Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | SERITAGE GROWTH PROPERTIES | |
Entity Central Index Key | 0001628063 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-37420 | |
Entity Tax Identification Number | 38-3976287 | |
Entity Address, Address Line One | 500 Fifth Avenue | |
Entity Address, Address Line Two | Suite 1530 | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10110 | |
Entity Incorporation, State or Country Code | MD | |
City Area Code | 212 | |
Local Phone Number | 355-7800 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Series A Cumulative Redeemable Preferred Shares [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share | |
Trading Symbol | SRG-PA | |
Security Exchange Name | NYSE | |
Class A Common Shares [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A common shares of beneficial interest, par value $0.01 per share | |
Trading Symbol | SRG | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 38,622,102 | |
Class B Common Shares [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 | |
Class C Common Shares [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investment in real estate | ||
Land | $ 654,698 | $ 667,004 |
Buildings and improvements | 1,133,636 | 1,112,653 |
Accumulated depreciation | (156,023) | (147,696) |
Real Estate Investment Property, at Cost, Total | 1,632,311 | 1,631,961 |
Construction in progress | 412,222 | 338,672 |
Net investment in real estate | 2,044,533 | 1,970,633 |
Real estate held for sale | 3,204 | 5,275 |
Investment in unconsolidated joint ventures | 459,646 | 445,077 |
Cash and cash equivalents | 96,737 | 139,260 |
Tenant and other receivables, net | 48,602 | 54,470 |
Lease intangible assets, net | 44,121 | 68,153 |
Prepaid expenses, deferred expenses and other assets, net | 67,525 | 67,744 |
Total assets | 2,764,368 | 2,750,612 |
Liabilities | ||
Term Loan Facility, net | 1,598,593 | 1,598,487 |
Accounts payable, accrued expenses and other liabilities | 153,407 | 108,755 |
Total liabilities | 1,752,000 | 1,707,242 |
Commitments and contingencies (Note 9) | ||
Shareholders' Equity | ||
Additional paid-in capital | 1,177,553 | 1,149,721 |
Accumulated deficit | (440,600) | (418,711) |
Total shareholders' equity | 737,367 | 731,419 |
Non-controlling interests | 275,001 | 311,951 |
Total equity | 1,012,368 | 1,043,370 |
Total liabilities and equity | 2,764,368 | 2,750,612 |
Class A Common Shares [Member] | ||
Shareholders' Equity | ||
Common shares | 386 | 369 |
Total equity | 386 | 369 |
Class B Common Shares [Member] | ||
Shareholders' Equity | ||
Common shares | 12 | |
Total equity | 12 | |
Series A Preferred Shares [Member] | ||
Shareholders' Equity | ||
Preferred shares | 28 | 28 |
Total equity | $ 28 | $ 28 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Class A Common Shares [Member] | ||
Common shares, par value | $ 0.01 | $ 0.01 |
Common shares, authorized | 100,000,000 | 100,000,000 |
Common shares, outstanding | 38,622,102 | 36,897,364 |
Common shares, issued | 38,622,102 | 36,897,364 |
Class B Common Shares [Member] | ||
Common shares, par value | $ 0.01 | $ 0.01 |
Common shares, authorized | 5,000,000 | 5,000,000 |
Common shares, outstanding | 0 | 1,242,536 |
Common shares, issued | 0 | 1,242,536 |
Series A Preferred Shares [Member] | ||
Common shares, outstanding | 2,800,000 | 2,800,000 |
Preferred shares, par value | $ 0.01 | $ 0.01 |
Preferred shares, authorized | 10,000,000 | 10,000,000 |
Preferred shares, outstanding | 2,800,000 | 2,800,000 |
Preferred shares, issued | 2,800,000 | 2,800,000 |
Preferred shares, liquidation preference | $ 70,000 | $ 70,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
REVENUE | ||
Rental income | $ 33,110 | $ 43,578 |
Management and other fee income | $ 207 | $ 282 |
Type of Revenue [Extensible List] | us-gaap:ManagementServiceMember | us-gaap:ManagementServiceMember |
Total revenue | $ 33,317 | $ 43,860 |
EXPENSES | ||
Property operating | 10,301 | 10,237 |
Real estate taxes | 9,225 | 10,192 |
Depreciation and amortization | 34,097 | 26,216 |
General and administrative | 9,420 | 9,759 |
Total expenses | 63,043 | 56,404 |
Gain on sale of real estate, net | 20,788 | 21,261 |
Equity in (loss) income of unconsolidated joint ventures | (894) | 1,222 |
Interest and other income | 333 | 2,598 |
Interest expense | (21,513) | (23,454) |
Loss before taxes | (31,012) | (10,917) |
Provision for taxes | 37 | 23 |
Net loss | (30,975) | (10,894) |
Net loss attributable to non-controlling interests | 10,311 | 3,927 |
Net loss attributable to Seritage | (20,664) | (6,967) |
Preferred dividends | (1,225) | (1,225) |
Net loss attributable to Seritage common shareholders | $ (21,889) | $ (8,192) |
Net loss per share attributable to Seritage Class A and Class C common shareholders - Basic | $ (0.59) | $ (0.23) |
Net loss per share attributable to Seritage Class A and Class C common shareholders - Diluted | $ (0.59) | $ (0.23) |
Weighted average Class A and Class C common shares outstanding - Basic | 37,232 | 35,671 |
Weighted average Class A and Class C common shares outstanding - Diluted | 37,232 | 35,671 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Total | Class A Common Shares [Member] | Class B Common Shares [Member] | Series A Preferred Shares [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Non-Controlling Interest [Member] |
Beginning balance at Dec. 31, 2018 | $ 1,150,458 | $ 357 | $ 13 | $ 28 | $ 1,124,504 | $ (344,132) | $ 369,688 |
Beginning balance, shares at Dec. 31, 2018 | 35,668,000 | 1,322,000 | 2,800,000 | ||||
Net loss | (10,894) | (6,967) | (3,927) | ||||
Cumulative effect of accounting change | (1,286) | (1,286) | |||||
Common dividends and distributions declared | (14,026) | (8,996) | (5,030) | ||||
Preferred dividends declared | (1,225) | (1,225) | |||||
Vesting of restricted share units | (1,613) | (1,613) | |||||
Vesting of restricted share units, shares | (23,000) | ||||||
Share-based compensation | 1,566 | 1,566 | |||||
Share-based compensation, shares | 45,000 | ||||||
Ending balance at Mar. 31, 2019 | 1,122,980 | $ 357 | $ 13 | $ 28 | 1,124,457 | (362,606) | 360,731 |
Ending balance, shares at Mar. 31, 2019 | 35,690,000 | 1,322,365 | 2,800,000 | ||||
Beginning balance at Dec. 31, 2019 | 1,043,370 | $ 369 | $ 12 | $ 28 | 1,149,721 | (418,711) | 311,951 |
Beginning balance, shares at Dec. 31, 2019 | 36,897,364 | 1,242,536 | 2,800,000 | ||||
Net loss | (30,975) | (20,664) | (10,311) | ||||
Preferred dividends declared | (1,225) | (1,225) | |||||
Vesting of restricted share units | $ 1 | (1) | |||||
Vesting of restricted share units, shares | 75,000 | ||||||
Share-based compensation | 1,198 | 1,198 | |||||
Share class surrenders | $ (12) | 12 | |||||
Share class surrenders, shares | (1,243,000) | ||||||
OP Unit exchanges | $ 16 | 26,623 | (26,639) | ||||
OP Unit exchanges, shares | 1,650,000 | ||||||
Ending balance at Mar. 31, 2020 | $ 1,012,368 | $ 386 | $ 28 | $ 1,177,553 | $ (440,600) | $ 275,001 | |
Ending balance, shares at Mar. 31, 2020 | 38,622,102 | 0 | 2,800,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Preferred dividends declared, per share | $ / shares | $ 0.4375 |
Class B Common Shares [Member] | |
Share class surrenders, shares | 1,242,536 |
Class A Common Shares [Member] | |
OP Unit exchanges, shares | 1,650,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (30,975) | $ (10,894) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Equity in loss of unconsolidated joint ventures | 894 | (1,222) |
Distributions from unconsolidated joint ventures | 46 | 781 |
Gain on sale of real estate, net | (20,788) | (21,261) |
Share-based compensation | 1,179 | 1,532 |
Depreciation and amortization | 34,097 | 26,216 |
Amortization of deferred financing costs | 106 | 118 |
Amortization of above and below market leases, net | (97) | (104) |
Straight-line rent adjustment | 2,701 | (3,355) |
Change in operating assets and liabilities | ||
Tenants and other receivables | (2,300) | 484 |
Prepaid expenses, deferred expenses and other assets | (124) | (248) |
Accounts payable, accrued expenses and other liabilities | 5,061 | (8,818) |
Net cash used in operating activities | (10,200) | (16,771) |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Investment in unconsolidated joint ventures | (16,894) | (9,140) |
Distributions from unconsolidated joint ventures | 1,150 | 389 |
Net proceeds from sale of real estate | 58,330 | 37,569 |
Development of real estate | (73,610) | (85,413) |
Net cash used in investing activities | (31,024) | (56,595) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Purchase of shares related to stock grant recipients' tax withholdings | (74) | (1,613) |
Preferred dividends paid | (1,225) | (1,225) |
Common dividends paid | (8,998) | |
Non-controlling interests distributions paid | (5,030) | |
Net cash used in financing activities | (1,299) | (16,866) |
Net decrease in cash and cash equivalents | (42,523) | (90,232) |
Cash and cash equivalents, beginning of period | 139,260 | 532,857 |
Cash and cash equivalents, end of period | 96,737 | 442,625 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash payments for interest | 28,311 | 28,000 |
Capitalized interest | 7,914 | 5,666 |
Income taxes paid | 5 | 25 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Development of real estate financed with accounts payable | 57,644 | 17,438 |
Common dividends and OP units distributions declared and unpaid | 14,026 | |
Preferred dividends declared and unpaid | 1,225 | 1,225 |
Decrease in real estate, net resulting from deconsolidated properties | ||
Real estate, net | (14,656) | |
Tenants and other receivables, net | (2) | |
Prepaid expenses, deferred expenses and other assets, net | (84) | |
Accounts payable, accrued expenses and other liabilities | 6 | |
Transfer to real estate assets held for sale | (2,071) | 4,416 |
Transfer of below market asset to right of use asset | (11,005) | |
Recording of right of use assets | 1,598 | 19,373 |
Recording of lease liabilities | $ (1,598) | $ (8,368) |
Organization
Organization | 3 Months Ended |
Mar. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | Note 1 – Organization Seritage Growth Properties (“Seritage”) (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) of the Internal Revenue Code (the “Code”). Seritage’s assets are held by and its operations are primarily conducted, directly or indirectly, through Seritage Growth Properties, L.P., a Delaware limited partnership (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, the “Company” and “Seritage” refer to Seritage, the Operating Partnership and its owned and controlled subsidiaries. Seritage is principally engaged in the acquisition, ownership, development, redevelopment, management and leasing of diversified retail and mixed-use properties throughout the United States. As of March 31, 2020, the Company’s portfolio consisted of interests in 208 properties totaling approximately 32.8 million square feet of gross leasable area (“GLA”), including 180 wholly owned properties totaling approximately 28.3 million square feet of GLA across 44 states and Puerto Rico (the “Wholly Owned Properties), and interests in 28 joint venture properties totaling approximately 4.5 million square feet of GLA across 14 states (the “JV Properties”). On June 11, 2015, Sears Holdings Corporation (“Sears Holdings” or “Sears”) effected a rights offering to Sears Holdings stockholders to purchase common shares of Seritage in order to fund, in part, the $ 2.7 234 one 50 three 28 one two 224 31 As of March 31, 2020, the Company leased space at 17 Wholly Owned Properties to Holdco under the Holdco Master Lease, after giving effect to one pending recapture notice, and also leased space to Holdco at two JV Properties. COVID-19 Pandemic The recent spread of a novel strain of coronavirus (“COVID-19”) is having a significant impact on the global economy, the U.S. economy, the local economies in which the Company’s properties are located, and the broader financial markets. Nearly every industry has been impacted directly or indirectly, and the retail, retail real estate and real estate development industries in the United States have all come under severe pressure due to numerous factors, including preventative measures taken by local, state and federal authorities to alleviate the public health crisis such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders. These containment measures and other factors have affected operations at the Company’s properties and, with the exception of "essential" businesses, substantially all of the Company’s tenants have closed their stores. The Company also paused substantially all of its construction projects as of the end of March 2020. As a result of the rapid development, fluidity and uncertainty surrounding this situation, the Company expects that these conditions will change, potentially significantly, in future periods, and results for the three months ended March 31, 2020 may therefore not be indicative of the impact of the COVID-19 pandemic on the Company’s business for the second quarter of 2020 or for future periods. As of May 6, 2020, the Company had collected approximately 47% of contractual base rent and tenant reimbursements billed for the month of April (54% from tenants other than Holdco). The Company has received a number of rent relief requests from tenants, most often in the form of rent deferral requests, which the Company is evaluating on a case-by-case basis. Absent agreement between the Company and tenants with respect to such rent relief requests, the Company fully intends to enforce its contractual rights under its leases. There can be no assurance that rental modifications agreements will be reached or, if agreements are reached, that tenants will meet their future obligations. There is uncertainty as to the timing and extent to which these restrictions will be relaxed or lifted, businesses will reopen and previously underway projects will recommence. As such, the Company cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows over the foreseeable future. Liquidit y In response to the COVID-19 pandemic, the Company has taken a number of actions to manage its cash resources, including putting substantially all of its construction projects on hold, reducing operating and corporate expenses, and amending certain terms of its Term Loan Facility, as described in Note 6, Debt. 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, on a limited basis given the current environment, the reinvestment in and redevelopment of its properties (“development expenditures”). As a result of a decrease in occupancy levels due to the Company’s recapture of space for redevelopment purposes and the execution of certain termination rights by Sears Holdings under the Original Master Lease and Holdco under the Holdco Master Lease, property rental income, which is the Company’s primary source of operating cash flow for the three months ended March 31, 2020, did not fully fund obligations incurred during the three months ended March 31, 2020 and the Company had operating cash outflows of $10.2 million. Additionally, the Company’s development expenditures during the three months ended March 31, 2020 drove investing cash outflows of $31.0 million. Obligations are projected to continue to exceed property rental income and the COVID-19 pandemic has created uncertainty with respect to rent collections and the timing of the Company’s construction projects, substantially all of which are currently on hold. While the Company does not currently have the liquid funds available to satisfy its obligations and development expenditures, the Company expects to fund such obligations and any development expenditures with a combination of capital sources including, but not limited to, cash on hand, sales of Wholly Owned Properties, sales of interests in JV Properties, and potential credit and capital markets transactions, subject to any approvals that may be required under the Company’s Term Loan Facility, as described in Note 6, Debt. Management has determined that it is probable its plans 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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, 2019. 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 of three months ended March 31, 2020 may not be indicative of the results that may be expected for any other interim period or for the year ending December 31, 2020. 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, and all other entities in which they have a controlling financial interest or entities that meet the definition of a variable interest entity (“VIE”) in which the Company has, as a result of ownership, contractual interests or other financial interests, both the 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. If the Company has an interest in a VIE but it is not determined to be 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 the Company qualifies as its primary beneficiary. As of March 31, 2020 and December 31, 2019, the Company has several unconsolidated VIEs in the form of joint ventures (see Note 4). The Company does not consolidate these entities because the Company is not the primary beneficiary and the nature of its involvement in the activities of these entities does not give the Company power over decisions that significantly affect these entities’ economic performance. As of March 31, 2020, the Company holds a 69.1% 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. The Company has determined 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. The assets and liabilities of the Operating Partnership are the same as those of the Company and are presented in the condensed consolidated balance sheet. To the extent such variable interests are in entities that are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model. 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 the useful lives of tangible and intangible assets, real estate impairment assessments, and assessing the recoverability of accounts 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. 