☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 27, 2017,~~May 7, 2024, the registrant had the following common shares outstanding:


Class	Shares Outstanding
Class A common shares of beneficial interest, par value $0.01 per share	~~28,672,642~~ 56,268,317
Class B common shares of beneficial interest, par value $0.01 per share	~~1,434,922~~ 0
Class C common shares of beneficial interest, par value $0.01 per share	~~5,280,630~~ 0

SERITAGE GROWTH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED ~~SEPTEMBER 30, 2017~~March 31, 2024

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION
		Page

Item 1.	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023	3
	Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2024 and ~~2016~~2023	4
	Condensed Consolidated Statements of Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023	5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023	6
	Notes to Condensed Consolidated Financial Statements	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2827

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	4035

Item 4.	Controls and Procedures	4035

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4136

Item 1A.	Risk Factors	4136

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4136

Item 3.	Defaults upon Senior Securities	4136

Item 4.	Mine Safety Disclosures	4136

Item 5.	Other Information	4136

Item 6.	Exhibits	4237

SIGNATURES		4338

PART I. FINANCIAL INFORMATION

~~PART I.~~

~~FINANCIAL INFORMATION~~

~~Item 1.~~

~~Unaudited Condensed Consolidated Financial Statements~~

Item 1. Unaudited Condensed Consolidated Financial Statements

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	September 30, 2017			December 31, 2016				March 31, 2024			December 31, 2023
ASSETS
Investment in real estate
Land	$	799,971		$	840,021			$	72,562		$	102,090
Buildings and improvements		859,782			839,663				300,148			344,972
Accumulated depreciation		(126,712	)		(89,940	)			(31,514	)		(36,025	)
		1,533,041			1,589,744				341,196			411,037
Construction in progress		175,516			55,208				132,210			135,305
Net investment in real estate		1,708,557			1,644,952				473,406			546,342
Investment in unconsolidated joint ventures		338,326			425,020
Real estate held for sale									75,574			39,332
Investment in unconsolidated entities									199,810			196,437
Cash and cash equivalents		104,153			52,026				114,875			134,001
Restricted cash		202,513			87,616				15,883			15,699
Tenant and other receivables, net		28,166			23,172				9,907			12,246
Lease intangible assets, net		327,229			464,399				191			886
Prepaid expenses, deferred expenses and other assets, net		20,284			15,052				24,922			28,921
Total assets	$	2,729,228		$	2,712,237
Total assets (1)								$	914,568		$	973,864

LIABILITIES AND EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans payable, net	$	1,200,615		$	1,166,871
Unsecured term loan, net		84,009			—
Term loan facility, net								$	330,000		$	360,000
Accounts payable, accrued expenses and other liabilities		111,482			121,055				40,970			50,700
Total liabilities(1)		1,396,106			1,287,926				370,970			410,700

Commitments and contingencies (Note 9)

Shareholders' Equity
Class A shares $0.01 par value; 100,000,000 shares authorized; 28,001,411 and 25,843,251 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		280			258
Class B shares $0.01 par value; 5,000,000 shares authorized; 1,434,922 and 1,589,020 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		14			16
Class C shares $0.01 par value; 50,000,000 shares authorized; 5,951,861 and 5,754,685 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		59			58
Class A common shares $0.01 par value; 100,000,000 shares authorized; 56,262,944 and 56,194,727 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively									562			562
Series A preferred shares $0.01 par value; 10,000,000 shares authorized; 2,800,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023; liquidation preference of $70,000									28			28
Additional paid-in capital		996,047			925,563				1,362,386			1,361,742
Accumulated deficit		(177,394	)		(121,338	)			(820,552	)		(800,342	)
Total shareholders' equity		819,006			804,557				542,424			561,990
Non-controlling interests		514,116			619,754				1,174			1,174
Total equity		1,333,122			1,424,311				543,598			563,164
Total liabilities and equity	$	2,729,228		$	2,712,237			$	914,568		$	973,864
(1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets, as of March 31, 2024, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $3.3 million of land, $2.8 million of building and improvements, $(0.8) million of accumulated depreciation and $2.6 million of other assets included in other line items. The Company's consolidated balance sheets as of December 31, 2023, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $3.3 million of land, $2.8 million of building and improvements, $(0.8) million of accumulated depreciation and $2.4 million of other assets included in other line items.							(1) The Company's consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The consolidated balance sheets, as of March 31, 2024, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $3.3 million of land, $2.8 million of building and improvements, $(0.8) million of accumulated depreciation and $2.6 million of other assets included in other line items. The Company's consolidated balance sheets as of December 31, 2023, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $3.3 million of land, $2.8 million of building and improvements, $(0.8) million of accumulated depreciation and $2.4 million of other assets included in other line items.

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 3 -

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

REVENUE

Rental income

$
48,167

$
45,584

$
139,526

$
136,737

Tenant reimbursements

15,881

12,023

47,813

45,741

Total revenue

64,048

57,607

187,339

182,478

EXPENSES

Property operating

4,311

4,505

13,985

17,176

Real estate taxes

11,335

7,965

35,707

31,101

Depreciation and amortization

61,059

44,532

170,293

121,365

General and administrative

5,272

4,252

16,639

13,104

Litigation charge

—

19,000

—

19,000

Provision for doubtful accounts

68

124

119

269

Acquisition-related expenses

—

—

—

73

Total expenses

82,045

80,378

236,743

202,088

Operating loss

(17,997
)

(22,771
)

(49,404
)

(19,610
)
Equity in (loss) income of unconsolidated joint
   ventures

(3,686
)

1,497

(4,226
)

4,495

Gain on sale of interest in unconsolidated
   joint venture

43,729

—

43,729

—

Gain on sale of real estate

13,018

—

13,018

—

Interest and other income

352

77

472

196

Interest expense

(18,049
)

(15,931
)

(53,072
)

(47,297
)
Unrealized loss on interest rate cap

(91
)

(47
)

(686
)

(1,898
)
Income (loss) before income taxes

17,276

(37,175
)

(50,169
)

(64,114
)
Provision for income taxes

—

(72
)

(266
)

(412
)
Net income (loss)

17,276

(37,247
)

(50,435
)

(64,526
)
Net (income) loss attributable to non-controlling
   interests

(6,762
)

16,145

19,892

27,972

Net income (loss) attributable to common shareholders

$
10,514

$
(21,102
)

$
(30,543
)

$
(36,554
)

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

$
0.31

$
(0.67
)

$
(0.91
)

$
(1.16
)
Net income (loss) per share attributable to Class A and
   Class C common shareholders - Diluted

$
0.31

$
(0.67
)

$
(0.91
)

$
(1.16
)
Weighted average Class A and Class C common shares
   outstanding - Basic

33,774

31,419

33,685

31,414

Weighted average Class A and Class C common shares
   outstanding - Diluted

33,841

31,419

33,685

31,414


	Three Months Ended March 31,
	2024			2023
REVENUE
Rental income	$	5,725		$	418
Management and other fee income		48			262
Total revenue		5,773			680
EXPENSES
Property operating		3,673			8,185
Real estate taxes		1,393			1,537
Depreciation and amortization		5,271			4,564
General and administrative		9,192			12,220
Total expenses		19,529			26,506
Gain on sale of real estate, net		1,139			12,392
Impairment of real estate assets		(1,148	)		(2,576	)
Equity in income (loss) of unconsolidated entities		379			(36,372	)
Interest and other income, net		1,423			5,585
Interest expense		(7,011	)		(15,202	)
Loss before income taxes		(18,974	)		(61,999	)
(Provision) benefit for income taxes		(11	)		13
Net loss		(18,985	)		(61,986	)
Preferred dividends		(1,225	)		(1,225	)
Net loss attributable to Seritage common shareholders	$	(20,210	)	$	(63,211	)

Net loss per share attributable to Seritage Class A common shareholders - Basic	$	(0.36	)	$	(1.13	)
Net loss per share attributable to Seritage Class A common shareholders - Diluted	$	(0.36	)	$	(1.13	)
Weighted average Class A common shares outstanding - Basic		56,215			56,059
Weighted average Class A common shares outstanding - Diluted		56,215			56,059

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 4 -

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, amounts in ~~thousands)~~thousands, except per share amounts)

Additional

Non-

Class A

Class B

Class C

Paid-In

Accumulated

Controlling

Total

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Interests

Equity

Balance at January 1, 2016

24,818

$
248

1,589

$
16

6,773

$
68

$
924,508

$
(38,145
)

$
683,382

$
1,570,077

Net loss

—

—

—

—

—

—

—

(36,554
)

(27,972
)

(64,526
)
Dividends and
   distributions declared
   ($0.75 per share and unit)

—

—

—

—

—

—

—

(23,726
)

(18,133
)

(41,859
)
Vesting of restricted share units

7

0

—

—

—

—

(13
)

—

—

(13
)
Stock-based compensation

—

—

—

—

—

—

801

—

—

801

Share class exchanges, net
   (997,450 common shares)

997

10

—

—

(997
)

(10
)

—

—

—

—

Balance at September 30, 2016

25,822

$
258

1,589

$
16

5,776

$
58

$
925,296

$
(98,425
)

$
637,277

$
1,464,480

Balance at January 1, 2017

25,843

258

1,589

16

5,755

58

925,563

(121,338
)

619,754

1,424,311

Net loss

—

—

—

—

—

—

—

(30,543
)

(19,892
)

$
(50,435
)
Dividends and
   distributions declared
   ($0.75 per share and unit)

—

—

—

—

—

—

—

(25,513
)

(16,394
)

(41,907
)
Vesting of restricted share units

11

0

—

—

—

—

(13
)

—

—

(13
)
Stock-based compensation

—

—

—

—

—

—

1,166

—

—

1,166

Share class exchanges, net
   (197,176 common shares)

(197
)

(1
)

—

—

197

1

—

—

—

—

Share class surrenders
   (154,098 common shares)

—

—

(154
)

(2
)

—

—

2

—

—

—

OP Unit exchanges
   (2,344,589 units)

2,344

23

—

—

—

—

69,329

—

(69,352
)

—

Balance at September 30, 2017

28,001

$
280

1,435

$
14

5,952

$
59

$
996,047

$
(177,394
)

$
514,116

$
1,333,122


	Class A Common				Series A Preferred				Additional Paid-In			Accumulated			Non- Controlling			Total
	Shares		Amount		Shares		Amount		Capital			Deficit			Interests			Equity
Balance at January 1, 2023		56,053	$	561		2,800	$	28	$	1,360,411		$	(640,531	)	$	2,130		$	722,599
Net loss		—		—		—		—		—			(61,986	)		-			(61,986	)
Preferred dividends declared ($0.4375 per share)		—		—		—		—		—			(1,225	)		—			(1,225	)
Vesting of restricted share units		7		—		—		—		—			—			—			—
Share-based compensation		—		—		—		—		784			—			—			784
Sale of consolidated VIEs		—		—		—		—		(1,135	)		—			(1,082	)		(2,217	)
Balance at March 31, 2023		56,060	$	561	$	2,800	$	28	$	1,360,060		$	(703,742	)	$	1,048		$	657,955

Balance at January 1, 2024		56,195	$	562		2,800	$	28	$	1,361,742		$	(800,342	)	$	1,174		$	563,164
Net loss		—				—		—		—			(18,985	)		—			(18,985	)
Preferred dividends declared ($0.4375 per share)		—		—		—		—		—			(1,225	)		—			(1,225	)
Vesting of restricted share units		68		—		—		—		—			—			—			—
Share-based compensation		—		—		—		—		644			—			—			644
Balance at March 31, 2024		56,263	$	562		2,800	$	28	$	1,362,386		$	(820,552	)	$	1,174		$	543,598

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 5 -

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)


	Three Months Ended March 31,
	2024			2023
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(18,985	)	$	(61,986	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in (income) loss of unconsolidated entities		(379	)		36,372
Gain on sale of real estate, net		(1,139	)		(12,392	)
Impairment of real estate assets		1,148			2,576
Share-based compensation		644			774
Depreciation and amortization		5,271			4,564
Amortization of deferred financing costs		—			105
Amortization of above and below market leases, net		38			48
Straight-line rent adjustment		67			10,842
Change in operating assets and liabilities
Tenants and other receivables		4,351			4,668
Prepaid expenses, deferred expenses and other assets		2,406			5,034
Accounts payable, accrued expenses and other liabilities		(10,046	)		(12,557	)
Net cash used in operating activities		(16,624	)		(21,952	)
CASH FLOW FROM INVESTING ACTIVITIES
Investment in unconsolidated entities		(2,925	)		(7,665	)
Net proceeds from sale of real estate		44,312			279,985
Development of real estate		(12,480	)		(32,030	)
Net cash provided by investing activities		28,907			240,290
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of term loan		(30,000	)		(230,000	)
Preferred dividends paid		(1,225	)		(1,225	)
Net cash used in financing activities		(31,225	)		(231,225	)
Net decrease in cash and cash equivalents		(18,942	)		(12,887	)
Cash and cash equivalents, and restricted cash, beginning of period		149,700			144,939
Cash and cash equivalents, and restricted cash, end of period	$	130,758		$	132,052

Nine Months Ended September 30,

2017

2016

CASH FLOW FROM OPERATING ACTIVITIES

Net loss

$
(50,435
)

$
(64,526
)
Adjustments to reconcile net loss to net cash provided by operating activities:

Equity in loss (income) of unconsolidated joint ventures

4,226

(4,495
)
Distributions from unconsolidated joint ventures

10,714

11,872

Gain on sale of interest in unconsolidated joint venture

(43,729
)

—

Gain on sale of real estate

(13,018
)

—

Unrealized loss on interest rate cap

686

1,898

Stock-based compensation

1,167

801

Depreciation and amortization

170,293

121,365

Amortization of deferred financing costs

6,390

4,021

Amortization of above and below market leases, net

(581
)

(520
)
Straight-line rent adjustment

(2,364
)

(11,242
)
Change in operating assets and liabilities

Tenants and other receivables

(3,444
)

8,425

Prepaid expenses, deferred expenses and other assets

(7,300
)

8,496

Accounts payable, accrued expenses and other liabilities

(15,657
)

24,043

Net cash provided by operating activities

56,948

100,138

CASH FLOW FROM INVESTING ACTIVITIES

Investments in unconsolidated joint ventures

(36,038
)

—

Net proceeds from sale of real estate

50,887

—

Net proceeds from disposition of interest in unconsolidated joint venture

189,391

—

Development of real estate

(164,070
)

(47,236
)
Net cash provided by (used in) investing activities

40,170

(47,236
)
CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Future Funding Facility

79,998

19,239

Proceeds from Unsecured Term Loan

85,000

—

Repayment of mortgage loans payable, net

(50,634
)

—

Payment of deferred financing costs

(2,686
)

(6
)
Common dividends paid

(25,379
)

(31,482
)
Non-controlling interests distributions paid

(16,393
)

(24,176
)
Net cash provided by (used in) financing activities

69,906

(36,425
)
Net increase in cash, cash equivalents, and restricted cash

167,024

16,477

Cash, cash equivalents, and restricted cash, beginning of period

139,642

155,342

Cash, cash equivalents, and restricted cash, end of period

$
306,666

$
171,819

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest

$
54,026

$
45,495

Capitalized interest

7,785

2,198

Income taxes paid

266

412

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Development of real estate financed with accounts payable

$
17,223

$
3,442

Dividends and distribution declared and unpaid

13,969

13,954

Decrease in assets and liabilities resulting from deconsolidated properties

Real estate, net

(64,998
)

—

Tenant and other receivables, net

(814
)

—

Lease intangible assets, net

(13,480
)

—

Prepaid expenses, deferred expenses and other assets, net

(8
)

—

Accounts payable, accrued expenses and other liabilities

3,612

—

- 6 -

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited, amounts in thousands)


	Three Months Ended March 31,
	2024		2023
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	134,001	$	133,480
Restricted cash at beginning of period		15,699		11,459
Cash and cash equivalents and restricted cash at beginning of period	$	149,700	$	144,939

Cash and cash equivalents at end of period	$	114,875	$	120,476
Restricted cash at end of period		15,883		11,576
Cash and cash equivalents and restricted cash at end of period	$	130,758	$	132,052


	Three Months Ended March 31,
	2024		2023
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	$	6,108	$	16,273
Capitalized interest		—		1,409
Income taxes paid		11		(13	)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Development of real estate financed with accounts payable	$	20,581	$	22,196
Preferred dividends declared and unpaid		1,225		1,225
Transfer to / (from) real estate assets held for sale		36,242		(209,723	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 67 -

SERITAGE GROWTH PROPERTIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization

Seritage Growth Properties (“Seritage”) ~~was organized in~~(NYSE: SRG), a Maryland real estate investment trust formed on June 3, 2015, operated as a fully integrated, self-administered and ~~was initially capitalized with 100 shares~~self-managed real estate investment trust (“REIT”) as defined under Section 856(a) of ~~Class A common shares. The Company conducts~~the Internal Revenue Code (the “Code”) from formation through December 31, 2021. On March 31, 2022, Seritage revoked its REIT election and became a taxable C Corporation effective January 1, 2022. Seritage’s assets are held by and its operations are primarily conducted, directly or indirectly, through Seritage Growth Properties, L.P. ~~(the “Operating Partnership”)~~, a Delaware limited partnership ~~that was formed on April 22, 2015.~~(the “Operating Partnership”). Under the partnership agreement of the Operating Partnership, Seritage, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. Unless otherwise expressly stated or the context otherwise requires, ~~“Seritage”~~the “Company” and ~~the “Company”~~“Seritage” refer to Seritage, the Operating Partnership and its owned and controlled subsidiaries.

