Corporate Term Loan Successfully
Extended to July 31, 2025 By Reducing Loan Balance to $800M
2022 Gross Proceeds from Asset Sales of
$739.7M 2023 Year to Date Gross Proceeds from Asset Sales of
$232.8M
$800M of Debt Paydowns since end of 2021
Annualized Interest Savings of $56.0M
Seritage Growth Properties (NYSE: SRG) (the “Company”), a
national owner and developer of retail, residential and mixed-use
properties, today provided an update on the Company’s disposition
activity and the two-year extension of the Company’s corporate term
loan.
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“We are very pleased to announce the two-year extension of our
corporate term loan, which was made possible by the significant
progress we have made in advancing our plan of sale,” said Andrea
Olshan, Chief Executive Officer and President. “As we look ahead,
we are encouraged by the assets we currently have under contract or
subject to accepted offers, which would generate total anticipated
gross proceeds of over $580 million, if completed. We expect that
these transactions, together with the monetization of other assets
we have slated for sale, will provide us with the financial
flexibility to fund ongoing operating expenses, capital obligations
and further loan paydowns.”
Q4 2022 Disposition
Update
- Generated $332.5 million of gross proceeds from the sale of 24
full assets and 5 partial assets:
- $190.9 million from the sale of stabilized, partially
stabilized and pad sites at prices reflecting blended cap rates of
7.7%, 6.0% and 6.6% respectively; and
- $141.6 million from the sale of vacant or non-income producing
assets at prices reflecting, on average, $59.74 PSF or $720
thousand per acre. The sale of these assets eliminates $6.5 million
of annual carrying costs.
- Prepaid $240 million of the Company’s term loan reducing annual
interest expense related to the term loan by approximately $16.8
million and reducing the outstanding principal balance of the term
loan to $1.03 billion as of December 31, 2022.
FY 2022 Disposition
Update
- Generated $739.7 million of gross proceeds from the sale of 65
full assets and 8 partial assets:
- $348.2 million from the sale of stabilized, partially
stabilized and pad sites at prices reflecting blended cap rates of
7.2%, 5.1% and 6.5% respectively;
- $325.5 million of gross proceeds from the sale of vacant or
non-income producing assets at prices reflecting, on average,
$54.66 PSF or $681 thousand per acre. The sale of these assets
eliminates $13.9 million of annual carrying costs; and
- $66.0 million of gross proceeds from monetizing unconsolidated
entity interests.
- Prepaid $410 million towards the Company’s term loan reducing
annual interest expense by approximately $28.7 million.
2023 Year to Date Disposition
Update
- Generated $232.8 million of gross proceeds from the sale of 17
full assets:
- $228.5 million from the sale of stabilized and partially
stabilized sites at prices reflecting a blended cap rate of 9.2%
and 9.3% respectively; and
- $4.3 million of gross proceeds from the sale of vacant or
non-income producing assets at prices reflecting, on average,
$21.23 PSF or $264 thousand per acre. The sale of these assets
eliminates $0.9 million of annual carrying costs.
- Prepaid $230 million towards the Company’s term loan reducing
annual interest expense by approximately $16.1 million and reducing
the outstanding principal balance of the term loan to $800 million
as of February 2, 2023.
- After giving effect to the $230 million paydown, the Company
has in excess of $100 million of cash on hand as of February 2,
2023.
Looking Ahead and Market
Update
As of February 2, 2023, the Company had assets under contract
for sale for total anticipated gross proceeds of $489.0 million
(the “Pending Sales”) composed of:
- $244.6 million anticipated from transactions subject to
customary closing conditions, but no due diligence contingency;
and
- $244.4 million anticipated from transactions subject to due
diligence contingencies and customary closing conditions.
Additionally, the Company has accepted offers and is currently
negotiating definitive purchase and sale agreements on assets for
total anticipated gross proceeds of approximately $95.0 million
(the “Pipeline Sales”). The Pending Sales and the Pipeline Sales
are composed of a combination of multi-tenant retail assets,
certain premier and mixed-use assets, joint venture interests as
well as non-core assets.
