Seaport Entertainment Group Reports Third Quarter 2024 Results

Rhea-AI Summary

Seaport Entertainment Group (NYSE American: SEG) reported Q3 2024 financial results following its separation from Howard Hughes Holdings. The company posted total revenues of $39.7 million, down 1.9% from $40.5 million in Q3 2023, and a net loss of $32.5 million ($5.89 per share), improved from a $736.2 million loss year-over-year.

Key developments include completing a rights offering raising $166.7 million, signing a licensing agreement with The Dead Rabbit, and extending Live Nation programming agreement for five years. The company ended Q3 with $27.8 million in cash and equivalents, $103.4 million in consolidated debt, and a $5 million undrawn credit facility.

Positive

• Significant improvement in net loss to $32.5M from $736.2M in Q3 2023
• Successful completion of rights offering raising $166.7M
• Extended Live Nation programming agreement for 5 years
• No meaningful debt maturities until Q3 2029
• Strong liquidity position with $27.8M cash and $5M undrawn credit facility

Negative

• Revenue decline of 1.9% to $39.7M compared to Q3 2023
• Net loss of $32.5M in Q3 2024
• YTD revenue decrease of 4.8% to $88.3M
• 59% of debt exposed to floating interest rates at 9.7%

Insights

Financial Analyst

The Q3 results reveal significant financial challenges with a $32.5 million net loss ($5.89 per share), though notably improved from the massive $736.2 million loss in Q3 2023. Revenue declined slightly to $39.7 million, down 1.9% year-over-year. The recent $166.7 million rights offering strengthens the balance sheet, but high interest costs (weighted average of 8.0%) on $103.4 million debt remain concerning.

The company's strategic moves, including the Live Nation partnership extension and winter programming expansion, show potential for revenue growth, but current financials indicate a challenging path to profitability. The debt structure, while well-termed with no major maturities until 2029, carries significant interest burden with 59% at floating rates averaging 10.2%.

Entertainment Industry Analyst

The post-spinoff strategy focuses on entertainment platform development through key partnerships, notably the Live Nation agreement extension and The Dead Rabbit licensing deal. The planned year-round programming at Pier 17 with enclosed winter facilities represents a significant operational expansion, potentially increasing venue utilization and revenue streams.

However, the 4.8% year-to-date revenue decline raises concerns about current operational efficiency. The transition from seasonal to year-round operations, while promising, involves substantial execution risk and upfront costs. The entertainment sector's post-pandemic recovery patterns and NYC's competitive venue market will be critical factors in determining success.

NEW YORK--(BUSINESS WIRE)-- Seaport Entertainment Group Inc. (NYSE American: SEG) (“Seaport Entertainment Group,” “SEG” or the “Company”) announced today its operating and financial results for the quarter ended September 30, 2024.

Third Quarter 2024 Highlights

• Completed the previously announced separation from predecessor parent company Howard Hughes Holdings Inc. (NYSE: HHH) (“Howard Hughes”) on July 31, 2024 (the “Separation”), and is now an independent, standalone publicly traded company listed on the NYSE American under the ticker symbol “SEG”.
• Reported a net loss of ($32.5) million, or ($5.89) per basic and diluted share attributable to common stockholders, compared with a net loss of ($736.2) million, or ($133.31) per basic and diluted share attributable to common stockholders for the third quarter of 2023.
• Total revenues were $39.7 million compared to $40.5 million for the prior year quarter.

Other Recent Highlights

• Completed the previously announced rights offering on October 17, 2024, issuing 7,000,000 shares of common stock at a price per share of $25.00, generating net proceeds to the Company of approximately $166.7 million.
• Signed a license agreement with The Dead Rabbit to brand The Rooftop at Pier 17 food & beverage operations during the Company’s holiday and winter programming beginning November 2024.
• Extended the Company’s programming agreement with Live Nation for five years, effective January 1, 2025, for The Rooftop at Pier 17, the Company’s one-of-a-kind live music experience with panoramic views of some of New York City’s most iconic landmarks.
• Launching year-round concert and event programming in partnership with Live Nation for The Rooftop at Pier 17 utilizing a seasonal floor-to-ceiling glass enclosure, commencing in fall/winter 2025.