~~On June 11,~~Prior to the adoption of the Company’s Plan of Sale (defined below), Seritage was principally engaged in the ownership, development, redevelopment, disposition, management and leasing of diversified retail and mixed-use properties throughout the United States. Seritage will continue to actively manage each remaining location until such time as each property is sold. As of March 31, 2024, the Company’s portfolio consisted of interests in 27 properties comprised of approximately 3.5 million square feet of gross leasable area (“GLA”) or build-to-suit leased area, and 410 acres of land. The portfolio consists of approximately 2.3 million square feet of GLA and 276 acres held by 18 consolidated properties (such properties, the “Consolidated Properties”) and 1.2 million square feet of GLA and 134 acres held by nine unconsolidated properties (such properties, the “Unconsolidated Properties”).

The Company commenced operations on July 7, 2015, following a rights offering to the shareholders of Sears Holdings Corporation (“Sears Holdings” or “Sears”) ~~effected a rights offering (the “Rights Offering”) to Sears Holdings stockholders~~ to purchase common shares of Seritage in order to fund, in part, the ~~$2.7~~$2.7 billion acquisition of ~~234~~certain of Sears Holdings’ owned properties and ~~one of~~ its ~~ground leased properties (the “Wholly Owned Properties”), and its 50%~~50% interests in three joint ventures ~~(such joint ventures, the “JVs,” and such 50% joint venture interests, the “JV Interests”) that collectively owned 28 properties, ground~~which were simultaneously leased one property and leased two properties (collectively, the “JV Properties”) (collectively, the “Transaction”). The Rights Offering ended on July 2, 2015, and the Company’s Class A common shares were listed on the New York Stock Exchange (“NYSE”) on July 6, 2015.

On July 7, 2015, the Company completed the Transaction with Sears Holdings and commenced operations. The Company did not have any operations prior to the completion of the Rights Offering and the Transaction.

On July 12, 2017, the Company completed two transactions whereby it (i) sold its 50% JV Interests in eight JV Properties and (ii) sold a 50% interest in five Wholly-Owned Properties retaining a 50% JV Interest in the five new JV Properties.

Seritage is a fully-integrated, self-administered, self-managed real estate investment trust (“REIT”) primarily engaged in the real property business through the Company’s investment in the Operating Partnership. As of September 30, 2017, the Company’s portfolio consisted of interests in 258 properties, including 230 Wholly Owned Properties and 28 JV Properties. 171 of the Wholly Owned Properties were leasedback to Sears Holdings ~~pursuant to~~under a master lease agreement (the ~~“Master~~“Original Master Lease”) and ~~operated under either~~ the “Original JV Master Leases,” respectively).

As of March 15, 2021, the Company no longer had any remaining properties leased to Transform Holdco LLC (“Holdco”), an affiliate of ESL Investments, Inc. or Sears ~~or Kmart brand. At 85 Wholly Owned Properties, third-party tenants under direct leases occupied~~Holdings.

On March 1, 2022, the Company announced that its Board of Trustees had commenced a ~~portion~~process to review a broad range of ~~leasable space alongside Sears or Kmart, and 41 Wholly Owned Properties were leased only to third parties. A substantial majority~~strategic alternatives. The Board of Trustees created a Special Committee (the “Special Committee”) of the ~~space~~Company’s Board of Trustees to oversee the process. The Special Committee retained Barclays as its financial advisor. The agreement with Barclays expired in August 2023. The Company’s strategic review process remains ongoing as the Company executes sales pursuant to the Plan of Sale, and the Company remains open minded to pursuing value maximizing alternatives, including a potential sale of the Company. There can be no assurance that the review process will result in any transaction or that the Company will be successful in fully executing the Plan of Sale. The Board of Trustees is currently overseeing the Plan of Sale.

As a result of the Company's revocation of its REIT election, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders, which provides the ~~JV Properties~~Company with greater flexibility to sell its assets and use its free cash flow to make principal repayments on its Term Loan Facility. Effective January 1, 2022, the Company is ~~also leased (or subleased)~~subject to federal and state income taxes on its taxable income at applicable tax rates and is no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT since inception and through the 2021 tax year, and existing REIT requirements and limitations, including those established by the ~~JVs~~Company’s organizational documents, remained in place until December 31, 2021.

As a result of the Company’s change in corporate structure to ~~Sears Holdings~~a taxable C Corporation in fiscal year 2022, the Company incurred a one-time, non-cash deferred tax benefit of approximately $161.3 million during the three months ended March 31, 2022. The Company also recorded a full valuation allowance against the deferred tax asset pursuant to ASC 740, Income Taxes, as discussed in more detail below.

The Company sought a shareholder vote to approve a proposed plan of sale of the Company’s assets and dissolution (the “Plan of Sale”) that would allow the Board to sell all of the Company’s assets, distribute the net proceeds to shareholders and dissolve the Company. The Plan of Sale allows Seritage and potential buyers to enter into and complete value maximizing transactions without subjecting any such transaction to the delay and conditionality associated with having to seek and obtain shareholder approval. On July 6, 2022, Edward Lampert, the Company’s former Chairman, entered into a Voting and Support Agreement under ~~master lease agreements (collectively,~~which he exchanged his equity interest in the ~~“JV Master Leases”).~~ Operating Partnership for Class A common shares and agreed to vote his shares in favor of the Plan of Sale. As of March 31, 2024, Mr. Lampert owns approximately 24.0% of the Company’s outstanding Class A common shares, and Seritage, including its consolidated subsidiaries, is the sole owner of all outstanding Operating Partnership interests.

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The ~~Master Lease~~affirmative vote of at least two-thirds of all outstanding common shares of the Company was required to approve the Plan of Sale. The 2022 Annual Meeting of Shareholders occurred on October 24, 2022, following the Company's filing of a final proxy statement with the SEC on September 14, 2022. During the meeting, the Plan of Sale was approved by the shareholders. The strategic review process remains ongoing as the Company executes the Plan of Sale, and the ~~JV Master Leases~~Company remains open minded to pursuing value maximizing alternatives, including a potential sale of the Company. There can be no assurance that the review process will result in any transaction or that the Company will be successful in fully executing on the Plan of Sale.

Liquidity

The Company’s primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures. Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations and certain development expenditures incurred during the three months ended March 31, 2024 and the Company incurred net operating cash outflows of $16.6 million. Additionally, the Company generated investing cash inflows of $28.9 million during the three months ended March 31, 2024, which were driven by asset sales partially offset by development expenditures and investments in unconsolidated entities.

Obligations are projected to continue to exceed property rental income and the Company expects to fund such costs with a combination of capital sources including, but not limited to, cash on hand, sales of Consolidated and Unconsolidated Properties. and potential financing transactions. During the three months ended March 31, 2024, the Company sold 5 consolidated properties for gross proceeds of $48.8 million and made aggregate principal prepayments of $30.0 million on the Term Loan Facility, reducing the outstanding Term Loan Facility balance to $330.0 million at March 31, 2024. Subsequent to March 31, 2024, the Company made additional principal prepayments totaling $50.0 million reducing the balance of the Term Loan Facility to $280.0 million as of May 1, 2024.

Going Concern

In accordance with ASC 205-40, Presentation of Financial Statements - Going Concern, for each annual and interim reporting period, management evaluates whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As part of this evaluation, the Company takes into consideration all Obligations due within the subsequent 12 months, as well as cash on hand and expected cash receipts. Management has determined that it is probable its plans, as described under Liquidity, will be effectively implemented within one year after the date the financial statements are issued and that these actions will provide the necessary cash flows to fund the Company’s Obligations and development expenditures for the one-year period.

As the outstanding balance of the Term Loan Facility, which matures on July 31, 2025, is not due within the 12 month period subsequent to the date that these financial statements are issued, the Company’s Term Loan Facility is not factored into the Company’s analysis as a current Obligation.

The anticipated proceeds from the sales of assets under contract of $30.0 million and existing cash on hand, would allow the Company to fund its Obligations and certain development expenditures because the ~~JVs with~~Term Loan Facility is not presently a current obligation as noted in the ~~right~~preceding paragraph. As a result, the Company has concluded that management’s plans do alleviate substantial doubt about the Company’s ability to ~~recapture certain space from Sears Holdings at each property for retenanting or redevelopment purposes.~~continue as a going concern within one year after the date that these financial statements are issued.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, ~~as amended,~~ (the “Annual Report”), for the year ended December 31, ~~2016.~~2023. Certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been condensed or omitted from this quarterly report. In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this quarterly report. Operating results offor the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 may not be indicative of the results that may be expected for any other interim period or for the year ending December 31, ~~2017.~~2024. Capitalized terms used, but not defined in this quarterly report, have the same meanings as set forth in our Annual Report.

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, each of their ~~wholly-owned subsidiaries,~~consolidated properties, and all other entities in which ~~they have~~the Company has a controlling financial ~~interest or~~interest. For entities that meet the definition of a variable interest entity (“VIE”) ~~in which~~, the Company ~~has, as a result~~consolidates those entities when the Company is the primary beneficiary of ~~ownership, contractual interests or other financial interests,~~the entity. The Company is determined to be the primary beneficiary when it possesses both the unilateral power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. ~~All intercompany accounts and transactions have been eliminated.~~

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~~If the~~The Company ~~has an interest in a VIE but~~continually evaluates whether it ~~is not determined to be~~qualifies as the primary beneficiary ~~the Company accounts for its interest under the equity method of accounting. Similarly, for those entities which are not VIEs~~ and over which the Company has the ability to exercise significant influence, but does not have a controlling financial interest, the Company accounts for its interests under the equity method of accounting. The Company continually reconsiders its determination of whether an entity is a VIE ~~and whether~~upon reconsideration

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events. As of March 31, 2024, the Company ~~qualifies~~consolidates one VIE in which we are considered the primary beneficiary, as ~~its~~the Company has the power to direct the activities of the entity, specifically surrounding the development plan. As of March 31, 2024 and December 31, 2023, the Company has several investments in unconsolidated VIEs and does not consolidate these entities because the Company is not the primary beneficiary. All intercompany accounts and transactions have been eliminated.

To the extent such variable interests are in entities that ~~cannot be~~are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model. ~~The~~

As of March 31, 2024, the Company, and its wholly owned subsidiaries, holds a ~~60.9%~~100% interest in the Operating Partnership and is the sole general partner which gives the Company exclusive and complete responsibility for the day-to-day management, authority to make decisions, and control of the Operating Partnership. ~~Through consideration of new consolidation guidance effective for~~

Certain prior period amounts, if any, have been reclassified to conform to the Company as of January 1, 2016, it has been concluded that the Operating Partnership is a VIE as the limited partners in the Operating Partnership, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. Accordingly, the Company consolidates its interest in the Operating Partnership. However, as the Company holds what is deemed a majority voting interest in the Operating Partnership, it qualifies for the exemption from providing certain of the disclosure requirements associated with investments in VIEs.current period’s presentation.

~~The portions of consolidated entities not owned by the Company and the Operating Partnership are presented as non-controlling interests as of and during the periods presented.~~

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant assumptions and estimates relate to ~~fair values of acquired assets and liabilities assumed for purposes of applying the acquisition method of accounting, the useful lives of tangible and intangible assets,~~ real estate impairment assessments and assessing the recoverability of accounts ~~receivables.~~receivable. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. Management evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from these estimates.

Segment Reporting

The Company currently operates in a single reportable segment which includes the ~~acquisition,~~ ownership, development, redevelopment, management, sale and leasing of ~~retail~~real estate properties. The Company’s chief operating decision maker, its ~~Chief Executive Officer,~~principal executive officer, assesses and measures the operating and financial results for each property on an individual basis and does not distinguish or group properties based on geography, size, or type. The Company, therefore, aggregates all properties into one reportable segment due to their similarities with regard to the nature and economics of the properties, tenants, and ~~operations.~~operational process.

~~Accounting for Real Estate Acquisitions~~

Upon the acquisition of real estate, the Company assesses the fair value of acquired assets and liabilities assumed, including land, buildings, improvements and identified intangibles such as above-market and below-market leases, in-place leases and other items, as applicable, and allocates the purchase price based on these assessments. In making estimates of fair values, the Company may use a number of sources, including data provided by third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located.

The fair values of tangible assets are determined on an "if vacant" basis. The "if vacant" fair value allocated to land is generally estimated via a market or sales comparison approach with the subject site being compared to similar properties that have sold or are currently listed for sale. The comparable properties are adjusted for dissimilar characteristics such as market conditions, location, access/frontage, size, shape/topography, or intended use, including the impact of any encumbrances on such use. The "if vacant" value allocated to buildings and site improvements is generally estimated using an income approach and a cost approach that utilizes published guidelines for current replacement cost or actual construction costs for similar, recently developed properties. Assumptions used in the income approach include capitalization and discount rates, lease-up time, market rents, make-ready costs, land value, and site improvement value.

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The estimated fair value of in-place tenant leases includes lease origination costs (the costs the Company would have incurred to lease the property to the current occupancy level) and the lost revenues during the period necessary to lease-up from vacant to the current occupancy level. Such estimates include the fair value of leasing commissions, legal costs and tenant coordination costs that would be incurred to lease the property to this occupancy level. Additionally, the Company evaluates the time period over which such occupancy level would be achieved and includes an estimate of the net operating costs (primarily real estate taxes, insurance and utilities) incurred during the lease-up period, which generally ranges up to one year. The fair value of acquired in-place tenant leases is included in lease intangible assets on the condensed consolidated balance sheets and amortized over the remaining lease term for each tenant.

Identifiable intangible assets and liabilities are calculated for above-market and below-market tenant and ground leases where the Company is either the lessor or the lessee. The difference between the contractual rental rates and the Company’s estimate of market rental rates is measured over a period equal to the remaining non-cancelable term of the leases, including significantly below-market renewal options for which exercise of the renewal option appears to be reasonably assured. Above-market tenant leases and below-market ground leases are included in lease intangible assets on the condensed consolidated balance sheets; below-market tenant leases and above-market ground leases are included in accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheets. The values assigned to above-market and below-market tenant leases are amortized as reductions and increases, respectively, to base rental revenue over the remaining term of the respective leases. The values assigned to below-market and above-market ground leases are amortized as increases and reductions, respectively, to property operating expenses over the remaining term of the respective leases.

The Company expenses transaction costs associated with business combinations in the period incurred; these costs are included in acquisition-related expenses within the condensed consolidated statements of operations. The Company capitalizes transaction costs associated with asset acquisitions; these costs are allocated to the fair values of the net assets acquired, included within the condensed consolidated balance sheets and depreciated or amortized over the remaining life or term of the acquired assets.

Real Estate Investments

Real estate assets are recorded at cost, less accumulated depreciation and amortization.

Expenditures for ordinary repairs and maintenance will be expensed as incurred. Significant renovations which improve the property or extend the useful life of the assets are capitalized. As real estate is undergoing redevelopment activities, all amounts directly associated with and attributable to the project, including planning, development and construction costs, interest costs, personnel costs of employees directly involved, and other miscellaneous costs incurred during the period of redevelopment, are capitalized. The capitalization period begins when redevelopment activities are underway and ends when the project is substantially complete.

Depreciation of real estate assets, excluding land, is recognized on a straight-line basis over their estimated useful lives ~~as follows:~~which generally range between:


~~Building:~~Buildings:	25 – 40 years
Site improvements:	5 – 15 years
Tenant improvements:	shorter of the estimated useful life or non-cancelable term of lease

The Company amortizes identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired, generally the remaining non-cancelable term of a related lease.

OnThe Company, on a periodic basis, ~~management~~ assesses whether there are indicators, including macroeconomic conditions, that the value of the ~~Company’s~~ real estate assets ~~(including any related intangible assets or liabilities)~~ may be impaired. If an indicator is identified, amanagement will estimate the real estate asset ~~is considered impaired only if management’s estimate of current and~~recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated ~~and probability weighted~~ holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. ~~Various~~If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real estate asset. In estimating the fair value of an asset, various factors are considered, ~~in the estimation process,~~ including expected future operating income, trends and leasing prospects and the effects of demand, competition, and other economic ~~factors.~~factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value. ~~No such~~The Company recognized impairment ~~losses were recognized for~~charges of $1.1 million and $2.6 million during the three ~~or nine~~ months ended ~~September 30, 2017~~March 31, 2024 and 2023, respectively.

Real Estate Dispositions

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When the Company disposes of all or ~~September 30, 2016.~~a portion of a real estate asset, it recognizes a gain or loss on sale of real estate as the difference between the carrying value and consideration received. Consideration consists of cash proceeds received.

The following table summarizes our gain on sale of real estate, net during the three months ended March 31, 2024 and 2023 (in millions):


	Three Months Ended March 31,
	2024		2023
Dispositions to third parties
Gross proceeds	$	48.8	$	290.8
Gain on sale of real estate, net		1.1		12.4

Real Estate Held for Sale

When a real estate asset is identified by management as held for sale, the Company ceases depreciation of the asset and estimates its fair value, net of estimated costs to sell. If the estimated fair value, net of estimated costs to sell, of an asset is less than its net carrying value, an adjustment is recorded to reflect the estimated fair value. Properties classified as real estate held for sale generally represent properties that are either under contract for sale or have been identified for sale and all requirements to sell have been satisfied and are probable to close within a year.

In evaluating whether a property meets the held for sale criteria, the Company makes a determination as to the point in time that it is probable that a sale will be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other matters critical to the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period or at all.

As of March 31, 2024, seven properties were classified as held for sale with assets of $75.6 million and no liabilities, and, as of December 31, 2023, six properties were classified as held for sale with assets of $39.3 million and no liabilities.

Investments in Unconsolidated ~~Joint Ventures~~Entities

The Company accounts for its investments in unconsolidated ~~joint ventures~~entities using the equity method of accounting as the Company exercises significant influence but does not ~~control these entities.~~have a controlling financial interest. These investments are initially recorded at cost and are subsequently adjusted for cash contributions, cash distributions, and earnings which are recognized in accordance with the terms of the applicable agreement.