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: 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. On a periodic basis, management assesses whether there are indicators that the value of the Company’s real estate assets (including any related intangible assets or liabilities) may be impaired. These indicators include macroeconomic conditions, such as the expected impact of the current COVID-19 pandemic. If an indicator is identified, a real estate asset is considered impaired if management’s estimate of current and projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated and probability weighted holding period, are less than a real estate asset’s carrying value. Various factors are considered in the estimation process, including expected future operating income, trends and prospects and the effects of demand, competition, and other economic factors. 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. If the COVID-19 pandemic causes economic and market conditions to deteriorate further, subsequent tests for impairment may result in future impairment charges. No impairment losses were recognized for the three months ended March 31, 2020 and March 31, 2019. Real Estate Dispositions When the Company disposes of all or 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 and in certain circumstances, non-cash consideration which is typically in the form of equity in unconsolidated joint ventures The following table summarizes our gain on sale of real estate, net during the three months ended March 31, 2020 and March 31, 2019 (in thousands): Three Months Ended March 31, 2020 2019 Contributions to unconsolidated joint ventures Gross proceeds $ — $ 18.7 Gain on sale of real estate, net — 3.8 Dispositions to third parties Gross proceeds $ 60.4 $ 29.5 Gain on sale of real estate, net 20.8 17.7 Total gains on contributions and dispositions, net $ 20.8 $ 21.5 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 under contract for sale and are expected 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, 2020, one property was classified as held for sale with assets of $3.2 million and no liabilities, and as of December 31, 2019, two properties were classified as held for sale with assets of $5.3 million and no liabilities. Investments in Unconsolidated Joint Ventures The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting as the Company exercises significant influence, but does not control these entities. 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. 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 such as the expected impact of the current COVID-19 pandemic), that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired 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. If the COVID-19 pandemic causes economic and market conditions to deteriorate further, subsequent tests for impairment may result in future impairment charges. No such impairment losses were recognized for each of the three months ended March 31, 2020 or March 31, 2019. Cash and Cash Equivalents The Company considers instruments with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalent 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. 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, including the expected impact of the COVID-19 pandemic performs a periodic review of receivable balances to assess the risk of uncollectible amounts and establish appropriate provisions. Any receivables that are deemed to be uncollectible are recognized as a reduction to rental income in the Company’s condensed consolidated statements of operations. Prior period provision for doubtful accounts is presented on the Company's condensed consolidated statements of operations in accordance with the Company's previous presentation and has not been reclassified to rental income. Tenant and other receivables also include management fees receivable for services performed for the benefit of certain unconsolidated joint ventures. In the event that the collectability of a management fee receivable is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific receivable will be made. Revenue Recognition Rental income is comprised of base rent and reimbursements of property operating expenses. 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 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 a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis. The Company commences recognizing revenue based on an evaluation of several factors. Revenue recognition under a lease begins when the lessee takes control of the physical use of the leased asset. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred. Management and Other Fee Income Management and other fee income represents property management, construction, leasing and development fees for services performed for the benefit of certain unconsolidated joint ventures. Property management fee income is reported at 100% of the revenue earned from such joint ventures in management and other fee income on the condensed consolidated statements of operations. The Company’s share of management expenses incurred by the unconsolidated joint ventures is reported in equity in income (loss) of unconsolidated joint ventures 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 joint ventures. 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 income (loss) of unconsolidated joint ventures 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 property and asset management services, the Company is typically compensated for its services through a monthly management fee earned based on a specified percentage of monthly rental income or rental receipts generated from the property under management. For construction and development services, the Company is typically compensated for planning, administering and monitoring the design and construction of projects at our unconsolidated joint venture properties based on a percentage of 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 obligation s , satisfied as of a point in time. The Company’s leasing fee is typically paid upon the occurrence of certain contractual event(s) that may be contingent and the 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. Accounting for Recapture and Termination Activity Pursuant to the Original Master Lease and Holdco Master Lease (see Note 5) Seritage Recapture Rights. The Company generally treats the delivery of a recapture notice as a modification of the 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, if any, is amortized over the remaining life of the 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, if any, is amortized over the remaining useful life of the asset or liability. A 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 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. Termination Rights. The Original Master Lease provided, and the Holdco Master Lease provides the tenant with certain rights to terminate their lease. Such terminations 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 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. Share-Based Compensation The Company generally recognizes equity awards to employees as compensation expense and includes such expense within general and administrative expenses in the condensed consolidated statements of operations. Compensation expense for equity awards is based on the grant date fair value of the awards. Compensation expense is recognized ratably over the vesting period for awards with time-based vesting and 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 of performance criteria is deemed probable for the amount 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 utilizes 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 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 March 31, 2020, the Company leased space at 17 Wholly Owned Properties to Holdco under the Holdco Master Lease, after giving effect to one pending recapture notice , and a material amount of the Company’s rental revenues for the quarter ended March 31, 2020 was derived from the Holdco Master Lease. Until the Company further diversifies the tenancy of its portfolio, an event that has a material adverse effect on the business, financial condition or results of operations of Holdco or another major tenant could have a material adverse effect on the Company’s business, financial condition or results of operations . Other than the Company's tenant concentration, management believes the Company's portfolio was reasonably diversified by geographical location and did not contain any other significant concentrations of credit risk. As of March 31, 2020, the Company's portfolio of 180 Wholly Owned Properties and 28 JV Properties was diversified by location across 44 states and Puerto Rico. Earnings 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. As of 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 per share computations as they do not have economic rights. As of March 31, 2020, all outstanding Class B common shares have been surrendered and there are currently no class B common shares outstanding. As of March 31, 2019, 1,322,365 Class B non-economic common shares were issued and 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 per share. Recently Issued Accounting Pronouncements The following presents Accounting Standards Updates (“ASU”) issued by Financial Accounting Standards Board (“FASB”) which have been adopted by the Company: ASU Description Adoption Date Effect on the financial statements or other significant matters ASU Description Adoption Date Effect on the financial statements or other significant matters ASU 2016-02, Leases (“Topic 842”) ASU 2018-10, Codification Improvements ASU 2018-11, Leases, Targeted Improvements ASU 2018-20, Leases This standard, as amended by subsequent ASUs on the topic, sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Additional guidance and targeted improvements to the February 2016 ASU were made through the issuance of supplementary ASUs in July 2018, December 2018 and March 2019. The accounting applied by the lessor is largely unchanged from that applied under the existing lease standard. However, ASU 2016-02 requires lessees to apply a two-method approach, classifying leases as either finance or operating leases based on the principle of whether the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less should be accounted for consistent with earlier guidance under ASC 840 for operating leases. Lessees should recognize an expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. January 1, 2019 The Company adopted this standard by electing the package of practical expedients without hindsight which permits the Company to not reassess (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the adoption date. line item respectively on the condensed consolidated balance sheets. Additionally, the Company is no longer able to capitalize certain internal and external leasing costs. Because of this change, $1.3 million of such costs incurred in previous periods for leases which had not commenced at the beginning of current period were adjusted against opening equity upon adoption. The Company also combined $11,005 of below-market lease assets pertaining to the ground lease where we are a lessee with the right of use asset recorded for the ground lease as required upon adoption of ASU 2016-02. The below-market lease asset was previously recorded within the lease intangibles on the condensed consolidated balance sheets. ASU 2018-01, Leases, Land Easement Practical Expedient for Transition to Topic 842 In March 2018, the FASB finalized changes with respect to optional transition relief and approved a practical expedient for lessors that would permit lessors to make an accounting policy election to not separate non-lease components from the associated lease components, by class of underlying asset, if the following two criteria are met: (1) the timing and pattern of transfer of the lease and non-lease components are the same and (2) the lease component would be classified as an operating lease if accounted for separately. January 1, 2019 The Company has elected the optional transition relief and has determined that it is not required to bifurcate and separately report non-lease components, such as common area maintenance revenue, for operating leases on the condensed consolidated statements of operations for leases where the Company is the lessor. As a result, leases where the Company is the lessor have been accounted for in a similar method to earlier guidance under ASC 840. The Company’s adoption of ASC 842 did not have a material impact on our condensed consolidated financial statements. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) ASU 2018-19, Codification improvements to Topic 326, Financial Instruments – Credit Losses ASU 2016-13 changes the impairment model for most financial assets and certain other instruments, requiring the use of an "expected credit loss" model and adding more disclosure requirements. ASU 2018-19 clarifies that impairment of receivables arising from operating leases should accounted for in accordance with Topic 842, Leases. January 1, 2020 The Company’s adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements. ASU Description Adoption Date Effect on the financial statements or other significant matters Lease Modification Question and Answer Document ( the “Lease Modification Q&A”) In April 2020, the FASB staff issued the Lease Modification Q&A focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. April 10, 2020 The Lease Modification Q&A has no impact on the Company’s consolidated financial statements as of and for the three months ended March 31, 2020, however, its future impact to the Company is dependent upon the extent of and lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering into such concessions. |
Lease Intangible Assets and Lia
Lease Intangible Assets and Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Lease Intangible Assets and Liabilities | Note 3 – Lease Intangible Assets and Liabilities Lease intangible assets (acquired in-place leases, above-market leases and below-market ground leases) and liabilities (acquired below-market leases), net of accumulated amortization, were $44.1 million and $9.3 million, respectively, as of March 31, 2020 and $68.2 million and $10.6 million, respectively, as of December 31, 2019. The following table summarizes the Company’s lease intangible assets and liabilities (in thousands): March 31, 2020 Gross Accumulated Lease Intangible Assets Asset Amortization Balance In-place leases, net $ 203,672 $ (162,407 ) $ 41,265 Above-market leases, net 6,419 (3,563 ) 2,856 Total $ 210,091 $ (165,970 ) $ 44,121 Gross Accumulated Lease Intangible Liabilities Liability Amortization Balance Below-market leases, net $ 13,895 $ (4,620 ) $ 9,275 Total $ 13,895 $ (4,620 ) $ 9,275 December 31, 2019 Gross Accumulated Lease Intangible Assets Asset Amortization Balance In-place leases, net $ 245,745 $ (180,639 ) $ 65,106 Above-market leases, net 6,625 (3,578 ) 3,047 Total $ 252,370 $ (184,217 ) $ 68,153 Gross Accumulated Lease Intangible Liabilities Liability Amortization Balance Below-market leases, net $ 15,912 $ (5,264 ) $ 10,648 Total $ 15,912 $ (5,264 ) $ 10,648 Amortization of acquired below-market leases, net of acquired above-market leases, resulted in additional rental income of $0.1 million for the three months ended March 31, 2020, and March 31, 2019 Remainder of 2020 $ 159 2021 141 2022 111 2023 168 2024 183 Amortization of an acquired below-market ground lease resulted in additional property expense of $50 thousand for the three months ended March 31, 2020, and March 31, 2019. Future amortization of the below-market ground lease is estimated to increase property expenses as set forth below (in thousands): Remainder of 2020 $ 153 2021 203 2022 203 2023 203 2024 203 Amortization of acquired in-place leases resulted in additional depreciation and amortization expense of $21 million and $10.3 million for the three months ended March 31, 2020 and March 31, 2019, respectively. Future estimated amortization of acquired in-place leases is set forth below (in thousands): Remainder of 2020 $ 10,214 2021 13,226 2022 12,918 2023 12,118 2024 11,574 |
Investments in Unconsolidated J
