10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to _______

Commission File Number 001-37420

SERITAGE GROWTH PROPERTIES

(Exact name of registrant as specified in its charter)

Maryland	38-3976287
(State of Incorporation)	(I.R.S. Employer Identification No.)

500 Fifth Avenue, Suite 1530, New York, New York	10110
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 355-7800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Class A common shares of beneficial interest, par value $0.01 per share	SRG	New York Stock Exchange
7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share	SRG-PA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2021, the registrant had the following common shares outstanding:

Class	Shares Outstanding
Class A common shares of beneficial interest, par value $0.01 per share	43,631,345
Class B common shares of beneficial interest, par value $0.01 per share	0
Class C common shares of beneficial interest, par value $0.01 per share	0

SERITAGE GROWTH PROPERTIES

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED September 30, 2021

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION
		Page
Item 1.	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	38
Item 4.	Controls and Procedures	38
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
SIGNATURES		42

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share and per share amounts)

	September 30, 2021			December 31, 2020
ASSETS
Investment in real estate
Land	$	516,488		$	592,770
Buildings and improvements		999,343			1,107,532
Accumulated depreciation		(159,347	)		(142,206	)
		1,356,484			1,558,096
Construction in progress		390,443			352,776
Net investment in real estate		1,746,927			1,910,872
Real estate held for sale		12,273			1,864
Investment in unconsolidated entities		464,244			457,033
Cash and cash equivalents		153,378			143,728
Restricted cash		7,150			6,526
Tenant and other receivables, net		27,499			46,570
Lease intangible assets, net		15,970			18,595
Prepaid expenses, deferred expenses and other assets, net		67,265			63,755
Total assets (1)	$	2,494,706		$	2,648,943
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Term Loan Facility, net	$	1,599,226		$	1,598,909
Sales-leaseback financing obligations		20,613			20,425
Accounts payable, accrued expenses and other liabilities		123,178			146,882
Total liabilities (1)		1,743,017			1,766,216
Commitments and contingencies (Note 9)
Shareholders' Equity
Class A common shares $0.01 par value; 100,000,000 shares authorized;    43,631,345 and 38,896,428 shares issued and outstanding    as of September 30, 2021 and December 31, 2020, respectively		436			389
Series A preferred shares $0.01 par value; 10,000,000 shares authorized;    2,800,000 shares issued and outstanding as of September 30, 2021    December 31, 2020; liquidation preference of $70,000		28			28
Additional paid-in capital		1,240,311			1,177,260
Accumulated deficit		(625,491	)		(528,637	)
Total shareholders' equity		615,284			649,040
Non-controlling interests		136,405			233,687
Total equity		751,689			882,727
Total liabilities and shareholders' equity	$	2,494,706		$	2,648,943
(1) The Company's condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The condensed consolidated balance sheets, as of September 30, 2021, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $6.6 million of land, $3.9 million of building and improvements, $(0.9) million of accumulated depreciation and $4.3 million of other assets included in other line items. The Company's condensed consolidated balance sheets as of December 31, 2020, do not include assets and liabilities of consolidated variable interest entities.

The accompanying notes are an integral part of these condensed consolidated financial statements. 

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SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
REVENUE
Rental income	$	28,819		$	33,966		$	87,560		$	88,724
Management and other fee income / (expense)		184			(259	)		598			119
Total revenue		29,003			33,707			88,158			88,843
EXPENSES
Property operating		11,585			11,154			33,514			30,152
Real estate taxes		8,542			9,487			27,758			28,096
Depreciation and amortization		13,159			23,647			39,629			81,446
General and administrative		8,780			11,203			32,002			29,267
Total expenses		42,066			55,491			132,903			168,961
Gain / (loss) on sale of real estate, net		22,774			(14,706	)		65,079			59,959
Impairment of real estate assets		(3,814	)		(14,594	)		(70,053	)		(16,407	)
Equity in loss of unconsolidated entities		(5,535	)		(335	)		(9,024	)		(2,551	)
Interest and other income		48			1,986			8,202			2,460
Interest expense		(26,721	)		(22,742	)		(81,847	)		(66,400	)
Loss before taxes		(26,311	)		(72,175	)		(132,388	)		(103,057	)
Provision for taxes		(38	)		(226	)		(198	)		(215	)
Net loss		(26,349	)		(72,401	)		(132,586	)		(103,272	)
Net loss attributable to non-controlling interests		5,815			22,348			31,492			32,627
Net loss attributable to Seritage	$	(20,534	)	$	(50,053	)	$	(101,094	)	$	(70,645	)
Preferred dividends		(1,225	)		(1,225	)		(3,675	)		(3,675	)
Net loss attributable to Seritage common shareholders	$	(21,759	)	$	(51,278	)	$	(104,769	)	$	(74,320	)
Net loss per share attributable to Seritage Class A    common shareholders - Basic	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)
Net loss per share attributable to Seritage Class A    common shareholders - Diluted	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)
Weighted average Class A common shares    outstanding - Basic		43,631			38,645			41,976			38,172
Weighted average Class A common shares    outstanding - Diluted		43,631			38,645			41,976			38,172

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, amounts in thousands, except per share amounts)

	Class A Common				Class B Common						Series A Preferred				Additional Paid-In			Accumulated			Non- Controlling			Total
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Deficit			Interests			Equity
Balance at January 1, 2020		36,897	$	369		1,243		$	12			2,800	$	28	$	1,149,721		$	(418,711	)	$	311,951		$	1,043,370
Net loss		—		—		—			—			—		—		—			(70,645	)		(32,627	)		(103,272	)
Preferred dividends declared ($1.3125    per share)		—		—		—			—			—		—		—			(3,675	)		—			(3,675	)
Vesting of restricted share units		98		1		—			—			—		—		(1	)		—			—			—
Share-based compensation		—		—		—			—			—		—		3,372			—			—			3,372
Share class surrenders (1,242,536 common    shares)		—		—		(1,243	)		(12	)		—		—		12			—			—			—
OP Units exchanges (1,650,000 units)		1,650		16		—			—			—		—		26,623			—			(26,639	)		—
Balance at September 30, 2020		38,645	$	386		—			—		$	2,800	$	28	$	1,179,727		$	(493,031	)	$	252,685		$	939,795
Balance at January 1, 2021		38,896	$	389		—		$	—			2,800	$	28	$	1,177,260		$	(528,637	)	$	233,687		$	882,727
Net loss		—		—		—			—			—		—		—			(101,094	)		(31,492	)		(132,586	)
Preferred dividends declared ($1.3125    per share)		—		—		—			—			—		—		—			(3,675	)		—			(3,675	)
Vesting of restricted share units		87		1		—			—			—		—		(1	)		—			—			—
Share-based compensation		—		—		—			—			—		—		1,263			—			—			1,263
OP Unit exchanges (4,647,943 units)		4,648		46		—			—			—		—		61,789			—			(61,835	)		—
Contributions to consolidated variable interest entities		—				—			—			—		—		—			7,915			(3,955	)		3,960
Balance at September 30, 2021		43,631	$	436		—		$	—			2,800	$	28	$	1,240,311		$	(625,491	)	$	136,405		$	751,689

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, amounts in thousands, except per share amounts)

	Class A Common				Class B Common				Series A Preferred				Additional Paid-In		Accumulated			Non- Controlling			Total
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interests			Equity
Balance at July 1, 2020		38,645	$	386		—	$	—		2,800	$	28	$	1,178,268	$	(441,753	)	$	275,033			1,011,962
Net loss		—		—		—		—		—		—		—		(50,053	)		(22,348	)		(72,401	)
Preferred dividends declared ($0.4375    per share)		—		—		—		—		—		—		—		(1,225	)		—			(1,225	)
Vesting of restricted share units		—		—		—		—		—		—		—		—			—			-
Share-based compensation		—		—		—		—		—		—		1,459		—			—			1,459
Balance at September 30, 2020		38,645	$	386		—	$	—		2,800	$	28	$	1,179,727	$	(493,031	)	$	252,685		$	939,795
Balance at July 1, 2021		42,795	$	428		—	$	—		2,800	$	28	$	1,230,009	$	(611,647	)	$	156,071			774,889
Net loss		—		—		—		—		—		—		—		(20,534	)		(5,815	)		(26,349	)
Preferred dividends declared ($0.4375    per share)		—		—		—		—		—		—		—		(1,225	)		—			(1,225	)
Vesting of restricted share    units		—		—		—		—		—		—		—		—			—			—
Share-based compensation		—		—		—		—		—		—		414		—			—			414
OP Unit exchanges (836,078 units)		836		8		—		—		—		—		9,888		—			(9,896	)		—
Contributions to consolidated variable interest entities		—		—		—		—		—		—		—		7,915			(3,955	)		3,960
Balance at September 30, 2021		43,631	$	436		—	$	—		2,800	$	28	$	1,240,311	$	(625,491	)	$	136,405		$	751,689

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

	Nine Months Ended September 30,
	2021			2020
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(132,586	)	$	(103,272	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in loss of unconsolidated entities		9,024			2,551
Distributions from unconsolidated entities		141			93
Gain on sale of real estate, net		(65,079	)		(59,959	)
Impairment of real estate assets		70,053			16,407
Share-based compensation		1,225			3,179
Depreciation and amortization		39,629			81,446
Amortization of deferred financing costs		317			316
Amortization of above and below market leases, net		111			(1,677	)
Straight-line rent adjustment		(2,033	)		3,621
Interest on sale-leaseback financing obligations		188			—
Change in operating assets and liabilities
Tenants and other receivables		7,156			6,315
Prepaid expenses, deferred expenses and other assets		(8,165	)		(3,627	)
Accounts payable, accrued expenses and other liabilities		(5,547	)		29,307
Net cash (used in) operating activities		(85,566	)		(25,300	)
CASH FLOW FROM INVESTING ACTIVITIES
Investment in unconsolidated entities		(31,722	)		(50,660	)
Distributions from unconsolidated entities		9,913			1,150
Net proceeds from sale of real estate		195,183			234,777
Development of real estate		(77,554	)		(194,964	)
Net cash provided by (used in) investing activities		95,820			(9,697	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from sale-leaseback financing obligations		—			20,416
Purchase of shares related to stock grant recipients' tax withholdings		(262	)		(85	)
Preferred dividends paid		(3,675	)		(3,675	)
Contributions from noncontrolling interests in to consolidated VIEs		3,957			—
Net cash provided by financing activities		20			16,656
Net increase / (decrease) in cash and cash equivalents		10,274			(18,341	)
Cash and cash equivalents, and restricted cash, beginning of period		150,254			139,260
Cash and cash equivalents, and restricted cash, end of period	$	160,528		$	120,919

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SERITAGE GROWTH PROPERTIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited, amounts in thousands)

	Nine Months Ended September 30,
	2021		2020
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	143,728	$	139,260
Restricted cash at beginning of period		6,526		—
Cash and cash equivalents and restricted cash at beginning of period		150,254		139,260
Cash and cash equivalents at end of period	$	153,378	$	118,227
Restricted cash at end of period		7,150		2,692
Cash and cash equivalents and restricted cash at end of period		160,528		120,919

	Nine Months Ended September 30,
	2021			2020
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	$	86,321		$	85,555
Capitalized interest		8,759			22,215
Income taxes paid		198			256
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING    ACTIVITIES
Development of real estate financed with accounts payable	$	34,260		$	45,091
Preferred dividends declared and unpaid		1,225			1,225
Transfer to / (from) real estate assets held for sale		(1,864	)		2,915
Recording / (removal) of right of use assets		(983	)		1,598
(Recording) / removal of lease liabilities		983			(1,598	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SERITAGE GROWTH PROPERTIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization

Seritage Growth Properties (“Seritage”) (NYSE: SRG), a Maryland real estate investment trust formed on June 3, 2015, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) as defined under Section 856(c) of the Internal Revenue Code (the “Code”). Seritage’s assets are held by and its operations are primarily conducted, directly or indirectly, through Seritage Growth Properties, L.P., a Delaware limited partnership (the “Operating Partnership”). Under the partnership agreement of the Operating Partnership, Seritage, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. Unless otherwise expressly stated or the context otherwise requires, the “Company” and “Seritage” refer to Seritage, the Operating Partnership and its owned and controlled subsidiaries.

Seritage is principally engaged in the ownership, development, redevelopment, management and leasing of diversified retail 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 gross leasable area (“GLA”) or build-to-suit leased area, approximately 4.0 million of which is held by unconsolidated entities (the “Unconsolidated Properties”), approximately 600 acres held for or under development and approximately 10.0 million square feet or approximately 850 acres to be disposed of.

The Company commenced operations on July 7, 2015, following a rights offering to the shareholders of Sears Holdings Corporation (“Sears Holdings” or “Sears”) to purchase common shares of Seritage in order to fund, in part, the $2.7 billion acquisition of certain of Sears Holdings’ owned properties and its 50% interests in three joint ventures which were simultaneously leased back to Sears Holdings under a master lease agreement (the “Original Master Lease” and the “Original JV Master Leases”, respectively).

As of September 30, 2021, the Company did not have any remaining properties leased to Transform Holdco LLC (“Holdco”), an affiliate of ESL Investments Inc., or Sears Holdings after giving effect to the termination of the remaining five Consolidated Properties, which were completed on March 15, 2021, as further described in Note 5, Leases.

COVID-19 Pandemic

The Coronavirus (“COVID-19”) pandemic has caused and continues to cause significant impacts on the real estate industry in the United States, including the Company’s properties.

As a result of the development, fluidity and uncertainty surrounding this situation, the Company expects that these conditions may change, potentially significantly, in future periods and results for the three and nine months ended September 30, 2021 may not be indicative of the impact of the COVID-19 pandemic on the Company’s business for future periods. As such, the Company cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows over the foreseeable future.

As of September 30, 2021, the Company had collected 97% of rental income for the three and nine months ended September 30, 2021 and agreed to defer an additional 1%. While the Company intends to enforce its contractual rights under its leases, there can be no assurance that tenants will meet their future obligations or that additional rental modification agreements will not be necessary.

Liquidity

The Company’s primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures. Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations incurred during the nine months ended September 30, 2021 and the Company recorded net operating cash outflows of $85.6 million. Additionally, the Company generated investing cash inflows of $95.8 million during the nine months ended September 30, 2021, which were driven by asset sales and partially offset by development expenditures.

Obligations are projected to continue to exceed property rental income and the Company expects to fund such costs with a combination of capital sources including, cash on hand, and sales of Consolidated Properties, subject to any approvals, that may be required under the Company’s Term Loan Facility, as described in Note 6, Debt. Management has determined that it is probable its plans will be effectively implemented within one year after the date the condensed consolidated financial statements are issued and that these actions will provide the necessary cash flows to fund the Company’s Obligations and development expenditures.

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Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, (the “Annual Report”), for the year ended December 31, 2020. Certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been condensed or omitted from this quarterly report. In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this quarterly report. Operating results for the three and nine months ended September 30, 2021 may not be indicative of the results that may be expected for any other interim period or for the year ending December 31, 2021. Capitalized terms used, but not defined in this quarterly report, have the same meanings as set forth in our Annual Report.

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, each of their consolidated properties, and all other entities in which the Company has a controlling financial interest. For entities that meet the definition of a variable interest entity (“VIE”), the Company consolidates those entities when the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it possesses both the unilateral power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company continually evaluates whether it qualifies as the primary beneficiary and reconsiders its determination of whether an entity is a VIE upon reconsideration events. As of September 30, 2021, the Company consolidates two VIEs in which we are considered the primary beneficiary, as the Company has the power to direct the activities of the entities, specifically surrounding the development plan. As of September 30, 2021 and December 31, 2021, the Company has several unconsolidated VIEs and does not consolidate these entities because the Company is not the primary beneficiary. All intercompany accounts and transactions have been eliminated.

As of September 30, 2021, the Company holds a 77.9% interest in the Operating Partnership and is the sole general partner which gives the Company exclusive and complete responsibility for the day-to-day management, authority to make decisions, and control of the Operating Partnership. The Company has determined that the Operating Partnership is a VIE as the limited partners in the Operating Partnership, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. The Company consolidates its interest in the Operating Partnership. The assets and liabilities of the Operating Partnership are the same as those of the Company and are presented in the condensed consolidated balance sheets.