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On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions, that the value of the Company’s investments in unconsolidated ~~joint ventures~~entities may be impaired. An investment’s value is impaired ~~only~~ if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. ~~No such~~

The Company recorded no other-than-temporary impairment losses ~~were recognized~~in investments in unconsolidated entities for the three ~~or nine~~ months ended ~~September 30, 2017 or September 30, 2016.~~

~~Cash~~March 31, 2024 and ~~Cash Equivalents~~2023.

The Company considers instruments with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalents balances may, at a limited number of banks and financial institutions, exceed insurable amounts. The Company believes it mitigates this risk by investing in or through major financial institutions and primarily in funds that are insured by the United States federal government.

Restricted Cash

~~Restricted~~As of March 31, 2024 and December 31, 2023, respectively, restricted cash represents cash ~~deposited in escrow accounts~~collateral for letters of credit and cash escrowed for development purposes.

Rental Revenue Recognition and Tenant Receivables

Rental income is comprised of base rent and reimbursements of property operating expenses. The Company commences rental revenue recognition when the lessee takes control of the physical use of the leased asset based on evaluation of several factors. Base rent is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable base rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as straight-line rent receivable and included as a component of tenant and other receivables on the condensed consolidated balance sheets. Reimbursement of property operating expenses arises from tenant leases which ~~generally can only be used~~provide for the ~~payment~~recovery of all or a portion of the operating expenses and real estate taxes ~~debt service, insurance, and future capital expenditures~~of the respective property. This revenue is accrued in the same periods as ~~required by certain loan and lease agreements, as well as legally restricted tenant security deposits. As of September 30, 2017,~~ the Company had approximately $202.5 million of restricted cash, including $174.4 million reserved for redevelopment costs, tenant allowances and leasing commissions, deferred maintenance, environmental remediation and other capital expenditures, $22.1 million reserved for basic property carrying costs such as real estate taxes, insurance and ground rent, and $6.0 million of other restricted cash which consisted primarily of prepaid rental income.expenses are incurred.

~~Tenant and Other Receivables~~

~~Accounts receivable includes unpaid amounts billed to tenants, accrued revenues for future billings to tenants for property expenses, and amounts arising from the straight-lining of rent.~~ The Company periodically reviews its receivables for collectability, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates, and economic conditions in the area where the property is located. InTenant receivables, including receivables arising from the ~~event~~straight-lining of rents, are written-off directly when management deems that the collectability of substantially all future lease payments from a ~~receivable with respect~~specified lease

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is not probable of collection, at which point, the Company will begin recognizing revenue on a cash basis, based on actual amounts received. Any receivables that are deemed to ~~any tenant~~be uncollectible are recognized as a reduction to rental income in the Company’s condensed consolidated statements of operations. If future circumstances change such that the Company believes that it is ~~in doubt,~~reasonably certain that the Company will collect all rental income remaining on such leases, the Company will resume accruing rental income and recognize a ~~provision~~cumulative catch up for ~~uncollectible amounts will be established or~~previously written-off receivables.

The Company recorded a ~~direct write-off~~reduction to rental income of $29.7 thousand and $0.9 million during the three months ended March 31, 2024 and 2023, respectively, as a result of the ~~specific rent receivable will be made. For accrued rental revenues related to the straight-line method~~Company’s evaluation of ~~reporting rental revenue,~~collectability. In addition, the Company ~~performs~~recorded a ~~periodic review~~reduction of ~~receivable balances to assess~~income of previously recorded straight-line rent of $66.5 thousand and an increase of $0.1 million of straight-line rent for the ~~risk of uncollectible amounts~~three months ended March 31, 2024 and ~~establish appropriate provisions.~~2023, respectively.

~~Revenue Recognition~~

Rental income is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as deferred rent receivable and included as a component of tenant and other receivables on the condensed consolidated balance sheets.

In leasing tenant space, the Company may provide funding to the lessee through a tenant allowance. In accounting for a tenant allowance, the Company will determine whether the allowance represents funding for the construction of leasehold improvements and evaluate the ownership of such improvements. If the Company is considered the owner of the improvements for accounting purposes, the Company will capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the improvements or the related lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered ~~to be~~ a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

Tenant and Other Receivables

~~The Company commences recognizing revenue based on an evaluation~~Tenant and other receivables includes unpaid amounts billed to tenants, accrued revenues for future billings to tenants for property expenses, and amounts arising from the straight-lining of rent, as discussed above. Tenant and other receivables also includes management fees receivable for services performed for the benefit of certain unconsolidated entities. In the event that the collectability of a ~~number of factors. In most cases, revenue recognition under~~management fee receivable is in doubt, a ~~lease begins when the lessee takes possession of~~provision for uncollectible amounts will be established or ~~controls the physical use~~a direct write-off of the ~~leased asset. Generally, this occurs on the lease commencement date.~~specific receivable will be made.

Management and Other Fee Income

~~Tenant reimbursement~~Management and other fee income ~~arises from tenant leases which provide~~represents property management, construction, leasing and development fees for services performed for the ~~recovery~~benefit of ~~all or a portion~~certain unconsolidated entities.

Property management fee income is reported at 100% of the ~~operating expenses and real estate taxes of the respective property. This~~ revenue ~~is accrued~~earned from such unconsolidated properties in ~~the same periods as the expenses are incurred.~~

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~~Accounting for Recapture and Termination Activity Pursuant to the Master Lease~~

Seritage 100% Recapture Rights. The Company generally treats the delivery of a 100% recapture notice as a modification of the Master Lease as of the date of notice. Such a notice and lease modification result in the following accounting adjustments for the recaptured property:

−	Accrued rental revenues related to the straight-line method of reporting rental revenue that are deemed uncollectable as result of the lease modification are amortized over the remaining shortened life of the lease from the date of notice to the date of vacancy.

−	Intangible lease assets and liabilities that are deemed to be impacted by the lease modification are amortized over the shorter of the shortened lease term from the date of notice to the date of vacancy or the remaining useful life of the asset or liability.

A 100% recapture will generally occur in conjunction with obtaining a new tenant or a real estate development project. As such, termination fees, if any, associated with the 100% recapture notice are generally capitalized as either an initial direct cost of obtaining a new lease or a necessary cost of the real estate project and depreciated over the life of the new lease obtained or the real estate asset being constructed or improved.

Seritage 50% Recapture Rights. The Company generally treats the delivery of a 50% recapture notice as a modification of the Master Lease as of the date of notice. Such a notice and lease modification result in the following accounting adjustments for the recaptured property:

−

The portion of accrued rental revenues related to the straight-line method of reporting rental revenue that are subject to the lease modification are amortized over the remaining shortened life of the lease from the date of notice to the date of vacancy. The portion of accrued rental revenues related to the straight-line method of reporting rental revenue that is attributable to the retained space is amortized over the remaining life of the Master Lease.

−

The portion of intangible lease assets and liabilities that is deemed to be impacted by the lease modification is amortized over the shorter of the shortened lease term from the date of notice to the date of vacancy or the remaining useful life of the asset or liability. The portion of intangible lease assets and liabilities that is attributable to the retained space is amortized over the remaining useful life of the asset or liability.

Sears Holdings Termination Rights. The Master Lease provides Sears Holdings with certain rights to terminate the Master Lease with respect to properties that cease to be profitable for operation by Sears Holdings. Such a termination would generally result in the following accounting adjustments for the terminated property:

−	Accrued rental revenues related to the straight-line method of reporting rental revenue that are subject to the termination are amortized over the remaining shortened life of the lease from the date of notice to the date of vacancy.

−	Intangible lease assets and liabilities that are deemed to be impacted by the termination are amortized over the shorter of the shortened lease term from the date of notice to the date of vacancy or the remaining useful life of the asset or liability.

−	~~Termination fees required to be paid by Sears Holdings are recognized as follows:~~

For the portion of the termination fee attributable to the annual base rent of the subject property, termination income is recognized on a straight-line basis over the shortened life of the lease from the date the termination fee becomes legally binding to the date of vacancy.

For the portion of the termination fee attributable to estimated real estate taxes and property operating expenses for the subject property, prepaid rental income is recorded in the period such fee is received and recognized as tenant reimbursement revenue in the same periods as the expenses are incurred.

~~Derivatives~~

~~The Company’s use of derivative instruments is limited to the~~ management of interest rate exposure and not for speculative purposes. In connection with the issuance of the Company’s Mortgage Loans and Future Funding Facility, the Company purchased for $5.0 million an interest rate cap with a term of four years, a notional amount of $1,261 million and a strike rate of 3.5%. The interest rate cap is measured at fair value and included as a component of prepaid expenses, deferred expenses and other assets on the condensed consolidated balance sheets. The Company has elected not to utilize hedge accounting, and therefore, the change in fair value is included within change in fair value of interest rate capfee income on the condensed consolidated statements of operations. The Company’s share of management expenses incurred by the unconsolidated entities is reported in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Leasing and development fees are initially reported at the portion of revenue earned attributable to outside ownership of the related unconsolidated entities. The Company’s share in leasing and development fee income is recognized over the useful life of the associated development project, in the case of development fees, or lease term, in the case of leasing fees, as the associated asset is depreciated over the same term and included in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation.For ~~the three months ended September 30, 2017,~~property and asset management services, the Company ~~recorded~~is typically compensated for its services through a ~~loss~~monthly management fee earned based on a specified percentage of ~~$0.1 million compared to a loss of less than $0.1 million for~~monthly rental income or rental receipts generated from the ~~three months ended September 30, 2016.~~property under management. For ~~the nine months ended September 30, 2017,~~construction and development services, the Company ~~recorded~~is typically compensated for planning, administering and monitoring the design and construction of projects within our unconsolidated entities based on a ~~loss~~percentage of ~~$0.7 million compared~~project costs or a fixed fee. Revenues from such management contracts are recognized over the life of the applicable contract.

Conversely, leasing services are considered to be performance obligations, satisfied as of a ~~loss~~point in time. The Company’s leasing fee is typically paid upon the occurrence of ~~$1.9 million for~~certain contractual event(s) that may be contingent and the ~~nine months ended September 30, 2016.~~pattern of revenue recognition may differ from the timing of payment. For these services, the obligations are typically satisfied at lease execution and tenant opening date, and revenue is recognized in accordance with the related agreement at the point in time when the obligation has been satisfied.

Share-Based Compensation

~~- 11 -~~

~~Stock-Based Compensation~~

The Company generally recognizes equity awards to employees as compensation expense and includes such expense within general and administrative expenses onin the condensed consolidated statements of operations. Compensation expense for equity awards is ~~generally~~ based on the grant date fair value of the ~~common shares at the date of the grant and~~awards. Compensation expense is recognized ~~(i)~~ ratably over the vesting period for awards with time-based vesting and ~~(ii) for~~awards with market-based vesting conditions (e.g. total shareholder return). For awards with performance-based vesting determined by Company operating criteria, the Company recognizes compensation expense at the date the achievement

- 12 -

of performance criteria is deemed probable anfor the amount ~~equal to that~~ which would have been recognized ratably from the date of the grant through the date the achievement of performance criteria is deemed probable, and then ratably from the date the achievement of performance criteria is deemed probable through the remainder of the vesting period. The Company utilized a third-party valuation firm to measure the grant date fair value of restricted stock unit awards with market-based criteria using the Monte Carlo model. Forfeitures are recorded on an actual basis.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of operators, tenants, or obligors related to the ~~Company's~~Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. As of September 30, 2017, a majority of the Company's real estate properties were leased to Sears Holdings, and the majority of Company’s rental revenues were derived from the Master Lease (see Note 5). Until the Company further diversifies the tenancy of its portfolio, an event that has a material adverse effect on Sears Holdings’ business, financial condition or results of operations could have a material adverse effect onManagement believes the Company’s ~~business, financial condition or results of operations. Sears Holdings~~portfolio is a publicly traded company that is subject to the informational filing requirements of the Securities Exchange Act of 1934, as amended, and is required to file periodic reports on Form 10-K and Form 10-Q with the SEC. Refer to www.sec.gov for Sears Holdings publicly-available financial information.

~~Other than the Company's tenant concentration, management believes the Company's portfolio was~~ reasonably diversified ~~by geographical location~~ and ~~did~~does not contain any ~~other~~ significant concentrations of credit risk. As of ~~September 30, 2017,~~March 31, 2024, the ~~Company's~~Company has one tenant that comprises 15.4% of annualized based rent, with no other tenants exceeding 10.0% of annualized based rent. The Company’s portfolio of ~~230 Wholly Owned~~18 Consolidated Properties and ~~28 JV~~9 Unconsolidated Properties was diversified by location across ~~49 states and Puerto Rico.~~10 states.

~~Earnings~~Earnings/(Loss) per Share

The Company has three classes of common stock. The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A common shares and Class C non-voting common shares are identical, except with respect to voting. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. The net earnings (loss) per share amounts are the same for Class A and Class C common shares because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. Since August 29, 2018, all outstanding Class C common shares had been exchanged for Class A common shares and there are currently no Class C common shares outstanding.

Class B non-economic common shares are excluded from ~~earnings~~earnings/(loss) per share computations as they do not have economic rights. Since December 31, 2020, all outstanding Class B common shares have been surrendered and there are currently no Class B common shares outstanding.

All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing earnings per share pursuant to the two-class method which specifies that all outstanding non-vested share-based payment awards that contain non-forfeitable rights to distributions are considered participating securities and should be included in the computation of ~~earnings~~earnings/(loss) per share.

Income Taxes

The condensed consolidated financial statements reflect provisions for federal, state and local income taxes. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities as a result of a change in tax rates is recognized as income in the period that includes the enactment date. For years prior to 2022, the Company was taxed as a REIT and did not expect to pay federal, state or local income taxes at the REIT level (including its qualified REIT subsidiaries). While a REIT, the Company was required to distribute at least 90% of its REIT level taxable income to shareholders, and the resulting dividends paid deduction offset its REIT taxable income. Consequently, while a REIT, since the Company did not expect to pay taxes on its REIT taxable income, it did not recognize deferred tax assets or liabilities.

Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Significant judgments are required to determine the consolidated provision (benefit) for income taxes. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. Realization of the Company’s deferred tax assets is dependent upon many factors such as tax regulations applicable to the jurisdictions in which the Company operates, estimates of future taxable income and the character of such taxable income.

The Inflation Reduction Act of 2022 was enacted on August 16, 2022 and was effective January 1, 2023. The Inflation Reduction Act includes a 15% corporate alternative minimum tax (the “CAMT”) based on the adjusted financial statement income (“book income”) of applicable corporations. The CAMT generally applies to corporations with average annual book income over a 3-year period exceeding $1 billion. The Company does not expect this legislation to have a material effect on the condensed consolidated financial statements.

Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is recorded to adjust net deferred tax assets to the amount which management believes will more likely than not be recoverable. In making such determination, management considers available positive and

- 13 -

negative evidence, including future reversals of existing taxable temporary differences, future taxable income, and the implementation of prudent tax planning strategies. In the event that the Company is able to utilize its deferred tax assets in excess of their recorded amount, the valuation allowance will be reduced with a corresponding reduction to income tax expense.

Recently Issued Accounting Pronouncements

~~In February 2017,~~The Company has not adopted any Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards ~~Boards (“FASB”~~Board ("FASB") during the three months ended March 31, 2024.

In November 2023, the FASB issued ~~Accounting Standards Update (“ASU”~~ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") ~~2017-05, “Other Income—Gains~~ and ~~Losses from~~included within the ~~Derecognition~~segment measure of ~~Nonfinancial Assets”~~profit or loss, an amount and description of its composition for other segment items to ~~provide guidance~~reconcile segment profit or loss, and the title and position of the entity's CODM. ASU 2023-07 will be effective retrospectively for ~~recognizing gains~~fiscal years beginning after December 15, 2023 and losses from the transfer of nonfinancial assets. The standard requires a company to derecognize nonfinancial assets once it transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial assets to noncustomers. Additionally, when a company transfers its controlling interest in a nonfinancial asset, but retains a non-controlling ownership interest, the company is required to measure any non-controlling interest it receives or retains at fair value. ASU 2017-15 is effective for annual reportinginterim periods beginning after December 15, ~~2017, including interim reporting periods within that reporting period. The effective date of this guidance coincides with revenue recognition guidance.~~2024. The Company is currently ~~assessing~~evaluating the impact ~~that adoption~~ of ~~this~~the guidance ~~will have~~ on its ~~condensed~~ consolidated financial ~~statements and footnote disclosures.~~statements.

~~- 12 -~~

In ~~January 2017,~~December 2023, the FASB issued ASU ~~2017-01 which changes~~2023-09, Improvements to Income Tax Disclosures that requires public companies to annually (1) disclose specific categories in the ~~definition~~rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of ~~a business~~those reconciling items is equal to ~~exclude acquisitions where substantially all~~or greater than five percent of the ~~fair value of~~amount computed by multiplying pretax income or loss by the assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets. While there are various differences between the accounting for an asset acquisition and a business combination, the Company expects that the largest impact will be the capitalization of transaction costs for asset acquisitions which are expensed for business combinations.applicable statutory income tax rate). ASU 2017-01 is effective, on a prospective basis, for interim and annual periods beginning after January 1, 2019; early adoption is permitted. The Company has chosen to early adopt ASU 2017-01 during the current period on a prospective basis and it did not have an impact on the condensed consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows - Restricted Cash." ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or cash equivalents. Therefore, amounts generally described as restricted cash and equivalents should be included with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows. ASU 2016-18 is effective, on a retroactive basis, for interim and annual periods beginning after December 15, 2017; early adoption is permitted. The Company early adopted this guidance on March 31, 2017, which changes our statements of cash flows and related disclosure for all periods presented and accordingly, the following is a summary of our cash, cash equivalents, and restricted cash total as presented in our statements of cash flows for the nine months ended September 30, 2017 and September 30, 2016 (in thousands):

Nine Months Ended

September 30, 2017

September 30, 2016

Cash and cash equivalents

$
104,153

$
90,029

Restricted cash

202,513

81,790

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

$
306,666

$
171,819

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 provides classification guidance for eight specific topics including debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investees. ASU 2016-18 is effective, on a prospective basis, for interim and annual periods beginning after December 15, 2017; early adoption is permitted. The Company expects to retrospectively adopt ASU 2016-15 on the effective date of January 1, 2018, applying the cumulative earnings approach to classify distributions received from our equity method investees, which will impact our consolidated statements of cash flows upon adoption where distributions from unconsolidated joint ventures in excess of cumulative equity in earnings will be classified as an inflow from investing activities.

