Seritage Growth Properties Makes $160 Million Loan Prepayment

Rhea-AI Summary

Seritage Growth Properties (NYSE: SRG) announced a voluntary prepayment of $160 million on its $1.6 billion term loan with Berkshire Hathaway. This prepayment will reduce annual interest expenses by approximately $11 million. Following this transaction, the remaining term loan balance is $1.44 billion. Additionally, the maturity date of the loan has been extended to July 31, 2025, contingent on reducing the principal to $800 million by that date.

Positive

• Voluntary prepayment of $160 million improves financial flexibility.
• Reduction of annual interest expense by approximately $11 million.
• Extension of loan maturity to July 31, 2025 provides additional time for financial management.

Negative

• Remaining term loan balance of $1.44 billion indicates significant debt levels.

NEW YORK--(BUSINESS WIRE)-- Seritage Growth Properties (NYSE: SRG) (the “Company”), a national owner and developer of 170 retail, residential and mixed-use properties, today announced that on December 31, 2021, the Company made a voluntary prepayment of $160 million toward its $1.6 billion term loan facility provided by Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”).

The prepayment follows the amendment to the Senior Secured Term Loan Agreement with Berkshire Hathaway announced on November 29, 2021 under which Seritage and Berkshire Hathaway agreed that the Senior Secured Term Loan Agreement may be extended for two years from the July 31, 2023 maturity date (the “Maturity Date”) to July 31, 2025 provided that the term loan facility’s principal has been reduced to $800 million by the Maturity Date. Additionally, the companies mutually agreed that the “make whole” provision of the Senior Secured Term Loan Agreement shall not be applicable to prepayments of the term loan facility’s principal.

With the prepayment, $1.44 billion of the term loan facility remains outstanding. The prepayment will also reduce Seritage’s total annual interest expense related to the term loan facility by approximately $11 million.

About Seritage Growth Properties

Seritage is principally engaged in the ownership, development, redevelopment, management and leasing of diversified and mixed-use properties throughout the United States. As of September 30, 2021, the Company’s portfolio consisted of interests in 170 properties comprised of approximately 10.0 million square feet of GLA or build-to-suit leased area (approximately 8.0 million at share), approximately 4.0 million of which is held by unconsolidated entities (approximately 2.0 million at share), approximately 600 acres held for or under development and approximately 10.0 million square feet of GLA or approximately 850 acres to be disposed of.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, which may cause actual results to differ significantly from those expressed in any forward-looking statement. Factors that could cause or contribute to such differences include, but are not limited to: declines in retail, real estate and general economic conditions; the impact of ongoing negative operating cash flow on the Company’s ability to fund operations and ongoing development; the impact of the COVID-19 pandemic on the business of the Company’s tenants and the Company’s business, income, cash flow, results of operations, financial condition, liquidity, prospects, ability to service the Company’s debt obligations and ability to pay dividends and other distributions to shareholders; competition in the real estate and retail industries; risks relating to redevelopment activities and potential acquisition or disposition of properties; failure to achieve expected occupancy and/or rent levels within the projected time frame or at all; contingencies to the commencement of rent under leases; the Company’s historical exposure to Sears Holdings and the effects of its previously announced bankruptcy filing; the litigation filed against the Company and other defendants in the Sears Holdings adversarial proceeding pending in bankruptcy court; the terms of the Company’s indebtedness and availability or sources of liquidity, including the Company’s ability to access or obtain sufficient sources of financing to fund its liquidity needs and economic conditions that may affect the cost of borrowing; environmental, health, safety and land use laws and regulations; restrictions with which the Company is required to comply in order to maintain REIT status and other legal requirements to which the Company is subject; risks and costs associated with volatility in commodity and labor prices or as a result of supply chain or procurement disruptions; and the Company’s relatively limited operating history as an independent public company. For additional discussion of these and other applicable risks, assumptions and uncertainties, see the “Risk Factors” and forward-looking statement disclosure contained in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2020 and any subsequent quarterly reports on Form 10-Q. While the Company believes that its forecasts and assumptions are reasonable, the Company cautions that actual results may differ materially. The Company intends 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220104005618/en/

Seritage Growth Properties

Amanda Lombard, CFO

(212) 355-7800

IR@Seritage.com

Source: Seritage Growth Properties

FAQ

What did Seritage Growth Properties announce on December 31, 2021?

Seritage announced a voluntary prepayment of $160 million on its $1.6 billion term loan with Berkshire Hathaway.

How much does Seritage Growth Properties save on interest expenses?

The prepayment will reduce annual interest expenses by approximately $11 million.

What is the new maturity date for Seritage's loan with Berkshire Hathaway?

The new maturity date for the loan has been extended to July 31, 2025.

What is the remaining balance of Seritage's term loan after the prepayment?

After the prepayment, the remaining balance of the term loan is $1.44 billion.