To the extent such variable interests are in entities that are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model.

Certain prior period amounts, if any, have been reclassified to conform to the current period's presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant assumptions and estimates relate to real estate impairment assessments and assessing the recoverability of accounts receivable. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. Management evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from these estimates.

Real Estate Investments

Real estate assets are recorded at cost, less accumulated depreciation and amortization.

Expenditures for ordinary repairs and maintenance will be expensed as incurred. Significant renovations which improve the property or extend the useful life of the assets are capitalized. As real estate is undergoing redevelopment activities, all amounts directly associated with and attributable to the project, including planning, development and construction costs, interest costs, personnel costs of employees directly involved, and other miscellaneous costs incurred during the period of redevelopment, are capitalized. The capitalization period begins when redevelopment activities are underway and ends when the project is substantially complete.

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Depreciation of real estate assets, excluding land, is recognized on a straight-line basis over their estimated useful lives which generally range between:

Buildings:	25 – 40 years
Site improvements:	5 – 15 years
Tenant improvements:	shorter of the estimated useful life or non-cancelable term of lease

The Company amortizes identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired, generally the remaining non-cancelable term of a related lease.

The Company, on a periodic basis, assesses whether there are indicators, including macroeconomic conditions, that the value of the real estate assets may be impaired. If an indicator is identified, management will estimate the real estate asset recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real estate asset. In estimating the fair value of an asset, various factors are considered, including expected future operating income, trends and leasing prospects and the effects of demand, competition, and other economic factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value.

Real Estate Dispositions

When the Company disposes of all or a portion of a real estate asset, it recognizes a gain or loss on sale of real estate as the difference between the carrying value and consideration received. Consideration consists of cash proceeds received and in certain circumstances, non-cash consideration which is typically in the form of equity and is reported in equity in loss of unconsolidated entities on the Company’s condensed consolidated statements of operations. Refer to Note 4 for more information on the Company’s unconsolidated entity transactions.

The following table summarizes our gain on sale of real estate, net during the three and nine months ended September 30, 2021 and 2020 (in millions):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
Contributions to unconsolidated entities
Gross proceeds	$	—	$	27.0		$	—	$	27.0
(Loss) gain on sale of real estate, net		—		(1.5	)		—		(1.5	)
Dispositions to third parties
Gross proceeds	$	76.8	$	62.8		$	203.7	$	221.7
Gain on sale of real estate, net (1)		22.8		16.8			65.1		91.5
Total gains on contributions and dispositions, net	$	22.8	$	15.3		$	65.1	$	90.0

(1) Excludes loss of $30.0 million related to the revaluation of Mark 302 JV to adjust the gain from $38.8 million to $8.8 million as further described in Note 4 below.

Real Estate Held for Sale

When a real estate asset is identified by management as held for sale, the Company ceases depreciation of the asset and estimates its fair value, net of estimated costs to sell. If the estimated fair value, net of estimated costs to sell, of an asset is less than its net carrying value, an adjustment is recorded to reflect the estimated fair value. Properties classified as real estate held for sale generally represent properties that are under contract for sale and are probable to close within a year.

In evaluating whether a property meets the held for sale criteria, the Company makes a determination as to the point in time that it is probable that a sale will be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other

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matters critical to the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period or at all.

As of September 30, 2021, one property was classified as held for sale with assets of $12.3 million and no liabilities, and, as of December 31, 2020, one property was classified as held for sale with assets of $1.9 million and no liabilities.

Investments in Unconsolidated Entities

The Company accounts for its investments in unconsolidated entities using the equity method of accounting as the Company exercises significant influence but does not have a controlling financial interest. These investments are initially recorded at cost and are subsequently adjusted for cash contributions, cash distributions, and earnings which are recognized in accordance with the terms of the applicable agreement.

On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions, that the value of the Company’s investments in unconsolidated entities may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. No such impairment losses were recognized for the three and nine months ended September 30, 2021 and 2020.

Restricted Cash

As of September 30, 2021, restricted cash represents cash collateral for a letter of credit.

Rental Revenue Recognition and Tenant Receivables

Rental income is comprised of base rent and reimbursements of property operating expenses. The Company commences rental revenue recognition when the lessee takes control of the physical use of the leased asset based on evaluation of several factors. Base rent is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable base rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as straight-line rent receivable and included as a component of tenant and other receivables on the condensed consolidated balance sheets. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

The Company periodically reviews its receivables for collectability, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. Tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectability of substantially all future lease payments from a specified lease is not probable of collection, at which point, the Company will begin recognizing revenue on a cash basis, based on actual amounts received. Any receivables that are deemed to be uncollectable are recognized as a reduction to rental income in the Company’s condensed consolidated statements of operations. If future circumstances change such that the Company believes that it is reasonably certain that the Company will collect all rental income remaining on such leases, the Company will resume accruing rental income and recognize a cumulative catch up for previously written-off receivables. The Company also recognizes a general reserve, as a reduction to rental income, for its portfolio of operating lease receivables which are not expected to be fully collectable.

The Company recorded a reduction to rental income of $0.5 million and $2.3 million during the three months ended September 30, 2021 and 2020, respectively, as a result of the Company’s evaluation of collectability, and the Company recorded an increase to rental income of $0.1 million and a reduction to rental income of $6.1 million during the nine months ended September 30, 2021 and 2020, respectively. In addition, the Company recorded a reduction of income of previously recorded straight-line rent of $0.4 million and $0.3 million for the three and nine months ended September 30, 2021, respectively. No adjustments were recorded to straight-line rent for the three months ended September 30, 2020. Straight-line rent reversals of $4.7 million were recorded for the nine months ended September 30, 2020. During the three and nine months ended September 30, 2021, the Company recorded a reduction to rental income of $0.4 million and an increase to rental income of $0.2 million related to the allowance for deferral agreements.

Due to the COVID-19 pandemic, the Company has entered into amendments to existing leases with certain tenants (the “Rent Deferral Agreements”), that provide for the deferral of all or some portion of rental payments due during the period which such tenant was affected by the COVID-19 pandemic (“Deferred Rent”). The Rent Deferral Agreements typically provide for repayment of the Deferred Rent within six to 12 months following the end of the rent deferral period and, in many instances, waive certain other conditions in favor of the Company while Deferred Rent is outstanding. Deferred Rent generally becomes immediately due and

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payable under the Rent Deferral Agreements if the tenant does not make the minimum contractual payments or otherwise defaults on the lease. We recognize lease concessions related to the COVID-19 pandemic such as rent deferrals and abatements in accordance with the Lease Modification Q&A issued by the Financial Standards Accounting Board, (“FASB”), in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. As a result, the Company has not adjusted accrued rental revenues or the portion of accrued rental revenues related to the straight-line method for the portion which has been deferred. When the Deferred Rents are repaid, the Company will relieve the accrual in tenant and other receivables.

In leasing tenant space, the Company may provide funding to the lessee through a tenant allowance. In accounting for a tenant allowance, the Company will determine whether the allowance represents funding for the construction of leasehold improvements and evaluate the ownership of such improvements. If the Company is considered the owner of the improvements for accounting purposes, the Company will capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the improvements or the related lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

Tenant and Other Receivables

Tenant and other receivables includes unpaid amounts billed to tenants, accrued revenues for future billings to tenants for property expenses, and amounts arising from the straight-lining of rent, as discussed above. Tenant and other receivables also includes management fees receivable for services performed for the benefit of certain unconsolidated entities. In the event that the collectability of a management fee receivable is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific receivable will be made.

Management and Other Fee Income

Management and other fee income represents property management, construction, leasing and development fees for services performed for the benefit of certain unconsolidated entities.

Property management fee income is reported at 100% of the revenue earned from such unconsolidated properties in management and other fee income on the condensed consolidated statements of operations. The Company’s share of management expenses incurred by the unconsolidated entities is reported in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Leasing and development fees are initially reported at the portion of revenue earned attributable to outside ownership of the related unconsolidated entities. The Company’s share in leasing and development fee income is recognized over the useful life of the associated development project, in the case of development fees, or lease term, in the case of leasing fees, as the associated asset is depreciated over the same term and included in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation. For property and asset management services, the Company is typically compensated for its services through a monthly management fee earned based on a specified percentage of monthly rental income or rental receipts generated from the property under management. For construction and development services, the Company is typically compensated for planning, administering and monitoring the design and construction of projects within our unconsolidated entities based on a percentage of project costs or a fixed fee. Revenues from such management contracts are recognized over the life of the applicable contract.

Conversely, leasing services are considered to be performance obligations, satisfied as of a point in time. The Company’s leasing fee is typically paid upon the occurrence of certain contractual event(s) that may be contingent and the pattern of revenue recognition may differ from the timing of payment. For these services, the obligations are typically satisfied at lease execution and tenant opening date, and revenue is recognized in accordance with the related agreement at the point in time when the obligation has been satisfied.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of operators, tenants, or obligors related to the Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. Management believes the Company’s portfolio is reasonably diversified and does not contain any significant concentrations of credit risk. As of September 30, 2021, the Company has one tenant that comprises 13.1% of annualized based rent, with no other tenants

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exceeding 10.0% of annualized based rent. The Company’s portfolio of 146 Consolidated Properties and 24 Unconsolidated Properties was diversified by location across 38 states and Puerto Rico.

Earnings per Share

The Company has three classes of common stock. The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A common shares and Class C non-voting common shares are identical, except with respect to voting. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. The net earnings (loss) per share amounts are the same for Class A and Class C common shares because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. As of August 29, 2018, all outstanding Class C common shares had been exchanged for Class A common shares and there are currently no Class C common shares outstanding.

Class B non-economic common shares are excluded from earnings per share computations as they do not have economic rights. As of December 31, 2020, all outstanding Class B common shares have been surrendered and there are currently no Class B common shares outstanding.

All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing earnings per share pursuant to the two-class method which specifies that all outstanding non-vested share-based payment awards that contain non-forfeitable rights to distributions are considered participating securities and should be included in the computation of earnings per share.

Recently Issued Accounting Pronouncements

The Company has not adopted any Accounting Standards Updates (“ASUs”) issued by the FASB during the three and nine months ended September 30, 2021. Any other recently issued accounting standards or pronouncements not disclosed have been excluded as they either are not applicable to the Company, or they are not expected to have a material effect on the condensed consolidated financial statements of the Company. 

Note 3 – Lease Intangible Assets and Liabilities

The following tables summarize the Company’s lease intangible assets (acquired in-place leases, above-market leases and below-market ground leases) and liabilities (acquired below-market leases, which is included in accounts payable, accrued expenses and other liabilities on the consolidate balance sheets), net of accumulated amortization, as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021
	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	32,571	$	(18,113	)	$	14,458
Above-market leases, net		3,925		(2,413	)		1,512
Total	$	36,496	$	(20,526	)	$	15,970

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	6,626	$	(2,765	)	$	3,861
Total	$	6,626	$	(2,765	)	$	3,861

December 31, 2020
	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	73,169	$	(56,369	)	$	16,800
Above-market leases, net		4,139		(2,344	)		1,795
Total	$	77,308	$	(58,713	)	$	18,595

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	6,626	$	(2,440	)	$	4,186
Total	$	6,626	$	(2,440	)	$	4,186

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Amortization of acquired below-market leases, net of acquired above-market leases, resulted in additional rental income of $0.1 million and $1.5 million for the three and nine months ended September 30, 2021 and 2020, respectively. Amortization of an acquired below-market ground lease resulted in additional property expense of $0.1 million and $0.2 million for the three and nine months ended September 30, 2021 and 2020, respectively. Amortization of acquired in-place leases resulted in additional depreciation and amortization expense of $0.8 million and $11.0 million for the three months ended September 30, 2021 and 2020, respectively and $2.4 million and $42.0 million for the nine months ended September 30, 2021 and 2020 respectively. Future amortization of these leases intangibles is set forth below (in thousands):

	(Above) / below market leases, net			Below market ground lease		In-place leases
Remainder of 2021	$	(13	)	$	51	$	699
2022		(43	)		203		2,787
2023		6			203		1,921
2024		27			203		1,385
2025		97			203		1,077
2026		190			203		724
Thereafter		2,084			9,433		5,866

Note 4 – Investments in Unconsolidated Entities

The Company conducts a portion of its property rental activities through investments in unconsolidated entities. The Company’s partners in these unconsolidated entities are unrelated real estate entities or commercial enterprises. The Company and its partners in these unconsolidated entities make initial and/or ongoing capital contributions to these unconsolidated entities. The obligations to make capital contributions are governed by each unconsolidated entity’s respective operating agreement and related governing documents.

As of September 30, 2021, the Company had investments in ten unconsolidated entities as follows:

		Seritage %	# of	Total
Unconsolidated Entities	Entity Partner(s)	Ownership	Properties	GLA
GS Portfolio Holdings II LLC    ("GGP I JV")	Brookfield Properties Retail    (formerly GGP Inc.)	50.0%	3		402,900
GS Portfolio Holdings (2017) LLC    ("GGP II JV")	Brookfield Properties Retail    (formerly GGP Inc.)	50.0%	3		474,100
MS Portfolio LLC    ("Macerich JV")	The Macerich Company	50.0%	7		1,266,600
SPS Portfolio Holdings II LLC    ("Simon JV")	Simon Property Group, Inc.	50.0%	5		872,200
Mark 302 JV LLC    ("Mark 302 JV")	An investment fund managed    by Invesco Real Estate	50.0%	1		103,000
SI UTC LLC    ("UTC JV")	A separate account advised by    Invesco Real Estate	50.0%	1		226,200
SF WH Joint Venture LLC    ("West Hartford JV")	An affiliate of First Washington    Realty	50.0%	1		163,700
GGCAL SRG HV LLC    ("Cockeysville JV")	An affiliate of    Greenberg Gibbons	50.0%	1		160,200
Tech Ridge JV Holding LLC    ("Tech Ridge JV")	An affiliate of    RD Management	50.0%	1		—
J&J Baldwin Park LLC    ("Carson Investment")	An affiliate of NewMark Merrilll Companies and other entities	20.0%	1		182,200
			24		3,851,100

The Company has contributed certain properties to unconsolidated entities in exchange for equity interests in those unconsolidated entities. The contribution of property to unconsolidated entities is accounted for as a sale of real estate and the Company recognizes the gain or loss on the sale (the “Gain (Loss)”) based upon the transaction price attributed to the property at the closing of the unconsolidated entities transaction (the “Contribution Value”). The Gain or (Loss) is included in gain on sale of real estate on the condensed consolidated statements of operations.

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In certain circumstances, the Contribution Value is subject to revaluation as defined in the respective unconsolidated entity agreements, which may result in an adjustment to the gain or loss recognized. If the Contribution Value is subject to revaluation, the Company initially recognizes the gain or loss at the value that is the expected amount within the range of possible outcomes and will re-evaluate the expected amount on a quarterly basis through the final determination date.

Upon revaluation, the primary inputs in determining the Contribution Value will be updated for actual results and may result in a cash settlement or capital account adjustment between the unconsolidated entity partners, as well as an adjustment to the initial gain or loss.

Each reporting period, the Company re-analyzes the primary inputs that determine the Contribution Value and the gain or loss for those unconsolidated entities subject to a revaluation. The following table summarizes the properties contributed to the Company’s unconsolidated entities:

		September 30, 2021
Unconsolidated Entities	Contribution Date	Contribution Value		Gain (Loss)
2018
Mark 302 JV (1)	March 20, 2018	$	60.0	$	8.8
2019
Cockeysville JV (2)	March 29, 2019	$	12.5	$	3.8
Tech Ridge JV (3)	September 27, 2019		3.0		0.1

(1)The Mark 302 JV was subject to a revaluation which resulted in the Company adjusting the Contribution Value down to $60.0 million and reduced the Gain (Loss) by $30.0 million. As of September 30, 2021, the amended determination date, there has been no change to the adjusted Contribution Value and the final Contribution Value is $60.0 million.