Investments in Unconsolidated Joint Ventures | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Investments in Unconsolidated Joint Ventures | Note 4 – Investments in Unconsolidated Joint Ventures The Company conducts a portion of its property rental activities through investments in unconsolidated joint ventures. The Company’s partners in these joint ventures are unrelated real estate entities or commercial enterprises. The Company and its joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures. The obligations to make capital contributions are governed by each unconsolidated joint venture’s respective operating agreement and related governing documents. As of March 31, 2020, the Company had investments in nine unconsolidated joint ventures as follows: Seritage % # of Total Unconsolidated Joint Venture Joint Venture Partner Ownership Properties GLA GS Portfolio Holdings II LLC ("GGP I JV") Brookfield Properties Retail (formerly GGP Inc.) 50.0 % 4 520,500 GS Portfolio Holdings (2017) LLC ("GGP II JV") Brookfield Properties Retail (formerly GGP Inc.) 50.0 % 5 910,400 MS Portfolio LLC ("Macerich JV") The Macerich Company 50.0 % 9 1,570,200 SPS Portfolio Holdings II LLC ("Simon JV") Simon Property Group, Inc. 50.0 % 5 872,200 Mark 302 JV LLC ("Mark 302 JV") An investment fund managed by Invesco Real Estate 50.0 % 1 103,000 SI UTC LLC ("UTC JV") A separate account advised by Invesco Real Estate 50.0 % 1 226,300 SF WH Joint Venture LLC ("West Hartford JV") An affiliate of First Washington Realty 50.0 % 1 163,700 GGCAL SRG HV LLC ("Cockeysville JV") An affiliate of Greenberg Gibbons 50.0 % 1 160,200 Tech Ridge JV Holding LLC ("Tech Ridge JV") An affiliate of RD Management 50.0 % 1 — 28 4,526,500 The Company has contributed certain properties to joint ventures in exchange for equity interests in those joint ventures. The contribution of property to a joint venture is accounted for as a sale of real estate and the Company recognizes the gain (loss) on the sale (the “Gain (Loss)”) based upon the transaction price attributed to the property at the closing of the joint venture transaction (the “Contribution Value”). The Gain (Loss) is included in gain on sale of real estate within the condensed consolidated statements of operations. In certain circumstances, the Contribution Value is subject to revaluation as defined in the respective joint venture agreement s, which may result in an adjustment to the G ain ( L oss) recognized . If the Contribution Value is subject to revaluation, the Company initially recognizes the Gain (Loss) at the value that is the expected amount within the range of possible outcomes and will re-evaluate the expected amount on a periodic 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 joint venture partners, as well as an adjustment to the Initial Gain (Loss). Each reporting period, the Company re-analyzes the primary inputs that determine the Contribution Value and the Gain (Loss) for those joint ventures subject to a revaluation. The following table presents summarizes the properties contributed to the Company’s unconsolidated joint ventures: March 31, 2020 Unconsolidated Joint Venture Contribution Date Contribution Value Gain (Loss) 2018 Mark 302 JV (1) March 20, 2018 $ 90.0 $ 38.8 UTC JV May 18, 2018 68.0 28.3 West Hartford JV (2) May 18, 2018 20.3 (1.1 ) 2019 Cockeysville JV (3) March 29, 2019 $ 12.5 $ 3.8 Tech Ridge JV (4) September 27, 2019 3.0 0.1 (1) The Mark 302 JV is subject to a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2020. The primary inputs in determining the Contribution Value for the Mark 302 JV are property operating income and total project costs and the Contribution Value will be recalculated to yield a pre-determined rate of return to the investment fund managed by Invesco Real Estate. The Contribution Value cannot be more than $ ( 2 ) The West Hartford JV was subject to (i) a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2019, and (ii) an adjustment based on the timing, method and magnitude of the reassessment of the property for real estate tax purposes between 2018 and 2022. As of December 31, 2019, the Company revalued the Contribution Value and recorded an additional loss of $2.3 million, and the Company does not expect there to be any additional revaluations. ( 3 ) The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the Cockeysville JV if certain milestones are met with respect to entitling the Additional Land Parcel for residential use. If the Additional Land Parcel is contributed to the Cockeysville JV, the Company will record an increased investment in the Cockeysville JV in an amount equal to 50% of the fair value of the Additional Land Parcel at the time of contribution. The Contribution Value of the Cockeysville JV is based upon the Company’s assessment of the probability of the Additional Land Parcel being entitled for residential use. The maximum Gain (Loss) is the fair value of the Additional Land Parcel at the time the Contribution Value is revalued, which cannot be less than $ ( 4 ) The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. T he Contribution Value cannot be less than $2.75 million. The following tables present combined condensed financial data for the Company’s unconsolidated joint ventures (in thousands): March 31, 2020 December 31, 2019 ASSETS Investment in real estate Land $ 336,739 $ 336,739 Buildings and improvements 534,393 517,068 Accumulated depreciation (70,927 ) (86,496 ) 800,205 767,311 Construction in progress 195,170 177,028 Net investment in real estate 995,375 944,339 Cash and cash equivalents 19,773 27,977 Tenant and other receivables, net 1,879 3,113 Other assets, net 38,699 26,051 Total assets $ 1,055,726 $ 1,001,480 LIABILITIES AND MEMBERS' INTERESTS Liabilities Mortgage loans payable, net $ 14,470 $ 14,218 Accounts payable, accrued expenses and other liabilities 96,994 89,110 Total liabilities 111,464 103,328 Additional paid in capital 945,953 934,120 Retained earnings (1,691 ) (35,968 ) Total members interest 944,262 898,152 Total liabilities and members interest $ 1,055,726 $ 1,001,480 Three Months Ended March 31, 2020 2019 Total revenue $ 5,341 $ 11,218 Property operating expenses (2,737 ) (2,598 ) Depreciation and amortization (3,687 ) (5,253 ) Operating income (1,083 ) 3,367 Other expenses (489 ) (922 ) Net loss $ (1,572 ) $ 2,445 Equity in income (loss) of unconsolidated joint ventures (1) $ (786 ) $ 1,222 (1) Equity in income (loss) of unconsolidated joint ventures on the condensed consolidated statements of operations includes basis difference adjustments. Each unconsolidated joint venture is obligated to maintain financial statements in accordance with GAAP. The Company shares in the profits and losses of these unconsolidated joint ventures 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 that differ from the Company’s equity interest in the unconsolidated joint venture. This may arise from impairments that the Company recognizes related to its investment that differ from the impairments the unconsolidated joint venture recognizes with respect to its assets, differences between the Company’s basis in assets it has transferred to the unconsolidated joint venture and the unconsolidated joint venture’s basis in those assets or other items. There were no joint venture impairment charges for the three months ended March 31, 2020 and March 31, 2019. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Note 5 – Leases On October 15, 2018, Sears Holdings and certain of its affiliates filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On February 28, 2019, the Company and certain affiliates of Holdco executed the Holdco Master Lease which became effective on March 12, 2019 when the Bankruptcy Court issued an order approving the rejection of the Original Master Lease. The Company analyzed this transaction under applicable accounting guidance and determined that the termination of the Original Master Lease and entering into the Holdco Master Lease should be accounted for as a modification in accordance with ASC 842. Lease Structure The structure of the Holdco Master Lease is consistent with the structure of the Original Master Lease in all material respects, including (i) it is a unitary, non-divisible lease as to all properties, pursuant to which the tenant’s obligations as to each property are cross-defaulted with all obligations of the tenant with respect to all other properties; (ii) it is a triple net lease with respect to all space which is leased thereunder to the tenant, subject to proportional sharing by the tenant for repair and maintenance charges, real property taxes, insurance and other costs and expenses which are common to both the space leased by the tenant and other space occupied by other tenants in the same or other buildings, space which is recaptured pursuant to the Company’s recapture rights described below and all other space which is constructed on the properties; (iii) the tenant is required to make all expenditures reasonably necessary to maintain the premises in good appearance, repair and condition for as long as they are in occupancy; and (iv) the tenant is generally prohibited from subleasing any space demised under the lease. Term and Renewals Consistent with the terms of the Original Master Lease, the Holdco Master Lease will expire in July 2025 five-year four-year Rental Revenue The Holdco Master Lease provides for an initial base rent at the same rates which were in place at the time of the modification for accounting purposes. In each of the initial term and the first two renewal terms, consistent with the Original Master Lease, base rent under the Holdco Master Lease will be increased in August of each year by 2.0% per annum for each lease year over the rent for the immediately preceding lease year. For subsequent renewal terms, consistent with the Original Master Lease, rent will be set at the commencement of the renewal term for the Holdco Master Lease at a fair market rent based on a customary third-party appraisal process, taking into account all the terms of the Holdco 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. The base rent under the Holdco Master Lease will be subject to an adjustment in the form of a rent credit of up to approximately $12 million in each of the first and second years of the Holdco Master Lease. The rent credit is allocated to specific properties based on the trailing twelve- month EBITDA of the particular property Revenues from the Holdco Master Lease and the Original Master Lease for the three months ended March 31, 2020 and March 31, 2019 are as follows (in thousands and excluding straight-line rental income of $(4.5) million and $0.5 million, respectively. Three Months Ended March 31, 2020 2019 Fixed rental income $ 4,288 $ 12,288 Variable rental income 3,839 8,398 Total rental income $ 8,127 $ 20,686 Seritage Recapture Rights The Holdco Master Lease provides the Company with the right to recapture up to approximately 50% of the space occupied by the tenant at all properties (other than five specified properties) and 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 parking areas and common areas. Upon exercise of any of these partial recapture rights the Company will generally incur, as applicable, certain costs and expenses for the separation of the recaptured space from the remaining tenant space. Additionally, in contrast to the Original Master Lease, which permitted the Company to recapture 100% of certain properties upon payment of a specified recapture fee, the Holdco Master Lease provides the Company with the right, beginning in March 2020, to recapture 100% of the space occupied by the tenant at any of the properties included in the Holdco Master Lease (other than five specified properties) without paying a recapture fee. This right to recapture 100% of any property is limited to 10 properties in each year of the Holdco Master Lease term, with carry-over rights if less than 10 properties are recaptured in any given lease year. In the event of a 100% recapture of a property (or termination of a property by Holdco that is subject to a termination fee) and any subsequent redevelopment of such property for retail purposes, Holdco has certain rights of first offer to lease space at specified predefined rates depending on the condition the space is delivered. If the Company does not provide Holdco with a right of first offer on at least one-third of any such properties that are recaptured 100% by the Company (or terminated by Holdco with payment of a termination fee) in a given lease year, then the Company’s 100% recaptures rights are subject to payment of a recapture fee until such time as the Company has complied with the foregoing ratio. Upon the exercise of any of its recapture rights, the Company can reconfigure and rent the recaptured space to new, diversified tenants on potentially superior terms as determined by the Company and for its own account. The Company had previously exercised certain recapture rights with respect to 70 properties under the Original Master Lease prior to its rejection on March 12, 2019, and exercised recapture rights with respect to four properties under the Holdco Master Lease during the year ended December 31, 2019, including three properties where the Company had previously exercised certain recapture rights under the Original Master Lease. The following table provides a summary of the Company’s recapture activity as of March 31, 2020: (in thousands except property count) Year Square Feet Total Number of Properties 100% Recaptures (1) Partial Recaptures (2) 2019 629 4 3 1 2018 3,428 20 17 3 2017 3,302 27 16 11 2016 1,501 17 4 13 2015 372 3 3 — Total 9,232 71 43 28 (1) Includes properties for which the Company had converted partial recapture rights to 100% recapture rights. (2) Partial recaptures include the recapture of (i) up to approximately 50% of the space occupied by the tenant at all properties, (ii) automotive care centers which are free-standing or attached as “appendages” to the properties, and/or (iii) outparcels or outlots and certain portions of parking areas and common areas. Holdco Termination Rights Under the terms of the Holdco Master Lease, Holdco has the right, at any time, to terminate the Holdco Master Lease with respect to any property upon the payment of a termination fee equal to one year of base rent plus annual taxes and other operating expenses. Additionally, beginning in March 2020, the tenant has the right to terminate without payment of a termination fee: (i) up to 16 properties in the second year of the term of the Holdco Master Lease, (ii) up to 12 properties in the third year, (iii) up to 10 properties in the fourth year, and (iv) thereafter, the remaining properties, in each instance with carry over rights if less than the maximum permitted number of properties are terminated in any lease year. Sears Holdings exercised termination rights with respect to 87 properties under the Original Master Lease prior to its rejection on March 12, 2019 and Holdco exercised termination rights with respect to 29 properties under the Holdco Master Lease during the year ended December 31, 2019. The following table provides a summary of Sears Holdings’ and Holdco’s termination activity (excluding 31 properties totaling 4.3 million square feet that were rejected on March 12, 2019 as part of Sears Holdings’ bankruptcy filing) as of March 31, 2020: (in thousands except property count) Notice Date Termination Date Square Feet Total Number of Properties Number of Properties Redeveloped by the Company Number of Properties Sold by the Company November 2019 March 2020 4,332 29 7 1 August 2018 December 2018 1,605 13 6 3 June 2018 November 2018 (1) 1,218 9 6 1 April 2018 August 2018 1,494 9 4 1 June 2017 October 2017 (2) 3,812 20 8 4 January 2017 April 2017 1,872 19 7 8 September 2016 January 2017 1,727 17 8 6 Total 16,060 116 46 24 (1) Two properties were terminated in October 2018. (2) One property was terminated in November 2017 and one was terminated in January 2018. As of March 31, 2020, the Company had commenced or completed redevelopment projects at 46 of the terminated properties, and sold an additional 24 of the terminated properties, and will continue to announce redevelopment activity as new leases are signed to occupy the space formerly occupied by Sears or Kmart. Lessor Disclosures Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of March 31, 2020 and December 31, 2019 are approximately as follows: (in thousands) March 31, 2020 Remainder of 2020 81,885 2021 109,728 2022 109,126 2023 104,116 2024 100,364 2025 91,803 Thereafter 465,609 Total Lease Payments $ 1,062,631 (in thousands) December 31, 2019 2020 $ 113,265 2021 121,909 2022 124,067 2023 119,745 2024 116,607 Thereafter 1,019,054 Total Lease Payments $ 1,614,647 The components of lease revenues for the three months ended March 31, 2020 and 2019 were as follows: (in thousands) Three Months Ended March 31, 2020 2019 Fixed rental income $ 27,648 $ 28,889 Variable rental income 8,066 11,129 Total rental income $ 35,714 $ 40,018 Lessee Disclosures The Company has one ground lease and multiple corporate office leases which are classified as operating leases. As of March 31, 2020 and December 31, 2019, the outstanding amount of right-of-use, or ROU, assets were $19.8 million and $18.5 million, respectively. The Company recorded rent expense related to leased corporate office space of $274 thousand and $285 thousand for the three months ended March 31, 2020 and March 31, 2019, respectively. Such rent expense is classified within general and administrative expenses on the condensed consolidated statements of operations. In addition, the Company recorded ground rent expense of approximately $11 thousand for each of the three months ended March 31, 2020 and March 31, 2019. Such ground rent expense is classified within property operating expenses on the condensed consolidated statements of operations. The ground lease requires the Company to make fixed annual rental payments and expires in 2073 assuming all extension options are exercised. The following table sets forth information related to the measurement of our lease liabilities as of March 31, 2020: As of March 31, 2020 Weighted average remaining lease term (in years) 10.70 Weighted average discount rate 7.00 % Cash paid for operating leases $ 400,000 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 6 – Debt Term Loan Facility The Term Loan Agreement provides for a The Term Loan Facility matures on July 31, 2023. The Company used a portion of the proceeds from the Initial Funding to (i) repay existing indebtedness and (ii) pay transaction and related costs. The remaining proceeds from the Initial Funding, as well as borrowings under the Incremental Funding Facility, will be used to fund the Company’s redevelopment pipeline and to pay operating expenses of the Company and its subsidiaries Funded amounts under the Term Loan Facility bear interest at an annual rate of 7.0% and unfunded amounts under the Incremental Funding Facility are subject to an annual fee of 1.0% until drawn. The Company prepays the annual fee and amortizes the expense to interest expense on the condensed consolidated statements of operations. As of March 31, 2020, the aggregate principal amount outstanding under the Term Loan Facility was $1.6 billion. The Company’s ability to access the Incremental Funding Facility is subject to (i) the Company achieving rental income from non-Sears Holdings tenants, on an annualized basis (after giving effect to SNO Leases expected to commence rent payment within 12 months) for the fiscal quarter ending prior to the date of incurrence of the Incremental Funding Facility, of not less than $200 million (ii) the Company’s good faith projection that rental income from non-Sears Holdings tenants (after giving effect to SNO Leases expected to commence rent payment within 12 months) for the succeeding four consecutive fiscal quarters (beginning with the fiscal quarter during which the incremental facility is accessed) will be not less than $200 million, and (iii) the repayment by the Operating Partnership of any deferred interest permitted under the amendment to the Term Loan Agreement dated May 5, 2020 (as further described below). The Term Loan Facility is guaranteed by the Company and, subject to certain exceptions, is required to be guaranteed by all existing and future subsidiaries of the Operating Partnership. The Term Loan Facility is secured on a first lien basis by a pledge of the capital stock of the direct subsidiaries of the Operating Partnership and the guarantors, including its joint venture interests, except as prohibited by the organizational documents of such entities or any joint venture agreements applicable to such entities, and contains a requirement to provide