Seritage Growth Properties - FORM 8-K - EX-99.2

Attached files

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EX-99.1 - EX-99.1 - Seritage Growth Properties	srg-ex991_6.htm
8-K - 8-K - Seritage Growth Properties	srg-8k_20161103.htm

Exhibit 99.2

SUPPLEMENTAL INFORMATION

Quarter ended September 30, 2016


INTRODUCTION

Background

Seritage Growth Properties (NYSE: SRG) (the “Company”) is a fully-integrated, self-administered and self-managed retail REIT with interests in 235 wholly-owned properties and 31 joint venture properties totaling over 42 million square feet of gross leasable area (“GLA”) across 49 states and Puerto Rico. Pursuant to a master lease (the “Master Lease”), 221 of the Company’s wholly-owned properties are leased to Sears Holdings Corporation (“Sears Holdings”) and are operated under either the Sears or Kmart brand. The Master Lease provides the Company with the right to recapture certain space from Sears Holdings at each property for retenanting or redevelopment purposes. At several properties, third-party tenants under direct leases occupy a portion of leasable space alongside Sears and Kmart, and 14 properties are leased entirely to third parties. The Company also owns 50% interests in 31 properties through joint venture investments with General Growth Properties, Inc. (NYSE: GGP), Simon Property Group Inc. (NYSE: SPG), and The Macerich Company (NYSE: MAC). A substantial majority of the space at the Company’s joint venture properties is also leased to Sears Holdings under master lease agreements (the “JV Master Leases”) that provide for similar recapture rights as the Master Lease governing the Company’s wholly-owned properties.

On June 11, 2015, Sears Holdings effected a rights offering (the “Rights Offering”) to Sears Holdings stockholders to purchase common shares of Seritage in order to fund, in part, the $2.7 billion acquisition of 234 of Sears Holdings’ owned properties and one of its ground leased properties (the “Wholly Owned Properties”), as well as its 50% interests in three joint ventures that collectively own 28 properties, ground lease one property and lease two properties (collectively, the “JV Properties”) (collectively, the “Transaction”). The Rights Offering ended on July 2, 2015, and the Company’s Class A common shares were listed on the New York Stock Exchange on July 6, 2015.

On July 7, 2015, the Company completed the Transaction with Sears Holdings and commenced operations. The Company’s only operations prior to the completion of the Rights Offering and Transaction were those incidental to the completion of such activities.

General Information

Unless the context indicates otherwise, references in this supplemental information package (the "Supplemental") to "Seritage Growth,” “Seritage,” the “Company,” or “SRG” refer to Seritage Growth Properties and its subsidiaries. Additionally, where reference is made to "GAAP", this refers to accounting principles generally accepted in the United States.


TABLE OF CONTENTS

SERITAGE GROWTH PROPERTIES

SUPPLEMENTAL INFORMATION

QUARTER ENDED SEPTEMBER 30, 2016

		Page
COMPANY INFORMATION		1

CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets		2
Consolidated Statements of Operations		3

SUPPLEMENTAL FINANCIAL INFORMATION
Market Capitalization and Debt Ratios		4
Total Net Operating Income		5
EBITDA and Adjusted EBITDA		6
Funds from Operations and Company FFO		7
Additional Information		8

PROPERTY INFORMATION
Portfolio Overview		10
Signed Not Yet Open Leases (“SNO Leases”)		13
Redevelopment Projects		14
Sears Holdings Termination Properties		16
Joint Venture Properties		17
Wholly Owned Properties		19

DISCLOSURES
Non-GAAP Measures		26
Forward-Looking Statements		27


COMPANY INFORMATION

Company Contacts
Benjamin Schall	President and Chief Executive Officer
Brian Dickman	EVP and Chief Financial Officer
Matthew Fernand	EVP and General Counsel
James Bry	EVP, Development and Construction
Mary Rottler	EVP, Leasing and Operations
ir@seritage.com	Investor Relations and Communications	646.277.1268

Summary Information

September 30, 2016

(In thousands, except per share, PSF and ratio amounts)

			Three Months Ended			Nine Months Ended
Financial Results			September 30, 2016			September 30, 2016
Net loss (page 3)			$	(21,102	)	$	(36,554	)
Total NOI (page 5)				48,087			141,782
FFO (page 7)				12,251			71,972
Company FFO (page 7)				32,638			97,291
Net loss per diluted share (page 3)			$	(0.67	)	$	(1.16	)
FFO per diluted share (page 7)				0.22			1.29
Company FFO per diluted share (page 7)				0.59			1.75
Stock trading price range			$44.50 to $51.37			$37.51 to $56.47
Weighted average diluted shares used in EPS computations				31,419			31,414
Weighted average diluted shares used in FFO computations				55,595			55,590

						As of
Property Data (page 10)						September 30, 2016
Number of properties							266
Gross leasable area (total / at share)						42,403 / 39,679
Percentage leased (total / at share)						99.2% / 99.3%

	As of September 30, 2016
			% of Total
Tenant	Annual Rent		Annual Rent			Annual Rent PSF
Sears Holdings	$	151,746		68.6	%	$	4.39
In-Place Third-Party Leases		40,604		18.4	%		12.24
SNO Third-Party Leases		28,815		13.0	%		19.25
Total	$	221,165		100.0	%	$	5.61

						As of
Financial Ratios (page 4)						September 30, 2016
Total debt to total market capitalization							29.5	%
Net debt to adjusted EBITDA							5.3	x
Adjusted EBITDA to cash interest expense							3.3	x

- 1 -


CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet

September 30, 2016

(In thousands, except share and per share amounts)

	September 30, 2016			December 31, 2015
ASSETS
Investment in real estate
Land	$	840,021		$	840,563
Buildings and improvements		831,269			814,652
Accumulated depreciation		(78,025	)		(29,076	)
		1,593,265			1,626,139
Construction in progress		44,172			13,136
Net investment in real estate		1,637,437			1,639,275
Investment in unconsolidated joint ventures		419,675			427,052
Cash and cash equivalents		90,029			62,867
Restricted cash		81,790			92,475
Tenant and other receivables, net		13,477			9,772
Lease intangible assets, net		505,564			578,795
Prepaid expenses, deferred expenses and other assets, net		12,466			23,123
Total assets	$	2,760,438		$	2,833,359

LIABILITIES AND EQUITY
Liabilities
Mortgage loans payable, net	$	1,165,675		$	1,142,422
Accounts payable, accrued expenses and other liabilities		130,283			120,860
Total liabilities		1,295,958			1,263,282

Commitments and contingencies (Note 10)

Shareholders' Equity
Class A shares $0.01 par value; 100,000,000 shares authorized; 25,822,201 and 24,817,842 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		258			248
Class B shares $0.01 par value; 5,000,000 shares authorized; 1,589,020 shares issued and outstanding as of September 30, 2016 and December 31, 2015		16			16
Class C shares $0.01 par value; 50,000,000 shares authorized; 5,775,735 and 6,773,185 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		58			68
Additional paid-in capital		925,296			924,508
Accumulated deficit		(98,425	)		(38,145	)
Total shareholders' equity		827,203			886,695
Non-controlling interests		637,277			683,382
Total equity		1,464,480			1,570,077
Total liabilities and equity	$	2,760,438		$	2,833,359

- 2 -


CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Operations

September 30, 2016

(In thousands, except per share amounts)

				July 7, 2015
	Three Months Ended			(date operations commenced) to			Nine Months Ended
	September 30,			September 30,			September 30,
	2016			2015			2016
REVENUE
Rental income	$	45,584		$	41,389		$	136,737
Tenant reimbursements		12,023			12,674			45,741
Total revenue		57,607			54,063			182,478
EXPENSES
Property operating		4,505			2,815			17,176
Real estate taxes		7,965			10,741			31,101
Depreciation and amortization		44,532			32,935			121,365
General and administrative		4,252			5,782			13,104
Litigation charge		19,000			-			19,000
Allowance for doubtful accounts		124			-			269
Acquisition-related expenses		-			18,340			73
Total expenses		80,378			70,613			202,088
Operating income		(22,771	)		(16,550	)		(19,610	)
Equity in income of unconsolidated joint ventures		1,497			2,720			4,495
Interest and other income		77			38			196
Interest expense		(15,931	)		(14,796	)		(47,297	)
Unrealized loss on interest rate cap		(47	)		(2,814	)		(1,898	)
Loss before income taxes		(37,175	)		(31,402	)		(64,114	)
Provision for income taxes		(72	)		(451	)		(412	)
Net loss		(37,247	)		(31,853	)		(64,526	)
Net loss attributable to non-controlling interests		16,145			13,552			27,972
Net loss attributable to common shareholders	$	(21,102	)	$	(18,301	)	$	(36,554	)

Net loss per share attributable to Class A and Class C common shareholders - Basic and diluted (1)	$	(0.67	)	$	(0.58	)	$	(1.16	)

Weighted average Class A and Class C common shares outstanding - Basic and diluted (1)		31,419			31,384			31,414

(1)	Earnings per share is not presented for Class B shareholders as they do not have economic rights.