(2)The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the joint venture which was conditioned on certain milestones being met with respect to entitling the Additional Land Parcel for residential use. The Additional Land Parcel has been entitled for residential use. The Company has not reflected the contribution value of the Additional Land Parcel in the value of its investment in the Cockeysville JV based on uncertainty related to a potential alternative transaction with respect to the Additional Land Parcel. The Company will record an increased investment in the Cockeysville JV and additional gain in an amount equal to 50% of the fair value of the Additional Land Parcel at the earlier of when it becomes probable that the Additional Land Parcel will be contributed or upon an alternate outcome.

(3)The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. The Contribution Value cannot be less than $2.75 million.

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The following tables present combined condensed financial data for the Company’s unconsolidated entities (in thousands):

	September 30, 2021			December 31, 2020
ASSETS
Investment in real estate
Land	$	318,540		$	318,540
Buildings and improvements		505,793			492,973
Accumulated depreciation		(90,454	)		(81,730	)
		733,879			729,783
Construction in progress		216,479			222,663
Net investment in real estate		950,358			952,446
Cash and cash equivalents		25,881			16,094
Investment in unconsolidated entities		47,184			24,686
Tenant and other receivables, net		2,544			4,104
Other assets, net		35,789			38,196
Total assets	$	1,061,756		$	1,035,526
LIABILITIES AND MEMBERS' INTERESTS
Liabilities
Mortgage loans payable, net	$	52,942		$	34,672
Accounts payable, accrued expenses and other liabilities		34,771			48,405
Total liabilities		87,713			83,077
Members' Interest
Additional paid in capital		989,811			964,868
Retained earnings (accumulated deficit)		(15,768	)		(12,419	)
Total members' interest		974,043			952,449
Total liabilities and members' interest	$	1,061,756		$	1,035,526

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Total revenue	$	5,354		$	5,273		$	18,904		$	15,590
Property operating expenses		(2,969	)		(2,270	)		(8,382	)		(6,956	)
Depreciation and amortization		(8,094	)		(2,562	)		(21,137	)		(11,441	)
Operating income / (loss)		(5,709	)		441			(10,615	)		(2,807	)
Other expenses		(1,195	)		(1,093	)		(3,205	)		(2,060	)
Loss on disposition of real estate		(4,171	)		—			(4,171	)		—
Net loss	$	(11,075	)	$	(652	)	$	(17,991	)	$	(4,867	)
Equity in loss of unconsolidated    entities (1)	$	(5,535	)	$	(335	)	$	(9,024	)	$	(2,551	)

(1)Equity in loss of unconsolidated entities on the condensed consolidated statements of operations includes basis difference adjustments.

The Company shares in the profits and losses of these unconsolidated entities generally in accordance with the Company’s respective equity interests. In some instances, the Company may recognize profits and losses related to investment in an unconsolidated entity that differ from the Company’s equity interest in the unconsolidated entity. This may arise from impairments that the Company recognizes related to its investment that differ from the impairments the unconsolidated entity recognizes with respect to its assets, differences between the Company’s basis in assets it has transferred to the unconsolidated entity and the unconsolidated entity’s basis in those assets or other items. There were no impairment charges related to the Unconsolidated Properties for the three and nine months ended September 30, 2021 and 2020.

Unconsolidated Entity Management and Related Fees

The Company acts as the operating partner and day-to-day manager for the Mark 302 JV, the West Hartford JV, the UTC JV, and Tech Ridge JV. The Company is entitled to receive certain fees for providing management, leasing, and construction supervision services to certain of its unconsolidated entities. Refer to Note 2 for the Company’s accounting policies. The Company also acted as the development manager for one of the properties in the GGP II JV which entitled the Company to receive certain development fees

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which ended as of September 30, 2021. The Company earned $0.2 million and reversed $0.3 million from these services for the three months ended September 30, 2021 and 2020, respectively and $0.6 million and $0.1 million from these services for the nine months ended September 30, 2021 and 2020, respectively.

Note 5 – Leases

Lessor Disclosures

Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of September 30, 2021 are approximately as follows:

(in thousands)	September 30, 2021
Remainder of 2021	$	22,510
2022		85,443
2023		78,755
2024		75,545
2025		74,753
2026		69,768
Thereafter		337,480
Total	$	744,254

The components of lease revenues for the three and nine months ended September 30, 2021 and 2020 were as follows:

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed rental income	$	23,160	$	19,675	$	68,567	$	70,474
Variable rental income		4,652		10,976		16,921		20,195
Total rental income	$	27,812	$	30,651	$	85,488	$	90,669

Lessee Disclosures

The Company has one ground lease and one corporate office lease which are classified as operating leases. As of September 30, 2021, and December 31, 2020, the outstanding amount of right-of-use, or ROU, assets were $17.2 million and $18.8 million, respectively.

The Company recorded rent expense related to leased corporate office space of $0.3 million and $0.5 million for the three months ended September 30, 2021 and 2020, respectively. The Company recorded rent expense related to leased corporate office space of $1.0 million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively. Such rent expense is classified within general and administrative expenses on the condensed consolidated statements of operations.

In addition, the Company recorded ground rent expense of approximately $0.1 million for the three and nine months ended September 30, 2021 and 2020. Such ground rent expense is classified within property operating expenses on the condensed consolidated statements of operations. The ground lease requires the Company to make fixed annual rental payments and expires in 2073 assuming all extension options are exercised.

The following table sets forth information related to the measurement of our lease liabilities as of September 30, 2021:

	September 30, 2021
Weighted average remaining lease term (in years)		10.40
Weighted average discount rate		6.98	%
Cash paid for operating leases (in thousands)	$	1,432

Sale-leaseback Financing Obligations

During the year ended December 31, 2020, the Company completed a sale-leaseback transaction of a property in Hialeah, Florida for $21.0 million which is included in sales-leaseback financing obligations on the condensed consolidated balance sheets. As part of the sale-leaseback transaction, the Company agreed to lease all land and improvements on the land for a fixed term of 25 years at an initial base rent of $1.5 million per annum which will increase by 1.5% per year thereafter. For the initial periods of the sale-leaseback, cash payments are less than the interest expense recognized, which causes the obligation to increase during the initial years of the lease term. The implied interest rate is approximately 7.00%. The Company has a purchase option during years four, five or seven of the

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25-year term to reacquire, solely at the Company’s option, the Hialeah property at a predetermined price. The Hialeah property continues to be reflected as a long-lived asset and depreciated over its remaining useful life.

Future sale-leaseback financing obligations as of September 30, 2021 are approximately as follows:

(in thousands)	September 30, 2021
Remainder of 2021	$	363
2022		1,464
2023		1,486
2024		1,508
2025		1,531
2026		1,554
Thereafter		34,022
Interest		(21,315	)
Total	$	20,613

Original Master Lease and Holdco Master Lease

On February 28, 2019, the Company and certain affiliates of Transform Holdco LLC (“Holdco”), an affiliate of ESL Investments, Inc., executed the Holdco Master Lease (the “Holdco Master Lease”) which became effective on March 12, 2019 when the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) issued an order approving the rejection of the Original Master Lease. The Company analyzed this transaction under applicable accounting guidance and determined that the termination of the Original Master Lease and entering into the Holdco Master Lease should be accounted for as a modification. The Holdco Master Lease provided the Company with the right to recapture the space occupied by the tenant at all properties (other than five specified properties) and the right to recapture any automotive care centers which are free-standing or attached as “appendages” to the properties, all outparcels or outlots and certain portions of parking areas and common areas. Under the terms of the Holdco Master Lease, Holdco had the right, at any time, to terminate the Holdco Master Lease with respect to any property upon the payment of a termination fee equal to one year of base rent plus annual taxes and other operating expenses. Sears Holdings exercised termination rights with respect to 87 properties under the Original Master Lease prior to its rejection on March 12, 2019 and Holdco exercised termination rights with respect to all remaining properties under the Holdco Master Lease during the year ended December 31, 2020, with the remaining five properties effective in March 2021.

Revenues from the Holdco Master Lease as amended by the Amendment, and the Original Master Lease for the three months ended September 30, 2021 and 2020 are as follows (in thousands) and excluding straight-line rental income of $0.0 million and $0.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.0 million and $(7.9) million for the nine months ended September 30, 2021 and 2020, respectively.

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed rental income	$	—	$	—	$	—	$	4,288
Variable rental income		—		5,997		4,510		9,416
Total rental income	$	—	$	5,997	$	4,510	$	13,704

Note 6 – Debt

Term Loan Facility

On July 31, 2018, the Operating Partnership, as borrower, and the Company, as guarantor, entered into a Senior Secured Term Loan Agreement (the “Term Loan Agreement”) providing for a $2.0 billion term loan facility (the “Term Loan Facility”) with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”) as lender and Berkshire Hathaway as administrative agent. The Term Loan Facility provided for an initial funding of $1.6 billion at closing and includes a $400.0 million incremental funding facility (the “Incremental Funding Facility”) subject to certain conditions described below. The Term Loan Facility matures on July 31, 2023.

Funded amounts under the Term Loan Facility bear interest at an annual rate of 7.0% and unfunded amounts under the Incremental Funding Facility are subject to an annual fee of 1.0% until drawn. The Company prepays the annual fee and amortizes the expense to interest expense on the condensed consolidated statements of operations.

As of September 30, 2021, the aggregate principal amount outstanding under the Term Loan Facility was $1.6 billion.

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The Company’s ability to access the Incremental Funding Facility is subject to (i) the Company achieving rental income from non-Sears Holdings tenants, on an annualized basis (after giving effect to signed not yet open leases (“SNO Leases”) expected to commence rent payment within 12 months) for the fiscal quarter ending prior to the date of incurrence of the Incremental Funding Facility, of not less than $200 million (ii) the Company’s good faith projection that rental income from non-Sears Holdings tenants (after giving effect to SNO Leases expected to commence rent payment within 12 months) for the succeeding four consecutive fiscal quarters (beginning with the fiscal quarter during which the incremental facility is accessed) will be not less than $200 million, and (iii) the repayment by the Operating Partnership of any deferred interest permitted under the amendment to the Term Loan Agreement dated May 5, 2020 (as further described below). As of September 30, 2021, the Company has not yet achieved the requirements to access the Incremental Funding Facility.

The Term Loan Facility is guaranteed by the Company and, subject to certain exceptions, is required to be guaranteed by all existing and future subsidiaries of the Operating Partnership. The Term Loan Facility is secured on a first lien basis by a pledge of the capital stock of the direct subsidiaries of the Operating Partnership and the guarantors, including its joint venture interests, except as prohibited by the organizational documents of such entities or any joint venture agreements applicable to such entities, and contains a requirement to provide mortgages and other customary collateral upon the breach of certain financial metrics described below, the occurrence and continuation of an event of default and certain other conditions set forth in the Term Loan Agreement. During 2019, mortgages were recorded on a majority of the Company’s portfolio and during the nine months ended September 30, 2021, mortgages were recorded on the remaining unmortgaged properties in all but three locations.

The Term Loan Facility includes certain financial metrics to govern springing collateral requirements and certain covenant exceptions set forth in the Term Loan Agreement, including: (i) a total fixed charge coverage ratio of not less than 1.00 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending September 30, 2021, and not less than 1.20 to 1.00 for each fiscal quarter thereafter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.05 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending September 30, 2021, and not less than 1.30 to 1.00 for each fiscal quarter thereafter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion. Any failure to satisfy any of these financial metrics limits the Company’s ability to dispose of assets via sale or joint venture and triggers the springing mortgage and collateral requirements but will not result in an event of default. The Term Loan Facility also includes certain limitations relating to, among other activities, the Company’s ability to: sell assets or merge, consolidate or transfer all or substantially all of its assets; incur additional debt; incur certain liens; enter into, terminate or modify certain material leases and/or the material agreements for the Company’s properties; make certain investments (including limitations on joint ventures) and other restricted payments; pay distributions on or repurchase the Company’s capital stock; and enter into certain transactions with affiliates.

The Term Loan Facility contains customary events of default, including (subject to certain materiality thresholds and grace periods) payment default, material inaccuracy of representations or warranties, and bankruptcy or insolvency proceedings. If there is an event of default, the lenders may declare all or any portion of the outstanding indebtedness to be immediately due and payable, exercise any rights they might have under any of the Term Loan Facility documents, and require the Company to pay a default interest rate on overdue amounts equal to 2.0% in excess of the then applicable interest rate.

As of September 30, 2021, the Company was not in compliance with certain of the financial metrics described above. As a result, the Company must receive the consent of Berkshire Hathaway to dispose of assets via sale or joint venture and, as of September 30, 2021, Berkshire Hathaway had provided such consent for all such transactions submitted for approval. There can be no assurance that the lender will consent to future dispositions of assets. The Company believes it is in compliance with all other terms and conditions of the Term Loan Agreement.

The Company incurred $2.1 million of debt issuance costs related to the Term Loan Facility which are recorded as a direct deduction from the carrying amount of the Term Loan Facility and amortized over the term of the Term Loan Agreement. As of September 30, 2021 and December 31, 2020, the unamortized balance of the Company’s debt issuance costs were $0.8 million and $1.1 million, respectively.

On May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on July 31, 2023; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed

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to by the administrative agent under the Term Loan Agreement in its sole discretion). In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the $400.0 million Incremental Funding Facility under the Term Loan Agreement. The Company has paid all interest due under the Term Loan Agreement and has not deferred any interest as permitted under the amendment to the Term Loan Agreement.

Additionally, the amendment to the Term Loan Agreement provides that the administrative agent and the lenders express their continued support for asset dispositions, subject to the administrative agent’s right to approve the terms of individual transactions due to the occurrence of a Financial Metric Trigger Event, as such term is defined under the Term Loan Facility.

Note 7 – Income Taxes

The Company has elected to be taxed as a REIT as defined under Section 856(c) of the Code for federal income tax purposes and expects to continue to operate to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to currently distribute at least 90% of its adjusted REIT taxable income to its shareholders.

As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT or does not distribute 100% of its taxable income in any taxable year, it will be subject to U.S. federal income tax at regular corporate rates (including for any taxable year ended on or before December 31, 2017, any applicable alternative minimum tax) and any applicable state and local income taxes. In addition, if the Company fails to qualify as a REIT, it may not be able to qualify as a REIT for four subsequent taxable years in some cases.

Even if the Company qualifies for taxation as a REIT, the Company is subject to certain U.S. state, local and Puerto Rico taxes on its income and property, and to U.S. federal income and excise taxes on its undistributed REIT taxable income. The Company’s taxable REIT subsidiaries are subject to U.S. corporate income tax.

Note 8 – Fair Value Measurements

ASC 820, Fair Value Measurement, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the “exit price”). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels:

Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities

Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data

Level 3 - unobservable inputs used when little or no market data is available

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value.

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our condensed consolidated balance sheets consist of real estate assets that have been written down to estimated fair value and are classified as Level 3 within the fair value hierarchy.

During the three and nine months ended September 30, 2021, in accordance with ASC 360-10, Property, Plant and Equipment, the Company recorded impairment losses of $3.8 million and $70.1 million, respectively, on real estate assets which are included in impairment on real estate assets within the condensed consolidated statements of operations. In the second quarter of 2021, the Company announced an organizational restructuring and in conjunction commenced a portfolio review resulting in the modification of the plan for certain assets. As a result of the foregoing, the Company’s intent, anticipated holding periods and/or projected cash flows with respect to certain assets has evolved. This affected the Company’s view of recoverability of the carrying value of those assets over their respective holding periods. Of the $64.5 million of impairments recorded during the second quarter, approximately $30.6 million resulted from the Company’s decision to monetize additional assets through sales or development joint ventures. The $3.8 million of impairment losses recorded during the three months ended September 30, 2021 relate to five properties, which are being marketed for sale. We continue to evaluate our portfolio, including our development plans and holding periods, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities. Impairment losses of $14.6 million and $16.4 million were recognized for the three and nine months ended September 30, 2020, respectively.

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The fair value estimates used to determine the impairment charges were determined primarily by discounted cash flow analyses, market comparable data, and/or third-party appraisals, as applicable. The cash flows utilized in such analyses are comprised of unobservable inputs which include, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates based upon market conditions and future expectations. The capitalization rates and discount rates used in the analysis ranged from 6.0% and 12.0%. Comparable data utilizes comparable sales, listings, sales contracts and letters of intent which are subject to judgment as to comparability to the valued property. Because of these inputs, we have determined that the fair values of these properties are classified within Level 3 of the fair value hierarchy.