mortgages and other customary collateral upon the breach of certain financial metrics described below, the occurrence and continuation of an event of default and certain other conditions set forth in the Term Loan Agreement . The Term Loan Facility includes certain financial metrics to govern springing collateral requirements and certain covenant exceptions set forth in the Term Loan Agreement, including: (i) a total fixed charge coverage ratio of not less than 1.00 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending June 30, 2021, and not less than 1.20 to 1.00 for each fiscal quarter thereafter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.05 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending June 30, 2021, and not less than 1.30 to 1.00 for each fiscal quarter thereafter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion. Any failure to satisfy any of these financial metrics limits the Company’s ability to dispose of assets via sale or joint venture and triggers the springing mortgage and collateral requirements but will not result in an event of default. The Term Loan Facility also includes certain limitations relating to, among other activities, the Company’s ability to: sell assets or merge, consolidate or transfer all or substantially all of its assets; incur additional debt; incur certain liens; enter into, terminate or modify certain material leases and/or the material agreements for the Company’s properties; make certain investments (including limitations on joint ventures) and other restricted payments; pay distributions on or repurchase the Company’s capital stock; and enter into certain transactions with affiliates. The Term Loan Facility contains customary events of default, including (subject to certain materiality thresholds and grace periods) payment default, material inaccuracy of representations or warranties, and bankruptcy or insolvency proceedings. If there is an event of default, the lenders may declare all or any portion of the outstanding indebtedness to be immediately due and payable, exercise any rights they might have under any of the Term Loan Facility documents, and require the Company to pay a default interest rate on overdue amounts equal to 2.0% in excess of the then applicable interest rate. As of March 31, 2020, the Company was not in compliance with certain of the financial metrics described above. As a result, the Company must receive the consent of Berkshire Hathaway to dispose of assets via sale or joint venture and, as of March 31, 2020, Berkshire Hathaway had provided such consent for all such transactions submitted for approval. During 2019, Berkshire Hathaway requested mortgages on a majority of the Company’s portfolio which were recorded in accordance with the mortgage and collateral requirement (the “Lender Request”). There are no other changes to the terms and conditions of the Term Loan Facility, or the Company’s ability to operate thereunder, as a result of providing mortgages against any of the Company’s assets pursuant to the mortgage and collateral requirement. The Company accounted for the Lender Request transaction as a modification of debt as of December 31, 2019. The Company believes it is in compliance with all other terms and conditions of the Term Loan Agreement. The Company incurred $2.1 million of debt issuance costs related to the Term Loan Facility which are recorded as a direct deduction from the carrying amount of the Term Loan Facility and amortized over the term of the Term Loan Agreement. As of March 31, 2020 and December 31, 2019, the unamortized balance of the Company’s debt issuance costs were $1.4 million and $1.5 million, respectively. On May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment to the Senior Secured Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent (the “Amendment”) 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. Additionally, the Amendment provides that the administrative agent and the lenders express their continued support for asset 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 Facility. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7 – Income Taxes The Company has elected to be taxed as a REIT as defined under Section 856(c) of the Code for federal income tax purposes and expects to continue to operate to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to currently distribute at least 90% of its adjusted REIT taxable income to its shareholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT or does not distribute 100% of its taxable income in any taxable year, it will be subject to U.S. federal income tax at regular corporate rates (including for any taxable year ended on or before December 31, 2017, any applicable alternative minimum tax) and any applicable state and local income taxes. In addition, if the Company fails to qualify as a REIT, it may not be able to qualify as a REIT for four subsequent taxable years in some cases. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain U.S. state, local and Puerto Rico taxes on its income and property, and to U.S. federal income and excise taxes on its undistributed REIT taxable income. The Company’s taxable REIT subsidiaries are subject to U.S. corporate income tax. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 8 – Fair Value Measurements ASC 820, Fair Value Measurement Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data Level 3 - unobservable inputs used when little or no market data is available The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value. Financial Assets and Liabilities not Measured at Fair Value Financial assets and liabilities that are not measured at fair value on the condensed consolidated balance sheets include cash equivalents and term loan facility. The fair value of cash equivalents is classified as Level 1 and the fair value of term loan facility is classified as Level 2. Cash equivalents are carried at cost, which approximates fair value. The fair value of debt obligations is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings. As of March 31, 2020 and December 31, 2019 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies In accordance with accounting standards regarding loss contingencies, the Company accrues 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 the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or discloses the fact that such a range of loss cannot be estimated. The Company does 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. On April 18, 2019, at the direction of the Restructuring Sub-Committee of the Restructuring Committee of the Board of Directors of Sears Holdings, Sears Holdings, Sears, Roebuck & Co., Sears Development Co., Kmart Corporation, and Kmart of Washington, LLC filed a lawsuit (the “Litigation”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) against, among others, Edward S. Lampert, ESL Investments, Inc. and certain of its affiliates and investors, Fairholme Capital Management, L.L.C., certain members of the Sears Holdings board of directors, and the Company, the Operating Partnership, and certain of our affiliates and subsidiaries (the Company, the Operating Partnership, and certain of our affiliates and subsidiaries collectively, the “Seritage Defendants”). The Litigation is dual captioned as In re: Sears Holdings Corporation, et al., Case No. 18-23538 (RDD) and Sears Holdings Corporation et al., v. Lampert et al., Case No. 19-08250 (RDD). The Litigation alleges, among other things, that certain transactions undertaken by Sears Holdings since 2011 constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings. The challenged transactions include the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings. The Litigation alleges, among other things, that the real estate acquired by Seritage from Sears Holdings in July 2015 was worth at least $649 to $749 million more than the purchase price paid. The Litigation seeks as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers and either (i) rescission of the transfers of real estate from Sears Holdings to Seritage in 2015 and return of the proceeds of the transactions between Sears Holdings and Seritage, or, in the alternative, (ii) payment by Seritage to Sears Holdings of damages at least equal to the value of the transferred property. On October 15, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Modified Second Amended Joint Chapter 11 Plan of Sears Holdings and its affiliated debtors (the “Chapter 11 Plan”). Pursuant to the terms of the Confirmation Order, upon the effective date of the Chapter Plan, a liquidating trust will be formed, and the Litigation will vest in the liquidating trust. The Confirmation Order further provides that, prior to the effective date of the Chapter 11 Plan and the formation of the liquidating trust, the Litigation shall be controlled by five litigation designees selected by Sears Holdings and the Unsecured Creditors’ Committee (the “UCC”). For further information, refer to the Chapter 11 Plan, Confirmation Order and liquidating trust agreement, each of which has been publicly filed with the Bankruptcy Court. On February 21, 2020, the Seritage defendants filed a partial motion to dismiss seeking dismissal of the claims in the operative complaint in the Litigation relating to the release received in the Sears Holdings derivative litigation, unjust enrichment, and equitable subordination. The Company believes that the claims against the Seritage Defendants in the Litigation are without merit and intends to defend against them vigorously. In addition to the litigation described above, the Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. 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 will not have a material effect on the condensed consolidated financial position, results of operations, cash flows or liquidity of the Company. As of March 31, 2020, and December 31, 2019, the Company did not record any amounts for litigation or other matters. |
Related Party Disclosure
Related Party Disclosure | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Disclosure | Note 10 – Related Party Disclosure Edward S. Lampert Edward S. Lampert is the Chairman and Chief Executive Officer of ESL, which owns Holdco, and was Chairman of Sears Holdings. Mr. Lampert is also the Chairman of Seritage. As of March 31, 2020, Mr. Lampert beneficially owned a 30.9% interest in the Operating Partnership and approximately 6.6% of the outstanding Class A common shares. Subsidiaries of Holdco, as lessees, and subsidiaries of the Company, as lessors, are parties to the Holdco Master Lease and subsidiaries of Sears Holdings, as lessees, and subsidiaries of the Company, as lessors, were parties to the Original Master Lease (see Note 5). Unconsolidated Joint Ventures Certain unconsolidated joint ventures have engaged the Company to provide management, leasing, construction supervision and development services at the properties owned by the unconsolidated joint ventures. Refer to Note 2 for the Company’s accounting policies. In addition, as of March 31, 2020, the Company had incurred $0.4 million of development expenditures at properties owned by certain unconsolidated joint ventures for which the Company will be repaid by the respective unconsolidated joint ventures. These amounts are included in tenant and other receivables, net on the Company’s condensed consolidated balance sheets. $9.7 |
Non-Controlling Interests
Non-Controlling Interests | 3 Months Ended |
Mar. 31, 2020 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | Note 11 – Non-Controlling Interests Partnership Agreement On July 7, 2015, Seritage and ESL entered into the agreement of limited partnership of the Operating Partnership which was amended and restated on December 14, 2017. Pursuant to this partnership agreement, as the sole general partner of the Operating Partnership, Seritage exercises exclusive and complete responsibility and discretion in its day-to-day management, authority to make decisions, and control of the Operating Partnership, and may not be removed as general partner by the limited partners. As of March 31, 2020, the Company held a 69.1% interest in the Operating Partnership and ESL held a 30.9% interest. The portions of consolidated entities not owned by the Company are presented as non-controlling interest as of and during the periods presented. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Note 12 – Shareholders’ Equity Class A Common Shares During the three months ended March 31, 2020, 1,650,000 Operating Partnership Units (“OP Units”) were exchanged for an equal number of Class A shares. As of March 31, 2020, 38,622,102 Class A common shares were issued and outstanding. Class B Non-Economic Common Shares During the three months ended March 31, 2020, 1,242,536 Class B non-economic common shares were surrendered to the Company. As of March 31, 2020, there were no Class B non-economic common shares issued and outstanding. The Class B non-economic common shares have voting rights, but do not have economic rights and, as such, did not receive dividends and are not included in earnings per share computations. Class C Non-Voting Common Shares As of March 31, 2020, there were no Series A Preferred Shares In December 2017, the Company issued 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) in a public offering at $25.00 per share. The Company received net proceeds from the offering of approximately $66.7 million, after deducting payment of the underwriting discount and offering expenses, which it used to fund its redevelopment pipeline and for general corporate purposes The Company may not redeem the Series A Preferred Shares before December 14, 2022 except to preserve its status as a REIT or upon the occurrence of a Change of Control, as defined in the trust agreement addendum designating the Series A Preferred Shares. On and after December 14, 2022, the Company may redeem any or all of the Series A Preferred Shares at $25.00 per share plus any accrued and unpaid dividends. In addition, upon the occurrence of a Change of Control, the Company may redeem any or all of the Series A Preferred Shares for cash within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accrued and unpaid dividends. The Series A Preferred Shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company redeems or otherwise repurchases them or they are converted. Dividends and Distributions The Company’s Board of Trustees has not declared dividends on the Company’s Class A and Class C common shares during 2020. Dividends per Class A and Class C Declaration Date Record Date Payment Date Common Share 2019 February 25 March 29 April 11 $ 0.25 The Company’s Board of Trustees declared the following dividends on preferred shares during 2020 and 2019: Series A Declaration Date Record Date Payment Date Preferred Share 2020 February 18 March 31 April 15 $ 0.43750 2019 October 23 December 31 January 15, 2020 $ 0.43750 July 23 September 30 October 15 0.43750 April 30 June 28 July 15 0.43750 February 25 March 29 April 15 0.43750 As previously disclosed, the Company declared a dividend on the Company’s Class A and Class C common shares for the first quarter of 2019 and has not declared dividends on the Company’s Class A and Class C common shares since that time , based on our Board of Trustees’ assessment of the Company’s investment opportunities and its expectations of taxable income for the remainder of 2020 . The Company intends to, at a minimum, make distributions to its shareholders to comply with the REIT requirements of the Code , which may be satisfied by dividends on the Company’s Series A Preferred S hares . |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Note 13 – Earnings per Share The table below provides a reconciliation of net income (loss) and the number of common shares used in the computations of “basic” earnings per share (“EPS”), which utilizes the weighted-average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares. Potentially dilutive securities consist of shares of non-vested restricted stock and the redeemable non-controlling interests in the Operating Partnership. All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing EPS 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 EPS. Earnings per share has not been presented for Class B shareholders, as they do not have economic rights. (in thousands except per share amounts) Three Months Ended March 31, 2020 2019 Numerator - Basic and Diluted Net loss $ (30,975 ) (10,894 ) Net income attributable to non-controlling interests 10,311 3,927 Preferred dividends (1,225 ) (1,225 ) Net loss attributable to common shareholders - Basic and diluted $ (21,889 ) $ (8,192 ) Denominator - Basic and Diluted Weighted average Class A common shares outstanding 37,232 35,671 Weighted average Class C common shares outstanding — — Weighted average Class A and Class C common shares outstanding - Basic 37,232 35,671 Restricted shares and share units — — Weighted average Class A and Class C common shares outstanding - Diluted 37,232 35,671 Net loss per share attributable to Class A and Class C common shareholders - Basic $ (0.59 ) $ (0.23 ) Net loss per share attributable to Class A and Class C common shareholders - Diluted $ (0.59 ) $ (0.23 ) No adjustments were made to the numerator for the three months ended March 31, 2020 or March 31, 2019 because the Company generated a net loss. During periods of net loss, undistributed losses are not allocated to the participating securities as they are not required to absorb losses. No adjustments were made to the denominator for the three months ended March 31, 2020 or March 31, 2019 because (i) the inclusion of outstanding non-vested restricted shares would have had an anti-dilutive effect and (ii) including the non-controlling interest in the Operating Partnership would also require that the share of the Operating Partnership loss attributable to such interests be added back to net loss, therefore, resulting in no effect on earnings per share. As of March 31, 2020 and December 31, 2019, there were 434,358 and 349,318 shares, respectively, of share units outstanding. |
Share Based Compensation