“We are excited to embark on a new chapter following our recent public listing and successful rights offering. These key milestones position us to focus on long-term value creation as we implement innovative strategies across our portfolio intended to enhance operational efficiencies and strengthen cash flow,” said Anton Nikodemus, Chairman, President and Chief Executive Officer of Seaport Entertainment Group. “Looking ahead, we are building momentum by forging strategic partnerships and prioritizing a customer-centric approach to reimagining the customer experience across many of our assets. This emphasis on partnerships and the customer is ultimately what we believe will enable our development of a true entertainment platform that optimizes our unique real estate and market positioning to create long-term shareholder value.”

Quarterly Results

The table below provides a summary of the Company’s consolidated operating and financial results for the three months ended September 30, 2024, which includes periods during Howard Hughes’ ownership prior to the Company’s Separation:

		For the Three Months Ended September 30, 2024			For the Three Months Ended September 30, 2023			Variance to Comparable Period in Prior Year
Total Revenues	$	39,697		$	40,486		$	(789)		(1.9%)
Net loss	$	(32,274)		$	(736,154)		$	703,880		95.6%
Net loss attributable to common stockholders	$	(32,511)		$	(736,154)		$	703,643		95.6%
Net loss attributable to common stockholders per share	$	(5.89)		$	(133.31)		$	127.42		95.6%
Note: $ in thousands, except per share data.

Year-to-Date Results

The table below provides a summary of the Company’s consolidated operating and financial results for the nine months ended September 30, 2024, which includes periods during Howard Hughes’ ownership prior to the Company’s Separation:

		For the Nine Months Ended September 30, 2024			For the Nine Months Ended September 30, 2023			Variance to Comparable Period in Prior Year
Total Revenues	$	88,292		$	92,775		$	(4,483)		(4.8%)
Net loss	$	(111,349)		$	(802,057)		$	690,708		86.1%
Net loss attributable to common stockholders	$	(111,586)		$	(802,057)		$	690,471		86.1%
Net loss attributable to common stockholders per share	$	(20.21)		$	(145.25)		$	125.04		86.1%
Note: $ in thousands, except per share data.

Capital Markets and Balance Sheet

As of September 30, 2024, the Company had $27.8 million in cash, cash equivalents and restricted cash, $5.0 million of undrawn availability under its $5.0 million unsecured revolving credit facility, and $103.4 million of consolidated debt outstanding at an effective weighted-average interest rate of 8.0%. As of September 30, 2024, 41% of consolidated debt was fixed at a weighted-average interest rate of 4.9%. The remaining 59% of the Company’s consolidated debt is floating at a weighted-average interest rate of 10.2% before the effects of the Company’s total return swap, which reduces the effective rate of the floating rate debt to 9.7%. Additionally, 100% of the Company’s outstanding debt is asset-specific, secured debt, and the weighted-average maturity of the Company’s consolidated debt is approximately 9.0 years. The Company has no meaningful debt maturities until Q3 2029.

During the quarter ended September 30, 2024, the Company completed the following notable capital markets activities:

• The Company completed its previously announced Separation from predecessor Howard Hughes on July 31, 2024, and is now an independent, standalone publicly traded company listed on the NYSE American under the ticker symbol “SEG”.
• Prior to the Separation, a subsidiary of Howard Hughes that became a subsidiary of the Company in connection with the Separation issued 10,000 shares of 14.0% Series A Cumulative Redeemable Preferred Stock with an aggregate liquidation preference of $10.0 million. The Series A Preferred Stock is intended to preserve certain tax benefits for HHH and is not redeemable by the Company prior to July 11, 2029, except under limited circumstances.
• Also in connection with the Separation, on July 31, 2024, the Company entered into a revolving credit agreement (the “Revolving Credit Agreement”) with Howard Hughes, as lender. The Revolving Credit Agreement provides for a revolving commitment of $5.0 million, with an interest rate of 10.0% and a term of one year.

Subsequent to the quarter ended September 30, 2024, the Company completed the following notable capital markets activity:

• Completed the previously announced rights offering, issuing 7,000,000 shares of common stock at a price per share of $25.00, generating net proceeds to the Company of approximately $166.7 million.