- 3 -


SUPPLEMENTAL FINANCIAL INFORMATION

Market Capitalization and Debt Ratios

September 30, 2016

(In thousands, except per share and ratio amounts)

	As of			As of
Equity Market Capitalization	September 30, 2016			December 31, 2015
Class A common shares outstanding		25,822			24,818
Class C common shares outstanding		5,776			6,773
OP units outstanding		24,176			24,176
Total shares & units outstanding		55,774			55,767
Share Price	$	50.68		$	40.22
Equity market capitalization	$	2,826,626		$	2,242,949

Total Market Capitalization
Equity market capitalization	$	2,826,626		$	2,242,949
Total debt		1,180,434			1,161,196
Total market capitalization	$	4,007,060		$	3,404,144

Debt Ratios
Total debt to total market capitalization		29.5	%		34.1	%

Total debt	$	1,180,434		$	1,161,196
Cash and cash equivalents		(90,029	)		(62,867	)
Restricted cash		(81,790	)		(92,475	)
Net Debt	$	1,008,615		$	1,005,854

Net debt to Adjusted EBITDA (1)		5.3	x		5.3	x

Gross real estate investments	$	2,311,497		$	2,264,573
Investment in unconsolidated joint ventures		419,675			427,052
Total real estate investments	$	2,731,172		$	2,691,625

Net debt to total real estate investments		36.9	%		37.4	%

Interest expense	$	15,931		$	30,461
Amortization of deferred financing costs		(1,340	)		(2,657	)
Cash interest expense	$	14,591		$	27,804

Adjusted EBITDA to cash interest expense		3.3	x		3.3	x

(1)	Adjusted EBITDA for the period has been annualized for purposes of calculating net debt to Adjusted EBITDA.

- 4 -


SUPPLEMENTAL FINANCIAL INFORMATION

Total Net Operating Income

September 30, 2016

(In thousands)

				July 7, 2015
	Three Months Ended			(date operations commenced) to			Nine Months Ended
	September 30,			September 30,			September 30,
Total NOI	2016			2015			2016
Rental income	$	45,584		$	41,389		$	136,737
Tenant reimbursements		12,023			12,674			45,741
Total revenue		57,607			54,063			182,478
Property operating		4,505			2,815			17,176
Real estate taxes		7,965			10,741			31,101
Allowance for doubtful accounts		124			—			269
Total expenses		12,594			13,556			48,546
NOI from consolidated properties		45,013			40,507			133,932
NOI from unconsolidated properties		6,431			6,286			20,057
Total NOI before GAAP adjustments		51,444			46,793			153,989
Straight-line rental income (1)		(3,100	)		(4,124	)		(11,526	)
Above/below market rental income/expense (1)		(257	)		(207	)		(681	)
Total NOI	$	48,087		$	42,462		$	141,782

Reconciliation of Net Loss to NOI and Total NOI
Net loss	$	(37,247	)	$	(31,853	)	$	(64,526	)
Depreciation and amortization		44,532			32,935			121,365
General and administrative		4,252			5,782			13,104
Litigation charges		19,000			-			19,000
Acquisition-related expenses		-			18,340			73
Equity in income of unconsolidated joint ventures		(1,497	)		(2,720	)		(4,495	)
Interest and other income		(77	)		(38	)		(196	)
Interest expense		15,931			14,796			47,297
Unrealized loss on interest rate cap		47			2,814			1,898
Provision for income taxes		72			451			412
NOI	$	45,013		$	40,507		$	133,932
NOI of unconsolidated joint ventures		6,431			6,286			20,057
Straight-line rent adjustment (1)		(3,100	)		(4,124	)		(11,526	)
Above/below market rental income/expense (1)		(257	)		(207	)		(681	)
Total NOI	$	48,087		$	42,462		$	141,782

	As of			As of
Annualized Total NOI	September 30, 2016			September 30, 2015
Total NOI (per above)	$	48,087		$	42,462
Current period adjustments (2)		203			4,295
Adjusted Total NOI		48,290			46,757
Annualize	x 4			x 4
Adjusted Total NOI annualized		193,160			187,028
Plus: estimated annual Total NOI - SNO leases		28,815			8,698
Less: estimated annual Total NOI - recaptured Sears space		(6,378	)		-
Annualized Total NOI	$	215,597		$	195,726

(1)

Includes adjustments for unconsolidated joint ventures.

(2)

Includes adjustments to account for leases not in place for the full period.

- 5 -


SUPPLEMENTAL FINANCIAL INFORMATION

EBITDA and Adjusted EBITDA

September 30, 2016

(In thousands)

				July 7, 2015
	Three Months Ended			(date operations commenced) to			Nine Months Ended
	September 30,			September 30,			September 30,
EBITDA	2016			2015			2016
Net loss	$	(37,247	)	$	(31,853	)	$	(64,526	)
Depreciation and amortization		44,532			32,935			121,365
Depreciation and amortization (unconsolidated joint ventures)		5,191			3,688			15,653
Interest expense		15,931			14,796			47,297
Provision for income and other taxes		72			451			412
EBITDA	$	28,479		$	20,017		$	120,201


Adjusted EBITDA
EBITDA	$	28,479		$	20,017		$	120,201
Unrealized loss on interest rate cap		47			2,814			1,898
Litigation charge		19,000			-			19,000
Acquisition-related expenses		-			18,340			73
Up-front hiring and personnel costs		-			1,795			328
Adjusted EBITDA	$	47,526		$	42,966		$	141,500

- 6 -


SUPPLEMENTAL FINANCIAL INFORMATION

Funds from Operations and Company FFO

September 30, 2016

(In thousands, except per share amounts)

				July 7, 2015
	Three Months Ended			(date operations commenced) to			Nine Months Ended
	September 30,			September 30,			September 30,
Funds from Operations	2016			2015			2016
Net loss	$	(37,247	)	$	(31,853	)	$	(64,526	)
Real estate depreciation and amortization (consolidated properties)		44,307			32,935			120,845
Real estate depreciation and amortization (unconsolidated joint ventures)		5,191			3,688			15,653
FFO attributable to common shareholders and unitholders	$	12,251		$	4,770		$	71,972

FFO per diluted common share and unit	$	0.22		$	0.09		$	1.29

Company Funds from Operations
Funds from Operations attributable to Seritage Growth Properties	$	12,251		$	4,770		$	71,972
Unrealized loss on interest rate cap		47			2,814			1,898
Amortization of deferred financing costs		1,340			1,324			4,020
Litigation charge		19,000			-			19,000
Acquisition-related expenses		-			18,340			73
Up-front hiring and personnel costs		-			1,795			328
Company FFO attributable to common shareholders and unitholders	$	32,638		$	29,043		$	97,291

Company FFO per diluted common share and unit	$	0.59		$	0.52		$	1.75

Weighted Average Common Shares and Units Outstanding
Weighted average common shares outstanding		31,419			31,384			31,414
Weighted average OP units outstanding		24,176			24,176			24,176
Weighted average common shares and units outstanding		55,595			55,560			55,590

- 7 -


SUPPLEMENTAL FINANCIAL INFORMATION

Additional Information

September 30, 2016

(In thousands)

	As of		As of
Debt Summary	September 30, 2016		December 31, 2015
Mortgage notes payable	$	1,180,000	$	1,161,000
Interest rate	LIBOR + 465		LIBOR + 465
Maturity	July 2019		July 2019
Extension options (subject to terms and conditions)	(2) one-year options		(2) one-year options

Restricted Cash
Reserve for property operating expenses	$	31,426	$	38,511
Reserve for acquired redevelopment projects / capital expenditures		17,108		28,701
Prepaid rent		14,569		2,646
Reserve for environmental remediation		11,768		12,039
Reserve for deferred maintenance		6,919		10,578
Total restricted cash	$	81,790	$	92,475

Prepaid Expenses, Deferred Expenses and Other Assets
FF&E	$	4,942	$	2,572
Prepaid insurance		3,799		3,794
Deferred expenses and other		3,521		1,937
Interest rate cap		204		2,101
Escrowed recapture fees		-		12,719
Total prepaid expenses, deferred expenses and other assets	$	12,466	$	23,123

Accounts Payable, Accrued Expenses and Other Liabilities
Accrued real estate taxes	$	25,407	$	25,333
Litigation charge		19,000		-
Below-market leases		17,358		18,986
Dividends payable		14,659		27,894
Prepaid rental income		13,558		1,331
Accounts payable and accrued expenses		12,893		13,793
Environmental reserve		11,596		11,824
Deferred maintenance		7,001		10,281
Accrued interest		2,727		2,748
Sears Holdings payable		6,084		8,670
Total accounts payable, accrued expenses and other liabilities	$	130,283	$	120,860