On February 25, 2016, the FASB issued Accounting Standards Codification (“ASC”) 842 (“ASC 842”), “Leases” which replaces the existing guidance in ASC 840, Leases. ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASC 842 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use (ROU) asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the ROU asset and for operating leases, the lessee would recognize a straight-line total lease expense. The Company is currently assessing the impact that adoption of this guidance will have on its condensed consolidated financial statements and footnote disclosures.

In September 2015, the FASB issued ASU 2015-16, which amends Topic 805, Business Combinations, and requires the recognition of purchase price allocation adjustments that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, and eliminates the requirement to retrospectively account for these adjustments. ASU 2015-16 is effective, on a prospective basis, for interim and annual periods beginning after December 15, 2015; early adoption is permitted. The Company has chosen to early adopt ASU 2015-16 during the current period on a prospective basis and it did not have an impact on the condensed consolidated financial statements.

In May 2014, with subsequent updates issued in August 2015 and March, April, May and December 2016, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it does not apply to contracts within the scope of ASC 840 and ASC 842 (leases) and it may apply to certain other transactions such as the sale of real estate or equipment. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year. Accordingly, ASU 2014-092023-09 is effective for annual periods beginning after December 15, ~~2017, with early adoption permitted for annual periods beginning after December 15, 2016.~~2024. The ~~standard can be applied either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment recognized as~~Company is currently evaluating the impact of the ~~date of initial application. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance.~~

~~- 13 -~~

We have considered the sources of revenue that will be affected by ASU 2014-09, and do not believe our revenue recognition will be impacted by the new standard, as leases (the source of the majority of the Company's revenues) are excluded from ASU 2014-09. However, once the new lease guidance ~~goes into effect~~ on January 1, 2019 which sets forth principles for the recognition, measurement, presentation and disclosure of leases, we believe that the new revenue standard will apply to executory costs and other components of revenue due under leases that are deemed to be non-lease components (such as common area maintenance), which could affect our recognition pattern for such revenue.its consolidated financial statements.

Note 3 – Lease Intangible Assets and Liabilities

~~Lease~~The following tables summarize the Company’s lease intangible assets (acquired in-place leases ~~above-market leases~~ and ~~below-market ground~~above-market leases) and liabilities (acquired below-market ~~leases)~~leases, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets), net of accumulated amortization, ~~were $327.2 million and $15.0 million, respectively,~~ as of ~~September 30, 2017~~March 31, 2024 and ~~$464.4 million and $16.8 million, respectively, as of~~ December 31, ~~2016. The following table summarizes the Company’s lease intangible assets and liabilities~~2023 (in thousands):

September 30, 2017

March 31, 2024
	Gross		Accumulated					Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance		Asset		Amortization			Balance
In-place leases, net	$	553,656	$	(243,872	)	$	309,784	$	294	$	(103	)	$	191
Below-market ground leases, net		11,766		(457	)		11,309
Above-market leases, net		8,925		(2,789	)		6,136
Total	$	574,347	$	(247,118	)	$	327,229	$	294	$	(103	)	$	191


	Gross		Accumulated					Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance		Liability		Amortization			Balance
Below-market leases, net	$	19,730	$	(4,732	)	$	14,998	$	1,304	$	(470	)	$	834
Total	$	19,730	$	(4,732	)	$	14,998	$	1,304	$	(470	)	$	834

December 31, 2016

December 31, 2023
	Gross		Accumulated					Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance		Asset		Amortization			Balance
In-place leases, net	$	592,871	$	(146,964	)	$	445,907	$	1,541	$	(655	)	$	886
Below-market ground leases, net		11,766		(305	)		11,461
Above-market leases, net		8,964		(1,933	)		7,031
Total	$	613,601	$	(149,202	)	$	464,399	$	1,541	$	(655	)	$	886


	Gross		Accumulated					Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance		Liability		Amortization			Balance
Below-market leases, net	$	20,011	$	(3,184	)	$	16,827	$	1,304	$	(456	)	$	848
Total	$	20,011	$	(3,184	)	$	16,827	$	1,304	$	(456	)	$	848

- 14 -

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in additional rental income of ~~$0.3 million~~$13.4 thousand and ~~$0.3~~$0.1 million for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016, respectively, and $0.9 million and $0.9 million for the nine months ended September 30, 2017 and September 30, 2016,~~2023, respectively. ~~Future amortization~~Amortization of ~~these intangibles is estimated to increase rental income as set forth below (in thousands):~~

Remainder of 2017

$
(241
)
2018

(961
)
2019

(934
)
2020

(800
)
2021

(786
)

~~- 14 -~~

~~Amortization of~~an acquired below-market ground ~~leases~~lease resulted in additional property expense of ~~$50~~$50.7 thousand for each of the three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016, respectively, and $150 thousand for the nine months ended September 30, 2017 and September 30, 2016,~~2023, respectively. ~~Future amortization of below-market ground leases is estimated to increase property expenses as set forth below (in thousands):~~

Remainder of 2017

$
51

2018

203

2019

203

2020

203

2021

203

Amortization of acquired in-place leases resulted in additional depreciation and amortization expense of ~~$47.5 million~~$19.3 thousand and ~~$27.4~~$0.2 million for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016, respectively, and $124.3 million and $72.1 million for the nine months ended September 30, 2017 and September 30, 2016,~~2023, respectively. Future ~~estimated~~ amortization of ~~acquired in-place~~these leases intangibles is set forth below (in thousands):

Remainder of 2017

$
15,521

2018

42,303

2019

40,543

2020

40,097

2021

39,313


	(Above) / below market leases, net		Below market ground lease		In-place leases
Remainder of 2024	$	7	$	152	$	1
2025		8		203		2
2026		8		203		2
2027		8		203		2
2028		8		203		2
2029		8		203		2
Thereafter		787		8,841		180

Note 4 – Investments in Unconsolidated ~~Joint Ventures~~Entities

The Company conducts a portion of its property rental activities through investments in unconsolidated ~~joint ventures for which the Company holds less than a controlling interest.~~entities. The Company’s partners in these unconsolidated ~~joint ventures~~entities are unrelated real estate entities or commercial enterprises. The Company and its partners in these unconsolidated ~~joint venture partners~~entities make initial and/or ongoing capital contributions to these unconsolidated ~~joint ventures.~~entities. The obligations to make capital contributions are governed by each unconsolidated ~~joint venture’s~~entity’s respective operating agreement and related governing documents.

As of March 31, 2024, the Company had investments in seven unconsolidated entities as follows:


		Seritage %	# of	Total
Unconsolidated Entities	Entity Partner(s)	Ownership	Properties	GLA
GS Portfolio Holdings II LLC ("GGP I JV")	Brookfield Properties Retail (formerly GGP Inc.)	50.0%	1		87,500
GS Portfolio Holdings (2017) LLC ("GGP II JV")	Brookfield Properties Retail (formerly GGP Inc.)	50.0%	1		93,500
SPS Portfolio Holdings II LLC ("Simon JV")	Simon Property Group, Inc.	50.0%	3		275,700
Mark 302 JV LLC ("Mark 302 JV")	An investment fund managed by Invesco Real Estate	50.0%	1		51,500
SI UTC LLC ("UTC JV")	A separate account advised by Invesco Real Estate	50.0%	1		106,200
Tech Ridge JV Holding LLC ("Tech Ridge JV")	An affiliate of RD Management	50.0%	1		—
Landmark Land Holdings, LLC ("Landmark JV")	The Howard Hughes Corporation and Foulger-Pratt	31.3%	1		—
			9		614,400

The Company ~~currently~~ has ~~investments~~contributed certain properties to unconsolidated entities in ~~four~~exchange for equity interests in those unconsolidated ~~entities: (i) GS Portfolio Holdings II LLC~~entities. The contribution of property to unconsolidated entities is accounted for as a sale of real estate and the Company recognizes the gain or loss on the sale (the ~~“GGP I JV”~~“Gain (Loss)”), a joint venture between Seritage and a subsidiary of GGP Inc. (together with its subsidiaries, “GGP”); (ii) GS Portfolio Holdings (2017) LLC (the “GGP II JV”), a joint venture between Seritage and a subsidiary of GGP; (iii) SPS Portfolio Holdings LLC (the “Simon JV”), a joint venture between Seritage and a subsidiary of Simon Property Group, Inc. (together with its subsidiaries, “Simon”); and (iv) MS Portfolio LLC (the “Macerich JV”), a joint venture between Seritage and a subsidiary of The Macerich Company (together with its subsidiaries, “Macerich”). A substantial majority based upon the transaction price attributed to the property at the closing of the ~~space at the JV Properties is leased to Sears Holdings under the JV Master Leases which include recapture rights and termination rights with similar terms as those described under the Master Lease.~~

unconsolidated entities transaction (the “Contribution Value”). The ~~Company’s investments in unconsolidated joint ventures at September 30, 2017, consisted of (in thousands, except number of properties):~~

Seritage %

# of

Total

Initial

Joint Venture

Ownership

Properties

GLA

Value (1)

GGP I JV

50
%

4

598

$
37,570

GGP II JV

50
%

5

1,187

57,500

Macerich JV

50
%

9

1,572

150,000

Simon JV

50
%

10

1,714

114,012

Total

28

5,071

$
359,082

~~(1)~~

~~Represents contribution value at formation of each JV.~~

On July 12, 2017, the Company completed two transactions with GGP for gross consideration of $247.6 million whereby the Company (i) sold to GGP the Company’s 50% JV Interests in eight of the 12 assets in the GGP I JV for $190.1 million and recorded a gain of $43.7 million which is included in gain on sale of interest in unconsolidated joint venture within the condensed consolidated statements of operations; and (ii) contributed five Wholly Owned Properties to the GGP II JV and sold a 50% interest in the new JV Properties to GGP for $57.5 million and recorded a gain of $13.0 million whichGain or (Loss) is included in gain on sale of real estate ~~within~~on the condensed consolidated statements of operations.

In certain circumstances, the Contribution Value is subject to revaluation as defined in the respective unconsolidated entity agreements, which may result in an adjustment to the gain or loss recognized. If the Contribution Value is subject to revaluation, the Company initially recognizes the gain or loss at the value that is the expected amount within the range of possible outcomes and will re-evaluate the expected amount on a quarterly basis through the final determination date.

Upon revaluation, the primary inputs in determining the Contribution Value will be updated for actual results and may result in a cash settlement or capital account adjustment between the unconsolidated entity partners, as well as an adjustment to the initial gain or loss.

- 15 -

~~Subsequent to September 30, 2017,~~

Each reporting period, the Company ~~agreed~~re-analyzes the primary inputs that determine the Contribution Value and the gain or loss for those unconsolidated entities subject to ~~sell~~a revaluation. The following table summarizes the properties contributed to ~~Simon~~ the Company’s ~~50%~~unconsolidated entities (in millions):


		March 31, 2024
Unconsolidated Entities	Contribution Date	Contribution Value		Gain (Loss)
2019
Tech Ridge JV (1)	September 27, 2019	$	3.0	$	0.1

(1)

The Tech Ridge JV ~~Interests in five of the ten assets in the Simon JV for $68.0 million,~~is subject to ~~certain closing conditions (see Note 16).~~a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. The Contribution Value cannot be less than $2.75 million.

Summarized Financial Information for Unconsolidated Entities

The following tables present summarized financial data for UTC JV (in thousands):


	March 31, 2024			December 31, 2023
ASSETS
Investment in real estate
Land	$	27,993		$	27,992
Buildings and improvements		158,264			149,625
Accumulated depreciation		(8,119	)		(6,592	)
		178,138			171,025
Construction in progress		2,437			2,362
Net investment in real estate		180,575			173,387
Cash and cash equivalents		8,347			7,355
Tenant and other receivables, net		11,206			11,289
Other assets, net		2,550			11,927
Total assets	$	202,678		$	203,958

LIABILITIES AND MEMBERS' INTERESTS
Accounts payable, accrued expenses and other liabilities		14,592			18,133
Total liabilities		14,592			18,133

Members' Interest
Additional paid in capital		185,918			180,628
Retained earnings		2,168			5,197
Total members' interest		188,086			185,825
Total liabilities and members' interest	$	202,678		$	203,958
Carrying value of Company's investments in equity investments	$	98,651		$	97,018


	Three Months Ended March 31,
	2024			2023
Total revenue	$	4,571		$	1,943
Property operating expenses		(785	)		(776	)
Depreciation and amortization		(1,475	)		(973	)
Operating income		2,311			194
Other expenses		(143	)		(52	)
Net income	$	2,168		$	142
Equity in income of unconsolidated entities (1)	$	1,122		$	71
(1) Equity in income of unconsolidated entities on the consolidated statements of operations includes basis difference adjustments.

- 16 -

Summarized Financial Information for Unconsolidated Entities

The ~~Company continues to own 50% interests~~following tables present combined condensed financial data for the Company’s unconsolidated entities, excluding UTC JV (in thousands):


	March 31, 2024			December 31, 2023
ASSETS
Investment in real estate
Land	$	117,439		$	117,439
Buildings and improvements		96,099			96,016
Accumulated depreciation		(43,828	)		(43,070	)
		169,710			170,385
Construction in progress		112,275			104,866
Net investment in real estate		281,985			275,251
Cash and cash equivalents		7,558			2,795
Tenant and other receivables, net		24			6
Other assets, net		31,505			34,098
Total assets	$	321,072		$	312,150

LIABILITIES AND MEMBERS' INTERESTS
Accounts payable, accrued expenses and other liabilities		69,890			65,522
Total liabilities		69,890			65,522

Members' Interest
Additional paid in capital		296,790			340,311
Accumulated deficit		(45,608	)		(93,683	)
Total members' interest		251,182			246,628
Total liabilities and members' interest	$	321,072		$	312,150
Carrying value of Company's investments in equity investments	$	101,159		$	99,419


	Three Months Ended March 31,
	2024			2023
Total revenue	$	199		$	4,361
Property operating expenses		(923	)		(2,217	)
Depreciation and amortization		(758	)		(4,002	)
Operating loss		(1,482	)		(1,858	)
Other expenses		18			(224	)
Gains (losses) and (impairments)		—			(70,806	)
Net loss	$	(1,464	)	$	(72,888	)
Equity in loss of unconsolidated entities (1)	$	(743	)	$	(36,443	)

(1)

Equity in ~~nine assets in~~loss of unconsolidated entities on the ~~Macerich JV.~~

~~Each unconsolidated joint venture is obligated to maintain financial~~condensed consolidated statements ~~in accordance with GAAP.~~ of operations includes basis difference adjustments.

The Company shares in the profits and losses of these unconsolidated ~~joint ventures~~entities generally in accordance with the Company’s respective equity interests. In some instances, the Company may recognize profits and losses related to investment in an unconsolidated ~~joint venture~~entity that differ from the Company’s equity interest in the unconsolidated ~~joint venture.~~entity. This may arise from impairments that the Company recognizes related to its investment that differ from the impairments the unconsolidated ~~joint venture~~entity recognizes with respect to its ~~assets;~~assets, differences between the Company’s basis in assets it has transferred to the unconsolidated ~~joint venture~~entity and the unconsolidated ~~joint venture’s~~entity’s basis in those ~~assets; the Company’s deferral of the unconsolidated joint venture’s profits from land sales to the Company;~~assets or other items. ~~There were no joint venture~~The Company utilizes internally prepared fair value estimates as well as negotiated offers to sell the investments for the impairment ~~charges~~analysis. No other-than-temporary-impairment was recorded for the three ~~or nine~~ months ended ~~September 30, 2017 or September 30, 2016.~~March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, the Company did not exercise any put rights. The ~~following tables present combined condensed financial data for~~Company did not close on the sale of any previously exercised put rights during the three months ended March 31, 2024. During the year ended December 31, 2023, the Company closed on the sale of four of the previously exercised put rights and as of December 31, 2023 the sale of all exercised put rights have closed. The Company’s ~~unconsolidated joint ventures (in thousands):~~

September 30, 2017

December 31, 2016

ASSETS

Investment in real estate

Land

$
178,658

$
214,109

Buildings and improvements

510,641

598,978

Accumulated depreciation

(62,959
)

(56,324
)

626,340

756,763

Construction in progress

15,986

48,885

Net investment in real estate

642,326

805,648

Cash and cash equivalents

4,958

3,434

Tenant and other receivables, net

3,354

6,133

Other assets, net

47,564

38,646

Total assets

$
698,202

$
853,861

LIABILITIES AND MEMBERS INTERESTS

Liabilities

Mortgage loans payable, net

$
121,665

$
—

Accounts payable, accrued expenses and other liabilities

6,681

14,177

Total liabilities

128,346

14,177

Members Interest

Additional paid in capital

580,009

830,389

Retained earnings

(10,153
)

9,295

Total members interest

569,856

839,684

Total liabilities and members interest

$
698,202

$
853,861

Three Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

EQUITY IN INCOME OF UNCONSOLIDATED
JOINT VENTURES

Total revenue

$
12,550

$
16,266

$
46,062

$
50,113

Property operating expenses

(3,077
)

(3,103
)

(9,594
)

(9,703
)
Depreciation and amortization

(9,509
)

(10,382
)

(37,206
)

(31,304
)
Operating income

(36
)

2,781

(738
)

9,106

Other expenses

(7,337
)

212

(7,714
)

(117
)
Net (loss) income

$
(7,373
)

$
2,993

$
(8,452
)

$
8,989

Equity in (loss) income of unconsolidated
joint ventures

$
(3,686
)

$
1,497

$
(4,226
)

$
4,495

~~- 16 -~~

~~Note 5 – Leases~~

~~Master Lease~~

On July 7, 2015, subsidiaries of Seritage and subsidiaries of Sears Holdings entered into the Master Lease. The Master Lease generally is a triple net lease with respect to all space which is leased thereunder to Sears Holdings, subject to proportional sharing by Sears Holdings for repair and maintenance charges, real property taxes, insurance and other costs and expenses which are common to both the space leased by Sears Holdings and other space occupied by unrelated third-party tenants in the same or other buildingspartners assess impairment on its underlying assets pursuant to ~~third-party leases, space which is recaptured pursuant to the Company recapture rights described below~~ASC 360, Property, Plant and ~~all other space which is constructed~~Equipment, and recorded impairment on ~~the properties. Under the Master Lease, Sears Holdings and/or one or more~~unconsolidated properties of ~~its subsidiaries will be required to make all expenditures reasonably necessary to maintain the premises in good appearance, repair~~$0 and ~~condition for as long as they are in occupancy.~~

The Master Lease has an initial term of 10 years and contains three options for five-year renewals of the term and a final option for a four-year renewal. As of September 30, 2017 and September 30, 2016, the annualized base rent paid directly by Sears Holdings and its subsidiaries under the Master Lease was approximately $108.5 million and $134.2 million, respectively. In each of the initial and first two renewal terms, annual base rent will be increased by 2.0% per annum for each lease year over the rent for the immediately preceding lease year. For subsequent renewal terms, rent will be set at the commencement of the renewal term at a fair market rent based on a customary third-party appraisal process, taking into account all the terms of the Master Lease and other relevant factors, but in no event will the renewal rent be less than the rent payable in the immediately preceding lease year.

