Seritage Growth Properties Reports Third Quarter 2020 Operating Results – Business Wire

NEW YORK--(BUSINESS WIRE)--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:

For the nine months ended September 30, 2020:

COVID-19 Business Update

As of October 30, 2020:

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.

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.

Subsequent to September 30, 2020, the Company sold two properties and one outparcel for aggregate gross proceeds of $11.8 million and, as of October 30, 2020, the Company had assets under contract for sale representing anticipated gross proceeds of $62.5 million, subject to buyer diligence and closing conditions.

Since it began its capital recycling program in July 2017, the Company has raised over $985 million of gross cash proceeds from the sale or joint venture of interests in 86 properties, plus outparcels at several properties.

Leasing

During the three months ended September 30, 2020, the Company signed new leases totaling 51,000 square feet at an average base rent of $17.71 PSF. On a same-space basis, new rents averaged 4.2x prior rents for space formerly occupied by Sears or Kmart, increasing to $20.91 PSF for new tenants compared to $4.93 PSF paid by Sears or Kmart across 19,000 square feet.

The table below provides a summary of the Companys leasing activity, including its proportional share of unconsolidated entities, for the three and nine months ended September 30, 2020 and since the Companys inception in July 2015:

(in thousands, except PSF amounts)

Since

Q3 2020

FY2020

Inception

Leases

6

24

426

Square feet

51,000

272,000

10,699,000

Annual base rent ($000s)

$

903

$

5,461

$

185,229

Annual base rent PSF (1)

$

17.71

$

20.08

$

18.34

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Seritage Growth Properties Reports Third Quarter 2020 Operating Results - Business Wire