- 8 -


SUPPLEMENTAL FINANCIAL INFORMATION

Additional Information (cont’d)

September 30, 2016

(In thousands)

	Three Months Ended			Nine Months Ended
Select Non-Cash Items	September 30, 2016			September 30, 2016
Straight-line rental income
Wholly-owned	$	3,016		$	11,243
Joint ventures		84			283
Total	$	3,100		$	11,526

Net amortization of above/below market rental income/expense
Wholly-owned	$	189		$	518
Joint ventures		68			163
Total	$	257		$	681

Amortization of deferred financing costs	$	(1,340	)	$	(4,020	)
Stock-based compensation expense		(267	)		(801	)

Capital Expenditures
Development and redevelopment costs	$	17,089		$	38,338
Tenant improvements and allowances		1,523			5,282
Maintenance capital expenditures		-			-
Leasing commissions		153			597
Total capital expenditures	$	18,765		$	44,217

Dividends
Dividends per Class A and Class C common share	$	0.25		$	0.75
Declaration date	August 2, 2016
Record date	September 30, 2016
Payment date	October 13, 2016

- 9 -


PROPERTY INFORMATION

Portfolio Overview

September 30, 2016

(In thousands, except number of properties/leases and PSF amounts)

Portfolio Summary

The following table provides a summary of the Company’s portfolio, including JV Properties presented at the Company’s proportional share, as of September 30, 2016:

	Consolidated			Unconsolidated			Seritage
	Portfolio			Joint Ventures			Total
Number of properties		235			31			266

Total GLA		36,954			5,449			42,403
At share		36,954			2,725			39,679

Leased GLA		36,664			5,449			42,113
At share		36,664			2,725			39,389

Percentage leased		99.2	%		100.0	%		99.3	%
At share		99.2	%		100.0	%		99.3	%

Annual Base Rent Summary

The following table provides a summary of annual base rent for the portfolio, including JV Properties presented at the Company’s proportional share, based on signed leases as of September 30, 2016:

	Number of		Leased		% of Total			Annual		% of Total			Annual
Tenant	Leases		GLA		Leased GLA			Rent		Annual Rent			Rent PSF
Sears Holdings (1)		252		34,574		87.8	%	$	151,746		68.6	%	$	4.39
In-Place Third-Party Leases		244		3,318		8.4	%		40,604		18.4	%		12.24
SNO Third-Party Leases		55		1,497		3.8	%		28,815		13.0	%		19.25
Sub-Total Third-Party Leases		299		4,815		12.2	%		69,419		31.4	%		14.42
Total		551		39,389		100.0	%	$	221,165		100.0	%	$	5.61

(1)	Leases reflects number of properties subject to the Master Lease and JV Master Leases.

- 10 -


PROPERTY INFORMATION

Portfolio Overview (cont’d)

September 30, 2016

(In thousands, except number of properties/leases and PSF amounts)

Geographic Summary

The following table sets forth information regarding the geographic diversification of the portfolio, including JV Properties presented at the Company’s proportional share, based on signed leases as of September 30, 2016:

	Number of		Annual		% of Total			Rent
State	Properties		Rent		Annual Rent			PSF
California		43	$	41,241		18.6	%	$	6.04
Florida		27		27,366		12.4	%		6.49
New York		12		13,005		5.9	%		6.66
Texas		17		12,764		5.8	%		4.91
Illinois		12		9,823		4.4	%		4.35
New Jersey		7		8,928		4.0	%		8.13
Pennsylvania		8		8,462		3.8	%		9.38
Virginia		6		7,854		3.6	%		6.52
Michigan		10		7,356		3.3	%		3.97
Puerto Rico		6		6,262		2.8	%		6.96
Total Top 10		148	$	143,061		64.6	%	$	6.01
Other (1)		118		78,104		35.4	%		5.01
Total		266	$	221,165		100.0	%	$	5.61

(1)	Includes 40 states

Tenant Summary

The following table lists the top tenants in the portfolio, including JV Properties presented at the Company’s proportional share, based on signed leases as of September 30, 2016:

	Number of		Annual		% of Total
Tenant	Leases		Rent		Annual Rent
Sears Holdings (1)		252	$	151,746		68.6	%
Lands' End (2)		73		7,060		3.2	%
Primark		5		5,544		2.5	%
Nordstrom Rack		6		4,385		2.0	%
Dave & Busters		3		4,247		1.9	%
Burlington Stores		6		4,075		1.8	%
At Home		7		3,922		1.8	%
Dick's Sporting Goods		3		3,498		1.6	%
PetSmart		4		1,549		0.7	%
BJs Brewhouse		5		1,213		0.5	%

(1)	Leases reflects number of properties subject to the Master Lease and JV Master Leases.

(2)

Lease agreements between Sears Holdings and Lands’ End were retained as a sublease under the Master Lease. However, Sears Holdings pays the Company additional rent under the Master Lease (in lieu of base rent attributable to the Lands’ End space leased to Sears Holdings under the Master Lease) an amount equal to rent payments (including expenses) required to be made by Lands’ End under the Lands’ End leases.

- 11 -


PROPERTY INFORMATION

Portfolio Overview (cont’d)

September 30, 2016

(In thousands, except number of properties and PSF amounts)

Retail Property Type

As of September 30, 2016, the portfolio included 133 properties attached to regional malls and 133 shopping center or freestanding properties. The following table provides a summary of the portfolio, including JV Properties presented at the Company’s proportional share, based on these property types and signed leases as of September 30, 2016:

	Number of		Leased		Annual		Rent
Property Type (1)	Properties		GLA		Rent (2)		PSF		Occupancy
Mall		133		21,543	$	131,393	$	6.10		99.8	%
Shopping Center		133		17,846		89,773		5.03		98.6	%
Total		266		39,389	$	221,165	$	5.61		99.3	%

(1)	Company classification. Mall properties are attached to regional malls; Shopping Center properties include properties attached to, within or adjacent to neighborhood shopping or power centers, as well as freestanding properties.

- 12 -


PROPERTY INFORMATION

Signed Not Yet Open Leases (“SNO Leases”)

September 30, 2016

(In thousands, except PSF amounts)

SNO Lease Summary

The table below provides a summary of the Company’s SNO leases from June 30, 2016 to September 30, 2016, including JV Properties presented at the Company’s proportional share:

(in thousands except number of leases and PSF data)							Total					Incremental (1)
	Number of						Annual			Annual		Annual		Annual
	SNO Leases			GLA			Rent			Rent PSF		Rent		Rent PSF
As of June 30, 2016		46			1,044		$	23,793		$	22.79	$	13,758	$	19.46
Opened		(5	)		(90	)		(2,444	)		27.16
Signed		14			543			7,466			13.75		4,706		10.32
As of September 30, 2016		55			1,497		$	28,815		$	19.25	$	18,464	$	15.89

(1)	Reflects incremental rent for new tenants over that paid by Sears Holdings on a same space basis.

SNO Lease Detail

Below is a list of the Company’s SNO Leases as of September 30, 2016, including JV Properties presented at the Company’s proportional share:

Property

Tenant(s)

GLA

Base Rent

Rent PSF

Multiple (6 locations)

Burlington Stores

282

Multiple (2 locations)

At Home

181

Multiple (3 locations)

Dave & Busters

119

Orlando, FL

Floor & Décor, Orchard Supply Hardware

100

St. Petersburg, FL

Dick's Sporting Goods, Lucky's Market, PetSmart

Honolulu, HI

Long’s Drugs (CVS), PetSmart, Ross Dress for Less

Rehoboth Beach, DE

Christmas Tree Shops and That!, PetSmart

Memphis, TN

Nordstrom Rack, Ulta Beauty

Multiple (5 locations)

BJ’s Brewhouse

Braintree, MA

Saks OFF 5th

King of Prussia, PA (auto center)

Outback Steakhouse, Yard House

Carson, CA (auto center)

Applebee’s, Chick-Fil-A, Chipotle, Jersey Mike’s, Smash Burger

Hialeah, FL

Forever 21

San Antonio, TX (auto center)

Jared the Galleria of Jewelry, Orvis

Other (Wholly Owned Properties)

Various

298

Other (JV Properties)

Various

118

Seritage Total (at share)

1,497

28,815

19.25

- 13 -


PROPERTY INFORMATION

Redevelopment Projects

September 30, 2016

(In thousands)

The table below summarizes the Company’s pipeline of retenanting and redevelopment projects, including those initiated subsequent to September 30, 2016:

(dollars in thousands)

Total

Estimated

Total Project

Development

Project

Construction

Substantial

Property

Description

Square Feet

Cost (1)