Revenues from the Master Lease for the three and nine months ended September 30, 2017 and September 30, 2016 are as follows (in thousands and excluding straight-line rental income of ($1.7) million and $2.3$70.8 million for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016, respectively,~~2023, respectively. The Company's share of these impairment charges is included in equity in loss of unconsolidated entities on the condensed consolidated statements of operations.

- 17 -

Unconsolidated Entity Management and ~~$0.1 million~~Related Fees

The Company acts as the operating partner and ~~$8.4 million~~day-to-day manager for the ~~nine~~Mark 302 JV, the UTC JV, and Tech Ridge JV. The Company is entitled to receive certain fees for providing management, leasing, and construction supervision services to certain of its unconsolidated entities. During the three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016, respectively):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Rental income

$
27,889

$
33,378

$
88,748

$
99,846

Termination fee income

10,596

—

17,361

—

Tenant reimbursements

10,639

10,627

38,370

41,895

Total revenue

$
49,124

$
44,005

$
144,479

$
141,741

~~The Master Lease provides~~2023, the Company ~~with the right to recapture up to approximately 50%~~recorded management and related fees of ~~the space occupied by Sears Holdings at each of the 224 Wholly Owned Properties initially~~$50.0 thousand and $0.3 million, respectively. These fees are included in management and other fee income on the ~~Master Lease (subject~~condensed consolidated statements of operations. Refer to certain exceptions). While the Company is permitted to exercise its recapture rights all at once or in stages as to any particular property, it is not permitted to recapture all or substantially all of the space subject to the recapture right at more than 50 Wholly Owned Properties during any lease year. In addition, Seritage has the right to recapture any automotive care centers which are free-standing or attached as “appendages” to the properties, all outparcels or outlots and certain portions of the parking areas and common areas. Upon exercise of these recapture rights, the Company will generally incur certain costs and expensesNote 2 for the ~~separation~~Company’s accounting policies.

Note 5 – Leases

Lessor Disclosures

Future minimum rental receipts, excluding variable payments and tenant reimbursements of ~~the recaptured space from the remaining Sears Holdings space as it reconfigures and rents the recaptured space to third-party tenants.~~

The Company also has the right to recapture 100% of the space occupied by Sears Holdings at each of 21 identified Wholly Owned Properties by making a specified lease termination payment to Sears Holdings, after which the Company can reposition and re-lease those stores. The lease termination payment is calculated as the greater of an amount specified at the time the Company entered into the Master Lease with Sears Holdings and an amount equal to 10 times the adjusted EBITDA attributable to such space within the Sears Holdings main store which is not attributable to the space subject to the separate 50% recapture right discussed above for the 12-month period ending at the end of the fiscal quarter ending immediately prior to recapturing such space.

~~- 17 -~~

~~As of September 30, 2017, the Company had exercised certain recapture rights at 45 properties:~~

~~Property~~	~~Recapture Type~~		~~Notice Date~~
~~North Little Rock, AK~~	~~Auto Center~~		~~September 2017~~
~~Ft. Wayne, IN~~	~~Out parcel~~		~~September 2017~~
~~St. Clair Shores, MI~~		~~100%~~	~~September 2017~~
~~Austin, TX~~	~~Partial~~		~~September 2017~~
~~Redmond, WA~~	~~Auto Center~~		~~September 2017~~
~~Temecula, CA~~	~~Partial~~		~~June 2017~~
~~Roseville, CA~~	~~Auto center~~		~~June 2017~~
~~North Riverside, IL~~	~~Partial~~		~~June 2017~~
~~Watchung, NJ~~		~~100%~~	~~June 2017~~
~~Canton, OH~~	~~Partial~~		~~June 2017~~
~~Dayton, OH~~	~~Auto center~~		~~June 2017~~
~~Carson, CA~~	~~100% (1)~~		~~April 2017 / December 2016~~
~~San Diego, CA~~	~~100% (2)~~		~~April 2017~~
~~Aventura, FL~~		~~100%~~	~~April 2017~~
~~Hialeah, FL~~	~~100% (2)~~		~~April 2017~~
~~Anderson, SC~~	~~100% (1)~~		~~April 2017 / July 2016~~
~~Charleston, SC~~	~~100% (1)~~		~~April 2017 / October 2016~~
~~Valley View, TX~~		~~100%~~	~~April 2017~~
~~North Miami, FL~~		~~100%~~	~~March 2017~~
~~Cockeysville, MD~~	~~Partial~~		~~March 2017~~
~~Olean, NY~~	~~Partial~~		~~March 2017~~
~~Santa Cruz, CA~~	~~Partial~~		~~December 2016~~
~~Santa Monica, CA~~		~~100%~~	~~December 2016~~
~~Saugus, MA~~	~~Partial~~		~~December 2016~~
~~Guaynabo, PR~~	~~Partial~~		~~December 2016~~
~~Roseville, MI~~	~~Partial~~		~~November 2016~~
~~Troy, MI~~	~~Partial~~		~~November 2016~~
~~West Hartford, CT~~		~~100%~~	~~October 2016~~
~~Rehoboth Beach, DE~~	~~Partial~~		~~October 2016~~
~~St. Petersburg, FL~~		~~100%~~	~~October 2016~~
~~Warwick, RI~~	~~Auto center~~		~~October 2016~~
~~North Hollywood, CA~~	~~Partial~~		~~July 2016~~
~~Orlando, FL~~		~~100%~~	~~July 2016~~
~~Ft. Wayne, IN~~	~~Out parcel~~		~~July 2016~~
~~West Jordan, UT~~	~~Partial + auto center~~		~~July 2016~~
~~Madison, WI~~	~~Partial~~		~~July 2016~~
~~Bowie, MD~~	~~Auto center~~		~~May 2016~~
~~Hagerstown, MD~~	~~Auto center~~		~~May 2016~~
~~Wayne, NJ (3)~~	~~Partial~~		~~May 2016~~
~~Albany, NY~~	~~Auto center~~		~~May 2016~~
~~Fairfax, VA~~	~~Partial + auto center~~		~~May 2016~~
~~San Antonio, TX~~	~~Auto center~~		~~March 2016~~
~~Honolulu, HI~~		~~100%~~	~~December 2015~~
~~Memphis, TN~~		~~100%~~	~~December 2015~~
~~Braintree, MA~~		~~100%~~	~~November 2015~~

~~(1)~~

~~In April 2017, the Company converted previously exercised partial recapture rights to 100% recapture rights.~~

~~(2)~~

~~In April 2017, the Company converted partial recapture rights to 100% recapture rights and exercised such recapture rights.~~

~~(3)~~

~~In July 2017, the Company contributed this asset to the GGP II JV and retained a 50% JV Interest in the JV.~~

The Master Lease also provides for certain rights to Sears Holdings to terminate the Master Lease with respect to Wholly Owned Properties that cease to be profitable for operation by Sears Holdings. In order to terminate the Master Lease with respect to a certain property, Sears Holdings must make a payment to the Company of an amount equal to one year of rent (together with taxes and other expenses) with respect to such property. Sears Holdings must provide notice of not less than 90 days of their intent to exercise such termination right and such termination right will be limited so that it will not have the effect of reducing the fixed rentexpenses, under ~~the Master Lease by more than 20% per annum.~~

As of September 30, 3017, Sears Holdings had terminated, or provided notice that it intended to exercise its rights to terminate, the Master Lease with respect to 56 stores totaling 7.4 million square feet of gross leasable area. The aggregate base rent at these stores at the time of termination was approximately $23.6 million. Sears Holdings continued to pay the Company rent until it vacated the stores and also paid aggregate termination fees of approximately $45.1 million, amounts equal to one year of aggregate annual base rent plus one year of estimated real estate taxes andnon-cancelable operating ~~expense.~~

~~- 18 -~~

~~As of September 30, 2017, the Company had announced redevelopment projects at 17 of the terminated properties and will continue to announce redevelopment activity as new~~ leases ~~are signed to occupy the space formerly occupied by Sears Holdings.~~

					~~Announced~~
~~Property~~	~~Square Feet~~		~~Notice~~	~~Termination~~	~~Redevelopment~~
~~Cullman, AL~~		~~98,500~~	~~September 2016~~	~~January 2017~~	~~Q2 2017~~
~~Sierra Vista, AZ~~		~~86,100~~	~~September 2016~~	~~January 2017~~
~~Thornton, CO~~		~~190,200~~	~~September 2016~~	~~January 2017~~	~~Q1 2017~~
~~Chicago, IL~~		~~118,800~~	~~September 2016~~	~~January 2017~~
~~Springfield, IL~~		~~84,200~~	~~September 2016~~	~~January 2017~~	~~Q3 2016~~
~~Elkhart, IN~~		~~86,500~~	~~September 2016~~	~~January 2017~~	~~Q4 2016~~
~~Merrillville, IN~~		~~108,300~~	~~September 2016~~	~~January 2017~~	~~Q4 2016~~
~~Houma, LA~~		~~96,700~~	~~September 2016~~	~~January 2017~~
~~New Iberia, LA~~		~~91,700~~	~~September 2016~~	~~January 2017~~	~~Q2 2017~~
~~Alpena, MI~~		~~118,200~~	~~September 2016~~	~~January 2017~~
~~Manistee, MI~~		~~87,800~~	~~September 2016~~	~~January 2017~~
~~Sault Sainte Marie, MI~~		~~92,700~~	~~September 2016~~	~~January 2017~~
~~Kearney, NE~~		~~86,500~~	~~September 2016~~	~~January 2017~~	~~Q3 2016~~
~~Deming, NM~~		~~96,600~~	~~September 2016~~	~~January 2017~~
~~Harlingen, TX~~		~~91,700~~	~~September 2016~~	~~January 2017~~
~~Yakima, WA~~		~~97,300~~	~~September 2016~~	~~January 2017~~
~~Riverton, WY~~		~~94,800~~	~~September 2016~~	~~January 2017~~
~~Riverside, CA~~		~~94,500~~	~~January 2017~~	~~April 2017~~
~~Kissimmee, FL~~		~~112,505~~	~~January 2017~~	~~April 2017~~
~~Leavenworth, KS~~		~~76,853~~	~~January 2017~~	~~April 2017~~
~~Hopkinsville, KY~~		~~70,326~~	~~January 2017~~	~~April 2017~~
~~Paducah, KY~~		~~108,244~~	~~January 2017~~	~~April 2017~~	~~Q3 2017~~
~~Owensboro, KY~~		~~68,334~~	~~January 2017~~	~~April 2017~~
~~Detroit Lakes, MN~~		~~79,102~~	~~January 2017~~	~~April 2017~~
~~Jefferson City, MO~~		~~92,016~~	~~January 2017~~	~~April 2017~~	~~Q2 2017~~
~~Henderson, NV~~		~~122,823~~	~~January 2017~~	~~April 2017~~	~~Q1 2017~~
~~Concord, NC~~		~~137,499~~	~~January 2017~~	~~April 2017~~
~~Chapel Hill, OH~~		~~187,179~~	~~January 2017~~	~~April 2017~~
~~Kenton, OH~~		~~96,066~~	~~January 2017~~	~~April 2017~~
~~Muskogee, OK~~		~~87,500~~	~~January 2017~~	~~April 2017~~
~~Mount Pleasant, PA~~		~~83,536~~	~~January 2017~~	~~April 2017~~
~~Sioux Falls, SD~~		~~72,511~~	~~January 2017~~	~~April 2017~~
~~El Paso, TX~~		~~103,657~~	~~January 2017~~	~~April 2017~~
~~Layton, UT~~		~~90,010~~	~~January 2017~~	~~April 2017~~
~~Elkins, WV~~		~~94,885~~	~~January 2017~~	~~April 2017~~
~~Platteville, WI~~		~~94,841~~	~~January 2017~~	~~April 2017~~
~~Sarasota, FL~~		~~204,500~~	~~June 2017~~	~~October 2017 (1)~~
~~Chicago, IL~~		~~293,700~~	~~June 2017~~	~~October 2017 (1)~~
~~Overland Park, KS~~		~~215,000~~	~~June 2017~~	~~October 2017 (1)~~
~~Lafayette, LA~~		~~194,900~~	~~June 2017~~	~~October 2017 (1)~~
~~Cockeysville, MD~~		~~83,900~~	~~June 2017~~	~~October 2017 (1)~~	~~Q1 2017~~
~~Hagerstown, MD~~		~~107,300~~	~~June 2017~~	~~October 2017 (1)~~	~~Q1 2016~~
~~Roseville, MI~~		~~277,000~~	~~June 2017~~	~~October 2017 (1)~~	~~Q3 2016~~
~~Burnsville, MN~~		~~161,700~~	~~June 2017~~	~~October 2017 (1)~~
~~Albany, NY~~		~~216,200~~	~~June 2017~~	~~October 2017 (1)~~	~~Q1 2016~~
~~East Northport, NY~~		~~187,000~~	~~June 2017~~	~~October 2017 (1)~~	~~Q2 2017~~
~~Johnson City, NY~~		~~155,100~~	~~June 2017~~	~~October 2017 (1)~~
~~Olean, NY~~		~~75,100~~	~~June 2017~~	~~October 2017 (1)~~	~~Q1 2017~~
~~Mentor, OH~~		~~208,700~~	~~June 2017~~	~~October 2017 (1)~~
~~Middleburg Heights, OH~~		~~351,600~~	~~June 2017~~	~~October 2017 (1)~~
~~Toledo, OH~~		~~209,900~~	~~June 2017~~	~~October 2017 (1)~~
~~York, PA~~		~~82,000~~	~~June 2017~~	~~October 2017 (1)~~
~~Warwick, RI~~		~~169,200~~	~~June 2017~~	~~October 2017 (1)~~	~~Q3 2016 / Q3 2017~~
~~Friendswood, TX (2)~~		~~166,000~~	~~June 2017~~	~~October 2017 (1)~~
~~Westwood, TX (3)~~		~~215,000~~	~~June 2017~~	~~October 2017 (1)~~
~~Greendale, WI~~		~~238,400~~	~~June 2017~~	~~October 2017 (1)~~
~~Total square feet~~		~~7,411,187~~

~~(1)~~

~~Sears Holdings vacated this property subsequent to September 30, 2017.~~

~~- 19 -~~

~~(2)~~

~~The Company and Sears Holdings agreed to extend occupancy, under the existing Master Lease terms, through November 2017 to support Hurricane Harvey relief efforts.~~

~~(3)~~

~~The Company and Sears Holdings agreed to extend occupancy, under the existing Master Lease terms, through January 2018 to support Hurricane Harvey relief efforts.~~

~~Note 6 – Debt~~

~~Mortgage Loans Payable~~

On July 7, 2015, pursuant to the Transaction, the Company entered into a mortgage loan agreement (the “Mortgage Loan Agreement”) and mezzanine loan agreement (collectively, the “Loan Agreements”), providing for term loans in an initial principal amount of approximately $1,161 million (collectively, the “Mortgage Loans”) and a $100 million future funding facility (the “Future Funding Facility”). Pursuant to the terms of the Loan Agreements, amounts available under the Future Funding Facility were fully drawn by the Company on June 30, 2017. Such amounts were deposited into a redevelopment reserve and will be used to fund redevelopment activity at the Company’s properties.

On July 12, 2017, as a result of the transaction whereby the Company contributed five Wholly Owned Properties to the GGP II JV and sold a 50% interest in the new JV Properties to GGP for $57.5 million, the Company reduced amounts outstanding under its mortgage loan by $50.6 million.

