Seritage Growth Properties Makes $25 Million Loan Prepayment

Rhea-AI Summary

Seritage Growth Properties (NYSE: SRG) has made a voluntary prepayment of $25 million toward its $1.6 billion term loan facility from Berkshire Hathaway Life Insurance Company of Nebraska. The company has now repaid a total of $1.345 billion since December 2021, leaving $255 million outstanding. This latest prepayment will reduce annual interest expenses by $1.75 million, while cumulative repayments since December 2021 have decreased annual interest expenses by approximately $94.1 million.

Positive

• Reduced outstanding debt by $25 million through voluntary prepayment
• Total debt reduction of $1.345 billion since December 2021
• Annual interest expense reduction of $1.75 million from latest prepayment
• Cumulative annual interest savings of $94.1 million since December 2021

Negative

• $255 million in term loan debt still outstanding

Insights

Financial Analyst

This voluntary loan prepayment demonstrates strong financial management and deleveraging progress. The $25 million prepayment brings total repayments to $1.345 billion since December 2021, significantly reducing the outstanding balance to $255 million from the original $1.6 billion Berkshire Hathaway facility. The interest savings are substantial - $1.75 million annually from this payment alone and cumulative savings of $94.1 million annually. This aggressive debt reduction strengthens the balance sheet and improves profitability through lower interest expenses, though the company still carries meaningful leverage. The continued ability to make voluntary prepayments suggests healthy cash flow generation from property sales and operations.

NEW YORK--(BUSINESS WIRE)-- Seritage Growth Properties (NYSE: SRG) (the “Company”), a national owner and developer of retail, residential and mixed-use properties, today announced that on October 23, 2024, the Company has made a voluntary prepayment of $25 million toward its $1.6 billion term loan facility provided by Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”).

With the prepayments, the Company has now repaid a total of $1.345 billion since December 2021 and $255 million of the term loan facility remains outstanding. The current prepayments will reduce Seritage’s total annual interest expense related to the term loan facility by approximately $1.75 million. The cumulative repayments since December 2021 have reduced Seritage’s total annual interest expense related to the term loan facility by approximately $94.1 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 June 30, 2024, the Company’s portfolio consisted of interests in 22 properties comprised of approximately 2.8 million square feet of gross leaseable area (“GLA”) or build-to-suit leased area and 352 acres of land. The portfolio consists of approximately 1.6 million square feet of GLA and 218 acres held by 13 wholly owned properties and 1.2 million square feet of GLA and 134 acres held by nine unconsolidated entities.

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,” “potential,” “will,” “approximately,” or ”anticipates” 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; risks relating to redevelopment activities; contingencies to the commencement of rent under leases; the terms of the Company’s indebtedness and other legal requirements to which the Company is subject; failure to achieve expected occupancy and/or rent levels within the projected time frame or at all; the impact of ongoing negative operating cash flow on the Company’s ability to fund operations and ongoing development; the Company’s ability to access or obtain sufficient sources of financing to fund the Company’s liquidity needs; environmental, health, safety and land use laws and regulations; and possible acts of war, terrorist activity or other acts of violence or cybersecurity incidents. 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 (SEC), including the Company’s annual report on Form 10-K for the year ended December 31, 2023 and any subsequent Form 10-Qs. 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/20241023641671/en/

Seritage Growth Properties

John Garilli

Interim Chief Financial Officer

(212) 355-7800

IR@Seritage.com

Source: Seritage Growth Properties

FAQ

How much did Seritage Growth Properties (SRG) prepay on its term loan in October 2023?

Seritage Growth Properties made a voluntary prepayment of $25 million toward its term loan facility on October 23, 2023.

What is the total amount Seritage (SRG) has repaid on its Berkshire Hathaway loan since December 2021?

Seritage has repaid a total of $1.345 billion on its Berkshire Hathaway term loan facility since December 2021.

How much will Seritage (SRG) save annually in interest expenses from its latest prepayment?

The latest $25 million prepayment will reduce Seritage's annual interest expenses by approximately $1.75 million.

How much remains outstanding on Seritage's (SRG) Berkshire Hathaway term loan?

$255 million remains outstanding on Seritage's term loan facility with Berkshire Hathaway.