Start

Completion

King of Prussia, PA

Repurpose former auto center space for Outback Steakhouse, Yard House and small shop retail

29,100

3,900

Underway

Q4 2016

Braintree, MA

100% recapture; redevelopment of existing building to be anchored by Nordstrom Rack and Saks OFF 5th

90,000

11,700

12,100

Underway

Q4 2016

Honolulu, HI

100% recapture; redevelopment of existing building for Longs Drugs (CVS), PetSmart and Ross Dress for Less

79,000

8,500

19,700

Underway

Q2 2017

San Antonio, TX

Recapture and repurpose auto center space for Orvis, Jared's Jeweler and small shop retail

18,900

3,300

Underway

Q2 2017

Memphis, TN

100% recapture; demolish and construct new buildings for Nordstrom Rack, Ulta Beauty, additional junior anchors, small shop retail and restaurants

135,200

24,100

25,200

Underway

Q3 2017

Ft. Wayne, IN

Site densification; new outparcel for BJ's Brewhouse

7,600

1,100

Q4 2016

Q2 2017

Albany, NY

Recapture and repurpose auto center space for BJ's Brewhouse and additional restaurants

28,000

5,700

Q4 2016

Q3 2017

Bowie, MD

Recapture and repurpose auto center space for BJ's Brewhouse

8,200

1,900

Q4 2016

Q3 2017

Hagerstown, MD

Recapture and repurpose auto center space for BJ's Brewhouse and additional restaurants

15,400

2,700

Q4 2016

Q4 2017

Wayne, NJ

Partial recapture; redevelopment of existing store for Dave & Busters, additional junior anchors and restaurants

111,300

21,100

Q1 2017

Q4 2017

Fairfax, VA

Partial recapture; redevelopment of existing store and attached auto center for Dave & Busters, additional junior anchors and restaurants

110,300

18,600

Q1 2017

Q4 2017

Madison, WI

Partial recapture; redevelopment of existing store for Dave & Busters, additional junior anchors, small shop retail and restaurants

75,300

14,200

Q1 2017

Q4 2017

West Jordan, UT

Partial recapture; redevelopment of existing store and attached auto center for Burlington Stores and small shop retail

81,400

10,800

Q1 2017

Q4 2017

Warwick, RI

Recapture and repurpose auto center space for BJ's Brewhouse and additional retail

27,900

4,500

Q1 2017

Q4 2017

Roseville, MI

Partial recapture; redevelopment of existing store for At Home

100,400

5,400

Q1 2017

Q4 2017

Troy, MI

Partial recapture; redevelopment of existing store for At Home

100,000

5,500

Q1 2017

Q4 2017

- 14 -


PROPERTY INFORMATION

(dollars in thousands)

Total

Estimated

Total Project

Development

Project

Construction

Substantial

Property

Description

Square Feet

Cost (1)

Start

Completion

West Hartford, CT

100% recapture; redevelopment of existing building to be anchored by Saks OFF 5th and REI

147,600

26,500

27,200

Q1 2017

Q1 2018

Anderson, SC

Partial recapture; redevelopment of existing building for Burlington Stores

124,300

7,600

Q2 2017

Q4 2017

North Hollywood, CA

Partial recapture; redevelopment of existing store for Burlington Stores and additional junior anchors

79,800

12,300

Q2 2017

Q1 2018

Charleston, SC

Partial recapture; redevelopment of existing store and detached auto center for Burlington Stores and additional retail

71,700

11,000

Q2 2017

Q1 2018

Rehoboth Beach, DE

Partial recapture; redevelopment of existing store to be anchored by Christmas Tree Shops and That! and PetSmart

56,700

8,600

Q2 2017

Q1 2018

Orlando, FL

100% recapture; demolish and construct new buildings for Floor & Décor, Orchard Supply Hardware, small shop retail and restaurants

139,200

19,600

19,900

Q2 2017

Q2 2018

Springfield, IL

Sears termination property; redevelopment of existing store for Burlington Stores, Outback Steakhouse, additional junior anchors and small shop retail

133,400

13,900

Q2 2017

Q2 2018

St. Petersburg, FL

100% recapture; demolish and construct new buildings for Dick's Sporting Goods, Lucky's Market, PetSmart and additional junior anchors, small shop retail and restaurants

142,400

21,300

22,900

Q2 2017

Q2 2018

Kearney, NE

Sears termination property; redevelopment of existing store for PetSmart and additional junior anchors

92,500

7,400

Q2 2017

Q2 2018

Total

2,005,600

271,200

286,500

Projected Annual Income (2)

Incremental

Total

Existing

Incremental

Yield (3)

Total redevelopment

projects

48,300

15,500

32,800

11.0% - 12.0%

(1)	Total estimated development costs exclude, and total estimated project costs include, termination fees to recapture 100% of certain properties.

(2)	Projected annual income includes assumptions on stabilized rents to be achieved for space under redevelopment. There can be no assurance that stabilized rent targets will be achieved.

(3)	Projected incremental annual income divided by total estimated project costs.

- 15 -


PROPERTY INFORMATION

Sears Holdings Termination Properties

September 30, 2016

(In thousands)

Terminated Properties Summary

During the three months ended September 30, 2016, Sears Holdings provided notice that it intends to exercise its right to terminate the Master Lease with respect to 17 stores totaling 1.7 million square feet of gross leasable area. The aggregate annual base rent at these stores is approximately $5.9 million, or 2.7% of the Company's total annual base rent as of September 30, 2016, including all signed leases. Sears Holdings will continue to pay Seritage rent until it vacates the stores which is expected to occur in January 2017, and will also pay Seritage a termination fee equal to one year of aggregate annual base rent plus one year of estimated real estate taxes and operating expenses.

The table below provides a summary of the 17 properties to be terminated:

Property	Square Feet
Cullman, AL		98,500
Sierra Vista, AZ		86,100
Thornton, CO		190,200
Chicago, IL		118,800
Springfield, IL		84,200
Elkhart, IN		86,500
Merrillville, IN		108,300
Houma, LA		96,700
New Iberia, LA		91,700
Alpena, MI		118,200
Manistee, MI		87,800
Sault Sainte Marie, MI		92,700
Kearney, NE		86,500
Deming, NM		96,600
Harlingen, TX		91,700
Yakima, WA		97,300
Riverton, WY		94,800
Total square feet		1,726,600

- 16 -


PROPERTY INFORMATION

Joint Venture Properties

September 30, 2016

(In thousands)

GGP Joint Venture

				Recapture			Total
	Mall Name	City	State	Rights (1)(2)			GLA (3)		Leased (3)
1	Valley Plaza Mall (4)	Bakersfield	CA		50	%		102,100		100	%
2	Pembroke Lakes Mall (4)(5)	Pembroke Pines	FL		50	%		72,100		100	%
3	Oakbrook Center (6)	Oak Brook	IL		50	%		157,000		100	%
4	Natick Collection (5)(6)	Natick	MA		50	%		95,300		100	%
5	The Mall in Columbia (6)	Columbia	MD		50	%		74,500		100	%
6	Ridgedale Center	Minnetonka	MN		50	%		102,500		100	%
7	Paramus Park (6)	Paramus	NJ		100	%		96,200		100	%
8	Coronado Center (4)	Albuquerque	NM		50	%		83,400		100	%
9	Staten Island Mall (4)	Staten Island	NY		50	%		94,400		100	%
10	Sooner Mall (5)	Norman	OK		50	%		33,400		100	%
11	Stonebriar Centre	Frisco	TX		50	%		81,500		100	%
12	Alderwood (6)	Lynnwood	WA		100	%		88,800		100	%

(1)

Properties with 50% recapture rights are subject to the joint venture’s right to recapture approximately 50% of the space within a store (subject to certain exceptions). In addition, the joint venture has the right to recapture any automotive care centers which are free-standing or attached as “appendages” to the stores and all outparcels or outlots, as well as certain portions of parking areas and common areas.

(2)	In addition to the 50% recapture rights described above, the joint venture reached an agreement with Sears Holdings to recapture 100% of certain stores for a specified fee.

(3)	Based on signed leases as of September 30, 2016; GLA presented at the Company's proportional share.

(4)	The joint venture exercised some or all of its recapture rights for this property prior to the quarter ended September 30, 2016.

(5)	Property is subject to a lease or ground lease agreement.

(6)	Subsequent to September 30, 2016, the joint venture announced plans to recapture this property according to a specific schedule.

