• SRG reports a net loss of $3.8 million in Q3 2023 but continues progress on asset sales with over $156 million grossed.

• Significant debt reduction with $150 million in principal repayments on the Term Loan Facility.

• Strategic sales and leasing activities aim to streamline portfolio and enhance value.

• Challenging market conditions persist, potentially impacting future sales and shareholder distributions.

• Warning! GuruFocus has detected 7 Warning Signs with SRG.

On November 8, 2023, Seritage Growth Properties (NYSE:SRG) announced its financial and operating results for the third quarter of 2023, revealing a net loss attributable to common shareholders of $3.8 million, or $0.07 per share. Despite the loss, SRG made notable progress in its strategic asset sales, grossing over $156 million during the quarter. The company's CEO, Andrea L. Olshan, highlighted the operational discipline that has led to reduced general and administrative expenses, with expectations for this trend to continue into 2024.

Asset Sales and Financial Position

SRG's asset sales during the quarter included two income-producing Multi-Tenant Retail assets and two Non-Core assets, among others, contributing to a significant cash position of $114.8 million as of September 30, 2023. The company also made substantial debt repayments, reducing the balance of its Term Loan Facility to $400 million by the end of the quarter, with a further reduction to $360 million subsequent to the quarter end.

Leasing and Operational Highlights

The company signed three leases covering 12 thousand square feet at an average projected annual net rent of $55.94 per square foot. Five tenants were opened, totaling approximately 41 thousand square feet at an average net rent of $65.36 per square foot. SRG's portfolio optimization efforts are evident in its leasing activities and the opening of new tenants.

Future Sales Projections and Market Conditions

SRG provided projections for future sales, indicating a range of anticipated gross proceeds for assets in Gateway and Primary Markets, among others. However, the company cautioned that challenging market conditions could materially affect these projections and the timing and amounts of distributions to shareholders.

Dividends and Strategic Review

The company declared preferred stock dividends throughout 2023 but does not expect to declare dividends on its common shares until the Term Loan Facility is repaid in full. SRG's strategic review process, including a Plan of Sale approved by shareholders, remains ongoing as the company seeks to maximize value.