Share Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share Based Compensation | Note 14 – Share-Based Compensation On July 7, 2015, the Company adopted the Seritage Growth Properties 2015 Share Plan (the “Plan”). The number of shares of common stock reserved for issuance under the Plan is 3,250,000. The Plan provides for grants of restricted shares, share units, other share-based awards, options, and share appreciation rights, each as defined in the Plan (collectively, the "Awards"). Directors, officers, other employees, and consultants of the Company and its subsidiaries and affiliates are eligible for Awards. Restricted Shares and Share Units Pursuant to the Plan, the Company has periodically made grants of restricted shares or share units. The vesting terms of these grants are specific to the individual grant and vary in that a portion of the restricted shares and share units vest in equal annual amounts over the subsequent three years (time-based vesting) and a portion of the restricted shares and share units vest on the third, and in some instances, the fourth anniversary of the grants subject to the achievement of certain performance criteria (performance-based and market-based vesting). In general, participating employees are required to remain employed for vesting to occur (subject to certain limited exceptions). Restricted shares and share units that do not vest are forfeited. Dividends on restricted shares and share units with time-based vesting are paid to holders of such shares and share units and are not returnable, even if the underlying shares or share units do not ultimately vest. Dividends on restricted shares and share units with performance-based vesting are accrued when declared and paid to holders of such shares on the third , and in some instances, the fourth See Note 2 for valuation information related to the grants of the awards that are subject to market-based vesting conditions. The following table summarizes restricted share activity for the three months ended March 31, 2020: Three Months Ended March 31, 2020 Weighted- Average Grant Shares Date Fair Value Unvested restricted shares at beginning of period 349,318 $ 44.88 Share units granted 106,327 31.06 Restricted shares vested (21,287 ) 41.63 Unvested restricted shares at end of period 434,358 41.65 The Company recognized $1.2 million and $1.5 million in compensation expense related to the restricted shares for the three months ended March 31, 2020 and March 31, 2019, respectively. Such expenses are included in general and administrative expenses on the Company's condensed consolidated statements of operations. As of March 31, 2020, there were approximately $9.2 million of total unrecognized compensation costs related to the outstanding restricted shares which are expected to be recognized over a weighted-average period of approximately 1.9 years. As of , there were approximately $6.6 million of total unrecognized compensation costs related to the outstanding restricted shares which were expected to be recognized over a weighted-average period of approximately 1.6 years. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | 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, 2019. 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 of three months ended March 31, 2020 may not be indicative of the results that may be expected for any other interim period or for the year ending December 31, 2020. 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, and all other entities in which they have a controlling financial interest or entities that meet the definition of a variable interest entity (“VIE”) in which the Company has, as a result of ownership, contractual interests or other financial interests, both the 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. If the Company has an interest in a VIE but it is not determined to be 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 the Company qualifies as its primary beneficiary. As of March 31, 2020 and December 31, 2019, the Company has several unconsolidated VIEs in the form of joint ventures (see Note 4). The Company does not consolidate these entities because the Company is not the primary beneficiary and the nature of its involvement in the activities of these entities does not give the Company power over decisions that significantly affect these entities’ economic performance. As of March 31, 2020, the Company holds a 69.1% 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. The Company has determined 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. The assets and liabilities of the Operating Partnership are the same as those of the Company and are presented in the condensed consolidated balance sheet. To the extent such variable interests are in entities that are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model. |
Use of Estimates | 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 the useful lives of tangible and intangible assets, real estate impairment assessments, and assessing the recoverability of accounts 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. |
Real Estate Investments | 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: 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. On a periodic basis, management assesses whether there are indicators that the value of the Company’s real estate assets (including any related intangible assets or liabilities) may be impaired. These indicators include macroeconomic conditions, such as the expected impact of the current COVID-19 pandemic. If an indicator is identified, a real estate asset is considered impaired if management’s estimate of current and projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated and probability weighted holding period, are less than a real estate asset’s carrying value. Various factors are considered in the estimation process, including expected future operating income, trends and prospects and the effects of demand, competition, and other economic factors. 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. If the COVID-19 pandemic causes economic and market conditions to deteriorate further, subsequent tests for impairment may result in future impairment charges. No impairment losses were recognized for the three months ended March 31, 2020 and March 31, 2019. Real Estate Dispositions When the Company disposes of all or 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 and in certain circumstances, non-cash consideration which is typically in the form of equity in unconsolidated joint ventures The following table summarizes our gain on sale of real estate, net during the three months ended March 31, 2020 and March 31, 2019 (in thousands): Three Months Ended March 31, 2020 2019 Contributions to unconsolidated joint ventures Gross proceeds $ — $ 18.7 Gain on sale of real estate, net — 3.8 Dispositions to third parties Gross proceeds $ 60.4 $ 29.5 Gain on sale of real estate, net 20.8 17.7 Total gains on contributions and dispositions, net $ 20.8 $ 21.5 |
Real Estate Held for Sale | 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 under contract for sale and are expected 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, 2020, one property was classified as held for sale with assets of $3.2 million and no liabilities, and as of December 31, 2019, two properties were classified as held for sale with assets of $5.3 million and no liabilities. |
Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting as the Company exercises significant influence, but does not control these entities. 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. 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 such as the expected impact of the current COVID-19 pandemic), that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired 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. If the COVID-19 pandemic causes economic and market conditions to deteriorate further, subsequent tests for impairment may result in future impairment charges. No such impairment losses were recognized for each of the three months ended March 31, 2020 or March 31, 2019. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers instruments with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalent 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. |
Tenant and Other Receivables | 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, including the expected impact of the COVID-19 pandemic performs a periodic review of receivable balances to assess the risk of uncollectible amounts and establish appropriate provisions. Any receivables that are deemed to be uncollectible are recognized as a reduction to rental income in the Company’s condensed consolidated statements of operations. Prior period provision for doubtful accounts is presented on the Company's condensed consolidated statements of operations in accordance with the Company's previous presentation and has not been reclassified to rental income. Tenant and other receivables also include management fees receivable for services performed for the benefit of certain unconsolidated joint ventures. In the event that the collectability of a management fee receivable is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific receivable will be made. |
Revenue Recognition | Revenue Recognition Rental income is comprised of base rent and reimbursements of property operating expenses. 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 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 a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis. The Company commences recognizing revenue based on an evaluation of several factors. Revenue recognition under a lease begins when the lessee takes control of the physical use of the leased asset. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred. |
Management and Other Fee Income | Management and Other Fee Income Management and other fee income represents property management, construction, leasing and development fees for services performed for the benefit of certain unconsolidated joint ventures. Property management fee income is reported at 100% of the revenue earned from such joint ventures in management and other fee income on the condensed consolidated statements of operations. The Company’s share of management expenses incurred by the unconsolidated joint ventures is reported in equity in income (loss) of unconsolidated joint ventures 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 joint ventures. 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 income (loss) of unconsolidated joint ventures 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 property and asset management services, the Company is typically compensated for its services through a monthly management fee earned based on a specified percentage of monthly rental income or rental receipts generated from the property under management. For construction and development services, the Company is typically compensated for planning, administering and monitoring the design and construction of projects at our unconsolidated joint venture properties based on a percentage of 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 obligation s , satisfied as of a point in time. The Company’s leasing fee is typically paid upon the occurrence of certain contractual event(s) that may be contingent and the 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. |
Accounting for Recapture and Termination Activity Pursuant to the Original Master Lease and Holdco Master Lease | Accounting for Recapture and Termination Activity Pursuant to the Original Master Lease and Holdco Master Lease (see Note 5) Seritage Recapture Rights. The Company generally treats the delivery of a recapture notice as a modification of the 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, if any, is amortized over the remaining life of the 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, if any, is amortized over the remaining useful life of the asset or liability. A 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 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. Termination Rights. The Original Master Lease provided, and the Holdco Master Lease provides the tenant with certain rights to terminate their lease. Such terminations 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 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. |
Share-Based Compensation | Share-Based Compensation The Company generally recognizes equity awards to employees as compensation expense and includes such expense within general and administrative expenses in the condensed consolidated statements of operations. Compensation expense for equity awards is based on the grant date fair value of the awards. Compensation expense is recognized ratably over the vesting period for awards with time-based vesting and 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 of performance criteria is deemed probable for the amount 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 utilizes 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 | Concentration of Credit Risk Concentrations of credit risk arise when a number of operators, tenants, or obligors related to the 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 March 31, 2020, the Company leased space at 17 Wholly Owned Properties to Holdco under the Holdco Master Lease, after giving effect to one pending recapture notice , and a material amount of the Company’s rental revenues for the quarter ended March 31, 2020 was derived from the Holdco Master Lease. Until the Company further diversifies the tenancy of its portfolio, an event that has a material adverse effect on the business, financial condition or results of operations of Holdco or another major tenant could have a material adverse effect on the Company’s business, financial condition or results of operations . Other than the Company's tenant concentration, management believes the Company's portfolio was reasonably diversified by geographical location and did not contain any other significant concentrations of credit risk. As of March 31, 2020, the Company's portfolio of 180 Wholly Owned Properties and 28 JV Properties was diversified by location across 44 states and Puerto Rico. |
Earnings per Share | Earnings 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. As of 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 per share computations as they do not have economic rights. As of March 31, 2020, all outstanding Class B common shares have been surrendered and there are currently no class B common shares outstanding. As of March 31, 2019, 1,322,365 Class B non-economic common shares were issued and 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 per share. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The following presents Accounting Standards Updates (“ASU”) issued by Financial Accounting Standards Board (“FASB”) which have been adopted by the Company: ASU Description Adoption Date Effect on the financial statements or other significant matters ASU Description Adoption Date Effect on the financial statements or other significant matters ASU 2016-02, Leases (“Topic 842”) ASU 2018-10, Codification Improvements ASU 2018-11, Leases, Targeted Improvements ASU 2018-20, Leases This standard, as amended by subsequent ASUs on the topic, sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Additional guidance and targeted improvements to the February 2016 ASU were made through the issuance of supplementary ASUs in July 2018, December 2018 and March 2019. The accounting applied by the lessor is largely unchanged from that applied under the existing lease standard. However, ASU 2016-02 requires lessees to apply a two-method approach, classifying leases as either finance or operating leases based on the principle of whether the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less should be accounted for consistent with earlier guidance under ASC 840 for operating leases. Lessees should recognize an expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. January 1, 2019 The Company adopted this standard by electing the package of practical expedients without hindsight which permits the Company to not reassess (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the adoption date. line item respectively on the condensed consolidated balance sheets. Additionally, the Company is no longer able to capitalize certain internal and external leasing costs. Because of this change, $1.3 million of such costs incurred in previous periods for leases which had not commenced at the beginning of current period were adjusted against opening equity upon adoption. The Company also combined $11,005 of below-market lease assets pertaining to the ground lease where we are a lessee with the right of use asset recorded for the ground lease as required upon adoption of ASU 2016-02. The below-market lease asset was previously recorded within the lease intangibles on the condensed consolidated balance sheets. ASU 2018-01, Leases, Land Easement Practical Expedient for Transition to Topic 842 In March 2018, the FASB finalized changes with respect to optional transition relief and approved a practical expedient for lessors that would permit lessors to make an accounting policy election to not separate non-lease components from the associated lease components, by class of underlying asset, if the following two criteria are met: (1) the timing and pattern of transfer of the lease and non-lease components are the same and (2) the lease component would be classified as an operating lease if accounted for separately. January 1, 2019 The Company has elected the optional transition relief and has determined that it is not required to bifurcate and separately report non-lease components, such as common area maintenance revenue, for operating leases on the condensed consolidated statements of operations for leases where the Company is the lessor. As a result, leases where the Company is the lessor have been accounted for in a similar method to earlier guidance under ASC 840. The Company’s adoption of ASC 842 did not have a material impact on our condensed consolidated financial statements. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) ASU 2018-19, Codification improvements to Topic 326, Financial Instruments – Credit Losses ASU 2016-13 changes the impairment model for most financial assets and certain other instruments, requiring the use of an "expected credit loss" model and adding more disclosure requirements. ASU 2018-19 clarifies that impairment of receivables arising from operating leases should accounted for in accordance with Topic 842, Leases. January 1, 2020 The Company’s adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements. ASU Description Adoption Date Effect on the financial statements or other significant matters Lease Modification Question and Answer Document ( the “Lease Modification Q&A”) In April 2020, the FASB staff issued the Lease Modification Q&A focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. April 10, 2020 The Lease Modification Q&A has no impact on the Company’s consolidated financial statements as of and for the three months ended March 31, 2020, however, its future impact to the Company is dependent upon the extent of and lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering into such concessions. |