Simon Joint Venture

				Recapture			Total
	Mall Name	City	State	Rights (1)			GLA (2)		Leased (2)
1	Brea Mall	Brea	CA		50	%		84,100		100	%
2	Santa Rosa Plaza	Santa Rosa	CA		50	%		82,700		100	%
3	Burlington Mall	Burlington	MA		50	%		135,600		100	%
4	Briarwood	Ann Arbor	MI		50	%		85,300		100	%
5	Ocean County Mall	Toms River	NJ		50	%		54,600		100	%
6	The Shops at Nanuet	Nanuet	NY		50	%		110,700		100	%
7	Woodland Hills Mall	Tulsa	OK		50	%		75,100		100	%
8	Ross Park Mall	Pittsburgh	PA		50	%		88,300		100	%
9	Barton Creek Square	Austin	TX		50	%		82,300		100	%
10	Midland Park Mall	Midland	TX		50	%		58,300		100	%

(1)

(2)	Based on signed leases as of September 30, 2016; GLA presented at the Company's proportional share.

- 17 -


PROPERTY INFORMATION

Joint Venture Properties (cont’d)

September 30, 2016

(In thousands)

Macerich Joint Venture

				Recapture			Total
	Mall Name	City	State	Rights (1)			GLA (2)		Leased (2)
1	Chandler Fashion Center	Chandler	AZ		50	%		70,800		100	%
2	Arrowhead Towne Center	Glendale	AZ		50	%		62,500		100	%
3	Los Cerritos Center	Cerritos	CA		50	%		138,800		100	%
4	Vintage Faire Mall	Modesto	CA		50	%		74,300		100	%
5	Danbury Fair	Danbury	CT		50	%		89,200		100	%
6	Deptford Mall	Deptford	NJ		50	%		95,900		100	%
7	Freehold Raceway Mall	Freehold	NJ		50	%		69,700		100	%
8	Washington Square Mall	Portland	OR		50	%		110,000		100	%
9	South Plains Mall	Lubbock	TX		50	%		75,300		100	%

(1)

(2)	Based on signed leases as of September 30, 2016; GLA presented at the Company's proportional share.

- 18 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
1	700 East Northern Lights Boulevard	Anchorage	AK	Shopping Center	Sears		100	%		257,700		95.8	%		26
2	1731 2nd Avenue Southwest	Cullman	AL	Freestanding	Kmart		50	%		98,500		100.0	%		6
3	3930 McCain Boulevard	North Little Rock	AR	Mall	Sears		50	%		185,700		100.0	%		15
4	2821 East Main Street	Russellville	AR	Freestanding	Kmart		50	%		88,000		100.0	%		7
5	4800 North US Highway 89	Flagstaff	AZ	Mall	Sears		50	%		66,200		100.0	%		7
6	6515 East Southern Avenue	Mesa	AZ	Mall	Sears		50	%		121,900		100.0	%		11
7	10140 North 91st Avenue	Peoria	AZ	Shopping Center	n/a	n/a				104,400		100.0	%		10
8	7611 West Thomas Road	Phoenix	AZ	Mall	Sears		50	%		144,200		100.0	%		10
9	12025 North 32nd Street	Phoenix	AZ	Freestanding	n/a	n/a				151,200		100.0	%		11
10	3400 Gateway Boulevard	Prescott	AZ	Mall	Sears		50	%		102,300		100.0	%		10
11	2250 El Mercado Loop	Sierra Vista	AZ	Mall	Sears		50	%		94,700		100.0	%		7
12	2011 East Fry Boulevard	Sierra Vista	AZ	Freestanding	Kmart		50	%		86,100		100.0	%		12
13	5950 East Broadway Boulevard	Tucson	AZ	Mall	Sears		50	%		250,100		100.0	%		20
14	3150 South 4th Avenue	Yuma	AZ	Shopping Center	Sears		50	%		90,400		100.0	%		14
15	3625 East 18th Street	Antioch	CA	Shopping Center	Kmart		50	%		95,200		100.0	%		7
16	42126 Big Bear Boulevard	Big Bear Lake	CA	Shopping Center	Kmart		50	%		80,400		95.4	%		8
17	20700 South Avalon Boulevard	Carson	CA	Mall	Sears		50	%		181,200		100.0	%		13
18	565 Broadway	Chula Vista	CA	Mall	Sears		50	%		250,100		100.0	%		16
19	5900 Sunrise Mall	Citrus Heights	CA	Mall	Sears		50	%		289,500		100.0	%		22
20	912 County Line Road	Delano	CA	Freestanding	Kmart		50	%		86,100		100.0	%		6
21	575 Fletcher Parkway	El Cajon	CA	Mall	Sears		50	%		286,500		100.0	%		22
22	3751 South Dogwood Road	El Centro	CA	Mall	Sears		50	%		139,700		100.0	%		14
23	1420 Travis Boulevard	Fairfield	CA	Mall	Sears		50	%		164,100		100.0	%		9
24	5901 Florin Road	Florin	CA	Shopping Center	Sears		50	%		272,700		100.0	%		20
25	3636 North Blackstone Avenue	Fresno	CA	Shopping Center	Sears		50	%		217,600		100.0	%		13
26	1500 Anna Sparks Way	McKinleyville	CA	Shopping Center	Kmart		50	%		94,800		100.0	%		8
27	1011 West Olive Avenue	Merced	CA	Shopping Center	Sears		50	%		92,600		100.0	%		10
28	5080 East Montclair Plaza Lane	Montclair	CA	Mall	Sears		50	%		174,700		100.0	%		3
29	22550 Town Circle	Moreno Valley	CA	Mall	Sears		50	%		169,400		100.0	%		11
30	6000 Mowry Avenue	Newark	CA	Mall	Sears		50	%		145,800		100.0	%		10
31	12121 Victory Boulevard (5)	North Hollywood	CA	Shopping Center	Sears		50	%		151,000		100.0	%		4
32	9301 Tampa Avenue	Northridge	CA	Mall	Sears		50	%		291,800		100.0	%		15
33	72880 Highway 111	Palm Desert	CA	Mall	Sears		50	%		151,500		100.0	%		8
34	1855 Main Street	Ramona	CA	Shopping Center	Kmart		50	%		107,600		94.5	%		10
35	5261 Arlington Avenue	Riverside	CA	Freestanding	Sears		50	%		214,200		100.0	%		19
36	3001 Iowa Avenue	Riverside	CA	Freestanding	Kmart		50	%		132,600		100.0	%		13

- 19 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
37	1191 Galleria Boulevard	Roseville	CA	Mall	Sears		50	%		139,000		100.0	%		9
38	1700 North Main Street	Salinas	CA	Mall	Sears		50	%		133,000		100.0	%		10
39	100 Inland Center	San Bernardino	CA	Mall	Sears		100	%		264,700		100.0	%		22
40	1178 El Camino Real	San Bruno	CA	Mall	Sears		50	%		276,600		100.0	%		13
41	4575 La Jolla Village Drive	San Diego	CA	Mall	Sears		50	%		194,800		100.0	%		13
42	2180 Tully Road	San Jose	CA	Mall	Sears		50	%		262,500		100.0	%		22
43	4015 Capitola Road	Santa Cruz	CA	Mall	Sears		50	%		119,600		100.0	%		10
44	200 Town Center East	Santa Maria	CA	Mall	Sears		50	%		108,600		100.0	%		5
45	302 Colorado Avenue	Santa Monica	CA	Freestanding	Sears		100	%		117,800		100.0	%		3
46	895 Faulkner Road	Santa Paula	CA	Freestanding	Kmart		50	%		71,300		100.0	%		10
47	40710 Winchester Road	Temecula	CA	Mall	Sears		50	%		115,600		100.0	%		10
48	145 West Hillcrest Drive	Thousand Oaks	CA	Shopping Center	Sears		50	%		164,000		100.0	%		11
49	3295 East Main Street	Ventura	CA	Mall	Sears		50	%		178,600		100.0	%		2
50	3501 South Mooney Boulevard	Visalia	CA	Shopping Center	Sears		50	%		75,600		100.0	%		7
51	1209 Plaza Drive	West Covina	CA	Mall	Sears		50	%		142,000		100.0	%		16
52	100 Westminster Mall	Westminster	CA	Mall	Sears		100	%		197,900		100.0	%		14
53	10785 West Colfax Avenue	Lakewood	CO	Shopping Center	Sears		50	%		153,000		100.0	%		8
54	1400 East 104th Avenue	Thornton	CO	Shopping Center	Kmart		50	%		190,200		100.0	%		25
55	850 Hartford Turnpike	Waterford	CT	Mall	Sears		50	%		149,300		100.0	%		11
56	1445 New Britain Avenue (7)	West Hartford	CT	Shopping Center	Sears		100	%		202,100		100.0	%		13
57	19563 Coastal Highway (7)	Rehoboth Beach	DE	Freestanding	Kmart		50	%		122,100		100.0	%		13
58	451 East Altamonte Drive	Altamonte Springs	FL	Mall	Sears		50	%		214,300		100.0	%		17
59	5900 Glades Road	Boca Raton	FL	Mall	Sears		50	%		178,500		100.0	%		19
60	303 U.S. Highway 301 Boulevard West	Bradenton	FL	Mall	Sears		50	%		99,900		100.0	%		15
61	7350 Manatee Avenue West	Bradenton	FL	Shopping Center	Kmart		50	%		82,900		100.0	%		9
62	27001 U.S. 19 North	Clearwater	FL	Mall	Sears		50	%		211,700		100.0	%		14
63	1625 Northwest 107th Avenue	Doral	FL	Mall	Sears		50	%		212,900		100.0	%		13
64	4125 Cleveland Avenue	Ft. Myers	FL	Mall	Sears		50	%		146,800		100.0	%		12
65	6201 West Newberry Road	Gainesville	FL	Mall	Sears		50	%		140,500		100.0	%		8
66	1675 West 49th Street	Hialeah	FL	Mall	Sears		50	%		197,400		100.0	%		8
67	1460 West 49th Street	Hialeah	FL	Freestanding	Kmart		50	%		106,400		100.0	%		9
68	2211 West Vine Street	Kissimmee	FL	Shopping Center	Kmart		50	%		148,900		100.0	%		14
69	3800 US Highway 98 North	Lakeland	FL	Mall	Sears		50	%		156,200		100.0	%		12
70	1050 South Babcock Street	Melbourne	FL	Freestanding	Sears		50	%		102,600		100.0	%		14
71	19505 Biscayne Boulevard	Miami	FL	Mall	Sears		100	%		173,300		100.0	%		12
72	20701 Southwest 112th Avenue	Miami	FL	Mall	Sears		100	%		170,100		100.0	%		15