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on the condensed consolidated balance sheets include cash equivalents and the term loan facility. The fair value of cash equivalents and restricted cash are classified as Level 1 and the fair value of term loan facility is classified as Level 2. Cash equivalents and restricted cash are carried at cost, which approximates fair value. The fair value of debt obligations is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings. As of September 30, 2021 and December 31, 2020, the estimated fair values of the Company’s debt obligations were $1.7 billion and $1.6 billion, respectively, which approximated the carrying value at such dates as the current risk-adjusted rate approximates the stated rates on the Company’s debt obligations.

Note 9 – Commitments and Contingencies

Insurance

The Company maintains general liability insurance and all-risk property and rental value, with sub-limits for certain perils such as floods and earthquakes on each of the Company’s properties. The Company also maintains coverage for terrorism acts as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2027.

Insurance premiums are charged directly to each of the properties. The Company will be responsible for deductibles and losses in excess of insurance coverage, which could be material. The Company continues to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, the Company cannot anticipate what coverage will be available on commercially reasonable terms in the future.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or may have arranged for the disposal or treatment of hazardous or toxic substances. As a result, the Company may be liable for certain costs including removal, remediation, government fines and injuries to persons and property.

Under the Original Master Lease and the Holdco Master Lease, Holdco is required to indemnify the Company from certain environmental liabilities at the Consolidated Properties before or during the period in which each Consolidated Property was leased to Holdco, including removal and remediation of all affected facilities and equipment constituting the automotive care center. In addition, an environmental reserve was funded at the closing of the transactions in connection with the Company commencing operations in the amount of approximately $12.0 million. As of September 30, 2021 and December 31, 2020, the balance of the environmental reserve was approximately $9.5 million and $9.5 million, respectively, and is included in accounts payable, accrued expenses and other liabilities in the condensed consolidated balance sheets.

Litigation and Other Matters

In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or discloses the fact that such a range of loss cannot be estimated. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.

On April 18, 2019, at the direction of the Restructuring Sub-Committee of the Restructuring Committee of the Board of Directors of Sears Holdings, Sears Holdings, Sears, Roebuck & Co., Sears Development Co., Kmart Corporation, and Kmart of Washington, LLC filed a lawsuit (the “Litigation”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) against, among others, Edward S. Lampert, ESL Investments, Inc. and certain of its affiliates and investors, Fairholme Capital Management, L.L.C., certain members of the Sears Holdings board of directors, and the Company, the Operating Partnership, and certain of our affiliates and subsidiaries (the Company, the Operating Partnership, and certain of our affiliates and subsidiaries collectively, the “Seritage Defendants”). The Litigation is dual captioned as In re: Sears Holdings Corporation, et al., Case No. 18-23538 (RDD) and Sears Holdings Corporation et al., v. Lampert et al., Case No. 19-08250 (RDD). The Litigation alleges, among

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other things, that certain transactions undertaken by Sears Holdings since 2011 constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings. The challenged transactions include the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings. The Litigation alleges, among other things, that the real estate acquired by Seritage from Sears Holdings in July 2015 was worth at least $649 to $749 million more than the purchase price paid. The Litigation seeks as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers and either (i) rescission of the transfers of real estate from Sears Holdings to Seritage in 2015 and return of the proceeds of the transactions between Sears Holdings and Seritage, or, in the alternative, (ii) payment by Seritage to Sears Holdings of damages at least equal to the value of the transferred property.

On October 15, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Modified Second Amended Joint Chapter 11 Plan of Sears Holdings and its affiliated debtors (the “Chapter 11 Plan”). Pursuant to the terms of the Confirmation Order, upon the effective date of the Chapter 11 Plan, a liquidating trust will be formed, and the Litigation will vest in the liquidating trust. The Confirmation Order further provides that, prior to the effective date of the Chapter 11 Plan and the formation of the liquidating trust, the Litigation shall be controlled by five litigation designees selected by Sears Holdings and the Unsecured Creditors’ Committee (the “UCC”). For further information, refer to the Chapter 11 Plan, Confirmation Order and liquidating trust agreement, each of which has been publicly filed with the Bankruptcy Court.

On February 21, 2020, the Seritage defendants filed a partial motion to dismiss seeking dismissal of the claims in the operative complaint in the Litigation relating to the release received in the Sears Holdings derivative litigation, unjust enrichment, and equitable subordination. Briefing and oral argument on the motions have been completed, and the parties are awaiting a decision.

On March 15, 2021, the Court consolidated the Litigation with a case captioned Sears Holding Corp. et al. v. Andrew H. Tish, et al., Case No. 20-07007 (RDD) (the “Shareholder Litigation,” and, together with the Litigation, the “Consolidated Litigation”). The Shareholder Litigation was brought by the UCC, Sears Holdings Corporation, and Sears, Roebuck and Co., against certain shareholders of Sears Holdings or its related companies. Seritage was not named as a defendant in the Shareholder Litigation, which alleges, among other things, that certain transactions undertaken by Sears Holdings since 2014 (including the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings) constituted actual and/or constructive fraudulent transfers and/or illegal dividends. The Company believes that the claims against the Seritage Defendants in the Consolidated Litigation are without merit and intends to defend against them vigorously.

In addition to the litigation described above, the Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business and due to the current environment. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the condensed consolidated financial position, results of operations, cash flows or liquidity of the Company. As of September 30, 2021, and December 31, 2020, the Company did not record any amounts for litigation or other matters.

Note 10 – Related Party Disclosure

Edward S. Lampert

Edward S. Lampert is the Chairman and Chief Executive Officer of ESL, which owns Holdco, and was Chairman of Sears Holdings. Mr. Lampert is also the Chairman of Seritage.

As of September 30, 2021, Mr. Lampert beneficially owned a 22.1% interest in the Operating Partnership and approximately 9.3% of the outstanding Class A common shares.

Subsidiaries of Holdco, as lessees, and subsidiaries of the Company, as lessors, were parties to the Holdco Master Lease and subsidiaries of Sears Holdings, as lessees, and subsidiaries of the Company, as lessors, were parties to the Original Master Lease (see Note 5).

Unconsolidated Entities

Certain unconsolidated entities have engaged the Company to provide management, leasing, construction supervision and development services at the properties owned by the unconsolidated entities. Refer to Note 2 for the Company’s significant accounting policies.

In addition, as of September 30, 2021, the Company had incurred $0.2 million of development expenditures at properties owned by certain unconsolidated entities for which the Company will be repaid by the respective unconsolidated entities. These amounts are included in tenant and other receivables, net on the Company’s condensed consolidated balance sheets. As of December 31, 2020, the Company had incurred $5.0 million of such development expenditures.

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Note 11 – Non-Controlling Interests

Partnership Agreement

On July 7, 2015, Seritage and ESL entered into the agreement of limited partnership of the Operating Partnership which was amended and restated on December 14, 2017. Pursuant to this partnership agreement, as the sole general partner of the Operating Partnership, Seritage exercises exclusive and complete responsibility and discretion in its day-to-day management, authority to make decisions, and control of the Operating Partnership, and may not be removed as general partner by the limited partners.

As of September 30, 2021, the Company held a 77.9% interest in the Operating Partnership and ESL held a 22.1% interest. The portions of consolidated entities not owned by the Company are presented as non-controlling interest as of and during the periods presented.

Note 12 – Shareholders’ Equity

Class A Common Shares

As of September 30, 2021, 43,631,345 Class A common shares were issued and outstanding. Class A shares have a par value of $0.01 per share. During the nine months ended September 30, 2021, 4,647,943 Operating Partnership Units (“OP Units”) were issued and exchanged for an equal number of Class A shares.

Class B Non-Economic Common Shares

As of September 30, 2021, there were no Class B non-economic common shares issued and outstanding.

Series A Preferred Shares

In December 2017, the Company issued 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) in a public offering at $25.00 per share. The Company received net proceeds from the offering of approximately $66.4 million, after deducting payment of the underwriting discount and offering expenses.

The Company may not redeem the Series A Preferred Shares before December 14, 2022, except to preserve its status as a REIT or upon the occurrence of a Change of Control, as defined in the trust agreement addendum designating the Series A Preferred Shares. On and after December 14, 2022, the Company may redeem any or all of the Series A Preferred Shares at $25.00 per share plus any accrued and unpaid dividends. In addition, upon the occurrence of a Change of Control, the Company may redeem any or all of the Series A Preferred Shares for cash within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accrued and unpaid dividends. The Series A Preferred Shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company redeems or otherwise repurchases them or they are converted.

Dividends and Distributions

The Company’s Board of Trustees has not declared dividends on the Company’s Class A common shares during 2021 or 2020.

The Company’s Board of Trustees declared the following dividends on preferred shares during 2021 and 2020:

			Series A
Declaration Date	Record Date	Payment Date	Preferred Share
2021
October 26	December 31	January 14, 2022	$	0.43750
July 27	September 30	October 15		0.43750
April 27	June 30	July 15		0.43750
February 23	March 31	April 15		0.43750
2020
December 17	December 31	January 15, 2021	$	0.43750
September 17	September 30	October 15		0.43750
June 9	June 30	July 15		0.43750
February 18	March 31	April 15		0.43750

As previously disclosed, the Company declared a dividend on the Company’s Class A common shares for the first quarter of 2019 and has not declared dividends on the Company’s Class A common shares since that time, based on our Board of Trustees’ assessment of

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the Company’s investment opportunities and its expectations of taxable income for the remainder of 2021. The Company intends to, at a minimum, make distributions to its shareholders to comply with the REIT requirements of the Code, which may be satisfied by dividends on the Company’s Series A Preferred Shares.

Note 13 – Earnings per Share

The table below provides a reconciliation of net income (loss) and the number of common shares used in the computations of “basic” earnings per share (“EPS”), which utilizes the weighted-average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares. Potentially dilutive securities consist of shares of non-vested restricted stock and the redeemable non-controlling interests in the Operating Partnership.

All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing EPS pursuant to the two-class method which specifies that all outstanding non-vested share-based payment awards that contain non-forfeitable rights to distributions are considered participating securities and should be included in the computation of EPS.

Earnings per share has not been presented for Class B shareholders, as they do not have economic rights.

(in thousands except per share amounts)	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator - Basic and Diluted
Net loss		(26,349	)		(72,401	)		(132,586	)		(103,272	)
Net loss attributable to non-controlling interests		5,815			22,348			31,492			32,627
Preferred dividends		(1,225	)		(1,225	)		(3,675	)		(3,675	)
Net loss attributable to common shareholders - Basic    and diluted	$	(21,759	)	$	(51,278	)	$	(104,769	)	$	(74,320	)
Denominator - Basic and Diluted
Weighted average Class A common shares outstanding		43,631			38,645			41,976			38,172
Weighted average Class A common shares    outstanding - Basic		43,631			38,645			41,976			38,172
Restricted shares and share units		—			—			—			—
Weighted average Class A common shares    outstanding - Diluted		43,631			38,645			41,976			38,172
Net loss per share attributable to Class A    common shareholders - Basic	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)
Net loss per share attributable to Class A    common shareholders - Diluted	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)

No adjustments were made to the numerator for the three and nine months ended September 30, 2021 and 2020 because the Company generated a net loss. During periods of net loss, undistributed losses are not allocated to the participating securities as they are not required to absorb losses.

No adjustments were made to the denominator for the three and nine months ended September 30, 2021 and 2020 because (i) the inclusion of outstanding non-vested restricted shares would have had an anti-dilutive effect and (ii) including the non-controlling interest in the Operating Partnership would also require that the share of the Operating Partnership loss attributable to such interests be added back to net loss, therefore, resulting in no effect on earnings per share.

As of September 30, 2021 and December 31, 2020, there were 169,768 and 157,465 shares, respectively, of non-vested restricted shares outstanding.

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Note 14 – Share-Based Compensation

On July 7, 2015, the Company adopted the Seritage Growth Properties 2015 Share Plan (the “Plan”). The number of shares of common stock reserved for issuance under the Plan is 3,250,000. The Plan provides for grants of restricted shares, share units, other share-based awards, options, and share appreciation rights, each as defined in the Plan (collectively, the “Awards”). Directors, officers, other employees, and consultants of the Company and its subsidiaries and affiliates are eligible for Awards.

Restricted Shares and Share Units

Pursuant to the Plan, the Company has periodically made grants of restricted shares or share units. The vesting terms of these grants are specific to the individual grant and vary in that a portion of the restricted shares and share units vest in equal annual amounts over the subsequent three years (time-based vesting) and a portion of the restricted shares and share units vest on the third, and in some instances, the fourth anniversary of the grants subject to the achievement of certain performance criteria (performance-based and market-based vesting).

In general, participating employees are required to remain employed for vesting to occur (subject to certain limited exceptions). Restricted shares and share units that do not vest are forfeited. Dividends on restricted shares and share units with time-based vesting are paid to holders of such shares and share units and are not returnable, even if the underlying shares or share units do not ultimately vest. Dividends on restricted shares and share units with performance-based vesting are accrued when declared and paid to holders of such shares on the third, and in some instances, the fourth anniversary of the initial grant subject to the vesting of the underlying shares. See Note 2 for valuation information related to the grants of the awards that are subject to market-based vesting conditions.

The following table summarizes restricted share activity for the nine months ended September 30, 2021:

	Nine Months Ended September 30,
				Weighted-
				Average Grant
	Shares			Date Fair Value
Unvested restricted shares at beginning of period		157,465		$	38.73
Share units granted		189,349			21.39
Restricted shares vested		(143,899	)		37.30
Restricted shares forfeited		(33,147	)		29.65
Unvested restricted shares at end of period		169,768			22.38

The Company recognized $0.4 million and $1.4 million in compensation expense related to the restricted shares for the three months ended September 30, 2021 and 2020, respectively and $1.5 million and $3.2 million for the nine months ended September 30, 2021 and 2020, respectively. Compensation expenses related to the restricted shares are included in general and administrative expenses on the Company’s condensed consolidated statements of operations.

As of September 30, 2021, there were approximately $3.2 million of total unrecognized compensation costs related to the outstanding restricted shares which are expected to be recognized over a weighted-average period of approximately 2.1 years. As of September 30, 2020, there were approximately $5.7 million of total unrecognized compensation costs related to the outstanding restricted shares which were expected to be recognized over a weighted-average period of approximately 1.7 years.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part 1 of this Quarterly Report.

Overview

We are principally engaged in the ownership, development, redevelopment, management and leasing of diversified retail and mixed-use properties throughout the United States. As of September 30, 2021, our portfolio consisted of interests in 170 properties comprised of approximately 10.0 million square feet of gross leasable area (“GLA”) or build-to-suit leased area, approximately 4.0 million of which is held by unconsolidated entities (the “Unconsolidated Properties”), approximately 600 acres held for or under development and approximately 10.0 million square feet or approximately 850 acres to be disposed of.

In the second quarter of 2021, we announced an organizational restructuring and in conjunction commenced a portfolio review resulting in the modification of the plan for certain assets. We continue to evaluate our strategy and at this time, we expect to reposition our portfolio into three business lines: residential developments, premier mixed-use assets, and multi-tenant retail destinations.

COVID-19 Pandemic

The Coronavirus (“COVID-19”) pandemic has caused and continues to cause significant impacts on the real estate industry in the United States, including the Company’s properties.

As a result of the development, fluidity and uncertainty surrounding this situation, the Company expects that these conditions may change, potentially significantly, in future periods and results for the three and nine months ended September 30, 2021 may not be indicative of the impact of the COVID-19 pandemic on the Company’s business for future periods. As such, the Company cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows over the foreseeable future.

As of September 30, 2021, we had collected 97% of rental income for the three and nine months ended September 30, 2021, and agreed to defer an additional 1%. While the Company intends to enforce its contractual rights under its leases, there can be no assurance that tenants will meet their future obligations or that additional rental modification agreements will not be necessary.