Lease Intangible Assets and L_2
Lease Intangible Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Lease Intangible Assets | The following table summarizes the Company’s lease intangible assets and liabilities (in thousands): March 31, 2020 Gross Accumulated Lease Intangible Assets Asset Amortization Balance In-place leases, net $ 203,672 $ (162,407 ) $ 41,265 Above-market leases, net 6,419 (3,563 ) 2,856 Total $ 210,091 $ (165,970 ) $ 44,121 December 31, 2019 Gross Accumulated Lease Intangible Assets Asset Amortization Balance In-place leases, net $ 245,745 $ (180,639 ) $ 65,106 Above-market leases, net 6,625 (3,578 ) 3,047 Total $ 252,370 $ (184,217 ) $ 68,153 |
Summary of Lease Intangible Liabilities | The following table summarizes the Company’s lease intangible assets and liabilities (in thousands): Gross Accumulated Lease Intangible Liabilities Liability Amortization Balance Below-market leases, net $ 13,895 $ (4,620 ) $ 9,275 Total $ 13,895 $ (4,620 ) $ 9,275 Gross Accumulated Lease Intangible Liabilities Liability Amortization Balance Below-market leases, net $ 15,912 $ (5,264 ) $ 10,648 Total $ 15,912 $ (5,264 ) $ 10,648 |
Schedule of Future Amortization for Below-Market Ground Leases | Future amortization of the below-market ground lease is estimated to increase property expenses as set forth below (in thousands): Remainder of 2020 $ 153 2021 203 2022 203 2023 203 2024 203 |
Above-Market Leases, Net [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Schedule of Future Amortization of Acquired Leases | Future amortization of these intangibles is estimated to increase rental income as set forth below (in thousands): Remainder of 2020 $ 159 2021 141 2022 111 2023 168 2024 183 |
In-Place Leases, Net [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Schedule of Future Amortization of Acquired Leases | Future estimated amortization of acquired in-place leases is set forth below (in thousands): Remainder of 2020 $ 10,214 2021 13,226 2022 12,918 2023 12,118 2024 11,574 |
Investments in Unconsolidated_2
Investments in Unconsolidated Joint Ventures (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Summary of Company's Investments in Unconsolidated Joint Ventures | As of March 31, 2020, the Company had investments in nine unconsolidated joint ventures as follows: Seritage % # of Total Unconsolidated Joint Venture Joint Venture Partner Ownership Properties GLA GS Portfolio Holdings II LLC ("GGP I JV") Brookfield Properties Retail (formerly GGP Inc.) 50.0 % 4 520,500 GS Portfolio Holdings (2017) LLC ("GGP II JV") Brookfield Properties Retail (formerly GGP Inc.) 50.0 % 5 910,400 MS Portfolio LLC ("Macerich JV") The Macerich Company 50.0 % 9 1,570,200 SPS Portfolio Holdings II LLC ("Simon JV") Simon Property Group, Inc. 50.0 % 5 872,200 Mark 302 JV LLC ("Mark 302 JV") An investment fund managed by Invesco Real Estate 50.0 % 1 103,000 SI UTC LLC ("UTC JV") A separate account advised by Invesco Real Estate 50.0 % 1 226,300 SF WH Joint Venture LLC ("West Hartford JV") An affiliate of First Washington Realty 50.0 % 1 163,700 GGCAL SRG HV LLC ("Cockeysville JV") An affiliate of Greenberg Gibbons 50.0 % 1 160,200 Tech Ridge JV Holding LLC ("Tech Ridge JV") An affiliate of RD Management 50.0 % 1 — 28 4,526,500 |
Summary of Properties Contributed In Unconsolidated Joint Ventures | The following table presents summarizes the properties contributed to the Company’s unconsolidated joint ventures: March 31, 2020 Unconsolidated Joint Venture Contribution Date Contribution Value Gain (Loss) 2018 Mark 302 JV (1) March 20, 2018 $ 90.0 $ 38.8 UTC JV May 18, 2018 68.0 28.3 West Hartford JV (2) May 18, 2018 20.3 (1.1 ) 2019 Cockeysville JV (3) March 29, 2019 $ 12.5 $ 3.8 Tech Ridge JV (4) September 27, 2019 3.0 0.1 (1) The Mark 302 JV is subject to a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2020. The primary inputs in determining the Contribution Value for the Mark 302 JV are property operating income and total project costs and the Contribution Value will be recalculated to yield a pre-determined rate of return to the investment fund managed by Invesco Real Estate. The Contribution Value cannot be more than $ ( 2 ) The West Hartford JV was subject to (i) a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2019, and (ii) an adjustment based on the timing, method and magnitude of the reassessment of the property for real estate tax purposes between 2018 and 2022. As of December 31, 2019, the Company revalued the Contribution Value and recorded an additional loss of $2.3 million, and the Company does not expect there to be any additional revaluations. ( 3 ) The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the Cockeysville JV if certain milestones are met with respect to entitling the Additional Land Parcel for residential use. If the Additional Land Parcel is contributed to the Cockeysville JV, the Company will record an increased investment in the Cockeysville JV in an amount equal to 50% of the fair value of the Additional Land Parcel at the time of contribution. The Contribution Value of the Cockeysville JV is based upon the Company’s assessment of the probability of the Additional Land Parcel being entitled for residential use. The maximum Gain (Loss) is the fair value of the Additional Land Parcel at the time the Contribution Value is revalued, which cannot be less than $ ( 4 ) The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. T he Contribution Value cannot be less than $2.75 million. |
Summary of Combined Condensed Financial Data of Unconsolidated Joint Ventures | The following tables present combined condensed financial data for the Company’s unconsolidated joint ventures (in thousands): March 31, 2020 December 31, 2019 ASSETS Investment in real estate Land $ 336,739 $ 336,739 Buildings and improvements 534,393 517,068 Accumulated depreciation (70,927 ) (86,496 ) 800,205 767,311 Construction in progress 195,170 177,028 Net investment in real estate 995,375 944,339 Cash and cash equivalents 19,773 27,977 Tenant and other receivables, net 1,879 3,113 Other assets, net 38,699 26,051 Total assets $ 1,055,726 $ 1,001,480 LIABILITIES AND MEMBERS' INTERESTS Liabilities Mortgage loans payable, net $ 14,470 $ 14,218 Accounts payable, accrued expenses and other liabilities 96,994 89,110 Total liabilities 111,464 103,328 Additional paid in capital 945,953 934,120 Retained earnings (1,691 ) (35,968 ) Total members interest 944,262 898,152 Total liabilities and members interest $ 1,055,726 $ 1,001,480 Three Months Ended March 31, 2020 2019 Total revenue $ 5,341 $ 11,218 Property operating expenses (2,737 ) (2,598 ) Depreciation and amortization (3,687 ) (5,253 ) Operating income (1,083 ) 3,367 Other expenses (489 ) (922 ) Net loss $ (1,572 ) $ 2,445 Equity in income (loss) of unconsolidated joint ventures (1) $ (786 ) $ 1,222 (1) Equity in income (loss) of unconsolidated joint ventures on the condensed consolidated statements of operations includes basis difference adjustments. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Summary of Revenue from Master Lease | Revenues from the Holdco Master Lease and the Original Master Lease for the three months ended March 31, 2020 and March 31, 2019 are as follows (in thousands and excluding straight-line rental income of $(4.5) million and $0.5 million, respectively. Three Months Ended March 31, 2020 2019 Fixed rental income $ 4,288 $ 12,288 Variable rental income 3,839 8,398 Total rental income $ 8,127 $ 20,686 |
Summary of Recapture Rights Exercised by the Company | The following table provides a summary of the Company’s recapture activity as of March 31, 2020: (in thousands except property count) Year Square Feet Total Number of Properties 100% Recaptures (1) Partial Recaptures (2) 2019 629 4 3 1 2018 3,428 20 17 3 2017 3,302 27 16 11 2016 1,501 17 4 13 2015 372 3 3 — Total 9,232 71 43 28 (1) Includes properties for which the Company had converted partial recapture rights to 100% recapture rights. (2) Partial recaptures include the recapture of (i) up to approximately 50% of the space occupied by the tenant at all properties, (ii) automotive care centers which are free-standing or attached as “appendages” to the properties, and/or (iii) outparcels or outlots and certain portions of parking areas and common areas. |
Summary of Termination and Redevelopment Properties | The following table provides a summary of Sears Holdings’ and Holdco’s termination activity (excluding 31 properties totaling 4.3 million square feet that were rejected on March 12, 2019 as part of Sears Holdings’ bankruptcy filing) as of March 31, 2020 (in thousands except property count) Notice Date Termination Date Square Feet Total Number of Properties Number of Properties Redeveloped by the Company Number of Properties Sold by the Company November 2019 March 2020 4,332 29 7 1 August 2018 December 2018 1,605 13 6 3 June 2018 November 2018 (1) 1,218 9 6 1 April 2018 August 2018 1,494 9 4 1 June 2017 October 2017 (2) 3,812 20 8 4 January 2017 April 2017 1,872 19 7 8 September 2016 January 2017 1,727 17 8 6 Total 16,060 116 46 24 (1) Two properties were terminated in October 2018. (2) One property was terminated in November 2017 and one was terminated in January 2018. |
Schedule of Future Minimum Rental Receipts excluding Variable Payments and Tenant Reimbursements of Expenses Under Non-cancelable Operating Leases | Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of March 31, 2020 and December 31, 2019 are approximately as follows: (in thousands) March 31, 2020 Remainder of 2020 81,885 2021 109,728 2022 109,126 2023 104,116 2024 100,364 2025 91,803 Thereafter 465,609 Total Lease Payments $ 1,062,631 (in thousands) December 31, 2019 2020 $ 113,265 2021 121,909 2022 124,067 2023 119,745 2024 116,607 Thereafter 1,019,054 Total Lease Payments $ 1,614,647 |
Components of Lease Revenues | The components of lease revenues for the three months ended March 31, 2020 and 2019 were as follows: (in thousands) Three Months Ended March 31, 2020 2019 Fixed rental income $ 27,648 $ 28,889 Variable rental income 8,066 11,129 Total rental income $ 35,714 $ 40,018 |
Information Related to Measurement of Lease Liabilities | The following table sets forth information related to the measurement of our lease liabilities as of March 31, 2020: As of March 31, 2020 Weighted average remaining lease term (in years) 10.70 Weighted average discount rate 7.00 % Cash paid for operating leases $ 400,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Class A and Class C Common Share [Member] | |
Class of Stock [Line Items] | |
Summary of Dividends and Distributions | The Company’s Board of Trustees has not declared dividends on the Company’s Class A and Class C common shares during 2020. Dividends per Class A and Class C Declaration Date Record Date Payment Date Common Share 2019 February 25 March 29 April 11 $ 0.25 |
Series A Preferred Shares [Member] | |
Class of Stock [Line Items] | |
Summary of Dividends and Distributions | The Company’s Board of Trustees declared the following dividends on preferred shares during 2020 and 2019: Series A Declaration Date Record Date Payment Date Preferred Share 2020 February 18 March 31 April 15 $ 0.43750 2019 October 23 December 31 January 15, 2020 $ 0.43750 July 23 September 30 October 15 0.43750 April 30 June 28 July 15 0.43750 February 25 March 29 April 15 0.43750 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of Net Income (Loss) and Number of Common Shares Used in Computations of Basic Earnings Per Share | Earnings per share has not been presented for Class B shareholders, as they do not have economic rights. (in thousands except per share amounts) Three Months Ended March 31, 2020 2019 Numerator - Basic and Diluted Net loss $ (30,975 ) (10,894 ) Net income attributable to non-controlling interests 10,311 3,927 Preferred dividends (1,225 ) (1,225 ) Net loss attributable to common shareholders - Basic and diluted $ (21,889 ) $ (8,192 ) Denominator - Basic and Diluted Weighted average Class A common shares outstanding 37,232 35,671 Weighted average Class C common shares outstanding — — Weighted average Class A and Class C common shares outstanding - Basic 37,232 35,671 Restricted shares and share units — — Weighted average Class A and Class C common shares outstanding - Diluted 37,232 35,671 Net loss per share attributable to Class A and Class C common shareholders - Basic $ (0.59 ) $ (0.23 ) Net loss per share attributable to Class A and Class C common shareholders - Diluted $ (0.59 ) $ (0.23 ) |
Share Based Compensation (Table
Share Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Restricted Share | The following table summarizes restricted share activity for the three months ended March 31, 2020: Three Months Ended March 31, 2020 Weighted- Average Grant Shares Date Fair Value Unvested restricted shares at beginning of period 349,318 $ 44.88 Share units granted 106,327 31.06 Restricted shares vested (21,287 ) 41.63 Unvested restricted shares at end of period 434,358 41.65 |
Organization - Additional Infor
Organization - Additional Information (Detail) $ in Thousands | May 06, 2020 | Feb. 28, 2019Property | Jun. 11, 2015USD ($)PropertyJointVentureRetailFacility | Mar. 31, 2020USD ($)ft²PropertyStateJointVenture | Mar. 31, 2019USD ($) |
Organization And Basis Of Presentation [Line Items] | |||||
Number of properties interested in the portfolio | 208 | ||||
Area of real estate property (in square feet) | ft² | 9,232 | ||||
Number of states in properties located | State | 44 | ||||
Number of properties | 28 | ||||
Number of joint venture acquired | JointVenture | 28 | ||||
Net cash (used in) provided by operating activities | $ | $ 10,200 | $ 16,771 | |||
Net cash (used in) provided by investing activities | $ | $ 31,024 | $ 56,595 | |||
Subsequent Event [Member] | COVID-19 Pandemic [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Expected future rent, description | Company had collected approximately 47% of contractual base rent and tenant reimbursements billed for the month of April (54% from tenants other than Holdco). | ||||
Percent of contractual rental income collected | 47.00% | ||||
Percent of tenant contractual rental income collected | 54.00% | ||||
Sears Holdings Corporation [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Business acquisition fair value, purchase price | $ | $ 2,700,000 | ||||
Number of real estate properties acquired | 234 | ||||
Number of ground leased properties acquired | 1 | ||||
Interests in joint ventures acquired | 50.00% | ||||
Number of joint venture acquired | JointVenture | 3 | ||||
Sears Holdings Corporation [Member] | Joint Venture [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of retail facilities | RetailFacility | 28 | ||||
Sears Holdings Corporation [Member] | Original Master Lease [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of acquired properties leased | 224 | ||||
Wholly Owned Properties [Member] | Holdco Master Lease [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of wholly owned properties | 17 | ||||
Joint Venture Properties [Member] | Holdco Master Joint Venture Leases [Member] | Recapturing And Termination [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of properties leased | 2 | ||||
Joint Venture Properties [Member] | Sears Holdings Corporation [Member] | Joint Venture [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of retail facilities subject to ground lease | RetailFacility | 1 | ||||
Number of retail facilities subject to lease | RetailFacility | 2 | ||||
Joint Venture Properties [Member] | Sears Holdings Corporation [Member] | Original Joint Venture Master Leases [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of acquired properties leased | 31 | ||||
Real Estate Investment Trust [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Area of real estate property (in square feet) | ft² | 32,800,000 | ||||
Real Estate Investment Trust [Member] | Wholly Owned Properties [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Area of real estate property (in square feet) | ft² | 28,300,000 | ||||
Number of wholly owned properties | 180 | ||||
Number of states in properties located | State | 44 | ||||
Real Estate Investment Trust [Member] | Wholly Owned Properties [Member] | Sears Holdings Corporation [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Number of wholly owned properties | 51 | ||||
Real Estate Investment Trust [Member] | Joint Venture Properties [Member] | |||||
Organization And Basis Of Presentation [Line Items] | |||||
Area of real estate property (in square feet) | ft² | 4,500,000 | ||||
Number of states in properties located | State | 14 | ||||
Number of properties | 28 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) | 3 Months Ended | |||||
Mar. 31, 2020USD ($)PropertyStateJointVentureshares | Mar. 31, 2019USD ($)shares | Dec. 31, 2019USD ($)Propertyshares | Jan. 01, 2019USD ($) | Dec. 31, 2018shares | Aug. 29, 2018shares | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Impairment loss on real estate assets | $ 0 | $ 0 | ||||
Number of Properties Classified | Property | 1 | 2 | ||||
Real estate held for sale, assets | $ 3,204,000 | $ 5,275,000 | ||||
Real estate held for sale, liabilities | 0 | 0 | ||||
Impairment loss | $ 0 | $ 0 | ||||
Revenue performance obligation satisfied over time method used description | 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. | |||||
Number of wholly owned properties acquired | Property | 180 | |||||
Number of joint venture properties acquired | JointVenture | 28 | |||||
Number of states in properties located | State | 44 | |||||
Operating Lease, Right-of-Use Asset | $ 19,800,000 | 18,500,000 | ||||