Investor Conference Call and Webcast

The Company will not be conducting an investor conference call for the quarter ended September 30, 2024. The Company anticipates hosting its first investor conference call in March 2025 when it reports its operating and financial results for the full year 2024.

About Seaport Entertainment Group (NYSE American: SEG)

Seaport Entertainment Group (NYSE American: SEG) is a premier entertainment and hospitality company formed to own, operate, and develop a unique collection of assets positioned at the intersection of entertainment and real estate. Seaport Entertainment Group’s focus is to deliver unparalleled experiences through a combination of restaurant, entertainment, sports, retail and hospitality offerings integrated into one-of-a-kind real estate that redefine entertainment and hospitality. For more information, please visit www.seaportentertainment.com.

Safe Harbor and Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include, but are not limited to, statements concerning the Company’s plans, goals, objectives, outlook, expectations, and intentions. Forward-looking statements are based on the Company’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause the Company’s results to differ materially from current expectations include, but are not limited to: risks related to our recent separation from, and relationship with, Howard Hughes; risks related to macroeconomic conditions; changes in discretionary consumer spending patterns or consumer tastes or preferences; risks associated with the Company’s investments in real estate assets and trends in the real estate industry; the Company’s ability to obtain operating and development capital on favorable terms, or at all; the availability of debt and equity capital; the Company’s ability to renew its leases or re-lease available space; the Company’s ability to compete effectively; the Company’s ability to successfully identify, acquire, develop, and manage properties on terms that are favorable to it; the impact of uncertainty around, and disruptions to, the Company’s supply chain; risks related to the concentration of the Company’s properties in Manhattan and the Las Vegas area; extreme weather conditions or climate change that may cause property damage or interrupt business; the impact of water and electricity shortages on the Company’s business; the contamination of the Company’s properties by hazardous or toxic substances; catastrophic events or geopolitical conditions that may disrupt the Company’s business; actual or threatened terrorist activity and other acts of violence, or the perception of a heightened threat of such events; losses that are not insured or that excess the applicable insurance limits; risks related to the disruption or failure of information technology networks and related systems – both ours and those operated and managed by third parties; the Company’s ability to attract and retain key personnel; the Company’s inability to control certain properties due to the joint ownership of such property and inability to successfully attract desirable strategic partners, including joint venture partners; the significant influence Pershing Square has over the Company; and the other factors detailed in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date of this press release. The Company is under no obligation to publicly update or revise and forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Availability of Information on SEG’s Website and Social Media Channels

Investors and others should note that SEG routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the SEG Investor Relations website. The Company uses these channels as well as social media channels (e.g., LinkedIn www.linkedin.com/company/new-york-seaportentertainment) as a means of disclosing information about the Company's business to our customers, employees, investors, and the public. While not all of the information that the Company posts to the SEG Investor Relations website or on the Company's social media channels is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in SEG to review the information that it shares through its website and on the Company's social media channels. Users may automatically receive email alerts and other information about the Company when enrolling an email address by visiting "Email Alerts" in the "Resources" section of the SEG Investor Relations website at https://ir.seaportentertainment.com/resources/email-alerts. The contents of these websites are not incorporated by reference into this press release or any report or document SEG files with the SEC, and any references to the websites are intended to be inactive textual references only.

Seaport Entertainment Group
Condensed Consolidated and Combined Balance Sheets
(in thousands except par value amounts)
(Unaudited)
		September 30, 2024			December 31, 2023
ASSETS
Buildings and equipment		$	532,415		$	528,299
Less: accumulated depreciation			(216,211)			(203,208)
Land			9,497			9,497
Developments			142,216			102,874
Net investment in real estate			467,917			437,462
Investments in unconsolidated ventures			33,879			37,459
Cash and cash equivalents			23,727			1,834
Restricted cash			4,041			42,011
Accounts receivable, net			9,351			13,672
Deferred expenses, net			4,285			4,379
Operating lease right-of-use assets, net			39,284			40,884
Other assets, net			40,320			39,112
Total assets		$	622,804		$	616,813
LIABILITIES
Mortgages payable, net		$	102,542		$	155,628
Operating lease obligations			47,630			48,153
Accounts payable and other liabilities			28,925			28,139
Total liabilities			179,097			231,920
Commitments and Contingencies			—			—
EQUITY
Preferred stock, $0.01 par value, 20,000 shares authorized, none issued or outstanding			—			—
Common stock, $0.01 par value, 480,000 shares authorized, 5,704 issued and outstanding in 2024 and none issued or outstanding in 2023			57			—
Additional paid in capital			443,783			—
Accumulated deficit			(10,033)			—
Net parent investment			—			384,893
Stockholders' equity			433,807			384,893
Noncontrolling interest in subsidiary			9,900			—
Total equity			443,707			384,893
Total liabilities and equity		$	622,804		$	616,813