Impairment of real estate assets and investments in unconsolidated entities

In the second quarter of 2021, we announced an organizational restructuring and in conjunction commenced a portfolio review resulting in the modification of the plan for certain assets. As a result of the foregoing, our intent, anticipated holding periods and/or projected cash flows with respect to certain assets evolved. This affected our view of recoverability of the carrying value of those assets over their respective holding periods. We have recognized $70.1 million of impairment losses in the nine months ended September 31, 2021, which are included in impairment on real estate assets within the condensed consolidated statements of operations, in part as a result of this portfolio review. We continue to evaluate our portfolio, including our development plans and holding periods, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities.

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Results of Operations

We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties. This revenue generally includes fixed base rents and recoveries of expenses that we have incurred and that we pass through to the individual tenants, in each case as provided in the respective leases.

Our primary cash expenses consist of our property operating expenses, general and administrative expenses, interest expense, and construction and development related costs. Property operating expenses include real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense is on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities.

Comparison of the Three Months Ended September 30, 2021 to the Three Months Ended September 30, 2020

The following table presents selected data on comparative results from the Company’s condensed consolidated statements of operations for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020 (in thousands):

	Three Months Ended September 30,
	2021		2020			$ Change
Revenue
Rental income	$	28,819	$	33,966		$	(5,147	)
Expenses
Property operating		11,585		11,154			431
Real estate taxes		8,542		9,487			(945	)
Depreciation and amortization		13,159		23,647			(10,488	)
General and administrative		8,780		11,203			(2,423	)
Gain / (loss) on sale of real estate, net		22,774		(14,706	)		37,480
Impairment of real estate assets		3,814		14,594			(10,780	)
Interest expense		26,721		22,742			3,979

Rental Income

The following table presents the results for rental income for the three months ended September 30, 2021, as compared to the corresponding period in 2020 (in thousands):

	Three Months Ended September 30,					Three Months Ended September 30,
	2021					2020
	Rental Income		% of Total Rental Income			Rental Income		% of Total Rental Income			$ Change
Sears/Kmart	$	—		0.0	%	$	5,997		17.7	%	$	(5,997	)
In-place diversified, non-Sears leases		27,812		96.5	%		24,654		72.6	%		3,158
Straight-line rent		1,004		3.5	%		1,775		5.2	%		(771	)
Amortization of the above/below market leases		3		0.0	%		1,540		4.5	%		(1,537	)
Total rental income	$	28,819		100.0	%	$	33,966		100.0	%	$	(5,147	)

The decrease of $6.0 million in Sears or Kmart rental income during 2021 is due to the termination of the Holdco Master Lease in 2020. As of March 15, 2021, Sears no longer occupies any space in the portfolio.

The increase of $3.2 million in diversified tenants rental income during 2021 is primarily due to newly commenced leases, offset by reductions related to properties sold and a reduction to rental revenue record as a result of the Company’s evaluation of collectability of its rental revenue recorded in the third quarter of 2020.

The decrease of $0.8 million in straight-line rental income during 2021 was primarily due to (i) properties sold after the third quarter of 2020 and (ii) reserves for cash basis tenants.

The decrease of $1.5 million in amortization of above/below market leases during 2021 was due primarily to the termination of certain leases previously acquired by the Company.

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Property Operating Expenses and Real Estate Taxes

The increase of $0.4 million in property operating expense for the three months ended September 30, 2021 was due primarily to an increase in utilities costs for spaces previously occupied by Holdco, insurance and management fees incurred, offset by a reduction in expenses related to sold properties and a decrease in property repair costs.

The decrease of $0.9 million in real estate taxes for the three months ended September 30, 2021 was due primarily to asset sales, lower tax assessments and was partially offset by a decrease in amounts capitalized.

Depreciation and Amortization Expenses

The decrease of $10.5 million in depreciation and amortization expenses for the three months ended September 30, 2021 was primarily due to recording accelerated amortization attributable to certain lease intangible assets for the three months ended September 30, 2020, and lower depreciation expense driven by property sales.

Accelerated amortization results from the recapture of space from, or the termination of space, by Holdco. Such recaptures and terminations are deemed lease modifications and require related lease intangibles to be amortized over the shorter of the shortened lease term or the remaining useful life of the asset.

General and Administrative Expenses

The decrease of $2.4 million in general and administrative expenses for the three months ended September 30, 2021 was driven by reductions in legal fees related to our litigation, stock-based compensation and salary expenses. This was partially offset by a $2.9 million increase in severance expenses and restructuring costs during the three months ended September 30, 2021.

Gain on Sale of Real Estate, Net

During the three months ended September 30, 2021, the Company sold three properties and pad sites for aggregate consideration of $76.9 million and recorded gains totaling $22.8 million, which are included in gain on sale of real estate, net within the condensed consolidated statements of operations.

Impairment of Real Estate Assets

During the three months ended September 30, 2021, the Company recognized $3.8 million in impairment on 5 real estate assets, which is included within the condensed consolidated statements of operations.

Interest Expense

The increase of $4.0 million in interest expense for the three months ended September 30, 2021 was driven by a decrease in amounts capitalized.

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

The following table presents selected data on comparative results from the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020 (in thousands):

	Nine Months Ended September 30,
	2021		2020		$ Change
Revenue
Rental income	$	87,560	$	88,724	$	(1,164	)
Expenses
Property operating		33,514		30,152		3,362
Real estate taxes		27,758		28,096		(338	)
Depreciation and amortization		39,629		81,446		(41,817	)
General and administrative		32,002		29,267		2,735
Gain on sale of real estate, net		65,079		59,959		5,120
Impairment of real estate assets		70,053		16,407		53,646
Interest expense		81,847		66,400		15,447

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Rental Income

The following table presents the results for rental income for the nine months ended September 30, 2021, as compared to the corresponding period in 2020 (in thousands):

	Nine Months Ended September 30,					Nine Months Ended September 30,
	2021					2020
	Rental Income		% of Total Rental Income			Rental Income			% of Total Rental Income			$ Change
Sears or Kmart	$	4,510		5.2	%	$	13,302			15.0	%	$	(8,792	)
In-place diversified, non-Sears leases		80,978		92.5	%		77,367			87.2	%		3,611
Straight-line rent / (expense)		2,033		2.3	%		(3,621	)		-4.1	%		5,654
Amortization of above/below market leases		39		0.0	%		1,676			1.9	%		(1,637	)
Total rental income	$	87,560		100.0	%	$	88,724			100.0	%	$	(1,164	)

The decrease of $8.8 million in Sears or Kmart rental income during 2021 is due to a reduction in the number of properties leased to Sears or Kmart under the Holdco Master Lease, as a result of terminations. As of March 15, 2021, Sears no longer occupies space at any properties.

The increase of $3.6 million in diversified tenants rental income during 2021 is primarily due to newly commenced leases, offset by reductions related to properties sold and a reduction to rental revenue record as a result of the Company’s evaluation of collectability of its rental revenue recorded in the second quarter of 2020.

The increase of $5.7 million in straight-line rental income during 2021 was primarily due to (i) the reversal in 2020 of previously recorded straight-line rent and (ii) the commencement of new leases with fixed rent increases.

The decrease of $1.6 million in amortization of above/below market leases during 2021 was due primarily to the termination of certain leases previously acquired by the Company.

Property Operating Expenses and Real Estate Taxes

The increase of $3.4 million in property operating expense for the nine months ended September 30, 2021 was due primarily to lower capitalized expenses for the nine months ended September 30, 2021 and payments relating to the sales leaseback financing obligation effective October 1st 2020, partially offset by property sales.

The decrease of $0.3 million in real estate taxes for the nine months ended September 30, 2021 was due primarily to asset sales, lower tax assessments, and was partially offset by increasing assessed real estate taxes and a decrease in amounts capitalized.

Depreciation and Amortization Expenses

The decrease of $41.8 million in depreciation and amortization expenses for the nine months ended September 30, 2021 was primarily due to recording accelerated amortization attributable to certain lease intangible assets for the nine months ended September 30, 2020, and lower depreciation expense driven by property sales.

Accelerated amortization results from the recapture of space from, or the termination of space by Holdco. Such recaptures and terminations are deemed lease modifications and require related lease intangibles to be amortized over the shorter of the shortened lease term or the remaining useful life of the asset.

General and Administrative Expenses

The increase of $2.7 million in general and administrative expenses for the nine months ended September 30, 2021 was driven by a $5.1 million increase in severance and restructuring costs, director and officer ("D&O") insurance, and decreased capitalized wages. This was partially offset by a decrease in stock-based compensation and legal fees relating to our litigation.

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Gain on Sale of Real Estate, Net

During the nine months ended September 30, 2021, the Company sold 14 properties and pad sites for aggregate consideration of $203.7 million and recorded gains totaling $65.1 million, which are included in gain on sale of real estate, net within the condensed consolidated statements of operations.

Impairment of Real Estate Assets

During the nine months ended September 30, 2021, the Company recognized $70.1 million in impairment of 34 real estate assets, which is included within the condensed consolidated statements of operations.

Interest Expense

The increase of $15.4 million in interest expense for the nine months ended September 30, 2021 was driven by a decrease in amounts capitalized and an increase of costs incurred relating to mortgage recording costs.

Liquidity and Capital Resources

Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures. Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations incurred during the nine months ended September 30, 2021 and the Company recorded net operating cash outflows of $85.6 million. Additionally, the Company’s generated investing cash inflows of $95.8 million during the nine months ended September 30, 2021, which were driven by asset sales and partially offset by development expenditures.

Obligations are projected to continue to exceed property rental income and we expect to fund such obligations and any development expenditures with cash on hand and a combination of capital sources including, but not limited to the following, subject to any approvals that may be required under the Term Loan Agreement:

Sales of Consolidated Properties. As of September 30, 2021, we had sold 82 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $795.2 million of gross proceeds since we began our capital recycling program in July 2017.

Sales of interests in Unconsolidated Properties. As of September 30, 2021, we had sold our interests in 15 Unconsolidated Properties and generated approximately $278.1 million of gross proceeds since July 2017. Certain of our unconsolidated entity agreements also include rights that allow us to sell our interests in select Unconsolidated Properties to our partners at fair market value;

New Unconsolidated Properties. As of September 30, 2021, we had contributed interests in 11 properties to unconsolidated entities, which generated approximately $212.4 million of gross proceeds since July 2017. In addition to generating liquidity upon closing, these entities also reduce our development expenditures by the amount of our partners’ interests in the unconsolidated entities;

Unconsolidated entities debt. We may incur property-level debt in new or existing unconsolidated entities, including construction financing for properties under development and longer-term mortgage debt for stabilized properties; and

Other credit and capital markets transactions. We may raise additional capital through the public or private issuance of debt securities, common or preferred equity or other instruments convertible into or exchangeable for common or preferred equity.

As previously disclosed, on May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment (the “Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on July 31, 2023; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed to by the administrative agent under the Term Loan Agreement in its sole discretion).

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In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the $400.0 million incremental funding facility under the Term Loan Agreement (the “Incremental Funding Facility”).

Additionally, the Term Loan Amendment provides that the administrative agent and the lenders express their continued support for asset dispositions, subject to the administrative agent’s right to approve the terms of individual transactions due to the occurrence of a Financial Metric Trigger Event, as such term is defined under the Term Loan Agreement.

Our Term Loan Facility includes a $400.0 million Incremental Funding Facility, access to which is subject to rental income from non-Sears Holdings tenants of at least $200.0 million, on an annualized basis and after giving effect to SNO leases expected to commence rent payment within 12 months, which we have not yet achieved, as disclosed in Note 6. There is no assurance of the Company’s ability to access the Incremental Funding Facility.

Cash Flows for the nine months Ended September 30, 2021 Compared to the nine months Ended September 30, 2020

The following table summarizes the Company’s cash flow activities for the nine months ended September 30, 2021 and 2020 (in thousands):

	Nine Months Ended September 30,
	2021			2020			$ Change
Net cash (used in) operating activities	$	(85,566	)	$	(25,300	)	$	(60,266	)
Net cash provided by (used in) investing activities		95,820			(9,697	)		105,517
Net cash provided by financing activities		20			16,656			(16,636	)

Cash Flows from Operating Activities

Significant components of net cash used in operating activities include:

In 2021, a decrease in rental income and a decrease in accounts payable, accrued expenses and other liabilities, partially offset by a decrease in tenant and other receivables.

Cash Flows from Investing Activities

Significant components of net cash provided by (used in) investing activities include:

−In 2021, $195.2 million of net proceeds from the sale of real estate offset by development of real estate of ($77.6) million and investments in unconsolidated entities of ($31.7) million; and

−In 2020, development of real estate and property improvements of ($195.0) million and investments in unconsolidated entities of $(50.7) million, partially offset by $234.8 million of net proceeds from the sale of real estate.

Cash Flows from Financing Activities

Significant components of net cash provided by financing activities include:

−In 2021, contributions from noncontrolling interest in other partnerships, $4.0 million;

−In 2021, cash payments of preferred dividends, ($3.7) million;

−In 2020, cash proceeds from sales-leaseback financing, $20.4 million;

−In 2020, cash payments of preferred dividends, ($3.7) million.

Dividends and Distributions

The Company’s Board of Trustees has not declared dividends on the Company’s Class A common shares during the nine months ended September 30, 2021.

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The Company’s Board of Trustees declared the following dividends on preferred shares during 2021 and 2020:

			Series A
Declaration Date	Record Date	Payment Date	Preferred Share
2021
October 26	December 31	January 14, 2022	$	0.43750
July 27	September 30	October 15		0.43750
April 27	June 30	July 15		0.43750
February 23	March 31	April 15		0.43750
2020
December 17	December 31	January 15, 2021	$	0.43750
September 17	September 30	October 15		0.43750
June 9	June 30	July 15		0.43750
February 18	March 31	April 15		0.43750

As previously disclosed, the Company declared a dividend on the Company’s Class A common shares for the first quarter of 2019 and has not declared dividends on the Company’s Class A common shares since that time, based on our Board of Trustees’ assessment of the Company’s investment opportunities and its expectations of taxable income for the remainder of 2021. The Company intends to, at a minimum, make distributions to our shareholders to comply with the REIT requirements of the Code, which may be satisfied by dividends on the Company’s Series A Preferred shares.

Off-Balance Sheet Arrangements

The Company accounts for its investments in entities that it does not have a controlling interest in or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the condensed consolidated balance sheets of the Company as investments in unconsolidated entities. As of September 30, 2021 and December 31, 2020, we did not have any off-balance sheet financing arrangements.

Contractual Obligations

There have been no significant changes in the contractual obligations disclosed in our Form 10-K for the year ended December 31, 2020.

Capital Expenditures

During the three and nine months ended September 30, 2021 the Company invested $32.6 million and $77.6 million, respectively, in our consolidated development and operating properties and an additional $10.4 million and $31.7 million, respectively, into our unconsolidated joint ventures.

The Company also continued to advance its previously underway premier projects in Aventura (FL) and La Jolla (CA), and its pipeline of such projects, including its two previously announced multifamily projects, in Redmond (WA) and Dallas (TX), each of which represents the first phase of larger, mixed-use developments. A multifamily project in Lynwood (WA) in an Unconsolidated Entity is also underway and has been scheduled for opening in the fourth quarter of 2021.

During the three and nine months ended September 30, 2021, we incurred maintenance capital expenditures of approximately $1.7 million and $2.6 million, respectively, that were not associated with re-tenanting and redevelopment projects.

During the three and nine months ended September 30, 2020, we incurred maintenance capital expenditures of approximately $0.1 million and $2.6 million, respectively, that were not associated with re-tenanting and redevelopment projects.

Litigation and Other Matters

In accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or disclose the fact that such a range of loss cannot be estimated. We do not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. In such cases, we disclose the nature of the contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made.

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During the Sears Holdings bankruptcy proceedings, the Official Committee of Unsecured Creditors of Sears Holdings (the “UCC”) and others, including the Restructuring Subcommittee of the Board of Directors of Sears Holdings, alleged that the 2015 Transactions between us and Sears Holdings constituted a fraudulent conveyance, and indicated an intent to pursue litigation challenging the 2015 Transactions on that and other grounds. The approval of the Holdco Acquisition by the Bankruptcy Court expressly preserved claims relating to the 2015 Transactions between us and Sears Holdings.