~~As of September 30, 2017, the aggregate principal amount outstanding under the Mortgage Loans and the Future Funding Facility was $1,211 million.~~

Interest under the Mortgage Loans is due and payable on the payment dates, and all outstanding principal amounts are due when the loan matures on the payment date in July 2019, pursuant to the Loan Agreements. The Company has two one-year extension options subject to the payment of an extension fee and satisfaction of certain other conditions. Borrowings under the Mortgage Loans bear interest at the London Interbank Offered Rates (“LIBOR”) plus,executed as of ~~September 30, 2017, a weighted-average spread~~March 31, 2024 are approximately as follows:


(in thousands)	March 31, 2024
Remainder of 2024	$	15,385
2025		22,720
2026		21,543
2027		20,268
2028		17,690
2029		15,302
Thereafter		84,764
Total	$	197,672

The components of ~~470 basis points; payments are made monthly on an interest-only basis. The weighted-average interest rates for the Mortgage Loans and Future Funding Facility~~lease revenues for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016~~2023 were ~~5.97%~~as follows:


(in thousands)	Three Months Ended March 31,
	2024		2023
Fixed rental income	$	4,837	$	12,154
Variable rental income		942		(895	)
Total rental income	$	5,779	$	11,259

Lessee Disclosures

The Company has one ground lease and ~~5.24%~~one corporate office lease which are classified as operating leases. As of March 31, 2024, and December 31, 2023, the outstanding amount of right-of-use, ~~respectively.~~ or ROU, assets were $14.2 million and $14.4 million, respectively, which is included in prepaid expenses, deferred expenses and other assets, net on the condensed consolidated balance sheets.

The ~~weighted-average interest rates~~Company recorded rent expense related to leased corporate office space of $0.3 million for the ~~Mortgage Loans~~three months ended March 31, 2024 and ~~Future Funding Facility~~2023. Such rent expense is classified within general and administrative expenses in the condensed consolidated statements of operations.

In addition, the Company recorded ground rent expense of approximately $0.1 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016 were 5.92% and 5.19%, respectively.~~

~~The Loan Agreements contain a yield maintenance provision for the early extinguishment of the debt before March 9, 2018.~~

~~The Mortgage Loans and Future Funding Facility are secured by all of the Company’s Wholly Owned Properties and a pledge of its equity~~2023. Such ground rent expense is classified within property operating expenses in the ~~JVs.~~condensed consolidated statements of operations. The Loan Agreements contain customary covenants for a real estate financing, including restrictions that limit the Company’s ability to grant liens on its assets, incur additional indebtedness, or transfer or sell assets, as well as those that may requireground lease requires the Company to ~~obtain lender approval for certain major tenant~~make fixed annual rental payments and expires in 2073 assuming all extension options are exercised.

The Company expects to make cash payments on operating leases ~~or significant redevelopment projects. Such restrictions also include cash flow sweep provisions based upon certain measures~~ of ~~the Company’s and Sears Holdings’ financial and operating performance, including (a) where the “Debt Yield” (the ratio of net operating income~~$0.8 million for the ~~mortgage borrowers to their debt) is less than 11.0%, (b) if the performance~~remainder of ~~Sears Holdings at the stores subject to the Master Lease with Sears Holdings fails to meet specified rent ratio thresholds, (c) if the Company fails to meet specified tenant diversification tests~~2024, $1.2 million in 2025, $1.2 million in 2026, $1.2 million in 2027, $0.8 million in 2028, $45.0 thousand in 2029 and (d) upon the occurrence of a bankruptcy or insolvency action with respect to Sears Holdings or if there is a payment default under the Master Lease with Sears Holdings, in each case, subject to cure rights, including providing specified amounts of cash collateral or satisfying tenant diversification thresholds.

In November 2016, the Company and the servicer for its Mortgage Loans entered into amendments to the Loan Agreements to resolve a disagreement regarding one of the cash flow sweep provisions in the Loan Agreements. The principal terms of these amendments are that the Company (i) posted $30.0$2.0 million and will post $3.3 million on a monthly basis, to a redevelopment project reserve account, which amounts may be used by the Company to fund redevelopment activity and (ii) extended the spread maintenance provision for prepayment of the loan by two months through March 9, 2018 (with the spread maintenance premium for the ~~second month at a reduced amount). As a result of this agreement and the resolution of the related disagreement, no cash flow sweep was imposed.~~

All obligations under the Loan Agreements are non-recourse to the borrowers and the pledgors of the JV Interests and the guarantors thereunder, except that (i) the borrowers and the guarantors will be liable, on a joint and several basis, for losses incurred by the lenders in respect of certain matters customary for commercial real estate loans, including misappropriation of funds and certain environmental liabilities and (ii) the indebtedness under the Loan Agreements will be fully recourse to the borrowers and guarantors upon the occurrence of certain events customary for commercial real estate loans, including without limitation prohibited transfers, prohibited voluntary liens, and bankruptcy. Additionally the guarantors delivered a limited completion guaranty with respect to future redevelopments undertaken by the borrowers at the properties, and the Company must maintain (i) a net worth of not less than $1.0 billion and (ii) a minimum liquidity of not less than $50.0 million, throughout the term of the Loan Agreements.

~~- 20 -~~

periods thereafter. The ~~Company believes it~~present value discount is ~~currently in compliance with all material terms and conditions of the Loan Agreements.~~($3.1) million.

The ~~Company incurred $22.3 million of debt issuance costs~~following table sets forth information related to the ~~Mortgage Loans and Future Funding Facility which are recorded~~measurement of our lease liabilities as ~~a direct deduction from~~of March 31, 2024:


	March 31, 2024
Weighted average remaining lease term (in years)		10.7
Weighted average discount rate		6.77	%
Cash paid for operating leases (in thousands)	$	330

- 18 -

Subsequent to March 31, 2024, the ~~carrying amount~~Company exercised its early termination right provision of the ~~Mortgage Loans and Future Funding Facility and amortized over~~corporate office lease. This reduced the lease term ofby 37 months, amending the ~~Loan Agreements. As of September~~initial lease end date from August 30, ~~2017,~~2028 to July 31, 2025. In connection with electing its termination right, the ~~unamortized balance of the Company’s debt issuance costs was $9.9~~Company paid a $1.6 million ~~as compared~~termination fee subsequent to ~~$14.3 million as December~~March 31, ~~2016.~~2024.

Item 2. Management’s Discussion and ~~Other Liabilities~~Analysis of Financial Condition and Results of Operations

~~The following table summarizes the significant components of accounts payable, accrued expenses and other liabilities as of September 30, 2017 and December 31, 2016 (in thousands):~~

Subsequent to September 30, 2017, the Company agreed to sell to Simon the Company’s 50% interest in five of the ten assets in the Simon JV for $68.0 million, subject to certain closing conditions. Upon closing, which is expected in the fourth quarter of 2017, the Company would realize approximately $7.0 million of value creation above its basis across the five properties and generate unrestricted cash proceeds, after closing costs and any required tax distributions, to fund its redevelopment pipeline and for general corporate purposes.

~~The table below presents the properties sold in the transaction and the properties remaining in the Company’s JV with Simon:~~

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” ~~“will,”~~ “would,” ~~“may”~~“may,” "will," "continue to." "pro forma" or the opposite of these words and phrases or other similar ~~expressions~~words or phrases which are predictions of or indicate future events or trends and which do no relate solely to historical matters in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part 1 of this Quarterly Report.

Seritage Growth Properties (NYSE: SRG), a Maryland real estate investment trust formed on June 3, 2015, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) as defined under Section 856(c)Prior to the adoption of the Internal Revenue Code (the “Code”). Seritage’s assets are held by and its operations are primarily conducted through, directly or indirectly, the Operating Partnership. Under the partnership agreementCompany’s Plan of ~~the Operating Partnership,~~Sale (defined below), Seritage as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. Unless otherwise expressly stated or the context otherwise requires, the “Company”, “we,” “us,” and “our” as used herein refer to Seritage, the Operating Partnership, and its owned and controlled subsidiaries.

~~We are~~was principally engaged in the ~~acquisition,~~ ownership, development, redevelopment, disposition, management and leasing of diversified retail ~~real estate~~and mixed-use properties throughout the United States. Seritage will continue to actively manage each remaining location until such time as each property is sold. As of ~~September 30, 2017, our~~March 31, 2024, the Company’s portfolio ~~included over 40.0~~consisted of interests in 27 properties comprised of approximately 3.5 million square feet of gross leasable area (“GLA”)~~, consisting~~ or build-to-suit leased area, and 410 acres of ~~230 Wholly Owned Properties totaling over 35.4~~land. The portfolio consists of approximately 2.3 million square feet of GLA ~~across 49 states~~ and ~~Puerto Rico,~~276 acres held by 18 consolidated properties (such properties, the “Consolidated Properties”) and ~~interests in 28 JV Properties totaling approximately 5.1~~1.2 million square feet of GLA ~~across 15 states.~~and 134 acres held by nine unconsolidated properties (such properties, the “Unconsolidated Properties”).

On March 1, 2022, the Company announced that its Board of Trustees commenced a process to review a broad range of strategic alternatives to enhance shareholder value. The Board of Trustees created a special committee of the ~~Company’s wholly-owned properties were leased~~Board of Trustees (the “Special Committee”) to ~~Sears Holdings pursuant~~oversee the process. The Special Committee retained Barclays Capital, Inc. as its financial advisor from March 2022 through August 2023 to assist with the strategic review. The Company sought a shareholder vote to approve a proposed plan of sale of our assets and dissolution (the “Plan of Sale”) that would allow our board to sell all of our assets, distribute the net proceeds to shareholders and dissolve the Company. The Plan of Sale can be suspended by the Board of Trustees.

The 2022 Annual Meeting of Shareholders occurred on October 24, 2022, at which time the Plan of Sale was approved by the shareholders, following our filing of a final proxy statement with the SEC on September 14, 2022. See Note 1 – Organization of the Notes to the Master Lease and operated under either the Sears or Kmart brand. At 85 properties, third-party tenants under direct leases occupy a portion of leasable space alongside Sears and Kmart, and 41 properties are leased only to third parties. A substantial majority of the space at the JV Properties is also leased to Sears Holdings under the JV Master Leases.

We generate revenues primarily by leasing our properties to tenants, including both Sears Holdings and third-party tenants, who operate retail stores (and potentially other uses) in the leased premises, a business model common to many publicly traded REITs. In addition to revenues generated under the Master Lease through rent payments from Sears Holdings, we generate revenue through leases to third-party tenants under existing and future leases for space at our properties.

~~The Master Lease provides us with the right to recapture up to approximately 50% of the space occupied by Sears Holdings at each of the 224 Wholly Owned Properties initially~~condensed consolidated financial statements included in the Master Lease (subject to certain exceptions and limitations). In addition, Seritage has the right to recapture any automotive care centers which are free-standing or attached as “appendages” to the properties, and all outparcels or outlots and certain portions of parking areas and common areas. Upon exercisePart I, Item 1 of this ~~recapture right, we will generally incur certain costs and expenses~~Quarterly Report on Form 10-Q for additional information about the ~~separation~~Plan of the recaptured space from the remaining Sears Holdings space and can reconfigure and rent the recaptured space to third-party tenants on potentially superior terms determined by us and for our own account. We also have the right to recapture 100% of the space occupied by Sears Holdings at each of 21 identified Wholly Owned Properties by making a specified lease termination payment to Sears Holdings, after which we expect to be able to reposition and re-lease those stores on potentially superior terms determined by us and for our own account.

As of September 30, 2017, we had exercised recapture rights at 45 properties, including 17 properties at which we exercised partial recapture rights, 17 properties at which we exercised 100% recapture rights (five of which were converted from partial recapture properties), and 11 properties at which we exercised our rights to recapture only automotive care centers or outparcels.

~~While~~Sale. The strategic review process remains ongoing as the Company ~~continues to assess~~executes the ~~impact~~Plan of the natural disasters (wildfires in California and Hurricanes Harvey, Irma, and Maria) that occurred during the quarter ended September 30, 2017 on our operations our ability to collect rent from tenants, we do not believe these natural disasters will have a material impact on our operating results or financial position. All stores occupied by Sears Holdings are currently open for businessSale, and the Company ~~has not experienced interruptions~~remains open minded to pursuing value maximizing alternatives, including a potential sale of the Company. There can be no assurance that the review process will result in ~~rental payments nor does it expect to incur material capital expenditures to repair~~ any ~~property damage.~~

~~On July 12, 2017,~~transaction or that the Company ~~completed two transactions with GGP~~will be successful in fully executing on the Plan of Sale. The Board of Trustees is currently overseeing the Plan of Sale.

In the first quarter of 2022, we announced a Review of Strategic Alternatives and during the second quarter determined that the best plan for ~~gross consideration~~all assets is to pursue sales. As a result of ~~$247.6 million whereby~~ the ~~Company (i) sold to GGP~~foregoing, the Company’s ~~50% JV Interests in eight of~~anticipated holding periods with respect to certain assets changed. During the 12three months ended March 31, 2024, we agreed to sell two assets below book value resulting in the ~~GGP I JV for $190.1 million and recorded a gain~~recognition of ~~$43.7~~impairment losses of $1.1 million, which is included in ~~gain~~impairment of real estate assets within the consolidated statements of operations. We did not recognize any other-than-temporary impairment losses on ~~sale of interest~~our investments in unconsolidated ~~joint venture within~~entities during the three months ended March 31, 2024. We continue to evaluate our portfolio, including our development plans and offers received, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities.

On March 31, 2022, the Company announced that its Board of Trustees, with the recommendation of the Special Committee, approved a plan to terminate the Company's REIT status and become a taxable C Corporation, effective for the year ended December 31, 2022. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders, which provides the Company with greater flexibility to use its free cash flow. Effective January 1, 2022, the Company is subject to federal and state income taxes on its taxable income at applicable tax rates and is no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT since inception and through the 2021 tax year, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place until December 31, 2021. Refer to Note 7 – Income Taxes of the Notes to the condensed consolidated financial statements included in Part I, Item 1 of ~~operations;~~this Quarterly Report on Form 10-Q.

The Company’s primary objective is to create value for its shareholders through the monetization of the Company's assets through the Plan of Sale, which can be suspended by the Board of Trustees. Additionally, we have identified various sites that we believe have the demographic profile to support other uses such as residential, biotechnology, office and ~~(ii) contributed five Wholly Owned Properties~~others. Given our fee ownership of these properties and control over parking lots and outparcels, we believe that these sites are well positioned for such value creation opportunities. We additionally look to further lease our built retail footprint and densify any excess parking land through the addition of triple net (“NNN”) pad sites, which are standalone sites upon which a customized space can be built or leased for a tenant, to the ~~GGP II JV and sold a 50% interest in the new JV Properties~~extent that we believe these actions would be accretive to ~~GGP for $57.5 million and recorded a gain of $13.0 million which is included in gain on sale of real estate within the condensed consolidated statements of operations.~~shareholder value.

~~As a result of the transactions,~~In order to achieve its objective, the Company ~~reduced amounts outstanding under its mortgage loan by $50.6 million and received approximately $171.6 million of additional cash proceeds before closing costs, which it~~ intends to ~~use~~execute the following strategies:

We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties. This revenue generally includes fixed base rents and recoveries of expenses that we have incurred and that we pass through to the individual tenants, in each case as provided in the respective leases.

Our primary cash expenses consist of our property operating expenses, general and administrative expenses, interest expense, and construction and development related costs. Property operating expenses ~~include:~~include real estate taxes, repairs and maintenance, management ~~expenses,~~fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense is ~~primarily~~ on our ~~mortgage loans payable.~~term loan facility. In addition, we incur substantial non-cash charges for depreciation ~~and amortization on~~of our properties and ~~related~~amortization of intangible assets and ~~liabilities resulting~~liabilities.

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

The following table presents selected data on comparative results from the ~~Transaction.~~

~~We did not have any revenues or expenses until we completed the Transaction on July 7, 2015.~~

~~For~~Company’s condensed consolidated statements of operations for the three months ended ~~September 30, 2017:~~

On an annual basis, and taking into account all signed leases, including those which have not yet commenced rental payments, rental income attributable to third-party tenants would have represented approximately 45.4% of total annual base rental income as of September 30, 2017.

The increase in rental income attributable to third-party tenants, and the reduction in rental income attributable directly to Sears Holdings, are driven by the Company’s leasing and redevelopment activity, including signing leases with new, third-party tenants and recapturing space from Sears Holdings.

~~Pursuant to the provisions of the Master Lease and many third-party leases, the Company is entitled to be reimbursed for certain property related expenses. For~~ the three months ended ~~September 30, 2017 and September 30, 2016,~~March 31, 2023 (in thousands):

The following table presents the ~~Company recorded tenant reimbursement~~results for rental income of $15.9 million and $12.0 million, respectively, compared to property operating expenses and real estate tax expense aggregating of $15.6 million and $12.5 million, respectively. For the nine months ended September 30, 2017 and September 30, 2016, the Company recorded tenant reimbursement income of $47.8 million and $45.7 million, respectively, compared to property operating expenses and real estate tax expense aggregating of $49.7 million and $48.3 million, respectively.

~~Depreciation and amortization expenses consist of depreciation of real property, depreciation of furniture, fixtures and equipment, and amortization of certain lease intangible assets.~~

~~For~~for the three months ended ~~September 30, 2017, the Company incurred depreciation and amortization expenses of $61.1 million~~March 31, 2024, as compared to ~~depreciation and amortization expenses~~the corresponding period in 2023 (in thousands):

The decrease of ~~$44.5~~$5.5 million in in-place retail lease rental income during 2024 is primarily due to property sales.

The decrease of $10.8 million in straight-line rental expense was primarily due to write off of deferred rents related to property sales during the ~~prior year period.~~ quarter ended March 31, 2023.

The ~~increase~~decrease of ~~$16.6~~$4.5 million in property operating expense for the three months ended March 31, 2024 was due primarily to approximately $30.2 million of additional accelerated amortization attributable to certain lease intangible assets, offset by (i) approximately $11.0 million of lower scheduled amortization resulting from an increase in fully-amortized lease intangibles, (ii) approximately $2.1 million of lower depreciation resulting from the accelerated depreciation in the prior year period of certain buildingsasset sales and insurance refunds for sold properties that were ~~demolished for redevelopment, and (iii) approximately $0.5 million of lower scheduled amortization and depreciation as a result of~~less than the ~~contribution of five Wholly Owned Properties into the GGP II JV and sale of a 50% interest in the new JV Properties in July 2017.~~estimated receivables.