Seaport Entertainment Group
Condensed Consolidated and Combined Statements of Operations
(in thousands except share amounts)
(Unaudited)
		Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
REVENUES
Sponsorships, events, and entertainment revenue		$	24,703			$	24,482			$	47,534			$	50,643
Hospitality revenue			8,817				10,677				21,735				25,633
Rental revenue			6,165				5,326				18,929				16,495
Other revenue			12				1				94				4
Total revenues			39,697				40,486				88,292				92,775
EXPENSES
Sponsorships, events, and entertainment costs			18,196				16,166				35,601				36,988
Hospitality costs			8,373				8,495				22,308				23,983
Operating costs			11,615				11,261				34,440				31,272
Provision for (recovery of) doubtful accounts			298				104				2,558				91
General and administrative			18,319				7,220				53,486				19,713
Depreciation and amortization			7,694				13,636				21,101				40,036
Other			—				30				—				51
Total expenses			64,495				56,912				169,494				152,134
OTHER
Provision for impairment			—				(672,492	)			—				(672,492	)
Other income (loss), net			4,798				23				4,715				26
Total other			4,798				(672,469	)			4,715				(672,466	)
Operating income (loss)			(20,000	)			(688,895	)			(76,487	)			(731,825	)
Interest income (expense)			(3,133	)			(592	)			(8,889	)			(1,849	)
Equity earnings (losses) from unconsolidated ventures			(7,578	)			(46,619	)			(24,410	)			(68,335	)
Loss on early extinguishment of debt			(1,563	)			(48	)			(1,563	)			(48	)
Income (loss) before income taxes			(31,274	)			(736,154	)			(111,349	)			(802,057	)
Income tax expense (benefit)			—				—				—				—
Net loss			(31,274	)			(736,154	)			(111,349	)			(802,057	)
Preferred distributions to noncontrolling interest in subsidiary			(237	)			—				(237	)			—
Net loss attributable to common stockholders		$	(32,511	)		$	(736,154	)		$	(111,586	)		$	(802,057	)
Total weighted average shares
Basic			5,522				5,522				5,522				5,522
Diluted			5,522				5,522				5,522				5,522
Earnings (loss) per share attributable to common shareholders
Basic		$	(5.89	)		$	(133.31	)		$	(20.21	)		$	(145.25	)
Diluted		$	(5.89	)		$	(133.31	)		$	(20.21	)		$	(145.25	)

 

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Investor Relations:

Seaport Entertainment Group Inc.

T: (212) 732-8257

ir@seaportentertainment.com

Media Relations:

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Source: Seaport Entertainment Group Inc.

FAQ

What was SEG's revenue in Q3 2024?

Seaport Entertainment Group (SEG) reported total revenues of $39.7 million in Q3 2024, a 1.9% decrease from $40.5 million in Q3 2023.

How much did SEG raise in its rights offering in October 2024?

SEG raised approximately $166.7 million in net proceeds through a rights offering, issuing 7,000,000 shares of common stock at $25.00 per share.

What was SEG's net loss per share in Q3 2024?

SEG reported a net loss of $5.89 per basic and diluted share in Q3 2024, compared to a loss of $133.31 per share in Q3 2023.

When did SEG separate from Howard Hughes Holdings?

SEG completed its separation from Howard Hughes Holdings on July 31, 2024, becoming an independent, publicly traded company on the NYSE American.