- 20 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
73	2000 9th Street North	Naples	FL	Mall	Sears		50	%		161,900		100.0	%		12
74	10700 Biscayne Boulevard	North Miami	FL	Freestanding	Kmart		100	%		122,300		100.0	%		11
75	3100 Southwest College Road	Ocala	FL	Mall	Sears		50	%		146,200		100.0	%		12
76	380 Blanding Boulevard	Orange Park	FL	Shopping Center	n/a	n/a				87,400		100.0	%		9
77	3111 East Colonial Drive (5)	Orlando	FL	Mall	Sears		100	%		202,000		100.0	%		18
78	733 North Highway 231	Panama City	FL	Mall	Sears		50	%		139,300		100.0	%		15
79	7171 North Davis Highway	Pensacola	FL	Shopping Center	Sears		50	%		212,300		100.0	%		15
80	8000 West Broward Boulevard	Plantation	FL	Mall	Sears		50	%		201,600		100.0	%		18
81	8201 South Tamiami Trail	Sarasota	FL	Mall	Sears		50	%		212,500		100.0	%		15
82	4501 66th Street North	St. Petersburg	FL	Freestanding	Kmart		50	%		120,600		100.0	%		11
83	2300 Tyrone Boulevard North (7)	St. Petersburg	FL	Mall	Sears		100	%		193,900		100.0	%		14
84	1500 Cumberland Mall Southeast	Atlanta	GA	Mall	Sears		50	%		226,300		100.0	%		15
85	7810 Abercorn Street	Savannah	GA	Mall	Sears		100	%		167,300		100.0	%		15
86	500 North Nimitz Highway (5)	Honolulu	HI	Freestanding	n/a	n/a				76,100		100.0	%		4
87	1501 Highway 169 North	Algona	IA	Freestanding	Kmart		50	%		99,300		100.0	%		7
88	4600 1st Avenue Northeast	Cedar Rapids	IA	Mall	Sears		50	%		146,000		100.0	%		12
89	1405 South Grand Avenue	Charles City	IA	Freestanding	Kmart		50	%		96,600		100.0	%		11
90	2307 Superior Street	Webster City	IA	Shopping Center	Kmart		50	%		40,800		100.0	%		4
91	460 North Milwaukee Street	Boise	ID	Mall	Sears		50	%		123,600		100.0	%		8
92	4730 West Irving Park Road	Chicago	IL	Freestanding	Sears		50	%		356,700		100.0	%		6
93	1601 North Harlem Avenue	Chicago	IL	Freestanding	Sears		50	%		293,700		100.0	%		7
94	5050 South Kedzie Avenue	Chicago	IL	Shopping Center	Kmart		50	%		168,500		100.0	%		9
95	17550 Halsted Street	Homewood	IL	Shopping Center	n/a	n/a				196,100		100.0	%		19
96	3340 Mall Loop Drive	Joliet	IL	Mall	Sears		50	%		204,600		100.0	%		17
97	2860 South Highland Avenue	Lombard	IL	Freestanding	n/a	n/a				139,300		100.0	%		8
98	4902-5000 23rd Avenue	Moline	IL	Freestanding	Kmart		50	%		123,700		100.0	%		12
99	7503 West Cermak Road	North Riverside	IL	Mall	Sears		50	%		203,000		100.0	%		13
100	2 Orland Square Drive	Orland Park	IL	Mall	Sears		50	%		199,600		100.0	%		16
101	2500 Wabash Avenue	Springfield	IL	Shopping Center	Kmart		50	%		133,400		97.6	%		14
102	3231 Chicago Road	Steger	IL	Freestanding	Kmart		50	%		87,400		100.0	%		3
103	3101 Northview Drive	Elkhart	IN	Shopping Center	Kmart		50	%		86,500		100.0	%		8
104	4201 Coldwater Road (5)	Ft. Wayne	IN	Mall	Sears		50	%		227,600		100.0	%		15
105	101 West Lincoln Highway	Merrillville	IN	Shopping Center	Kmart		50	%		173,100		85.0	%		17
106	4820 South 4th Street Trafficway	Leavenworth	KS	Freestanding	Kmart		50	%		83,600		100.0	%		9
107	9701 Metcalf Avenue	Overland Pk	KS	Shopping Center	Sears		50	%		223,200		100.0	%		19
108	3010 Fort Campbell Boulevard	Hopkinsville	KY	Shopping Center	Kmart		50	%		93,000		80.9	%		13

- 21 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
109	2815 West Parrish Avenue	Owensboro	KY	Shopping Center	Kmart		50	%		68,300		100.0	%		5
110	5101 Hinkleville Road	Paducah	KY	Mall	Sears		50	%		108,200		100.0	%		9
111	133 Monarch Drive	Houma	LA	Freestanding	Kmart		50	%		101,400		100.0	%		9
112	5715 Johnston Street	Lafayette	LA	Mall	Sears		50	%		194,900		100.0	%		16
113	900 East Admiral Doyle Drive	New Iberia	LA	Freestanding	Kmart		50	%		91,700		100.0	%		12
114	200 Grossman Drive (5)	Braintree	MA	Shopping Center	n/a	n/a				89,300		90.3	%		34
115	1325 Broadway	Saugus	MA	Mall	Sears		50	%		210,500		100.0	%		16
116	15700 Emerald Way (5)	Bowie	MD	Shopping Center	Sears		50	%		131,700		100.0	%		11
117	126 Shawan Road	Cockeysville	MD	Shopping Center	Sears		50	%		165,900		100.0	%		12
118	3207 Solomons Island Road	Edgewater	MD	Shopping Center	Kmart		50	%		117,200		100.0	%		14
119	17318 Valley Mall Road (5)	Hagerstown	MD	Mall	Sears		50	%		122,700		93.6	%		12
120	417 Main Street	Madawaska	ME	Shopping Center	Kmart		50	%		49,700		100.0	%		2
121	2355 US Highway 23 South	Alpena	MI	Freestanding	Kmart		50	%		118,200		100.0	%		12
122	1250 Boardman-Jackson Crossing	Jackson	MI	Shopping Center	Sears		50	%		152,700		100.0	%		15
123	2100 Southfield Road	Lincoln Park	MI	Shopping Center	Sears		50	%		301,700		100.0	%		17
124	1560 US 31 South	Manistee	MI	Shopping Center	Kmart		50	%		94,600		100.0	%		12
125	32123 Gratiot Avenue (7)	Roseville	MI	Mall	Sears		50	%		385,400		100.0	%		21
126	2760 I-75 Business Spur	Sault Ste. Marie	MI	Freestanding	Kmart		50	%		92,700		100.0	%		11
127	22801 Harper Avenue	St. Clair Shores	MI	Freestanding	Kmart		100	%		122,200		100.0	%		11
128	300 West 14 Mile Road (7)	Troy	MI	Mall	Sears		50	%		402,600		100.0	%		30
129	3100 Washtenaw Road	Ypsilanti	MI	Freestanding	n/a	n/a				99,400		100.0	%		12
130	14250 Buck Hill Road	Burnsville	MN	Mall	Sears		50	%		167,400		100.0	%		15
131	1305 Highway 10 West	Detroit Lakes	MN	Shopping Center	Kmart		50	%		87,100		100.0	%		15
132	3001 White Bear Avenue North	Maplewood	MN	Mall	Sears		50	%		174,900		100.0	%		14
133	425 Rice Street	St. Paul	MN	Freestanding	Sears		100	%		217,900		100.0	%		17
134	11 South Kingshighway Street	Cape Girardeau	MO	Freestanding	Kmart		50	%		82,600		100.0	%		6
135	1 Flower Valley Shopping Center	Florissant	MO	Shopping Center	Kmart		50	%		119,000		100.0	%		11
136	2304 Missouri Boulevard	Jefferson City	MO	Freestanding	Kmart		50	%		97,100		100.0	%		10
137	3700 South Campbell Avenue	Springfield	MO	Shopping Center	n/a	n/a				112,900		100.0	%		8
138	2308 Highway 45 North	Columbus	MS	Shopping Center	Kmart		50	%		166,700		98.3	%		18
139	3180 Highway 2 West	Havre	MT	Freestanding	Kmart		50	%		94,700		100.0	%		9
140	1 South Tunnel Road	Asheville	NC	Mall	Sears		50	%		240,700		100.0	%		16
141	545 Concord Parkway North	Concord	NC	Shopping Center	Kmart		50	%		171,300		100.0	%		26
142	1302 Bridford Parkway	Greensboro	NC	Shopping Center	n/a	n/a				173,300		99.0	%		16
143	1 20th Avenue Southeast	Minot	ND	Shopping Center	Kmart		50	%		110,400		100.0	%		13
144	4700 2nd Avenue	Kearney	NE	Freestanding	Kmart		50	%		86,500		100.0	%		8