For the nine months ended September 30, 2017, the Company incurred depreciation and amortization expenses of $170.3 million as compared to depreciation and amortization expenses of $121.4 million in the prior year period. The increase of $48.9 million was due primarily to approximately (i) $67.6 million of additional accelerated amortization attributable to certain lease intangible assets and (ii) $1.1 million of additional accelerated depreciation in the current year period of certain buildings that were demolished for redevelopment, offset by (i) approximately $19.3 million of lower scheduled amortization resulting from an increase in fully-amortized lease intangibles and (ii) approximately $0.5 million of lower scheduled amortization and depreciation as a result of the contribution of five Wholly Owned Properties into the GGP II JV and sale of a 50% interest in the new JV Properties in July 2017.

Accelerated amortization results from the recapture of space from, or the termination of space by, Sears Holdings. Such recaptures and terminations are deemed lease modifications and require related lease intangibles to be amortized over the shorter of the shortened lease term or the remaining useful life of the asset.

General and administrative expenses consist of personnel costs, including ~~stock-based~~amortization of costs associated with share-based compensation awarded in prior years, professional fees, office expenses and overhead expenses.

~~For the three months ended September 30, 2017, the Company incurred~~The decrease of $3.0 million in general and administrative expenses ~~of $5.3 million compared to general and administrative expenses of $4.3 million for the prior year period. The $1.0 million increase was driven primarily by increased personnel costs~~.

For the nine months ended September 30, 2017, the Company incurred general and administrative expenses of $16.6 million compared to general and administrative expenses of $13.1 million for the prior year period. The $3.5 million increase was driven primarily by ~~increased personnel costs and an increase in fees to firms providing professional services~~.

The Company did not incur any acquisition-related expenses for the three or nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, the Company recorded less than $0.1 million of acquisition-related expenses, primarily remaining legal fees.

For the three months ended September 30, 2017, the Company incurred $18.0 million of interest expense (net of amounts capitalized) as compared to interest expense of $15.9 million for the prior year period. For the nine months ended September 30, 2017, the Company incurred $53.1 million of interest expense (net of amounts capitalized) as compared to interest expense of $47.3 million for the prior year period. The increase in interest expense in both periods was driven by higher average borrowings under the Future Funding Facility and Unsecured Term Loan, as well as higher average LIBOR rates.

~~For the three months ended September 30, 2017, the Company recorded a loss of $0.1 million compared to a loss of less than $0.1 million~~ for the three months ended ~~September 30, 2016. For~~March 31, 2024 was driven by a decrease in employee compensation due to reduced headcount and a reduction in consulting services.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, the Company sold five properties for aggregate consideration of $48.8 million and recorded a gain totaling $1.1 million, which is included in gain on sale of real estate, net within the condensed consolidated statements of operations.

During the three months ended March 31, 2024, the Company recognized $1.1 million impairment of real estate assets as a result of the Company accepting offers below book value on two properties. During the three months ended March 31, 2023, the Company recognized $2.6 million of impairment losses as a result of the Company's plan to pursue the Plan of Sale, which is included within the condensed consolidated statements of operations.

The increase of $36.8 million in income (loss) of unconsolidated entities for the three months ended March 31, 2024 was driven by a $70.8 million impairment charge recorded by one unconsolidated entity during the three months ended March 31, 2023. The Company's share of the impairment was $35.4 million and was included in the equity in loss of ~~$0.7~~consolidated entities on the consolidated statements of operations.

The decrease of $4.2 million ~~compared~~of interest and other income is driven by the recognition of $3.8 million of income related to ~~a loss of $1.9 million~~the settlement with the D&O insurers for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2023.

The decrease of $8.2 million in interest expense for the three months ended March 31, 2024 was driven by partial Term Loan Facility pay downs between April 1, 2023 and March 31, 2024.

~~Property rental income is our primary source of cash and is dependent on a number of factors, including occupancy levels and rental rates, as well as our tenants’ ability to pay rent.~~ Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service ~~reinvestment in~~(collectively, “Obligations”), and ~~redevelopment~~certain development expenditures. Property rental income, which is the Company’s primary source of ~~properties,~~operating cash flow, did not fully fund obligations incurred during the three months ended March 31, 2024 and ~~distributions~~the Company recorded net operating cash outflows of $16.7 million. Additionally, the Company generated investing cash inflows of $28.9 million during the three months ended March 31, 2024, which were driven by asset sales and partially offset by development expenditures.

Obligations are projected to ~~shareholders~~continue to exceed property rental income and ~~unitholders. We believe that~~ we ~~currently have sufficient liquidity~~expect to fund such uses in the form of, as of September 30, 2017, (i) $104.1 million of unrestricted cash, (ii) $202.5 million of restricted cash, (iii) anticipated cash provided by operations; and subsequent to September 30, 2017, unrestricted cash proceeds, after closing costsobligations and any required tax distributions, that we expect to receive as a result of selling certain JV Interests to Simon. We may also raise additional capital through the public or private issuance of debt securities, common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity, as well as through asset sales or joint ventures.

~~With respect to the Company’s Unsecured Term Loan due December 31, 2017, the Company may repay the $85.0 million total principal amount outstanding as of September 30, 2017~~development expenditures with ~~unrestricted~~ cash on hand ~~seek an extension~~and a combination of capital sources including, but not limited to the following, subject to any approvals that may be required under the Term Loan Agreement:

Subsequent to March 31, 2024, we sold two Consolidated Properties for aggregate gross proceeds of $31.8 million. As of May 7, 2024, we had two assets under contracts for sale with no due diligence contingencies for total anticipated proceeds of $8.3 million and

two assets under contract for sale subject to customary due diligence for total anticipated proceeds of $21.8 million. All four assets are subject to closing conditions.

As previously disclosed, on May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment (the “Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on July 31, 2023; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed to by the administrative agent under the Term Loan Agreement in its sole discretion). In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the $400.0 million incremental funding facility under the Term Loan Agreement (the “Incremental Funding Facility”).

Additionally, the Term Loan Amendment provides that the administrative agent and the lenders express their continued support for asset ~~sales or new JVs.~~dispositions, subject to the administrative agent’s right to approve the terms of individual transactions due to the occurrence of a Financial Metric Trigger Event, as such term is defined under the Term Loan Agreement. The Third Term Loan Amendment (as defined in Note 6 – Debt of the Notes to the condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q) executed on June 16, 2022 provided exceptions to this right.

~~In November 2016,~~Our Term Loan Facility includes a $400.0 million Incremental Funding Facility, access to which is subject to rental income from non-Sears Holdings tenants of at least $200.0 million, on an annualized basis and after giving effect to SNO leases expected to commence rent payment within 12 months, which we have not yet achieved, as disclosed in Note 6. There is no assurance of the Company’s ability to access the Incremental Funding Facility.

During the three months ended March 31, 2024, we have repaid $30.0 million against the principal of the Term Loan Facility. Our outstanding balance as of March 31, 2024, is $330.0 million. Subsequent to March 31, 2024, the Company ~~and~~made additional principal payments totaling $50.0 million reducing the ~~servicer for our Mortgage Loans entered into amendments to our Loan Agreements to resolve a disagreement regarding one~~balance of the Term Loan Facility to $280.0 million as of May 1, 2024.

See Note 1 – Organization of the Notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of liquidity and going concern.

Cash Flows for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

The following table summarizes the Company’s cash flow sweep provisions in our Loan Agreements. The principal terms of these amendments are that the Company has (i) posted $30.0 million, and will post $3.3 million on a monthly basis, to a redevelopment project reserve account, which amounts may be used by the Company to fund redevelopment activity and (ii) extended the spread maintenance provision for prepayment of the loan by two months through March 9, 2018 (with the spread maintenance premiumactivities for the ~~second month at a reduced amount).~~

~~The Company believes it is currently in compliance with all material terms and conditions of the Loan Agreements.~~

~~Net cash provided by operating activities was $56.9 million for the nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~$100.1 million for the nine months ended September 30, 2016.~~ 2023, respectively (in thousands):

Significant ~~changes in the~~ components of net cash ~~provided by~~used in operating activities include:

~~Net cash provided~~ by ~~investing activities was $40.2 million for the nine months ended September 30, 2017 compared~~a decrease to ~~net cash used by investing activities of $47.2 million for the nine months ended September 30, 2016.~~ tenant and other receivables.

Significant components of net cash provided by ~~and used in~~ investing activities include:

~~Net cash provided by financing activities was $69.9 million for the nine months ended September 30, 2017 compared to~~ net cash used in financing activities include:

The Company’s Board of Trustees did not declare dividends on the ~~nine~~Company’s Class A common shares during the three months ended ~~September 30, 2016. Significant components of net cash provided by~~March 31, 2024 and ~~used in financings activities include:~~

The Company’s Board of Trustees declared the following ~~common stock~~ dividends on preferred shares during ~~2017~~2024 and ~~2016, with holders~~2023:

The Board of ~~Operating Partnership units entitled to an equal distribution per Operating Partnership unit held~~Trustees will determine future distributions on the ~~record date:~~Company's common shares following the pay down of the Term Loan Facility.

The Company accounts for its investments in entities that it does not have a controlling interest in or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the condensed consolidated balance sheets of the Company as investments in unconsolidated entities. As of March 31, 2024 and December 31, 2023, we did not have any off-balance sheet financing arrangements.

There have been no significant changes in the contractual obligations disclosed in our Form 10-K for the year ended December 31, 2023.

During the three months ended March 31, 2024, the Company invested $12.5 million in our consolidated development and operating properties and an additional $2.9 million into our unconsolidated joint ventures, as we continue to advance our business plans, including our previously announced projects.

During the three ended March 31, 2023, the Company invested $32.0 million in our consolidated development and operating properties and an additional $7.7 million into our unconsolidated joint ventures.

During the three months ended March 31, 2024 and 2023, respectively, we incurred no maintenance capital expenditures that were not associated with re-tenanting and redevelopment projects.

In accordance with accounting standards regarding loss contingencies, ~~the Company accrues~~we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and ~~the Company discloses~~we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or disclose the fact that such a range of loss cannot be estimated. ~~The Company does~~We do not record liabilities when the likelihood that the liability has been incurred is probable

but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. In such cases, ~~the Company discloses~~we disclose the nature of the contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made.

On March 2, 2021, we brought a lawsuit in Delaware state court against QBE Insurance Corporation, Endurance American Insurance Company, Allianz Global Risks US Insurance Company and Continental Casualty Company, each of which are D&O insurance providers of the Company (the “D&O Insurers”). Our lawsuit sought, among other things, declaratory relief and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the litigation related to the bankruptcy of Sears Holdings (the "Litigation"). The ~~Company~~Litigation was settled in 2022 and the Litigation was dismissed. Any amounts received from the insurers will offset the Seritage Defendants’ contribution. We reached settlement agreements with two of the D&O Insurers for gross proceeds of $12.7 million which is recorded in interest and other income in the consolidated statements of operations during the year ended December 31, 2022. In 2023, we reached settlement agreements with the other two D&O Insurers for gross proceeds of $11.6 million. We received $3.8 million during the three months ended March 31, 2023, which is recorded in interest and other income in the consolidated statements of operations.

We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of ~~business.~~business and due to the current environment. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, ~~that~~ the final outcome of such ~~matters~~ordinary course legal proceedings and claims will not have a material effect on the condensed consolidated financial position, results of operations ~~cash flows~~ or liquidity of the Company.

~~The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not~~See Note 9 – Commitments and Contingencies Litigation and Other Matters of the ~~primary beneficiary using the equity method of accounting and those investments are reflected on~~Notes to the condensed consolidated ~~balance sheets~~financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of the ~~Company as investments~~Litigation and related matters.

A summary of our critical accounting policies is included in ~~unconsolidated joint ventures. As of September 30, 2017 and~~our Annual Report on Form 10-K for the year ended December 31, ~~2016, we did not have any off-balance sheet financing arrangements.~~2023 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the three months ended March 31, 2024, there were no material changes to these policies.

We are currently retenanting or redeveloping several properties primarily to convert single-tenant buildings occupied by Sears Holdings into multi-tenant properties occupied by a diversity of retailers and related concepts. The table below provides a brief description of each of the 55 new redevelopment projects originated on the Seritage platform as of September 30, 2017. These projects represent an estimated total investment of $676.0 million, of which $520.5 million remained to be spent.

The Company makes reference to NOI and Total NOI ~~FFO, Company FFO, EBITDA and Adjusted EBITDA~~ which are ~~considered non-GAAP measures.~~financial measures that include adjustments to GAAP.

~~We define~~ NOI is defined as income from property operations less property operating expenses. Other ~~REITs~~real estate companies may use different methodologies for calculating NOI, and accordingly the ~~Company's~~Company’s depiction of NOI may not be comparable to other ~~REITs. We believe~~real estate companies. The Company believes NOI provides useful information regarding ~~the Company,~~Seritage, its financial condition, and results of operations because it reflects only those income and expense items that are incurred at the property level.

The Company also uses Total NOI, which includes its proportional share of unconsolidated properties. ~~We believe~~The Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of unconsolidated properties that are accounted for under GAAP using the equity method. We

The Company also ~~consider~~considers NOI and Total NOI to be a helpful supplemental measure of ~~our~~its operating performance because it excludes from NOI variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles.

Due to the adjustments noted, NOI and Total NOI should only be used as an alternative measure of the ~~Company's~~Company’s financial performance.

~~Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA~~

~~Due to the adjustments noted, EBITDA and Adjusted EBITDA should only be used as an alternative measure of the Company's financial performance~~

We define FFO using the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"), which may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO. FFO is calculated as net income computed in accordance with GAAP, excluding gains (or losses) from property sales, real estate related depreciation and amortization, and impairment charges on depreciable real estate assets.

We consider FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry. FFO facilitates an understanding of the operating performance of our properties between periods because it does not give effect to real estate depreciation and amortization which are calculated to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance.

The Company makes certain adjustments to FFO, which it refers to as Company FFO, to account for certain non-cash and non-comparable items, such as termination fee income, unrealized loss on interest rate cap, litigations charges, acquisition-related expenses, amortization of deferred financing costs and up-front-hiring and personnel costs, that it does not believe are representative of ongoing operating results. The Company previously referred to this metric as Normalized FFO; the definition and calculation remain the same.

~~Due to the adjustments noted, FFO and Company FFO should only be used as an alternative measure of the Company's financial performance.~~

~~None of~~Neither NOI nor Total NOI ~~EBITDA, Adjusted EBITDA, FFO and Company FFO~~ are measures that (i) represent cash flow from operations as defined by GAAP; (ii) are indicative of cash available to fund all cash flow needs, including the ability to make distributions; (iii) are alternatives to cash flow as a measure of liquidity; or (iv) should be considered alternatives to net income (which is determined in accordance with GAAP) for purposes of evaluating the Company’s operating performance. Reconciliations of these measures to the respective GAAP measures we deem most comparable are presented below on a comparative basis for all periods.

The following table reconciles NOI and Total NOI to GAAP net loss for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016~~2023 (in thousands):

~~The following table reconciles EBITDA and Adjusted EBITDA to GAAP net loss for the three and nine months ended September 30, 2017 and September 30, 2016 (in thousands):~~

~~The following table reconciles FFO and Company FFO to GAAP net loss for the three and nine months ended September 30, 2017 and September 30, 2016 (in thousands):~~

~~Except as discussed below, there~~There were no material changes in the Quantitative and Qualitative Disclosures about Market Risk set forth in our ~~2016~~2023 Annual Report on Form 10-K.

As of September 30, 2017, we had $1.30 billion of consolidated debt, including $1.21 billion outstanding under our variable-rate Mortgage Loans and Future Funding Facility. The interest rate on the loans is the 30-day LIBOR rate plus, as of September 30, 2017, a weighted average spread of 470 basis points. We have purchased a LIBOR interest rate cap that has a LIBOR strike rate of 3.5% and a term of four years. We are subject to market risk with respect to changes in the LIBOR rate. An immediate 100 basis point change in interest rates would have affected annual pretax funding costs by approximately $12.1 million.

As of September 30, 2017, the estimated fair value of our consolidated debt was $1.3 billion. The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt.

~~Under~~We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d – 15(e) under the ~~supervision~~Securities Exchange Act of 1934, as amended, (the “Exchange Act”)). Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, with the participation of our ~~management, including~~principal executive officer and principal financial officer, evaluated the ~~Chief Executive Officer and the Chief Financial Officer, we conducted an evaluation~~effectiveness of the ~~effectiveness~~design and operation of our disclosure controls and ~~procedures (as such term is defined in Rules 13a-15(e)~~procedures. Based on that evaluation, our principal executive officer and ~~15d-15(e) under the Exchange Act)~~principal financial officer concluded that, as of the end of the period covered by this ~~report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that~~report, our disclosure controls and procedures were not effective due to the material weaknesses described below.

Notwithstanding the material weaknesses in our internal control over financial reporting, our principal executive officer and principal financial officer have concluded that the unaudited condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As previously reported, management identified material weaknesses due to deficiencies in the design and operating effectiveness of our controls over the impairment of investments in real estate and other than temporary impairment of equity method investments. The deficiencies related to the identification of impairment indicators. Additionally, as management determined that it had not maintained adequate evidence of ~~such date.~~the review of information used in the impairment indicator analysis and the fair value of investments in real estate and equity method investments. As further reported, management had identified a deficiency in the operating effectiveness in our review over the calculation of other than temporary impairments. These deficiencies contributed to the potential for there to be material errors in our financial statements.

Additionally, as previously reported, management identified a material weakness due to a deficiency in the design of our controls over the accounting for certain non-routine transactions, particularly related to accounting for transactions with joint ventures and certain consulting contracts. For these transactions, Management did not possess the adequate technical capabilities to appropriately assess these non-routine transactions to ensure compliance with accounting principles generally accepted in the United States. This deficiency contributed to the potential for there to be material errors in our financial statements.

