activity for the nine months ended September 30, 2020 consisted of 19 properties and 12 outparcels totaling 3.1 million square feet and $272.5 million of gross proceeds.