- 22 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
145	1500 South Willow Street	Manchester	NH	Mall	Sears		50	%		144,100		100.0	%		11
146	310 Daniel Webster Highway	Nashua	NH	Mall	Sears		50	%		167,100		100.0	%		7
147	50 Fox Run Road	Portsmouth	NH	Mall	Sears		50	%		127,000		100.0	%		13
148	77 Rockingham Park Boulevard	Salem	NH	Mall	Sears		50	%		250,500		100.0	%		14
149	1500 Highway 35	Middletown	NJ	Freestanding	Sears		100	%		191,200		100.0	%		23
150	1640 Route 22	Watchung	NJ	Freestanding	Sears		100	%		262,900		100.0	%		19
151	50 Route 46 (5)	Wayne	NJ	Mall	Sears		50	%		327,300		100.0	%		26
152	1205 East Pine Street	Deming	NM	Freestanding	Kmart		50	%		96,600		100.0	%		10
153	3000 East Main Street	Farmington	NM	Freestanding	Kmart		50	%		90,700		100.0	%		11
154	2220 North Grimes Street	Hobbs	NM	Shopping Center	Kmart		50	%		88,900		100.0	%		8
155	10405 South Eastern Avenue	Henderson	NV	Shopping Center	Kmart		50	%		143,900		100.0	%		12
156	4000 Meadows Lane	Las Vegas	NV	Mall	Sears		50	%		150,200		100.0	%		11
157	5400 Meadowood Mall Circle	Reno	NV	Mall	Sears		50	%		198,800		100.0	%		3
158	1425 Central Avenue (5)	Albany	NY	Mall	Sears		50	%		285,500		92.8	%		21
159	4155 State Route 31	Clay	NY	Mall	Sears		50	%		146,500		100.0	%		12
160	4000 Jericho Turnpike	East Northport	NY	Shopping Center	Sears		50	%		195,400		100.0	%		18
161	195 North Broadway	Hicksville	NY	Freestanding	Sears		100	%		362,600		100.0	%		30
162	601 Harry L Drive	Johnson City	NY	Mall	Sears		50	%		155,100		100.0	%		11
163	2801 West State Street	Olean	NY	Freestanding	Kmart		50	%		118,000		100.0	%		13
164	317 Greece Ridge Center Drive	Rochester	NY	Mall	Sears		50	%		128,500		100.0	%		15
165	171 Delaware Avenue	Sidney	NY	Shopping Center	Kmart		50	%		94,400		100.0	%		19
166	200 Eastview Mall	Victor	NY	Mall	Sears		50	%		123,000		100.0	%		14
167	600 Lee Boulevard	Yorktown Heights	NY	Mall	Sears		50	%		160,000		100.0	%		12
168	4100 Belden Village Avenue Northwest	Canton	OH	Mall	Sears		50	%		219,400		100.0	%		19
169	2000 Brittain Road	Chapel Hill	OH	Mall	Sears		50	%		194,700		100.0	%		21
170	2700 Miamisburg Centerville Road	Dayton	OH	Mall	Sears		50	%		192,500		100.0	%		16
171	1005 East Columbus Street	Kenton	OH	Freestanding	Kmart		50	%		96,100		100.0	%		11
172	502 Pike Street	Marietta	OH	Freestanding	Kmart		50	%		87,500		100.0	%		7
173	7875 Johnnycake Ridge Road	Mentor	OH	Mall	Sears		50	%		219,100		100.0	%		20
174	6950 West 130th Street	Middleburg Heights	OH	Shopping Center	Sears		50	%		359,000		100.0	%		15
175	1447 North Main Street	North Canton	OH	Shopping Center	Kmart		50	%		87,100		100.0	%		9
176	555 South Avenue	Tallmadge	OH	Freestanding	Kmart		50	%		84,200		100.0	%		8
177	3408 West Central Avenue	Toledo	OH	Shopping Center	Sears		50	%		218,700		100.0	%		11
178	4 East Shawnee Road	Muskogee	OK	Freestanding	Kmart		50	%		87,500		100.0	%		10
179	4400 South Western Avenue	Oklahoma City	OK	Freestanding	Sears		50	%		173,700		100.0	%		24
180	3132 East 51st Street	Tulsa	OK	Freestanding	n/a	n/a				87,200		100.0	%		9

- 23 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
181	1180 Southeast 82nd Avenue	Happy Valley	OR	Mall	Sears		50	%		144,300		100.0	%		12
182	2640 West 6th Street	The Dalles	OR	Freestanding	Kmart		50	%		87,100		100.0	%		8
183	1180 Walnut Bottom Road	Carlisle	PA	Shopping Center	Kmart		50	%		117,800		100.0	%		3
184	3975 Columbia Avenue	Columbia	PA	Shopping Center	Kmart		50	%		86,700		100.0	%		8
185	160 North Gulph Road, Suite 4000 (6)	King Of Prussia	PA	Mall	n/a	n/a				210,900		97.6	%		14
186	1745 Quentin Road	Lebanon	PA	Shopping Center	Kmart		50	%		117,200		100.0	%		15
187	100 Cross Roads Plaza	Mount Pleasant	PA	Shopping Center	Kmart		50	%		83,500		100.0	%		10
188	400 North Best Avenue	Walnutport	PA	Freestanding	Kmart		50	%		121,200		100.0	%		16
189	1094 Haines Road	York	PA	Shopping Center	Kmart		50	%		82,000		100.0	%		6
190	PR 167 & Las Cumbres	Bayamon	PR	Shopping Center	Kmart		50	%		115,200		100.0	%		10
191	400 Calle Betances	Caguas	PR	Mall	Sears		50	%		138,700		100.0	%		8
192	Avenue 65 Infanteria	Carolina	PR	Mall	Sears		50	%		198,000		100.0	%		11
193	Martinez Nadal Avenue (PR-20), Km 3.4	Guaynabo	PR	Shopping Center	Kmart		50	%		217,300		93.5	%		18
194	PR Road 2, Km 149.5	Mayaguez	PR	Shopping Center	Kmart		50	%		118,200		100.0	%		13
195	2643 Ponce Bypass	Ponce	PR	Shopping Center	Kmart		50	%		126,900		100.0	%		9
196	650 Bald Hill Road (7)	Warwick	RI	Shopping Center	Sears		50	%		246,100		100.0	%		20
197	3801B Clemson Boulevard (5)	Anderson	SC	Shopping Center	Kmart		50	%		118,800		100.0	%		12
198	7801 Rivers Avenue (7)	Charleston	SC	Mall	Sears		50	%		138,900		100.0	%		14
199	2302 Cherry Road	Rock Hill	SC	Shopping Center	Kmart		50	%		89,300		100.0	%		12
200	3020 West 12th Street	Sioux Falls	SD	Freestanding	Kmart		50	%		72,500		100.0	%		6
201	2800 North Germantown Parkway	Cordova	TN	Mall	Sears		50	%		160,900		100.0	%		12
202	4570 Poplar Avenue (5)	Memphis	TN	Freestanding	n/a	n/a				135,200		32.0	%		11
203	12625 North Interstate Highway 35	Austin	TX	Shopping Center	Sears		50	%		172,000		100.0	%		25
204	3450 West Camp Wisdom Road	Dallas	TX	Mall	Sears		50	%		205,300		100.0	%		13
205	9484 Dyer Street	El Paso	TX	Freestanding	Kmart		50	%		112,100		100.0	%		11
206	300 Baybrook Mall	Friendswood	TX	Mall	Sears		50	%		166,000		100.0	%		13
207	1129 Morgan Boulevard	Harlingen	TX	Shopping Center	Kmart		50	%		91,700		100.0	%		7
208	303 Memorial City	Houston	TX	Mall	Sears		50	%		218,600		100.0	%		20
209	12605 North Gessner Road	Houston	TX	Freestanding	n/a	n/a				134,000		100.0	%		11
210	6301 Northwest Loop 410	Ingram	TX	Mall	Sears		50	%		168,400		100.0	%		12
211	2501 Irving Mall	Irving	TX	Mall	Sears		50	%		176,900		100.0	%		18
212	201 Central Park Mall (5)	San Antonio	TX	Freestanding	Sears		50	%		213,100		96.3	%		15
213	4000 North Shepherd	Shepherd	TX	Freestanding	Sears		50	%		201,700		100.0	%		12
214	13131 Preston Road	Valley View	TX	Mall	Sears		100	%		235,000		100.0	%		23
215	9570 Southwest Freeway	Westwood	TX	Freestanding	Sears		50	%		215,000		100.0	%		18
216	2010 North Main Street	Layton	UT	Shopping Center	Kmart		50	%		177,200		85.1	%		14