On April 18, 2019, at the direction of the Restructuring Sub-Committee of the Restructuring Committee of the Board of Directors of Sears Holdings Corporation, Sears Holdings, Sears, Roebuck & Co., Sears Development Co., Kmart Corporation, and Kmart of Washington, LLC filed a lawsuit (the “Litigation”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) against, among others, Edward S. Lampert, ESL Investments, Inc. and certain of its affiliates and investors, Fairholme Capital Management, L.L.C., certain members of the Sears Holdings board of directors, the Company, the Operating Partnership, and certain of our affiliates and subsidiaries (the Company, the Operating Partnership, and certain of our affiliates and subsidiaries collectively, the “Seritage Defendants”). The Litigation is dual captioned as In re: Sears Holdings Corporation, et al., Case No. 18-23538 (RDD) and Sears Holdings Corporation et al., v. Lampert et al., Case No. 19-08250 (RDD).

The Litigation alleges, among other things, that certain transactions undertaken by Sears Holdings since 2011 constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings. The challenged transactions include the July 2015 transactions giving rise to Seritage, the master lease agreement (the “Original Master Lease”) with Sears Holdings, and the acquisition of real estate from Sears Holdings. The Litigation alleges, among other things, that the real estate acquired by Seritage from Sears Holdings in July 2015 was worth at least $649 to $749 million more than the purchase price paid. The Litigation seeks as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers and either (i) rescission of the transfers of real estate from Sears Holdings to Seritage in 2015, return of the proceeds of the transactions between Sears Holdings and Seritage, or (ii) in the alternative, payment by Seritage to Sears Holdings of damages at least equal to the value of the transferred property.

On October 15, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Modified Second Amended Joint Chapter 11 Plan of Sears Holdings and its affiliated debtors (the “Chapter 11 Plan”). Pursuant to the terms of the Confirmation Order, upon the effective date of the Chapter 11 Plan, a liquidating trust will be formed, and the Litigation will vest in the liquidating trust. The Confirmation Order further provides that, prior to the effective date of the Chapter 11 Plan and the formation of the liquidating trust, the Litigation shall be controlled by five litigation designees selected by Sears Holdings and the Unsecured Creditors’ Committee (the “UCC”). For further information, refer to the Chapter 11 Plan, Confirmation Order and liquidating trust agreement, each of which has been publicly filed with the Bankruptcy Court.

On February 21, 2020, the Seritage defendants filed a partial motion to dismiss seeking dismissal of the claims in the operative complaint in the Litigation relating to the release received in the Sears Holdings derivative litigation, unjust enrichment, and equitable subordination. Briefing and oral argument on the motions have been completed, and the parties are awaiting a decision.

On March 15, 2021, the Court consolidated the Litigation with a case captioned Sears Holding Corp. et al. v. Andrew H. Tish, et al., Case No. 20-07007 (RDD) (the “Shareholder Litigation,” and, together with the Litigation, the “Consolidated Litigation”). The Shareholder Litigation was brought by the UCC, Sears Holdings Corporation, and Sears, Roebuck and Co., against certain shareholders of Sears Holdings or its related companies. Seritage was not named as a defendant in the Shareholder Litigation, which alleges, among other things, that certain transactions undertaken by Sears Holdings since 2014 (including the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings) constituted actual and/or constructive fraudulent transfers and/or illegal dividends. We believe that the claims against the Seritage Defendants in the Litigation are without merit and intend to defend against them vigorously.

On March 2, 2021, the Company brought a lawsuit in Delaware state court against QBE Insurance Corporation, Endurance American

Insurance Company, Allianz Global Risks US Insurance Company and Continental Casualty Company, each of which are D&O

insurance providers of the Company (the “D&O Insurers”). The Company’s lawsuit is seeking, among other things, declaratory relief

and money damages as a result of certain of the D&O Insurers refusal to pay certain costs and expenses related to the defense of the

Litigation discussed above.

We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business and due to the current environment. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, the final outcome of such ordinary course legal proceedings and claims will not have a material effect on the condensed consolidated financial position, results of operations or liquidity of the Company.

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Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2020 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For the nine months ended September 30, 2021, there were no material changes to these policies.

Non-GAAP Supplemental Financial Measures and Definitions

The Company makes reference to NOI, Total NOI, FFO and Company FFO which are financial measures that include adjustments to GAAP.

Net Operating Income ("NOI") and Total NOI

NOI is defined as income from property operations less property operating expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's depiction of NOI may not be comparable to other REITs. 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. The Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of unconsolidated properties that are accounted for under GAAP using the equity method.

The Company also considers NOI and Total NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles.

Due to the adjustments noted, NOI and Total NOI should only be used as an alternative measure of the Company’s financial performance.

Funds from Operations ("FFO") and Company FFO

FFO is calculated in accordance with National Association of REITs 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 termination fee income, severance and restructuring costs, litigation charges, acquisition-related expenses, amortization of deferred financing costs and certain up-front-hiring costs, that it does not believe are representative of ongoing operating results.

Due to the adjustments noted, FFO and Company FFO should only be used as an alternative measure of the Company’s financial performance.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

None of NOI, Total NOI, FFO and 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 are presented below on a comparative basis for all periods.

- 35 -

The following table reconciles NOI and Total NOI to GAAP net loss for the three months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
NOI and Total NOI	2021			2020			2021			2020
Net loss	$	(26,349	)	$	(72,401	)	$	(132,586	)	$	(103,272	)
Termination fee income		(379	)		(5,300	)		(2,990	)		(6,290	)
Management and other fee (income) / expense		(184	)		259			(598	)		(119	)
Depreciation and amortization		13,159			23,647			39,629			81,446
General and administrative expenses		8,780			11,203			32,002			29,267
Equity in loss of unconsolidated entities		5,535			335			9,024			2,551
(Gain) / loss on sale of real estate, net		(22,774	)		14,706			(65,079	)		(59,959	)
Impairment of real estate assets		3,814			14,594			70,053			16,407
Interest and other income		(48	)		(1,986	)		(8,202	)		(2,460	)
Interest expense		26,721			22,742			81,847			66,400
Provision for income taxes		38			226			198			215
Straight-line rent / (expense)		(1,005	)		(1,774	)		(2,033	)		3,621
Above/below market rental (income) / expense		48			(1,541	)		111			(1,677	)
NOI	$	7,356		$	4,710		$	21,376		$	26,130
Unconsolidated entities
Net operating income of unconsolidated entities		666			1,481			4,749			4,297
Straight-line rent		(272	)		(136	)		(576	)		(407	)
Above/below market rental (income) / expense		181			(76	)		119			(616	)
Termination fee (income) / expense		144			—			(607	)		(293	)
Total NOI	$	8,075		$	5,979		$	25,061		$	29,111

- 36 -

The following table reconciles FFO and Company FFO to GAAP net loss for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
FFO and Company FFO	2021			2020			2021			2020
Net loss	$	(26,349	)	$	(72,401	)	$	(132,586	)	$	(103,272	)
Real estate depreciation and amortization    (consolidated properties)		12,781			23,158			38,496			79,946
Real estate depreciation and amortization    (unconsolidated entities)		3,971			1,270			10,354			5,711
(Gain) / loss on sale of real estate, net		(22,774	)		14,706			(65,079	)		(59,959	)
Impairment of real estate assets		3,814			14,594			70,053			16,407
Loss on disposition of real estate    (unconsolidated entities)		2,086			—			2,086			—
Dividends on preferred shares		(1,225	)		(1,225	)		(3,675	)		(3,675	)
FFO attributable to common shareholders    and unitholders	$	(27,696	)	$	(19,898	)	$	(80,351	)	$	(64,842	)
Termination fee income		(379	)		(5,300	)		(2,990	)		(6,290	)
Termination fee (income) / expense    (unconsolidated entities)		144			—			(607	)		(293	)
Amortization of deferred financing costs		105			105			317			316
Severance and restructuring costs		2,891			—			5,087			425
Mortgage recording costs		26			—			2,339			—
Company FFO attributable to common    shareholders and unitholders	$	(24,909	)	$	(25,093	)	$	(76,205	)	$	(70,684	)
FFO per diluted common share and unit	$	(0.49	)	$	(0.36	)	$	(1.44	)	$	(1.16	)
Company FFO per diluted common share and unit	$	(0.44	)	$	(0.45	)	$	(1.36	)	$	(1.27	)
Weighted Average Common Shares and Units Outstanding
Weighted average common shares outstanding		43,631			38,645			41,976			38,172
Weighted average OP units outstanding		12,355			17,255			13,978			17,694
Weighted average common shares and    units outstanding		55,986			55,900			55,954			55,866

- 37 -

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There were no material changes in the Quantitative and Qualitative Disclosures about Market Risk set forth in our 2020 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date.

Changes in Internal Controls.

There were no changes in our internal control over financial reporting that occurred during the period ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 38 -

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this Item is incorporated by reference to Note 9 of the condensed consolidated financial statements included herein.

Item 1A. Risk Factors

Information regarding risk factors appears in our 2020 Annual Report on Form 10-K in Part I, Item 1A. Risk Factors. There have been no material changes from the risk factors previously disclosed in our 2020 Annual Report on Form 10-K, except for the following updates.

Economic conditions may affect the cost of borrowing, which could materially adversely affect our business

Our business is affected by a number of factors that are largely beyond our control but may nevertheless have a significant negative impact on us. These factors include, but are not limited to:
 

interest rates and credit spreads;

the availability of credit, including the price, terms and conditions under which it can be obtained;

a decrease in consumer spending or sentiment, including as a result of increases in savings rates and tax increases, and any effect that this may have on retail activity;

the actual and perceived state of the real estate and retail markets, market for dividend-paying stocks and public capital markets in general; and

unemployment rates, both nationwide and within the primary markets in which we operate.

 

In addition, economic conditions such as inflation or deflation could materially adversely affect our business, financial condition and results of operations. Deflation may have an impact on our ability to repay our debt. Deflation may delay consumption and thus weaken tenant sales, which may reduce our tenants’ ability to pay rents. Deflationary pressure on retailers may diminish their ability to rent our space and decrease our ability to re-lease the space on favorable terms to us.

The U.S. economy is currently experiencing and may continue to experience higher inflation than in prior periods. During inflationary periods, interest rates have historically increased, which may materially increase the interest expense we pay in connection with our indebtedness. Our general and administrative expenses would also be expected to increase at a rate higher than rents we collect. Also, inflation may adversely affect tenant leases with stated rent increases, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our own results of operations.

Restricted lending practices may impact our ability to obtain financing for our properties and may also negatively impact our tenants’ ability to obtain credit. Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.

We may face increased risks and costs associated with volatility in commodity and labor prices or as a result of supply chain or procurement disruptions, which may adversely affect the status of our construction projects

The price of commodities and skilled labor for our construction projects may increase unpredictably due to external factors, including, but not limited to, performance of third-party suppliers and contractors; overall market supply and demand; government regulation; international trade; and changes in general business, economic, or political conditions. As a result, the costs of raw construction materials and skilled labor required for the completion of our development and redevelopment projects may fluctuate significantly from time to time.

While we do not rely on any single supplier or vendor for the majority of our materials and skilled labor, we may experience difficulties obtaining necessary materials from suppliers or vendors whose supply chains might become impacted by economic or political changes, or difficulties obtaining adequate skilled labor from third-party contractors in a tightening labor market. It is uncertain whether we would be able to source the essential commodities, supplies, materials, and skilled labor timely or at all without incurring significant costs or delays, particularly during times of economic uncertainty resulting from events outside of our control. We may be forced to seek new third-party suppliers or contractors, who we have not worked with in the past.

- 39 -

During 2021, industry prices for certain construction materials, including steel, copper, lumber, plywood, electrical materials, and heating, ventilation, and air conditioning materials, experienced significant increases as a result of low inventories; surging demand fueled by the U.S. economy rebounding from the effects of COVID-19; tariffs imposed on imports of foreign steel, including on products from key competitors in the European Union and China; and significant changes in the U.S. steel production landscape stemming from the consolidation of certain steel-producing companies. Price surges on construction materials may result in corresponding increases in our overall construction costs as our projects undergo construction.

In addition, as of November 2021, the U.S. is widely reported to be experiencing serious supply chain disruptions as a result of substantial backlogs of container ships seeking to unload cargo at major ports on both the west and east coasts, with delays caused or exacerbated by port and trucking labor shortages, railway logistics issues and a shortage of warehouse space in close proximity to the affected ports. Supply chain constraints have impacted the cost, availability, and timing of certain materials deliveries. If not resolved, these backlogs and related logistics issues could result in project delays and increased costs for our construction activities and the US economy generally.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

- 40 -

Item 6. Exhibits

Exhibit No.	Description	SEC Document Reference
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350	Furnished herewith.
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350	Furnished herewith.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith.
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	Filed herewith.

- 41 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SERITAGE GROWTH PROPERTIES
Dated: November 4, 2021	/s/ Andrea Olshan
	By:	Andrea Olshan
	President and Chief Executive Officer (Principal Executive Officer)
Dated: November 4, 2021	/s/ Amanda Lombard
	By:	Amanda Lombard
	Chief Financial Officer (Principal Financial and Accounting Officer)

- 42 -

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Andrea Olshan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Seritage Growth Properties;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Andrea Olshan	Date: November 4, 2021
Andrea Olshan
President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Amanda Lombard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Seritage Growth Properties;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Amanda Lombard	Date: November 4, 2021
Amanda Lombard
Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Seritage Growth Properties, a Maryland real estate investment trust (the “Company”), on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Andrea Olshan, President and Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Andrea Olshan

Andrea Olshan

President and Chief Executive Officer

(Principal Executive Officer)

November 4, 2021

A signed original of this written statement required by Section 906 has been provided to Seritage Growth Properties and will be retained by Seritage Growth Properties and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Seritage Growth Properties, a Maryland real estate investment trust (the “Company”), on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Amanda Lombard, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Amanda Lombard

Amanda Lombard

Chief Financial Officer

(Principal Financial and Accounting Officer)

November 4, 2021

A signed original of this written statement required by Section 906 has been provided to Seritage Growth Properties and will be retained by Seritage Growth Properties and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Oct. 29, 2021
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Registrant Name	SERITAGE GROWTH PROPERTIES
Entity Central Index Key	0001628063
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	001-37420
Entity Tax Identification Number	38-3976287
Entity Address, Address Line One	500 Fifth Avenue
Entity Address, Address Line Two	Suite 1530
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10110
Entity Incorporation, State or Country Code	MD
City Area Code	212
Local Phone Number	355-7800
Document Quarterly Report	true
Document Transition Report	false
Series A Cumulative Redeemable Preferred Shares [Member]
Document Information [Line Items]
Title of 12(b) Security	7.00% Series A cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share
Trading Symbol	SRG-PA
Security Exchange Name	NYSE
Class A Common Shares [Member]
Document Information [Line Items]
Title of 12(b) Security	Class A common shares of beneficial interest, par value $0.01 per share
Trading Symbol	SRG
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		43,631,345
Class B Common Shares [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		0
Class C Common Shares [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		0

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Investment in real estate
Land		$ 516,488	$ 592,770
Buildings and improvements		999,343	1,107,532
Accumulated depreciation		(159,347)	(142,206)
Real Estate Investment Property, at Cost, Total		1,356,484	1,558,096
Construction in progress		390,443	352,776
Net investment in real estate		1,746,927	1,910,872
Real estate held for sale		12,273	1,864
Investment in unconsolidated entities		464,244	457,033
Cash and cash equivalents		153,378	143,728
Restricted cash		7,150	6,526
Tenant and other receivables, net		27,499	46,570
Lease intangible assets, net		15,970	18,595
Prepaid expenses, deferred expenses and other assets, net		67,265	63,755
Total assets	[1]	2,494,706	2,648,943
Liabilities
Term Loan Facility, net		1,599,226	1,598,909
Sales-leaseback financing obligations		20,613	20,425
Accounts payable, accrued expenses and other liabilities		123,178	146,882
Total liabilities	[1]	1,743,017	1,766,216
Commitments and contingencies (Note 9)
Shareholders' Equity
Additional paid-in capital		1,240,311	1,177,260
Accumulated deficit		(625,491)	(528,637)
Total shareholders' equity		615,284	649,040
Non-controlling interests		136,405	233,687
Total equity		751,689	882,727
Total liabilities and shareholders' equity		2,494,706	2,648,943
Class A Common Shares [Member]
Shareholders' Equity
Common shares		436	389
Total equity		436	389
Series A Preferred Shares [Member]
Shareholders' Equity
Preferred shares		28	28
Total equity		$ 28	$ 28