As previously reported, in response to the material weaknesses, management, with oversight of the Audit Committee began to implement steps to remediate the material weaknesses. While the Company has made progress with the remediation of these material weaknesses, the remediation efforts are ongoing, because additional time is needed to complete the remediation and allow for the internal controls to be tested by management.

However, the material weaknesses discussed above cannot be considered completely remediated until the applicable controls are fully implemented, have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting.

~~There~~Other than described above, there were no other changes in ~~our~~ internal control over financial reporting that occurred during the ~~period~~quarter ended ~~September 30, 2017~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The information required by this Item is incorporated by reference to Note 9 of the condensed consolidated financial statements included herein.

~~Information regarding risk factors appears~~ in our ~~2016~~ Annual Report on Form 10-K ~~in Part I, Item 1A. Risk Factors. Except as discussed below, there~~for the year ended December 31, 2023 for a description of certain material risks and uncertainties to which our business, financial condition and results of operations are subject. There have been no material changes ~~from~~to the risk factors ~~previously disclosed~~discussed in our ~~2016~~ Annual Report on Form ~~10-K.~~

~~We will be substantially dependent on Sears Holdings, as a tenant, until we further diversify~~10-K for the tenancy of our portfolio, and an event that has a material adverse effect on Sears Holdings’ business, financial condition or results of operations could have a material adverse effect on our business, financial condition or results of operations.year ended December 31, 2023.

Sears Holdings is the lessee of a substantial majority of our properties and accounts for a substantial majority of our revenues. Under the Master Lease, Sears Holdings is required to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with these leased properties and to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with its business, subject to proportionate sharing of certain of these expenses with occupants of the remainder of the space not leased to Sears Holdings. Sears Holdings may not in the future have sufficient assets, income and access to financing to enable it to satisfy its payment obligations under the Master Lease. In its most recent Form 10-K, Sears Holdings disclosed, among other things, that its historical operating results indicate substantial doubt exists related to Sears Holdings’ ability to continue as a going concern. In addition, Sears Holdings has disclosed that its domestic pension and postretirement benefit plan obligations are currently underfunded. Sears Holdings may have to make significant cash payments to some or all of its pension and postretirement benefit plans, which would reduce the cash available for its businesses, potentially including its rent obligations under the Master Lease. The inability or unwillingness of Sears Holdings to meet its rent obligations and other obligations under the Master Lease could materially adversely affect our business, financial condition or results of operations, including our ability to pay the interest, principal and other costs and expenses under our financings, or to pay cash dividends to Seritage shareholders. For these reasons, if Sears Holdings were to experience a material adverse effect on its business, financial condition or results of operations, our business, financial condition or results of operations could also be materially adversely affected.

Our dependence on rental payments from Sears Holdings as our main source of revenues may limit our ability to enforce our rights under the Master Lease. In addition, we may be limited in our ability to enforce our rights under the Master Lease because it is a unitary lease and does not provide for termination with respect to individual properties by reason of the default of the tenant. Failure by Sears Holdings to comply with the terms of the Master Lease or to comply with the regulations to which the leased properties are subject could require us to find another master lessee for all such leased property and there could be a decrease or cessation of rental payments by Sears Holdings. In such event, we may be unable to locate a suitable master lessee or a lessee for individual properties at similar rental rates and other obligations and in a timely manner or at all, which would have the effect of reducing our rental revenues. In addition, each JV is subject to similar limitations on enforcements of remedies and risks under its respective JV Master Lease, which could reduce the value of our investment in, or distributions to us by, one or more of the JVs.


Maryland	38-3976287
(State of Incorporation)	(I.R.S. Employer Identification No.)


~~489~~500 Fifth Avenue ~~18th Floor,~~ , Suite 1530, New York, New York	~~10017~~10110
(Address of principal executive offices)	(Zip Code)


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 share	SRG	New York Stock Exchange
7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share	SRG-PA	New York Stock Exchange


Large accelerated filer	☒☐		Accelerated filer	☐☒
Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
			Emerging growth company	☐


	Balance		Fair Value Measurements Using
Description (1)	March 31, 2024		(Level 1)		(Level 2)		(Level 3)
Impaired real estate assets	$	8,325	$	8,325	$	-	$	-

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
REVENUE
Rental income	$	48,167		$	45,584		$	139,526		$	136,737
Tenant reimbursements		15,881			12,023			47,813			45,741
Total revenue		64,048			57,607			187,339			182,478
EXPENSES
Property operating		4,311			4,505			13,985			17,176
Real estate taxes		11,335			7,965			35,707			31,101
Depreciation and amortization		61,059			44,532			170,293			121,365
General and administrative		5,272			4,252			16,639			13,104
Litigation charge		—			19,000			—			19,000
Provision for doubtful accounts		68			124			119			269
Acquisition-related expenses		—			—			—			73
Total expenses		82,045			80,378			236,743			202,088
Operating loss		(17,997	)		(22,771	)		(49,404	)		(19,610	)
Equity in (loss) income of unconsolidated joint ventures		(3,686	)		1,497			(4,226	)		4,495
Gain on sale of interest in unconsolidated joint venture		43,729			—			43,729			—
Gain on sale of real estate		13,018			—			13,018			—
Interest and other income		352			77			472			196
Interest expense		(18,049	)		(15,931	)		(53,072	)		(47,297	)
Unrealized loss on interest rate cap		(91	)		(47	)		(686	)		(1,898	)
Income (loss) before income taxes		17,276			(37,175	)		(50,169	)		(64,114	)
Provision for income taxes		—			(72	)		(266	)		(412	)
Net income (loss)		17,276			(37,247	)		(50,435	)		(64,526	)
Net (income) loss attributable to non-controlling interests		(6,762	)		16,145			19,892			27,972
Net income (loss) attributable to common shareholders	$	10,514		$	(21,102	)	$	(30,543	)	$	(36,554	)

Net income (loss) per share attributable to Class A and Class C common shareholders - Basic	$	0.31		$	(0.67	)	$	(0.91	)	$	(1.16	)
Net income (loss) per share attributable to Class A and Class C common shareholders - Diluted	$	0.31		$	(0.67	)	$	(0.91	)	$	(1.16	)
Weighted average Class A and Class C common shares outstanding - Basic		33,774			31,419			33,685			31,414
Weighted average Class A and Class C common shares outstanding - Diluted		33,841			31,419			33,685			31,414

																			Additional						Non-
	Class A						Class B						Class C						Paid-In			Accumulated			Controlling			Total
	Shares			Amount			Shares			Amount			Shares			Amount			Capital			Deficit			Interests			Equity
Balance at January 1, 2016		24,818		$	248			1,589		$	16			6,773		$	68		$	924,508		$	(38,145	)	$	683,382		$	1,570,077

Net loss		—			—			—			—			—			—			—			(36,554	)		(27,972	)		(64,526	)
Dividends and distributions declared ($0.75 per share and unit)		—			—			—			—			—			—			—			(23,726	)		(18,133	)		(41,859	)
Vesting of restricted share units		7			0			—			—			—			—			(13	)		—			—			(13	)
Stock-based compensation		—			—			—			—			—			—			801			—			—			801
Share class exchanges, net (997,450 common shares)		997			10			—			—			(997	)		(10	)		—			—			—			—

Balance at September 30, 2016		25,822		$	258			1,589		$	16			5,776		$	58		$	925,296		$	(98,425	)	$	637,277		$	1,464,480


Balance at January 1, 2017		25,843			258			1,589			16			5,755			58			925,563			(121,338	)		619,754			1,424,311

Net loss		—			—			—			—			—			—			—			(30,543	)		(19,892	)	$	(50,435	)
Dividends and distributions declared ($0.75 per share and unit)		—			—			—			—			—			—			—			(25,513	)		(16,394	)		(41,907	)
Vesting of restricted share units		11			0			—			—			—			—			(13	)		—			—			(13	)
Stock-based compensation		—			—			—			—			—			—			1,166			—			—			1,166
Share class exchanges, net (197,176 common shares)		(197	)		(1	)		—			—			197			1			—			—			—			—
Share class surrenders (154,098 common shares)		—			—			(154	)		(2	)		—			—			2			—			—			—
OP Unit exchanges (2,344,589 units)		2,344			23			—			—			—			—			69,329			—			(69,352	)		—

Balance at September 30, 2017		28,001		$	280			1,435		$	14			5,952		$	59		$	996,047		$	(177,394	)	$	514,116		$	1,333,122

	Nine Months Ended
	September 30, 2017		September 30, 2016
Cash and cash equivalents	$	104,153	$	90,029
Restricted cash		202,513		81,790
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	306,666	$	171,819

Remainder of 2017	$	15,521
2018		42,303
2019		40,543
2020		40,097
2021		39,313

	Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
EQUITY IN INCOME OF UNCONSOLIDATED JOINT VENTURES
Total revenue	$	12,550		$	16,266		$	46,062		$	50,113
Property operating expenses		(3,077	)		(3,103	)		(9,594	)		(9,703	)
Depreciation and amortization		(9,509	)		(10,382	)		(37,206	)		(31,304	)
Operating income		(36	)		2,781			(738	)		9,106
Other expenses		(7,337	)		212			(7,714	)		(117	)
Net (loss) income	$	(7,373	)	$	2,993		$	(8,452	)	$	8,989
Equity in (loss) income of unconsolidated joint ventures	$	(3,686	)	$	1,497		$	(4,226	)	$	4,495


			Series A
Declaration Date	Record Date	Payment Date	Preferred Share
2024
May 2	June 28	July 15	$	0.43750
February 29	March 29	April 15		0.43750
2023
October 30	December 29	January 16, 2024	$	0.43750
July 25	September 29	October 13		0.43750
April 27	June 30	July 14		0.43750
February 15	March 31	April 17		0.43750

			Dividends per
			Class A and Class C
Declaration Date	Record Date	Payment Date	Common Share
2017
October 24	December 29	January 11, 2018	$	0.25
July 25	September 29	October 12		0.25
April 25	June 30	July 13		0.25
February 28	March 31	April 13		0.25
2016
November 1	December 31	January 12, 2017	$	0.25
August 2	September 30	October 13		0.25
May 3	June 30	July 14		0.25
March 8	March 31	April 14		0.25

(in thousands except per share amounts)	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator
Net income (loss)	$	17,276		$	(37,247	)	$	(50,435	)	$	(64,526	)
Net (income) loss attributable to non-controlling interests		(6,762	)		16,145			19,892			27,972
Net income (loss) attributable to common shareholders	$	10,514		$	(21,102	)	$	(30,543	)	$	(36,554	)
Earnings allocated to unvested participating securities		(21	)		-			-			-
Net income (loss) available to common shareholders - Basic and diluted	$	10,493		$	(21,102	)	$	(30,543	)	$	(36,554	)

Denominator
Weighted average Class A common shares outstanding		27,758			25,671			27,810			25,443
Weighted average Class C common shares outstanding		6,016			5,748			5,875			5,971
Weighted average Class A and Class C common shares outstanding - Basic		33,774			31,419			33,685			31,414
Restricted shares and share units		67			-			-			-
Weighted average Class A and Class C common shares outstanding - Diluted		33,841			31,419			33,685			31,414

Net income (loss) per share attributable to Class A and Class C common shareholders - Basic	$	0.31		$	(0.67	)	$	(0.91	)	$	(1.16	)
Net income (loss) per share attributable to Class A and Class C common shareholders - Diluted	$	0.31		$	(0.67	)	$	(0.91	)	$	(1.16	)



	Nine Months Ended September 30, 2017					Three Months Ended March 31, 2024
				Weighted-					Weighted-
				Average Grant					Average Grant
	Shares			Date Fair Value		Shares			Date Fair Value
Unvested restricted shares at beginning of period		216,348		$	38.98		361,645		$	14.31

Restricted shares granted		62,135			45.23
Share units granted							-
Restricted shares vested		(32,345	)		33.02		(131,272	)		13.48
Restricted shares forfeited		(568	)		45.23		(131,975	)		17.18

Unvested restricted shares at end of period		245,570		$	41.33		98,398		$	11.55

	September 30, 2017		December 31, 2016
Accounts payable and accrued expenses	$	21,905	$	22,424
Accrued real estate taxes		21,576		23,942
Unearned tenant reimbursements		17,133		4,039
Below-market leases		14,998		16,827
Dividends payable		14,648		14,132
Environmental reserve		11,322		11,584
Prepaid rental income		3,875		1,979
Accrued interest		3,444		3,004
Deferred maintenance		2,581		4,124
Litigation charge		—		19,000
Total accounts payable, accrued expenses and other liabilities	$	111,482	$	121,055

~~Five Existing JV Assets to be Sold to Simon~~		~~Five Remaining Assets in JV with Simon~~
~~Retail Center~~	~~Location~~	~~Retail Center~~	~~Location~~
~~Brea Mall~~	~~Brea, CA~~	~~Barton Creek Square~~	~~Austin, TX~~
~~Burlington Mall~~	~~Burlington, MA~~	~~Briarwood Mall~~	~~Ann Arbor, MI~~
~~Midland Park Mall~~	~~Midland, TX~~	~~Santa Rosa Plaza~~	~~Santa Rosa, CA~~
~~Ross Park Mall~~	~~Pittsburgh, PA~~	~~The Shops at Nanuet~~	~~Nanuet, NY~~
~~Ocean County Mall~~	~~Toms River, NJ~~	~~Woodland Hills Mall~~	~~Tulsa, OK~~


	Three Months Ended March 31,
NOI and Total NOI	2024			2023
Net loss	$	(18,985	)	$	(61,986	)
Management and other fee income		(48	)		(262	)
Depreciation and amortization		5,271			4,564
General and administrative expenses		9,192			12,220
Equity in (income) loss of unconsolidated entities		(379	)		36,372
Gain on sale of real estate, net		(1,139	)		(12,392	)
Impairment of real estate assets		1,148			2,576
Interest and other income, net		(1,423	)		(5,585	)
Interest expense		7,011			15,202
Provision (Benefit) for income taxes		11			(13	)
Straight-line rent		67			10,843
Above/below market rental expense		38			48
NOI	$	764		$	1,587
Unconsolidated entities
Net operating income of unconsolidated entities		1,531			1,659
Straight-line rent		(188	)		(147	)
Above/below market rental expense		(9	)		5
Total NOI	$	2,098		$	3,104

	Three Months Ended September 30,						Nine Months Ended September 30,
EBITDA	2017			2016			2017			2016
Net income (loss)	$	17,276		$	(37,247	)	$	(50,435	)	$	(64,526	)
Depreciation and amortization		61,059			44,532			170,293			121,365
Depreciation and amortization (unconsolidated joint ventures)		4,755			5,191			18,583			15,653
Interest expense		18,049			15,931			53,072			47,297
Provision for income and other taxes		—			72			266			412
EBITDA	$	101,139		$	28,479		$	191,779		$	120,201

Adjusted EBITDA
EBITDA	$	101,139		$	28,479		$	191,779		$	120,201
Termination fee income		(10,596	)		—			(17,360	)		—
Unrealized loss on interest rate cap		91			47			686			1,898
Litigation charge		—			19,000			—			19,000
Acquisition-related expenses		—			—			—			73
Up-front hiring and personnel costs		—			—			—			328
Gain on sale of interest in unconsolidated joint venture		(43,729	)		—			(43,729	)		—
Gain on sale of real estate		(13,018	)		—			(13,018	)		—
Adjusted EBITDA	$	33,887		$	47,526		$	118,358		$	141,500

	Three Months Ended September 30,						Nine Months Ended September 30,
Funds from Operations	2017			2016			2017			2016
Net income (loss)	$	17,276		$	(37,247	)	$	(50,435	)	$	(64,526	)
Real estate depreciation and amortization (consolidated properties)		60,483			44,307			169,158			120,845
Real estate depreciation and amortization (unconsolidated joint ventures)		4,755			5,191			18,583			15,653
Gain on sale of interest in unconsolidated joint venture		(43,729	)		—			(43,729	)		—
Gain on sale of real estate		(13,018	)		—			(13,018	)		—
FFO attributable to common shareholders and unitholders	$	25,767		$	12,251		$	80,559		$	71,972

FFO per diluted common share and unit	$	0.46		$	0.22		$	1.45		$	1.29

Company Funds from Operations
Funds from Operations attributable to Seritage Growth Properties	$	25,767		$	12,251		$	80,559		$	71,972
Termination fee income		(10,596	)		—			(17,360	)		—
Unrealized loss on interest rate cap		91			47			686			1,898
Amortization of deferred financing costs		2,329			1,340			6,390			4,020
Litigation charge		—			19,000			—			19,000
Acquisition-related expenses		—			—			—			73
Up-front hiring and personnel costs		—			—			—			328
Company FFO attributable to common shareholders and unitholders	$	17,591		$	32,638		$	70,275		$	97,291

Company FFO per diluted common share and unit	$	0.32		$	0.59		$	1.26		$	1.75

Weighted Average Common Shares and Units Outstanding
Weighted average common shares outstanding		33,841			31,419			33,685			31,414
Weighted average OP units outstanding		21,832			24,176			21,916			24,176
Weighted average common shares and units outstanding		55,673			55,595			55,601			55,590

~~Exhibit No.~~	Description	~~Description~~	SEC Document Reference

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.

31.2		Certification of the Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.

32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350	~~Filed~~Furnished herewith.

32.2		Certification of the Interim Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350	~~Filed~~Furnished herewith.

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith.

101.SCH		Inline XBRL Taxonomy Extension Schema Document	Filed herewith.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	Filed herewith.


	SERITAGE GROWTH PROPERTIES

Dated: ~~November 3, 2017~~May 10, 2024	/s/ ~~Benjamin Schall~~Andrea Olshan
	By:	~~Benjamin Schall~~Andrea Olshan
	President and Chief Executive Officer (Principal Executive Officer)

Dated: ~~November 3, 2017~~May 10, 2024	/s/ ~~Brian Dickman~~John Garilli
	By:	~~Brian Dickman~~John Garilli
	~~Executive Vice President and~~Interim Chief Financial Officer (Principal Financial and Accounting Officer)