- 24 -

PROPERTY INFORMATION

Wholly Owned Properties

September 30, 2016

					Sears or	Recapture			Total					Land
	Property Address	City	State	Property Type (1)	Kmart	Rights (2)(3)			GLA (4)		Leased (4)			Acres
217	7453 South Plaza Center Drive (5)	West Jordan	UT	Shopping Center	Sears		50	%		205,500		100.0	%		12
218	5901 Duke Street	Alexandria	VA	Mall	Sears		50	%		262,100		100.0	%		18
219	1401 Greenbrier Parkway	Chesapeake	VA	Mall	Sears		50	%		169,400		100.0	%		15
220	12000 Fair Oaks Mall (5)	Fairfax	VA	Mall	Sears		50	%		219,900		95.0	%		15
221	5200 Mercury Boulevard Suite 100	Hampton	VA	Shopping Center	Sears		50	%		245,000		100.0	%		16
222	4588 Virginia Beach Boulevard	Virginia Beach	VA	Mall	Sears		50	%		197,300		100.0	%		14
223	141 West Lee Highway	Warrenton	VA	Shopping Center	Sears		50	%		121,000		100.0	%		9
224	2200 148th Avenue Northeast	Redmond	WA	Shopping Center	Sears		50	%		267,400		100.0	%		15
225	8800 Northeast Vancouver Mall Drive	Vancouver	WA	Mall	Sears		50	%		129,700		100.0	%		10
226	2304 East Nob Hill Boulevard	Yakima	WA	Freestanding	Kmart		50	%		117,300		82.9	%		14
227	5200 South 76th Street	Greendale	WI	Mall	Sears		50	%		238,400		100.0	%		21
228	53 West Towne Mall (5)	Madison	WI	Mall	Sears		50	%		138,300		100.0	%		18
229	1425 East Bus Highway 151	Platteville	WI	Freestanding	Kmart		50	%		94,800		100.0	%		10
230	1701 4th Avenue West	Charleston	WV	Shopping Center	Kmart		50	%		105,600		100.0	%		10
231	731 Beverly Pike	Elkins	WV	Shopping Center	Kmart		50	%		99,600		95.3	%		8
232	101 Great Teays Boulevard	Scott Depot	WV	Freestanding	Kmart		50	%		89,800		100.0	%		8
233	4000 East 2nd Street	Casper	WY	Shopping Center	Kmart		50	%		91,400		100.0	%		8
234	2150 South Douglas Highway	Gillette	WY	Freestanding	Kmart		50	%		94,600		100.0	%		10
235	1960 North Federal Boulevard	Riverton	WY	Freestanding	Kmart		50	%		94,800		100.0	%		9
	Total - Wholly-Owned Properties									36,954,200		99.2	%		3,004

(1)	Company classification. Mall properties are attached to regional malls; Shopping Center properties include properties attached, within or adjacent to neighborhood shopping or power centers, as well as freestanding properties.

(2)

Properties with 50% recapture rights are subject to the Company's right to recapture approximately 50% of the space within a store (subject to certain exceptions). In addition, the Company has the right to recapture any automotive care centers which are free-standing or attached as “appendages” to the stores and all outparcels or outlots, as well as certain portions of parking areas and common areas.

(3)	In addition to the 50% recapture rights described above, properties with 100% recapture rights are subject to the Company's right to recapture the entire space within a store for a specified fee.

(4)	Based on signed leases as of September 30, 2016.

(5)	The Company exercised some or all of its recapture rights for this property during or prior to the quarter ended September 30, 2016.

(6)	Property is subject to a ground lease.

(7)	The Company submitted a recapture notice for this property subsequent to September 30, 2016.

- 25 -

DISCLOSURES

Non-GAAP Measures

The Company makes reference to NOI, Total NOI, EBITDA, Adjusted EBITDA, FFO and Company FFO which are financial measures that include adjustments to accounting principles generally accepted in the United States (“GAAP”).

None of Total NOI, EBITDA, Adjusted EBITDA, FFO or Company FFO, are measures that (i) represent cash flow from operations as defined by GAAP; (ii) are indicative of cash available to fund all cash flow needs, including the ability to make distributions; (iii) are alternatives to cash flow as a measure of liquidity; or (iv) should be considered alternatives to net income (which is determined in accordance with GAAP) for purposes of evaluating the Company’s operating performance. Reconciliations of these measures to the respective GAAP measures we deem most comparable have been provided in the tables accompanying this press release.

Net Operating Income ("NOI") and Total NOI

NOI is defined as income from property operations less property operating expenses. The Company believes NOI provides useful information regarding Seritage, its financial condition, and results of operations because it reflects only those income and expense items that are incurred at the property level.

The Company also uses Total NOI, which includes its proportional share of unconsolidated properties. This form of presentation offers insights into the financial performance and condition of the Company as a whole given the Company’s ownership of unconsolidated properties that are accounted for under GAAP using the equity method. The Company also considers Total NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI items such as straight-line rent, and amortization of intangibles resulting from acquisition accounting.

Annualized Total NOI is an estimate, as of the end of the reporting period, of the annual Total NOI to be generated by the Company’s portfolio including all signed leases and modifications to the Company’s master lease with Sears Holdings with respect to recaptured space. We calculate Annualized Total NOI by adding or subtracting current period adjustments for leases that commenced or expired during the period to Total NOI (as defined) for the period and multiplying by four, adding estimated annual Total NOI attributable to SNO leases and subtracting estimated annual Total NOI attributable to Sears Holdings’ space to be recaptured.

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

EBITDA is defined as net income less depreciation, amortization, interest expense and provision for income and other taxes. EBITDA is a commonly used measure of performance in many industries, but may not be comparable to measures calculated by other companies. The Company believes EBITDA provides useful information to investors regarding its results of operations because it removes the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between the Company and other equity REITs, retail property owners who are not REITs, and other capital-intensive companies.

The Company makes certain adjustments to EBITDA, which it refers to as Adjusted EBITDA, to account for certain non-cash and non-comparable items, such as loss on interest rate cap, litigation charges, acquisition-related expenses, and up-front-hiring and personnel costs, that it does not believe are representative of ongoing operating results.

Funds From Operations ("FFO") and Company FFO

FFO is calculated in accordance with the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from property sales, real estate related depreciation and amortization, and impairment charges on depreciable real estate assets. The Company considers FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry.

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

- 26 -


DISCLOSURES

Forward-Looking Statements

This document contains forward-looking statements, which are based on the current beliefs and expectations of management and are subject to significant risks, assumptions and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: competition in the real estate and retail industries; our substantial dependence on Sears Holdings Corporation; Sears Holdings Corporation’s termination and other rights under its master lease with us; risks relating to our recapture and acquisition of properties and redevelopment activities; contingencies to the commencement of rent under leases; the terms of our indebtedness; restrictions with which we are required to comply in order to maintain REIT status and other legal requirements to which we are subject; and our lack of operating history. For additional discussion of these and other applicable risks, assumptions and uncertainties, see the “Risk Factors” and forward-looking statement disclosure contained in filings with the Securities and Exchange Commission. While we believe that our forecasts and assumptions are reasonable, we caution that actual results may differ materially. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.

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Seritage Growth Properties

489 Fifth Avenue | New York, NY 10017

212-355-7800 | www.seritage.com

Seritage Growth Properties - FORM 8-K - EX-99.2 - November 3, 2016

Attached files

Seritage Growth Properties Reports