[1] The Company's condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The condensed consolidated balance sheets, as of September 30, 2021, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $6.6 million of land, $3.9 million of building and improvements, $(0.9) million of accumulated depreciation and $4.3 million of other assets included in other line items. The Company's condensed consolidated balance sheets as of December 31, 2020, do not include assets and liabilities of consolidated variable interest entities.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Land	$ 516,488	$ 592,770
Buildings and improvements	999,343	1,107,532
Accumulated depreciation	(159,347)	$ (142,206)
Variable Interest Entities
Land	6,600
Buildings and improvements	3,900
Accumulated depreciation	(900)
Other assets	$ 4,300
Class A Common Shares [Member]
Common shares, par value	$ 0.01	$ 0.01
Common shares, authorized	100,000,000	100,000,000
Common shares, outstanding	43,631,345	38,896,428
Common shares, issued	43,631,345	38,896,428
Series A Preferred Shares [Member]
Common shares, outstanding	2,800,000	2,800,000
Preferred shares, par value	$ 0.01	$ 0.01
Preferred shares, authorized	10,000,000	10,000,000
Preferred shares, outstanding	2,800,000	2,800,000
Preferred shares, issued	2,800,000	2,800,000
Preferred shares, liquidation preference	$ 70,000	$ 70,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
REVENUE
Rental income	$ 28,819	$ 33,966	$ 87,560	$ 88,724
Management and other fee income / (expense)	$ 184	$ (259)	$ 598	$ 119
Type of Revenue [Extensible List]	Management and Other Fee Income [Member]	Management and Other Fee Income [Member]	Management and Other Fee Income [Member]	Management and Other Fee Income [Member]
Total revenue	$ 29,003	$ 33,707	$ 88,158	$ 88,843
EXPENSES
Property operating	11,585	11,154	33,514	30,152
Real estate taxes	8,542	9,487	27,758	28,096
Depreciation and amortization	13,159	23,647	39,629	81,446
General and administrative	8,780	11,203	32,002	29,267
Total expenses	42,066	55,491	132,903	168,961
Gain / (loss) on sale of real estate, net	22,774	(14,706)	65,079	59,959
Impairment of real estate assets	(3,814)	(14,594)	(70,053)	(16,407)
Equity in loss of unconsolidated entities	(5,535)	(335)	(9,024)	(2,551)
Interest and other income	48	1,986	8,202	2,460
Interest expense	(26,721)	(22,742)	(81,847)	(66,400)
Loss before taxes	(26,311)	(72,175)	(132,388)	(103,057)
Provision for taxes	(38)	(226)	(198)	(215)
Net loss	(26,349)	(72,401)	(132,586)	(103,272)
Net loss attributable to non-controlling interests	5,815	22,348	31,492	32,627
Net loss attributable to Seritage	(20,534)	(50,053)	(101,094)	(70,645)
Preferred dividends	(1,225)	(1,225)	(3,675)	(3,675)
Net loss attributable to Seritage common shareholders	$ (21,759)	$ (51,278)	$ (104,769)	$ (74,320)
Net loss per share attributable to Seritage Class A common shareholders - Basic	$ (0.50)	$ (1.33)	$ (2.50)	$ (1.95)
Net loss per share attributable to Seritage Class A common shareholders - Diluted	$ (0.50)	$ (1.33)	$ (2.50)	$ (1.95)
Weighted average Class A common shares outstanding - Basic	43,631	38,645	41,976	38,172
Weighted average Class A common shares outstanding - Diluted	43,631	38,645	41,976	38,172

XML

CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands	Total	Class A Common Shares [Member]	Class B Common Shares [Member]	Series A Preferred Shares [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Non-Controlling Interest [Member]
Beginning balance at Dec. 31, 2019	$ 1,043,370	$ 369	$ 12	$ 28	$ 1,149,721	$ (418,711)	$ 311,951
Beginning balance, shares at Dec. 31, 2019		36,897,000	1,243,000	2,800,000
Net income (loss)	(103,272)					(70,645)	(32,627)
Preferred dividends declared	(3,675)					(3,675)
Vesting of restricted share units		$ 1			(1)
Vesting of restricted share units, shares		98,000
Share-based compensation	3,372				3,372
Share class surrenders			$ (12)		12
Share class surrenders, shares			(1,243,000)
OP Unit exchanges		$ 16			26,623		(26,639)
OP Unit exchanges, shares		1,650,000
Ending balance at Sep. 30, 2020	939,795	$ 386		$ 28	1,179,727	(493,031)	252,685
Ending balance, shares at Sep. 30, 2020		38,645,000	0	2,800,000
Beginning balance at Jun. 30, 2020	1,011,962	$ 386		$ 28	1,178,268	(441,753)	275,033
Beginning balance, shares at Jun. 30, 2020		38,645,000		2,800,000
Net income (loss)	(72,401)					(50,053)	(22,348)
Preferred dividends declared	(1,225)					(1,225)
Share-based compensation	1,459				1,459
Ending balance at Sep. 30, 2020	939,795	$ 386		$ 28	1,179,727	(493,031)	252,685
Ending balance, shares at Sep. 30, 2020		38,645,000	0	2,800,000
Beginning balance at Dec. 31, 2020	882,727	$ 389		$ 28	1,177,260	(528,637)	233,687
Beginning balance, shares at Dec. 31, 2020		38,896,428		2,800,000
Net income (loss)	(132,586)					(101,094)	(31,492)
Preferred dividends declared	(3,675)					(3,675)
Vesting of restricted share units		$ 1			(1)
Vesting of restricted share units, shares		87,000
Share-based compensation	1,263				1,263
OP Unit exchanges		$ 46			61,789		(61,835)
OP Unit exchanges, shares		4,648,000
Contributions to consolidated variable interest entities	3,960					7,915	(3,955)
Ending balance at Sep. 30, 2021	751,689	$ 436		$ 28	1,240,311	(625,491)	136,405
Ending balance, shares at Sep. 30, 2021		43,631,345	0	2,800,000
Beginning balance at Jun. 30, 2021	774,889	$ 428		$ 28	1,230,009	(611,647)	156,071
Beginning balance, shares at Jun. 30, 2021		42,795,000		2,800,000
Net income (loss)	(26,349)					(20,534)	(5,815)
Preferred dividends declared	(1,225)					(1,225)
Share-based compensation	414				414
OP Unit exchanges		$ 8			9,888		(9,896)
OP Unit exchanges, shares		836,000
Contributions to consolidated variable interest entities	3,960					7,915	(3,955)
Ending balance at Sep. 30, 2021	$ 751,689	$ 436		$ 28	$ 1,240,311	$ (625,491)	$ 136,405
Ending balance, shares at Sep. 30, 2021		43,631,345	0	2,800,000

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Preferred dividends declared, per share | $ / shares	$ 1.3125
Class B Common Shares [Member]
Share class surrenders, shares	1,242,536
Class A Common Shares [Member]
OP Unit exchanges, shares	1,650,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$ (132,586)	$ (103,272)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in loss of unconsolidated entities	9,024	2,551
Distributions from unconsolidated entities	141	93
Gain on sale of real estate, net	(65,079)	(59,959)
Impairment of real estate assets	70,053	16,407
Share-based compensation	1,225	3,179
Depreciation and amortization	39,629	81,446
Amortization of deferred financing costs	317	316
Amortization of above and below market leases, net	111	(1,677)
Straight-line rent adjustment	(2,033)	3,621
Interest on sale-leaseback financing obligations	188
Change in operating assets and liabilities
Tenants and other receivables	7,156	6,315
Prepaid expenses, deferred expenses and other assets	(8,165)	(3,627)
Accounts payable, accrued expenses and other liabilities	(5,547)	29,307
Net cash (used in) operating activities	(85,566)	(25,300)
CASH FLOW FROM INVESTING ACTIVITIES
Investment in unconsolidated entities	(31,722)	(50,660)
Distributions from unconsolidated entities	9,913	1,150
Net proceeds from sale of real estate	195,183	234,777
Development of real estate	(77,554)	(194,964)
Net cash provided by (used in) investing activities	95,820	(9,697)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from sale-leaseback financing obligations		20,416
Purchase of shares related to stock grant recipients' tax withholdings	(262)	(85)
Preferred dividends paid	(3,675)	(3,675)
Contributions from noncontrolling interests in to consolidated VIEs	3,957
Net cash provided by financing activities	20	16,656
Net increase / (decrease) in cash and cash equivalents	10,274	(18,341)
Cash and cash equivalents, and restricted cash, beginning of period	150,254	139,260
Cash and cash equivalents, and restricted cash, end of period	160,528	120,919
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents at beginning of period	143,728	139,260
Restricted cash at beginning of period	6,526
Cash and cash equivalents at end of period	153,378	118,227
Restricted cash at end of period	7,150	2,692
Cash and cash equivalents and restricted cash	160,528	120,919
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	86,321	85,555
Capitalized interest	8,759	22,215
Income taxes paid	198	256
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Development of real estate financed with accounts payable	34,260	45,091
Preferred dividends declared and unpaid	1,225	1,225
Transfer to / (from) real estate assets held for sale	(1,864)	2,915
Recording / (removal) of right of use assets	(983)	1,598
(Recording) / removal of lease liabilities	$ 983	$ (1,598)

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Organization

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Note 1 – Organization

Seritage Growth Properties (“Seritage”) (NYSE: SRG), a Maryland real estate investment trust formed on June 3, 2015, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) as defined under Section 856(c) of the Internal Revenue Code (the “Code”). Seritage’s assets are held by and its operations are primarily conducted, directly or indirectly, through Seritage Growth Properties, L.P., a Delaware limited partnership (the “Operating Partnership”). Under the partnership agreement of the Operating Partnership, Seritage, as the sole general partner, has exclusive responsibility and discretion in the management and control of the Operating Partnership. Unless otherwise expressly stated or the context otherwise requires, the “Company” and “Seritage” refer to Seritage, the Operating Partnership and its owned and controlled subsidiaries.

Seritage is principally engaged in the ownership, development, redevelopment, management and leasing of diversified retail 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 gross leasable area (“GLA”) or build-to-suit leased area, approximately 4.0 million of which is held by unconsolidated entities (the “Unconsolidated Properties”), approximately 600 acres held for or under development and approximately 10.0 million square feet or approximately 850 acres to be disposed of.

The Company commenced operations on July 7, 2015, following a rights offering to the shareholders of Sears Holdings Corporation (“Sears Holdings” or “Sears”) to purchase common shares of Seritage in order to fund, in part, the $2.7 billion acquisition of certain of Sears Holdings’ owned properties and its 50% interests in three joint ventures which were simultaneously leased back to Sears Holdings under a master lease agreement (the “Original Master Lease” and the “Original JV Master Leases”, respectively).

As of September 30, 2021, the Company did not have any remaining properties leased to Transform Holdco LLC (“Holdco”), an affiliate of ESL Investments Inc., or Sears Holdings after giving effect to the termination of the remaining five Consolidated Properties, which were completed on March 15, 2021, as further described in Note 5, Leases.

COVID-19 Pandemic

The Coronavirus (“COVID-19”) pandemic has caused and continues to cause significant impacts on the real estate industry in the United States, including the Company’s properties.

As a result of the development, fluidity and uncertainty surrounding this situation, the Company expects that these conditions may change, potentially significantly, in future periods and results for the three and nine months ended September 30, 2021 may not be indicative of the impact of the COVID-19 pandemic on the Company’s business for future periods. As such, the Company cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows over the foreseeable future.

As of September 30, 2021, the Company had collected 97% of rental income for the three and nine months ended September 30, 2021 and agreed to defer an additional 1%. While the Company intends to enforce its contractual rights under its leases, there can be no assurance that tenants will meet their future obligations or that additional rental modification agreements will not be necessary.

Liquidity

The Company’s primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures. Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations incurred during the nine months ended September 30, 2021 and the Company recorded net operating cash outflows of $85.6 million. Additionally, the Company generated investing cash inflows of $95.8 million during the nine months ended September 30, 2021, which were driven by asset sales and partially offset by development expenditures.

Obligations are projected to continue to exceed property rental income and the Company expects to fund such costs with a combination of capital sources including, cash on hand, and sales of Consolidated Properties, subject to any approvals, that may be required under the Company’s Term Loan Facility, as described in Note 6, Debt. Management has determined that it is probable its plans will be effectively implemented within one year after the date the condensed consolidated financial statements are issued and that these actions will provide the necessary cash flows to fund the Company’s Obligations and development expenditures.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, (the “Annual Report”), for the year ended December 31, 2020. Certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been condensed or omitted from this quarterly report. In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this quarterly report. Operating results for the three and nine months ended September 30, 2021 may not be indicative of the results that may be expected for any other interim period or for the year ending December 31, 2021. Capitalized terms used, but not defined in this quarterly report, have the same meanings as set forth in our Annual Report.

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, each of their consolidated properties, and all other entities in which the Company has a controlling financial interest. For entities that meet the definition of a variable interest entity (“VIE”), the Company consolidates those entities when the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it possesses both the unilateral power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company continually evaluates whether it qualifies as the primary beneficiary and reconsiders its determination of whether an entity is a VIE upon reconsideration events. As of September 30, 2021, the Company consolidates two VIEs in which we are considered the primary beneficiary, as the Company has the power to direct the activities of the entities, specifically surrounding the development plan. As of September 30, 2021 and December 31, 2021, the Company has several unconsolidated VIEs and does not consolidate these entities because the Company is not the primary beneficiary. All intercompany accounts and transactions have been eliminated.

As of September 30, 2021, the Company holds a 77.9% interest in the Operating Partnership and is the sole general partner which gives the Company exclusive and complete responsibility for the day-to-day management, authority to make decisions, and control of the Operating Partnership. The Company has determined that the Operating Partnership is a VIE as the limited partners in the Operating Partnership, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. The Company consolidates its interest in the Operating Partnership. The assets and liabilities of the Operating Partnership are the same as those of the Company and are presented in the condensed consolidated balance sheets.

To the extent such variable interests are in entities that are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model.

Certain prior period amounts, if any, have been reclassified to conform to the current period's presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant assumptions and estimates relate to real estate impairment assessments and assessing the recoverability of accounts receivable. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. Management evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from these estimates.

Real Estate Investments

Real estate assets are recorded at cost, less accumulated depreciation and amortization.

Expenditures for ordinary repairs and maintenance will be expensed as incurred. Significant renovations which improve the property or extend the useful life of the assets are capitalized. As real estate is undergoing redevelopment activities, all amounts directly associated with and attributable to the project, including planning, development and construction costs, interest costs, personnel costs of employees directly involved, and other miscellaneous costs incurred during the period of redevelopment, are capitalized. The capitalization period begins when redevelopment activities are underway and ends when the project is substantially complete.

Depreciation of real estate assets, excluding land, is recognized on a straight-line basis over their estimated useful lives which generally range between:

Buildings:	25 – 40 years
Site improvements:	5 – 15 years
Tenant improvements:	shorter of the estimated useful life or non-cancelable term of lease

The Company amortizes identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired, generally the remaining non-cancelable term of a related lease.

The Company, on a periodic basis, assesses whether there are indicators, including macroeconomic conditions, that the value of the real estate assets may be impaired. If an indicator is identified, management will estimate the real estate asset recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real estate asset. In estimating the fair value of an asset, various factors are considered, including expected future operating income, trends and leasing prospects and the effects of demand, competition, and other economic factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value.