Below Market Lease assets | 9,275,000 | $ 10,648,000 | ||||
ASU 2016-02 [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Operating Lease, Right-of-Use Asset | $ 8,400,000 | |||||
Operating Lease, Liability | $ 8,400,000 | |||||
ASU 2016-02 [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Lease, Cost | 1,300,000 | |||||
Below Market Lease assets | $ 11,005,000 | |||||
Class C Common Shares [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Common shares, outstanding | shares | 0 | |||||
Class B Common Shares [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Common shares, outstanding | shares | 0 | 1,322,365 | 1,242,536 | 1,322,000 | ||
Common shares, issued | shares | 0 | 1,322,365 | 1,242,536 | |||
Wholly Owned Properties [Member] | Holdco Master Lease [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of wholly owned properties | Property | 17 | |||||
Management and Other Fee Income [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of revenue earned from unconsolidated joint ventures | 100.00% | |||||
Operating Partnership [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of operating partnership interest held by parent | 69.10% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of Estimated Useful Lives (Detail) | 3 Months Ended |
Mar. 31, 2020 | |
Minimum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 25 years |
Minimum [Member] | Site Improvement [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Maximum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 40 years |
Maximum [Member] | Site Improvement [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 15 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Gain on Sale of Real Estate (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Contributions to unconsolidated joint ventures | ||
Gross proceeds | $ 18,700 | |
Gain on sale of real estate, net | 3,800 | |
Dispositions to third parties | ||
Gross proceeds | $ 60,400 | 29,500 |
Gain on sale of real estate, net | 20,800 | 17,700 |
Total gains on contributions and dispositions, net | $ 20,800 | $ 21,500 |
Lease Intangible Assets and L_3
Lease Intangible Assets and Liabilities - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||
Identified intangible assets, net of accumulated amortization | $ 44,121 | $ 68,153 | |
Identified intangible liability, net of accumulated amortization | 9,300 | 10,600 | |
Amortization of below-market leases, net of above-market leases | 100 | $ 100 | |
Additional property expense | 50 | 50 | |
In-Place Leases, Net [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Identified intangible assets, net of accumulated amortization | 41,265 | $ 65,106 | |
Amortization expense of intangible assets | $ 21,000 | $ 10,300 |
Lease Intangible Assets and L_4
Lease Intangible Assets and Liabilities - Summary of Lease Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Asset | $ 210,091 | $ 252,370 |
Accumulated Amortization | (165,970) | (184,217) |
Balance | 44,121 | 68,153 |
In-Place Leases, Net [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Asset | 203,672 | 245,745 |
Accumulated Amortization | (162,407) | (180,639) |
Balance | 41,265 | 65,106 |
Above-Market Leases, Net [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Asset | 6,419 | 6,625 |
Accumulated Amortization | (3,563) | (3,578) |
Balance | $ 2,856 | $ 3,047 |
Lease Intangible Assets and L_5
Lease Intangible Assets and Liabilities - Summary of Lease Intangible Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Below Market Lease Net [Abstract] | ||
Gross Liability | $ 13,895 | $ 15,912 |
Accumulated Amortization | (4,620) | (5,264) |
Balance | $ 9,275 | $ 10,648 |
Lease Intangible Assets and L_6
Lease Intangible Assets and Liabilities - Schedule of Future Amortization of Intangibles (Detail) - Above-Market Leases, Net [Member] $ in Thousands | Mar. 31, 2020USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Remainder of 2020 | $ 159 |
2021 | 141 |
2022 | 111 |
2023 | 168 |
2024 | $ 183 |
Lease Intangible Assets and L_7
Lease Intangible Assets and Liabilities - Schedule of Future Amortization for Below-Market Ground Lease (Detail) $ in Thousands | Mar. 31, 2020USD ($) |
Below Market Lease Amortization Income Maturity Schedule [Abstract] | |
Remainder of 2020 | $ 153 |
2021 | 203 |
2022 | 203 |
2023 | 203 |
2024 | $ 203 |
Lease Intangible Assets and L_8
Lease Intangible Assets and Liabilities - Schedule of Future Estimated Amortization of Acquired In-Place Leases (Detail) - In-Place Leases, Net [Member] $ in Thousands | Mar. 31, 2020USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Remainder of 2020 | $ 10,214 |
2021 | 13,226 |
2022 | 12,918 |
2023 | 12,118 |
2024 | $ 11,574 |
Investments in Unconsolidated_3
Investments in Unconsolidated Joint Ventures - Summary of Company's Investments in Unconsolidated Joint Ventures (Detail) | 3 Months Ended |
Mar. 31, 2020ft²Property | |
Income Statement Equity Method Investments [Line Items] | |
Number of properties | 28 |
Total GLA | ft² | 4,526,500 |
Brookfield Properties Retail I [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 4 |
Total GLA | ft² | 520,500 |
Brookfield Properties Retail II [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 5 |
Total GLA | ft² | 910,400 |
The Macerich Company [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 9 |
Total GLA | ft² | 1,570,200 |
Simon Property Group Inc [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 5 |
Total GLA | ft² | 872,200 |
Invesco Real Estate [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 1 |
Total GLA | ft² | 103,000 |
Invesco Real Estate II [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 1 |
Total GLA | ft² | 226,300 |
First Washington Realty [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 1 |
Total GLA | ft² | 163,700 |
Greenberg Gibbons [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 1 |
Total GLA | ft² | 160,200 |
RD Management [Member] | |
Income Statement Equity Method Investments [Line Items] | |
Seritage % Ownership | 50.00% |
Number of properties | 1 |
Investments in Unconsolidated_4
Investments in Unconsolidated Joint Ventures - Summary of Properties Contributed In Unconsolidated Joint Ventures (Detail) | 3 Months Ended | |
Mar. 31, 2020USD ($) | ||
Mark 302 JV [Member] | ||
Related Party Transaction [Line Items] | ||
Investment in joint venture revaluation date | Mar. 20, 2018 | [1] |
March 31, 2020 | $ 90 | [1] |
March 31, 2020 | $ 38.8 | [1] |
UTC Joint Venture [Member] | ||
Related Party Transaction [Line Items] | ||
Investment in joint venture revaluation date | May 18, 2018 | |
March 31, 2020 | $ 68 | |
March 31, 2020 | $ 28.3 | |
West Hartford JV [Member] | ||
Related Party Transaction [Line Items] | ||
Investment in joint venture revaluation date | May 18, 2018 | [2] |
March 31, 2020 | $ 20.3 | [2] |
March 31, 2020 | $ (1.1) | [2] |
Cockeysville JV [Member] | ||
Related Party Transaction [Line Items] | ||
Investment in joint venture revaluation date | Mar. 29, 2019 | [3] |
March 31, 2020 | $ 12.5 | [3] |
March 31, 2020 | $ 3.8 | [3] |
Tech Ridge JV [Member] | ||
Related Party Transaction [Line Items] | ||
Investment in joint venture revaluation date | Sep. 27, 2019 | [4] |
March 31, 2020 | $ 3 | [4] |
March 31, 2020 | $ 0.1 | [4] |
[1] | The Mark 302 JV is subject to a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2020. The primary inputs in determining the Contribution Value for the Mark 302 JV are property operating income and total project costs and the Contribution Value will be recalculated to yield a pre-determined rate of return to the investment fund managed by Invesco Real Estate. The Contribution Value cannot be more than $ | |
[2] | The West Hartford JV was subject to (i) a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2019, and (ii) an adjustment based on the timing, method and magnitude of the reassessment of the property for real estate tax purposes between 2018 and 2022. As of December 31, 2019, the Company revalued the Contribution Value and recorded an additional loss of $2.3 million, and the Company does not expect there to be any additional revaluations. | |
[3] | The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the Cockeysville JV if certain milestones are met with respect to entitling the Additional Land Parcel for residential use. If the Additional Land Parcel is contributed to the Cockeysville JV, the Company will record an increased investment in the Cockeysville JV in an amount equal to 50% of the fair value of the Additional Land Parcel at the time of contribution. The Contribution Value of the Cockeysville JV is based upon the Company’s assessment of the probability of the Additional Land Parcel being entitled for residential use. The maximum Gain (Loss) is the fair value of the Additional Land Parcel at the time the Contribution Value is revalued, which cannot be less than $ | |
[4] | The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. T he Contribution Value cannot be less than $2.75 million. |
Investments in Unconsolidated_5
Investments in Unconsolidated Joint Ventures - Summary of Properties Contributed In Unconsolidated Joint Ventures (Parenthetical) (Detail) - USD ($) | May 18, 2018 | Mar. 20, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 27, 2019 | |
Related Party Transaction [Line Items] | ||||||
Gain (loss) on sale of real estate | $ 20,788,000 | $ 21,261,000 | ||||
Mark 302 JV [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Investment in joint venture revaluation date | [1] | Mar. 20, 2018 | ||||
West Hartford JV [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Investment in joint venture revaluation date | [2] | May 18, 2018 | ||||
Cockeysville JV [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Investment in joint venture revaluation date | [3] | Mar. 29, 2019 | ||||
Invesco Real Estate [Member] | Santa Monica, CA [Member] | Mark 302 JV [Member] | Maximum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Investment in joint venture revaluation date | Dec. 31, 2020 | |||||
Final contribution value | $ 105,000,000 | |||||
Gain or loss on sale of real estate based on final contribution value | 53,800,000 | |||||
Contribution value | 105,000,000 | |||||
Invesco Real Estate [Member] | Santa Monica, CA [Member] | Mark 302 JV [Member] | Minimum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Final contribution value | 60,000,000 | |||||
Gain or loss on sale of real estate based on final contribution value | 8,800,000 | |||||
Contribution value | $ 60,000,000 | |||||
Invesco Real Estate [Member] | West Hartford C T | West Hartford JV [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Final contribution value | $ 2,300,000 | |||||
Gain or loss on sale of real estate based on final contribution value | 2,300,000 | |||||
Contribution value | $ 2,300,000 | |||||
Invesco Real Estate [Member] | West Hartford C T | West Hartford JV [Member] | Maximum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Investment in joint venture revaluation date | Dec. 31, 2019 | |||||
Invesco Real Estate [Member] | West Hartford C T | West Hartford JV [Member] | Minimum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Final contribution value | $ 2,750,000 | |||||
Contribution value | $ 2,750,000 | |||||
Invesco Real Estate [Member] | Cockeysville, MD [Member] | Cockeysville JV [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Gain (loss) on sale of real estate | $ 3,800,000 | |||||
[1] | The Mark 302 JV is subject to a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2020. The primary inputs in determining the Contribution Value for the Mark 302 JV are property operating income and total project costs and the Contribution Value will be recalculated to yield a pre-determined rate of return to the investment fund managed by Invesco Real Estate. The Contribution Value cannot be more than $ | |||||
[2] | The West Hartford JV was subject to (i) a revaluation upon the earlier of the first anniversary of project stabilization or December 31, 2019, and (ii) an adjustment based on the timing, method and magnitude of the reassessment of the property for real estate tax purposes between 2018 and 2022. As of December 31, 2019, the Company revalued the Contribution Value and recorded an additional loss of $2.3 million, and the Company does not expect there to be any additional revaluations. | |||||
[3] | The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the Cockeysville JV if certain milestones are met with respect to entitling the Additional Land Parcel for residential use. If the Additional Land Parcel is contributed to the Cockeysville JV, the Company will record an increased investment in the Cockeysville JV in an amount equal to 50% of the fair value of the Additional Land Parcel at the time of contribution. The Contribution Value of the Cockeysville JV is based upon the Company’s assessment of the probability of the Additional Land Parcel being entitled for residential use. The maximum Gain (Loss) is the fair value of the Additional Land Parcel at the time the Contribution Value is revalued, which cannot be less than $ |
Investments in Unconsolidated_6
Investments in Unconsolidated Joint Ventures - Summary of Combined Condensed Financial Data of Unconsolidated Joint Ventures (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
ASSETS | |||
Land | $ 336,739 | $ 336,739 | |
Buildings and improvements | 534,393 | 517,068 | |
Accumulated depreciation | (70,927) | (86,496) | |
Investment in real estate, gross | 800,205 | 767,311 | |
Construction in progress | 195,170 | 177,028 | |
Net investment in real estate | 995,375 | 944,339 | |
Cash and cash equivalents | 19,773 | 27,977 | |
Tenant and other receivables, net | 1,879 | 3,113 | |
Other assets, net | 38,699 | 26,051 | |
Total assets | 1,055,726 | 1,001,480 | |
LIABILITIES AND MEMBERS' INTERESTS | |||
Mortgage loans payable, net | 14,470 | 14,218 | |
Accounts payable, accrued expenses and other liabilities | 96,994 | 89,110 | |
Total liabilities | 111,464 | 103,328 | |
Additional paid in capital | 945,953 | 934,120 | |
Retained earnings | (1,691) | (35,968) | |
Total members interest | 944,262 | 898,152 | |
Total liabilities and members interest | 1,055,726 | $ 1,001,480 | |
Total revenue | 5,341 | $ 11,218 | |
Property operating expenses | (2,737) | (2,598) | |
Depreciation and amortization | (3,687) | (5,253) | |
Operating income | (1,083) | 3,367 | |
Other expenses | (489) | (922) | |
Net loss | (1,572) | 2,445 | |
Equity in income (loss) of unconsolidated joint ventures | $ (786) | $ 1,222 |
Investments in Unconsolidated_7
Investments in Unconsolidated Joint Ventures - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Equity Method Investments And Joint Ventures [Abstract] | ||
Joint venture impairment charges | $ 0 | $ 0 |
Leases - Additional Information
Leases - Additional Information (Detail) ft² in Millions | Mar. 12, 2019ft²Property | Feb. 28, 2019USD ($)LeaseOption | Mar. 31, 2020USD ($)Property | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)Property |
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Right to recapture property space | 50.00% | ||||
Number of real estate specified properties | 5 | ||||
Right to recapture property space exercised | 100.00% | ||||
Number of real estate properties acquisition exercised | 70 | ||||
Number of terminated properties commenced or completed for redevelopment | 46 | ||||
Number of terminated properties sold | 24 | ||||
Number of properties subject to ground lease | 1 | ||||
Number of properties subject to corporate office lease | 1 | ||||
ROU assets | $ | $ 19,800,000 | $ 18,500,000 | |||
Operating leases expiration year | 2073 | ||||
General and Administrative Expenses [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Rent expense | $ | $ 274,000 | $ 285,000 | |||
Property Operating Expense | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Rent expense | $ | $ 11,000 | 11,000 | |||
Sears Holdings Corporation [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Number of real estate properties acquisition exercised | 87 | ||||
Number of properties terminated under lease | 31 | ||||
Area of properties rejected under leases | ft² | 4.3 | ||||
Holdco [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Number of real estate properties acquisition exercised | 29 | ||||
Holdco Master Lease [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Lease expiration date | Jul. 31, 2025 | ||||
Number of options for renewal of lease | Option | 3 | ||||
Renewal period of leases | 5 years | ||||
Final option renewal period | 4 years | ||||
Number of renewal term that will be increased | Lease | 2 | ||||
Percentage of increase annual lease rent | 2.00% | ||||
Rent credit allocation description | The rent credit is allocated to specific properties based on the trailing twelve- month EBITDA of the particular property as of December 2018. | ||||
Number of real estate properties acquisition exercised | 4 | ||||
Lease termination, description | Under the terms of the Holdco Master Lease, Holdco has the right, at any time, to terminate the Holdco Master Lease with respect to any property upon the payment of a termination fee equal to one year of base rent plus annual taxes and other operating expenses. Additionally, beginning in March 2020, the tenant has the right to terminate without payment of a termination fee: (i) up to 16 properties in the second year of the term of the Holdco Master Lease, (ii) up to 12 properties in the third year, (iii) up to 10 properties in the fourth year, and (iv) thereafter, the remaining properties, in each instance with carry over rights if less than the maximum permitted number of properties are terminated in any lease year. | ||||
Number of properties right to terminate without termination fee second year | 16 | ||||
Number of properties right to terminate without termination fee third year | 12 | ||||
Number of properties right to terminate without termination fee fourth year | 10 | ||||
Holdco Master Lease [Member] | Maximum [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Lease adjustment in form of rent credit | $ | $ 12,000,000 | ||||
Original and Holdco Master Lease [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Straight-line rental income | $ | $ (4,500,000) | $ 500,000 | |||
Master Lease [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Right to recapture property space | 100.00% | ||||