Over the last several months, the Company, along with the
commercial real estate market as a whole, has experienced
progressively more challenging market conditions, especially with
respect to larger scale development sites, as a result of, among
other things, the continued rise in interest rates, increases to
required return hurdles for institutional buyers, availability of
debt capital, higher construction and labor costs for development,
decreased demand for speculative office development and slowing
rent growth expectations due to potential recession concerns. These
conditions apply downward pricing pressure on all of our assets.
The assets we have sold to date have been those less impacted by
these adverse market trends. In making decisions regarding whether
and when to transact on the Company’s remaining assets, the Company
will consider various factors including, but not limited to, the
breadth of the buyer universe, macroeconomic conditions, the
availability and cost of financing, as well as corporate, operating
and other capital expenses required to carry the asset. All of
these considerations may impact the amounts and timing of
distributions to shareholders.
Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
relate to expectations, beliefs, projections, future plans and
strategies, anticipated events or trends and similar expressions
concerning matters that are not historical facts. In some cases,
you can identify forward-looking statements by the use of
forward-looking terminology such as “may,” “should,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” or “potential” or the negative of these words and
phrases or similar words or phrases that are predictions of or
indicate future events or trends and that do not relate solely to
historical matters. Forward-looking statements involve known and
unknown risks, uncertainties, assumptions and contingencies, many
of which are beyond the Company’s control, which may cause actual
results to differ significantly from those expressed in any
forward-looking statement. Factors that could cause or contribute
to such differences include, but are not limited to: successful
completion of Company’s plan of sale; declines in retail, real
estate and general economic conditions, including the possibility
of a recession, and the impact of rising interest rates on buyer’s
ability to finance transactions; the future bankruptcy or
insolvency of any of the Company’s tenants; risks relating to
redevelopment activities; contingencies to the commencement of rent
under leases; the terms of the Company’s indebtedness and other
legal requirements to which the Company is subject; failure to
achieve expected occupancy and/or rent levels within the projected
time frame or at all; the impact of ongoing negative operating cash
flow on the Company’s ability to fund operations and ongoing
development; increased risks and costs associated with volatility
in commodity and labor prices or as a result of supply chain or
procurement disruptions; the Company’s ability to access or obtain
sufficient sources of financing to fund the Company’s liquidity
needs; rising real estate taxes that we might not be able to pass
on to our tenants; the impact of the COVID-19 pandemic on the
business of the Company’s tenants and business, income, cash flow,
results of operations, financial condition, liquidity and
prospects; and environmental, health, safety and land use laws and
regulations, as well as potential risks associated with
cybersecurity incidents, natural disasters, severe weather
conditions and climate change and related legislation and
regulations. For additional discussion of these and other
applicable risks, assumptions and uncertainties, see the “Risk
Factors” and forward-looking statement disclosure contained in the
Company’s filings with the Securities and Exchange Commission,
including the Company’s annual report on Form 10-K for the year
ended December 31, 2021 and in Part II, Item 1A of the Company’s
Quarterly Report on Form 10-Q for the three and nine months ended
September 30, 2022. While the Company believes that its forecasts
and assumptions are reasonable, the Company cautions that actual
results may differ materially. The Company intends 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.
About Seritage
Seritage is principally engaged in the ownership, development,
redevelopment, management and leasing of retail and mixed-use
properties throughout the United States. As of December 31, 2022,
the Company’s portfolio consisted of interests in 97 properties
comprised of approximately 13.4 million square feet of gross
leasable area ("GLA") or build-to-suit leased area, approximately
213 acres held for or under development and approximately 6.1
million square feet or approximately 498 acres to be disposed of.
The portfolio consists of approximately 10.8 million square feet of
GLA held by 80 wholly owned properties (such properties, the
“Consolidated Properties”) and 2.6 million square feet of GLA held
by 17 unconsolidated entities (such properties, the “Unconsolidated
Properties”).
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version on businesswire.com: https://www.businesswire.com/news/home/20230202005081/en/
Seritage Growth Properties John Garilli Interim Chief Financial
Officer (212) 355-7800 IR@Seritage.com
Seritage Growth Properties (NYSE:SRG)
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