Number of properties to recapture | 10 | ||||
Right to recapture property space exercised | 100.00% | ||||
Original Master Lease [Member] | |||||
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items] | |||||
Number of real estate properties acquisition exercised | 3 |
Leases - Summary of Revenue fro
Leases - Summary of Revenue from Master Lease (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property Subject to or Available for Operating Lease [Line Items] | ||
Fixed rental income | $ 27,648 | $ 28,889 |
Variable rental income | 8,066 | 11,129 |
Total rental income | 35,714 | 40,018 |
Original and Holdco Master Lease [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Fixed rental income | 4,288 | 12,288 |
Variable rental income | 3,839 | 8,398 |
Total rental income | $ 8,127 | $ 20,686 |
Leases - Summary of Recapture R
Leases - Summary of Recapture Rights Exercised by the Company (Detail) | 3 Months Ended | |
Mar. 31, 2020ft²Property | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Gross leasable area | ft² | 9,232 | |
Number of Properties | 71 | |
Year2019 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Gross leasable area | ft² | 629 | |
Number of Properties | 4 | |
Year2018 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Gross leasable area | ft² | 3,428 | |
Number of Properties | 20 | |
Year2017 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Gross leasable area | ft² | 3,302 | |
Number of Properties | 27 | |
Year2016 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Gross leasable area | ft² | 1,501 | |
Number of Properties | 17 | |
Year2015 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Gross leasable area | ft² | 372 | |
Number of Properties | 3 | |
Hundred Percent Recaptures | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 43 | [1] |
Hundred Percent Recaptures | Year2019 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 3 | [1] |
Hundred Percent Recaptures | Year2018 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 17 | [1] |
Hundred Percent Recaptures | Year2017 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 16 | [1] |
Hundred Percent Recaptures | Year2016 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 4 | [1] |
Hundred Percent Recaptures | Year2015 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 3 | [1] |
Partial Recaptures | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 28 | [2] |
Partial Recaptures | Year2019 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 1 | [2] |
Partial Recaptures | Year2018 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 3 | [2] |
Partial Recaptures | Year2017 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 11 | [2] |
Partial Recaptures | Year2016 | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Number of Properties | 13 | [2] |
[1] | Includes properties for which the Company had converted partial recapture rights to 100% recapture rights. | |
[2] | Partial recaptures include the recapture of (i) up to approximately 50% of the space occupied by the tenant at all properties, (ii) automotive care centers which are free-standing or attached as “appendages” to the properties, and/or (iii) outparcels or outlots and certain portions of parking areas and common areas. |
Leases - Summary of Recapture_2
Leases - Summary of Recapture Rights Exercised by the Company (Parenthetical) (Detail) | Mar. 31, 2020 |
Property Subject To Or Available For Operating Lease Net [Abstract] | |
Right to recapture property space exercised | 100.00% |
Right to recapture property space | 50.00% |
Leases - Summary of Termination
Leases - Summary of Termination and Redevelopement Properties (Detail) | 3 Months Ended | ||
Mar. 31, 2020ft²Property | Dec. 31, 2019Property | ||
Property Subject to or Available for Operating Lease [Line Items] | |||
Area of real estate property (in square feet) | ft² | 9,232 | ||
Number of Properties Classified | 1 | 2 | |
Lease Termination [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Area of real estate property (in square feet) | ft² | 16,060 | ||
Number of Properties Classified | 116 | ||
Number of Properties Redeveloped by the Company | 46 | ||
Number of Properties Sold by the Company | 24 | ||
Lease Termination [Member] | Master Lease [Member] | Holdco [Member] | November 2019 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | 2019-11 | ||
Termination Date | 2020-03 | ||
Area of real estate property (in square feet) | ft² | 4,332 | ||
Number of Properties Classified | 29 | ||
Number of Properties Redeveloped by the Company | 7 | ||
Number of Properties Sold by the Company | 1 | ||
Lease Termination [Member] | Master Lease [Member] | Sears Holdings Corporation [Member] | Augest 2018 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | 2018-08 | ||
Termination Date | 2018-12 | ||
Area of real estate property (in square feet) | ft² | 1,605 | ||
Number of Properties Classified | 13 | ||
Number of Properties Redeveloped by the Company | 6 | ||
Number of Properties Sold by the Company | 3 | ||
Lease Termination [Member] | Master Lease [Member] | Sears Holdings Corporation [Member] | June 2018 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | [1] | 2018-06 | |
Termination Date | [1] | 2018-11 | |
Area of real estate property (in square feet) | ft² | [1] | 1,218 | |
Number of Properties Classified | [1] | 9 | |
Number of Properties Redeveloped by the Company | [1] | 6 | |
Number of Properties Sold by the Company | [1] | 1 | |
Lease Termination [Member] | Master Lease [Member] | Sears Holdings Corporation [Member] | April 2018 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | 2018-04 | ||
Termination Date | 2018-08 | ||
Area of real estate property (in square feet) | ft² | 1,494 | ||
Number of Properties Classified | 9 | ||
Number of Properties Redeveloped by the Company | 4 | ||
Number of Properties Sold by the Company | 1 | ||
Lease Termination [Member] | Master Lease [Member] | Sears Holdings Corporation [Member] | June 2017 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | [2] | 2017-06 | |
Termination Date | [2] | 2017-10 | |
Area of real estate property (in square feet) | ft² | [2] | 3,812 | |
Number of Properties Classified | [2] | 20 | |
Number of Properties Redeveloped by the Company | [2] | 8 | |
Number of Properties Sold by the Company | [2] | 4 | |
Lease Termination [Member] | Master Lease [Member] | Sears Holdings Corporation [Member] | January 2017 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | 2017-01 | ||
Termination Date | 2017-04 | ||
Area of real estate property (in square feet) | ft² | 1,872 | ||
Number of Properties Classified | 19 | ||
Number of Properties Redeveloped by the Company | 7 | ||
Number of Properties Sold by the Company | 8 | ||
Lease Termination [Member] | Master Lease [Member] | Sears Holdings Corporation [Member] | September 2017 [Member] | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Notice Date | 2016-09 | ||
Termination Date | 2017-01 | ||
Area of real estate property (in square feet) | ft² | 1,727 | ||
Number of Properties Classified | 17 | ||
Number of Properties Redeveloped by the Company | 8 | ||
Number of Properties Sold by the Company | 6 | ||
[1] | Two properties were terminated in October 2018. | ||
[2] | One property was terminated in November 2017 and one was terminated in January 2018. |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Rental Receipts excluding Variable Payments and Tenant Reimbursements of Expenses Under Non-cancelable Operating Leases (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remainder of 2020 | $ 81,885 | |
2021 | 109,728 | |
2022 | 109,126 | |
2023 | 104,116 | |
2024 | 100,364 | |
2025 | 91,803 | |
Thereafter | 465,609 | |
Total Lease Payments | $ 1,062,631 | |
2020 | $ 113,265 | |
2021 | 121,909 | |
2022 | 124,067 | |
2023 | 119,745 | |
2024 | 116,607 | |
Thereafter | 1,019,054 | |
Total Lease Payments | $ 1,614,647 |
Leases - Components of Lease Re
Leases - Components of Lease Revenues (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lessor Disclosure [Abstract] | ||
Fixed rental income | $ 27,648 | $ 28,889 |
Variable rental income | 8,066 | 11,129 |
Total rental income | $ 35,714 | $ 40,018 |
Leases - Information Related to
Leases - Information Related to Measurement of Lease Liabilities (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Lessee Disclosure [Abstract] | |
Weighted average remaining lease term (in years) | 10 years 8 months 12 days |
Weighted average discount rate | 7.00% |
Cash paid for operating leases | $ 400,000 |
Debt - Additional Information (
Debt - Additional Information (Detail) - Term Loan Facility [Member] - USD ($) | May 05, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Principal amount outstanding | $ 1,600,000,000 | ||
Berkshire Hathaway [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount outstanding | $ 2,000,000,000 | ||
Line of credit, maturity date | Jul. 31, 2023 | ||
Minimum rental income to achieve from tenants on annual basis to access incremental funding facility | $ 200,000,000 | ||
Minimum rental income to achieve from tenants for succeeding four consecutive fiscal quarters to access incremental funding facility | 200,000,000 | ||
Minimum net worth required for loan documentation | $ 1,200,000,000 | ||
Default interest rate on overdue amounts excess of base interest rate | 2.00% | ||
Debt issuance costs | $ 2,100,000 | ||
Unamortized debt issuance costs | $ 1,400,000 | $ 1,500,000 | |
'Deferred interest | $ 400,000,000 | ||
Berkshire Hathaway [Member] | Subsequent Event [Member] | |||
Debt Instrument [Line Items] | |||
Default interest rate on overdue amounts excess of base interest rate | 2.00% | ||
Berkshire Hathaway [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Fixed charge coverage ratio for each fiscal quarter till June 30, 2021 | 1.00% | ||
Fixed charge coverage ratio for each fiscal quarter after June 30, 2021 | 1.20% | ||
Unencumbered fixed charge coverage ratio for each fiscal quarter till June 30, 2021 | 1.05% | ||
Unencumbered fixed charge coverage ratio to each fiscal quarter after June 30, 2021 | 1.30% | ||
Berkshire Hathaway [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Unencumbered fixed charge coverage ratio | 60.00% | ||
Maximum leverage ratio | 65.00% | ||
Berkshire Hathaway [Member] | Maximum [Member] | Unrestricted cash [Member] | Subsequent Event [Member] | |||
Debt Instrument [Line Items] | |||
Available cash | $ 30,000,000 | ||
Berkshire Hathaway [Member] | Initial Funding [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount outstanding | $ 1,600,000,000 | ||
Debt instrument, base annual interest rate | 7.00% | ||
Berkshire Hathaway [Member] | Incremental Funding Facility [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount outstanding | $ 400,000,000 | ||
Debt instrument, base annual interest rate | 1.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2020 | |
Minimum [Member] | |
Income Tax Contingency [Line Items] | |
Distribution of taxable income to qualify as REIT, percent | 90.00% |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Billions | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Debt obligations, fair value | $ 1.5 | $ 1.6 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - Sears Holdings Corporation [Member] $ in Millions | Apr. 18, 2019USD ($) |
Minimum [Member] | |
Loss Contingencies [Line Items] | |
Worth of real estate in excess of purchase price paid | $ 649 |
Maximum [Member] | |
Loss Contingencies [Line Items] | |
Worth of real estate in excess of purchase price paid | $ 749 |
Related Party Disclosure - Addi
Related Party Disclosure - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of Other Related Party Transactions [Line Items] | ||
Property development expenditures receivable | $ 48,602 | $ 54,470 |
Unconsolidated Joint Ventures [Member] | ||
Schedule of Other Related Party Transactions [Line Items] | ||
Property development expenditures receivable | $ 400 | $ 9,700 |
Operating Partnership [Member] | Sears Holdings Corporation [Member] | ESL [Member] | ||
Schedule of Other Related Party Transactions [Line Items] | ||
Ownership interest percentage held by related party | 30.90% | |
Operating Partnership [Member] | Sears Holdings Corporation [Member] | Class A Common Shares [Member] | ESL [Member] | ||
Schedule of Other Related Party Transactions [Line Items] | ||
Ownership interest percentage held by related party | 6.60% |
Non-controlling Interests - Add
Non-controlling Interests - Additional Information (Detail) - Operating Partnership [Member] | Mar. 31, 2020 |
Noncontrolling Interest [Line Items] | |
Percentage of operating partnership interest held by parent | 69.10% |
ESL [Member] | |
Noncontrolling Interest [Line Items] | |
Ownership interest percentage held by related party | 30.90% |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Dec. 14, 2022 | Mar. 31, 2020 | Dec. 31, 2017 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Class A Common Shares [Member] | ||||||
Class of Stock [Line Items] | ||||||
OP Unit exchanges, shares | 1,650,000 | |||||
Common shares, issued | 38,622,102 | 36,897,364 | ||||
Common shares, outstanding | 38,622,102 | 36,897,364 | 35,690,000 | 35,668,000 | ||
Class B Non-Economic Common Shares [Member] | ||||||
Class of Stock [Line Items] | ||||||
Common shares, issued | 0 | |||||
Common shares, outstanding | 0 | |||||
Common shares surrendered | 1,242,536 | |||||
Class C Non Voting Common Shares [Member] | ||||||
Class of Stock [Line Items] | ||||||
Common shares, issued | 0 | |||||
Common shares, outstanding | 0 | |||||
Series A Cumulative Redeemable Preferred Shares [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred shares, issued | 2,800,000 | |||||
Percentage of preferred dividend rate | 7.00% | |||||
Preferred shares public offering price per share | $ 25 | |||||
Net proceeds from public offering | $ 66.7 | |||||
Series A Cumulative Redeemable Preferred Shares [Member] | Scenario, Forecast [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred shares redemption price per share plus any accrued and unpaid dividends | $ 25 | |||||
Series A Cumulative Redeemable Preferred Shares [Member] | Scenario, Forecast [Member] | Maximum [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred shares redemption threshold period | 120 days |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Common Stock Dividends and Distributions (Detail) - $ / shares | Feb. 25, 2019 | Mar. 31, 2019 |
Dividends Payable [Line Items] | ||
Dividends per Class A and Class C Common Share | $ 0.25 | |
Class A and Class C Common Share [Member] | ||
Dividends Payable [Line Items] | ||
Declaration Date | Feb. 25, 2019 | |
Record Date | Mar. 29, 2019 | |
Payment Date | Apr. 11, 2019 | |
Dividends per Class A and Class C Common Share | $ 0.25 |
Shareholders' Equity - Summar_2
Shareholders' Equity - Summary of Preferred Stock Dividends and Distributions (Detail) - $ / shares | Feb. 18, 2020 | Oct. 23, 2019 | Jul. 23, 2019 | Apr. 30, 2019 | Feb. 25, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
Dividends Payable [Line Items] | |||||||
Dividends per Series A Preferred Share | $ 0.4375 | $ 0.4375 | |||||
Series A Preferred Shares [Member] | |||||||
Dividends Payable [Line Items] | |||||||
Declaration Date | Feb. 18, 2020 | Oct. 23, 2019 | Jul. 23, 2019 | Apr. 30, 2019 | Feb. 25, 2019 | ||
Record Date | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 28, 2019 | Mar. 29, 2019 | ||
Payment Date | Apr. 15, 2020 | Jan. 15, 2020 | Oct. 15, 2019 | Jul. 15, 2019 | Apr. 15, 2019 | ||
Dividends per Series A Preferred Share | $ 0.43750 | $ 0.43750 | $ 0.43750 | $ 0.43750 | $ 0.43750 |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation of Net Income (Loss) and Number of Common Shares Used in Computations of Basic Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator - Basic and Diluted | ||
Net loss | $ (30,975) | $ (10,894) |
Net income attributable to non-controlling interests | 10,311 | 3,927 |
Preferred dividends | (1,225) | (1,225) |
Net loss attributable to common shareholders - Basic and diluted | $ (21,889) | $ (8,192) |
Denominator - Basic and Diluted | ||
Weighted average Class A and Class C common shares outstanding - Basic | 37,232 | 35,671 |
Weighted average Class A and Class C common shares outstanding - Diluted | 37,232 | 35,671 |
Net loss per share attributable to Class A and Class C common shareholders - Basic | $ (0.59) | $ (0.23) |
Net loss per share attributable to Class A and Class C common shareholders - Diluted | $ (0.59) | $ (0.23) |
Class A Common Shares [Member] | ||
Denominator - Basic and Diluted | ||
Weighted average Class A and Class C common shares outstanding - Basic | 37,232 | 35,671 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Time Based Restricted Shares and Share Units [Member] | ||
Earning Per Share [Line Items] | ||
Non-vested restricted shares outstanding | 434,358 | 349,318 |
Share Based Compensation - Addi
Share Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Jul. 07, 2015 | |
Time Based Restricted Shares and Share Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Restricted Share [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation costs | $ 9.2 | $ 6.6 | |
Unrecognized compensation costs, weighted average expected recognition period | 1 year 10 months 24 days | 1 year 7 months 6 days | |
Restricted Share [Member] | General and Administrative Expenses [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense recognized | $ 1.2 | $ 1.5 | |
Seritage Growth Properties 2015 Share Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock reserved for issuance | 3,250,000 |
Share Based Compensation - Summ
Share Based Compensation - Summary of Restricted Share (Detail) - Restricted Share [Member] | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested restricted shares at beginning of period | shares | 349,318 |
Share units granted | shares | 106,327 |
Restricted shares vested | shares | (21,287) |
Unvested restricted shares at end of period | shares | 434,358 |
Weighted-Average Grant Date Fair Value, Unvested restricted shares at beginning of period | $ / shares | $ 44.88 |
Weighted-Average Grant Date Fair Value, Share units granted | $ / shares | 31.06 |
Weighted-Average Grant Date Fair Value, Restricted shares vested | $ / shares | 41.63 |
Weighted-Average Grant Date Fair Value, Unvested restricted shares at end of period | $ / shares | $ 41.65 |