Real Estate Dispositions

When the Company disposes of all or a portion of a real estate asset, it recognizes a gain or loss on sale of real estate as the difference between the carrying value and consideration received. Consideration consists of cash proceeds received and in certain circumstances, non-cash consideration which is typically in the form of equity and is reported in equity in loss of unconsolidated entities on the Company’s condensed consolidated statements of operations. Refer to Note 4 for more information on the Company’s unconsolidated entity transactions.

The following table summarizes our gain on sale of real estate, net during the three and nine months ended September 30, 2021 and 2020 (in millions):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
Contributions to unconsolidated entities
Gross proceeds	$	—	$	27.0		$	—	$	27.0
(Loss) gain on sale of real estate, net		—		(1.5	)		—		(1.5	)
Dispositions to third parties
Gross proceeds	$	76.8	$	62.8		$	203.7	$	221.7
Gain on sale of real estate, net (1)		22.8		16.8			65.1		91.5
Total gains on contributions and dispositions, net	$	22.8	$	15.3		$	65.1	$	90.0

(1) Excludes loss of $30.0 million related to the revaluation of Mark 302 JV to adjust the gain from $38.8 million to $8.8 million as further described in Note 4 below.

Real Estate Held for Sale

When a real estate asset is identified by management as held for sale, the Company ceases depreciation of the asset and estimates its fair value, net of estimated costs to sell. If the estimated fair value, net of estimated costs to sell, of an asset is less than its net carrying value, an adjustment is recorded to reflect the estimated fair value. Properties classified as real estate held for sale generally represent properties that are under contract for sale and are probable to close within a year.

In evaluating whether a property meets the held for sale criteria, the Company makes a determination as to the point in time that it is probable that a sale will be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other

matters critical to the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period or at all.

As of September 30, 2021, one property was classified as held for sale with assets of $12.3 million and no liabilities, and, as of December 31, 2020, one property was classified as held for sale with assets of $1.9 million and no liabilities.

Investments in Unconsolidated Entities

The Company accounts for its investments in unconsolidated entities using the equity method of accounting as the Company exercises significant influence but does not have a controlling financial interest. These investments are initially recorded at cost and are subsequently adjusted for cash contributions, cash distributions, and earnings which are recognized in accordance with the terms of the applicable agreement.

On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions, that the value of the Company’s investments in unconsolidated entities may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. No such impairment losses were recognized for the three and nine months ended September 30, 2021 and 2020.

Restricted Cash

As of September 30, 2021, restricted cash represents cash collateral for a letter of credit.

Rental Revenue Recognition and Tenant Receivables

Rental income is comprised of base rent and reimbursements of property operating expenses. The Company commences rental revenue recognition when the lessee takes control of the physical use of the leased asset based on evaluation of several factors. Base rent is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable base rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as straight-line rent receivable and included as a component of tenant and other receivables on the condensed consolidated balance sheets. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

The Company periodically reviews its receivables for collectability, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. Tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectability of substantially all future lease payments from a specified lease is not probable of collection, at which point, the Company will begin recognizing revenue on a cash basis, based on actual amounts received. Any receivables that are deemed to be uncollectable are recognized as a reduction to rental income in the Company’s condensed consolidated statements of operations. If future circumstances change such that the Company believes that it is reasonably certain that the Company will collect all rental income remaining on such leases, the Company will resume accruing rental income and recognize a cumulative catch up for previously written-off receivables. The Company also recognizes a general reserve, as a reduction to rental income, for its portfolio of operating lease receivables which are not expected to be fully collectable.

The Company recorded a reduction to rental income of $0.5 million and $2.3 million during the three months ended September 30, 2021 and 2020, respectively, as a result of the Company’s evaluation of collectability, and the Company recorded an increase to rental income of $0.1 million and a reduction to rental income of $6.1 million during the nine months ended September 30, 2021 and 2020, respectively. In addition, the Company recorded a reduction of income of previously recorded straight-line rent of $0.4 million and $0.3 million for the three and nine months ended September 30, 2021, respectively. No adjustments were recorded to straight-line rent for the three months ended September 30, 2020. Straight-line rent reversals of $4.7 million were recorded for the nine months ended September 30, 2020. During the three and nine months ended September 30, 2021, the Company recorded a reduction to rental income of $0.4 million and an increase to rental income of $0.2 million related to the allowance for deferral agreements.

Due to the COVID-19 pandemic, the Company has entered into amendments to existing leases with certain tenants (the “Rent Deferral Agreements”), that provide for the deferral of all or some portion of rental payments due during the period which such tenant was affected by the COVID-19 pandemic (“Deferred Rent”). The Rent Deferral Agreements typically provide for repayment of the Deferred Rent within six to 12 months following the end of the rent deferral period and, in many instances, waive certain other conditions in favor of the Company while Deferred Rent is outstanding. Deferred Rent generally becomes immediately due and

payable under the Rent Deferral Agreements if the tenant does not make the minimum contractual payments or otherwise defaults on the lease. We recognize lease concessions related to the COVID-19 pandemic such as rent deferrals and abatements in accordance with the Lease Modification Q&A issued by the Financial Standards Accounting Board, (“FASB”), in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. As a result, the Company has not adjusted accrued rental revenues or the portion of accrued rental revenues related to the straight-line method for the portion which has been deferred. When the Deferred Rents are repaid, the Company will relieve the accrual in tenant and other receivables.

In leasing tenant space, the Company may provide funding to the lessee through a tenant allowance. In accounting for a tenant allowance, the Company will determine whether the allowance represents funding for the construction of leasehold improvements and evaluate the ownership of such improvements. If the Company is considered the owner of the improvements for accounting purposes, the Company will capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the improvements or the related lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

Tenant and Other Receivables

Tenant and other receivables includes unpaid amounts billed to tenants, accrued revenues for future billings to tenants for property expenses, and amounts arising from the straight-lining of rent, as discussed above. Tenant and other receivables also includes management fees receivable for services performed for the benefit of certain unconsolidated entities. In the event that the collectability of a management fee receivable is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific receivable will be made.

Management and Other Fee Income

Management and other fee income represents property management, construction, leasing and development fees for services performed for the benefit of certain unconsolidated entities.

Property management fee income is reported at 100% of the revenue earned from such unconsolidated properties in management and other fee income on the condensed consolidated statements of operations. The Company’s share of management expenses incurred by the unconsolidated entities is reported in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Leasing and development fees are initially reported at the portion of revenue earned attributable to outside ownership of the related unconsolidated entities. The Company’s share in leasing and development fee income is recognized over the useful life of the associated development project, in the case of development fees, or lease term, in the case of leasing fees, as the associated asset is depreciated over the same term and included in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation. For property and asset management services, the Company is typically compensated for its services through a monthly management fee earned based on a specified percentage of monthly rental income or rental receipts generated from the property under management. For construction and development services, the Company is typically compensated for planning, administering and monitoring the design and construction of projects within our unconsolidated entities based on a percentage of project costs or a fixed fee. Revenues from such management contracts are recognized over the life of the applicable contract.

Conversely, leasing services are considered to be performance obligations, satisfied as of a point in time. The Company’s leasing fee is typically paid upon the occurrence of certain contractual event(s) that may be contingent and the pattern of revenue recognition may differ from the timing of payment. For these services, the obligations are typically satisfied at lease execution and tenant opening date, and revenue is recognized in accordance with the related agreement at the point in time when the obligation has been satisfied.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of operators, tenants, or obligors related to the Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. Management believes the Company’s portfolio is reasonably diversified and does not contain any significant concentrations of credit risk. As of September 30, 2021, the Company has one tenant that comprises 13.1% of annualized based rent, with no other tenants

exceeding 10.0% of annualized based rent. The Company’s portfolio of 146 Consolidated Properties and 24 Unconsolidated Properties was diversified by location across 38 states and Puerto Rico.

Earnings per Share

The Company has three classes of common stock. The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A common shares and Class C non-voting common shares are identical, except with respect to voting. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. The net earnings (loss) per share amounts are the same for Class A and Class C common shares because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. As of August 29, 2018, all outstanding Class C common shares had been exchanged for Class A common shares and there are currently no Class C common shares outstanding.

Class B non-economic common shares are excluded from earnings per share computations as they do not have economic rights. As of December 31, 2020, all outstanding Class B common shares have been surrendered and there are currently no Class B common shares outstanding.

All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing earnings per share pursuant to the two-class method which specifies that all outstanding non-vested share-based payment awards that contain non-forfeitable rights to distributions are considered participating securities and should be included in the computation of earnings per share.

Recently Issued Accounting Pronouncements

The Company has not adopted any Accounting Standards Updates (“ASUs”) issued by the FASB during the three and nine months ended September 30, 2021. Any other recently issued accounting standards or pronouncements not disclosed have been excluded as they either are not applicable to the Company, or they are not expected to have a material effect on the condensed consolidated financial statements of the Company. 

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Lease Intangible Assets and Liabilities

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Lease Intangible Assets and Liabilities

Note 3 – Lease Intangible Assets and Liabilities

The following tables summarize the Company’s lease intangible assets (acquired in-place leases, above-market leases and below-market ground leases) and liabilities (acquired below-market leases, which is included in accounts payable, accrued expenses and other liabilities on the consolidate balance sheets), net of accumulated amortization, as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021
	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	32,571	$	(18,113	)	$	14,458
Above-market leases, net		3,925		(2,413	)		1,512
Total	$	36,496	$	(20,526	)	$	15,970

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	6,626	$	(2,765	)	$	3,861
Total	$	6,626	$	(2,765	)	$	3,861

December 31, 2020
	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	73,169	$	(56,369	)	$	16,800
Above-market leases, net		4,139		(2,344	)		1,795
Total	$	77,308	$	(58,713	)	$	18,595

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	6,626	$	(2,440	)	$	4,186
Total	$	6,626	$	(2,440	)	$	4,186

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in additional rental income of $0.1 million and $1.5 million for the three and nine months ended September 30, 2021 and 2020, respectively. Amortization of an acquired below-market ground lease resulted in additional property expense of $0.1 million and $0.2 million for the three and nine months ended September 30, 2021 and 2020, respectively. Amortization of acquired in-place leases resulted in additional depreciation and amortization expense of $0.8 million and $11.0 million for the three months ended September 30, 2021 and 2020, respectively and $2.4 million and $42.0 million for the nine months ended September 30, 2021 and 2020 respectively. Future amortization of these leases intangibles is set forth below (in thousands):

	(Above) / below market leases, net			Below market ground lease		In-place leases
Remainder of 2021	$	(13	)	$	51	$	699
2022		(43	)		203		2,787
2023		6			203		1,921
2024		27			203		1,385
2025		97			203		1,077
2026		190			203		724
Thereafter		2,084			9,433		5,866

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Investments in Unconsolidated Entities

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Entities

Note 4 – Investments in Unconsolidated Entities

The Company conducts a portion of its property rental activities through investments in unconsolidated entities. The Company’s partners in these unconsolidated entities are unrelated real estate entities or commercial enterprises. The Company and its partners in these unconsolidated entities make initial and/or ongoing capital contributions to these unconsolidated entities. The obligations to make capital contributions are governed by each unconsolidated entity’s respective operating agreement and related governing documents.

As of September 30, 2021, the Company had investments in ten unconsolidated entities as follows:

		Seritage %	# of	Total
Unconsolidated Entities	Entity Partner(s)	Ownership	Properties	GLA
GS Portfolio Holdings II LLC    ("GGP I JV")	Brookfield Properties Retail    (formerly GGP Inc.)	50.0%	3		402,900
GS Portfolio Holdings (2017) LLC    ("GGP II JV")	Brookfield Properties Retail    (formerly GGP Inc.)	50.0%	3		474,100
MS Portfolio LLC    ("Macerich JV")	The Macerich Company	50.0%	7		1,266,600
SPS Portfolio Holdings II LLC    ("Simon JV")	Simon Property Group, Inc.	50.0%	5		872,200
Mark 302 JV LLC    ("Mark 302 JV")	An investment fund managed    by Invesco Real Estate	50.0%	1		103,000
SI UTC LLC    ("UTC JV")	A separate account advised by    Invesco Real Estate	50.0%	1		226,200
SF WH Joint Venture LLC    ("West Hartford JV")	An affiliate of First Washington    Realty	50.0%	1		163,700
GGCAL SRG HV LLC    ("Cockeysville JV")	An affiliate of    Greenberg Gibbons	50.0%	1		160,200
Tech Ridge JV Holding LLC    ("Tech Ridge JV")	An affiliate of    RD Management	50.0%	1		—
J&J Baldwin Park LLC    ("Carson Investment")	An affiliate of NewMark Merrilll Companies and other entities	20.0%	1		182,200
			24		3,851,100

The Company has contributed certain properties to unconsolidated entities in exchange for equity interests in those unconsolidated entities. The contribution of property to unconsolidated entities is accounted for as a sale of real estate and the Company recognizes the gain or loss on the sale (the “Gain (Loss)”) based upon the transaction price attributed to the property at the closing of the unconsolidated entities transaction (the “Contribution Value”). The Gain or (Loss) is included in gain on sale of real estate on the condensed consolidated statements of operations.

In certain circumstances, the Contribution Value is subject to revaluation as defined in the respective unconsolidated entity agreements, which may result in an adjustment to the gain or loss recognized. If the Contribution Value is subject to revaluation, the Company initially recognizes the gain or loss at the value that is the expected amount within the range of possible outcomes and will re-evaluate the expected amount on a quarterly basis through the final determination date.

Upon revaluation, the primary inputs in determining the Contribution Value will be updated for actual results and may result in a cash settlement or capital account adjustment between the unconsolidated entity partners, as well as an adjustment to the initial gain or loss.

Each reporting period, the Company re-analyzes the primary inputs that determine the Contribution Value and the gain or loss for those unconsolidated entities subject to a revaluation. The following table summarizes the properties contributed to the Company’s unconsolidated entities:

		September 30, 2021
Unconsolidated Entities	Contribution Date	Contribution Value		Gain (Loss)
2018
Mark 302 JV (1)	March 20, 2018	$	60.0	$	8.8
2019
Cockeysville JV (2)	March 29, 2019	$	12.5	$	3.8
Tech Ridge JV (3)	September 27, 2019		3.0		0.1

(1)The Mark 302 JV was subject to a revaluation which resulted in the Company adjusting the Contribution Value down to $60.0 million and reduced the Gain (Loss) by $30.0 million. As of September 30, 2021, the amended determination date, there has been no change to the adjusted Contribution Value and the final Contribution Value is $60.0 million.

(2)The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the joint venture which was conditioned on certain milestones being met with respect to entitling the Additional Land Parcel for residential use. The Additional Land Parcel has been entitled for residential use. The Company has not reflected the contribution value of the Additional Land Parcel in the value of its investment in the Cockeysville JV based on uncertainty related to a potential alternative transaction with respect to the Additional Land Parcel. The Company will record an increased investment in the Cockeysville JV and additional gain in an amount equal to 50% of the fair value of the Additional Land Parcel at the earlier of when it becomes probable that the Additional Land Parcel will be contributed or upon an alternate outcome.

(3)The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. The Contribution Value cannot be less than $2.75 million.

The following tables present combined condensed financial data for the Company’s unconsolidated entities (in thousands):

	September 30, 2021			December 31, 2020
ASSETS
Investment in real estate
Land	$	318,540		$	318,540
Buildings and improvements		505,793			492,973
Accumulated depreciation		(90,454	)		(81,730	)
		733,879			729,783
Construction in progress		216,479			222,663
Net investment in real estate		950,358			952,446
Cash and cash equivalents		25,881			16,094
Investment in unconsolidated entities		47,184			24,686
Tenant and other receivables, net		2,544			4,104
Other assets, net		35,789			38,196
Total assets	$	1,061,756		$	1,035,526
LIABILITIES AND MEMBERS' INTERESTS
Liabilities
Mortgage loans payable, net	$	52,942		$	34,672
Accounts payable, accrued expenses and other liabilities		34,771			48,405
Total liabilities		87,713			83,077
Members' Interest
Additional paid in capital		989,811			964,868
Retained earnings (accumulated deficit)		(15,768	)		(12,419	)
Total members' interest		974,043			952,449
Total liabilities and members' interest	$	1,061,756		$	1,035,526

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Total revenue	$	5,354		$	5,273		$	18,904		$	15,590
Property operating expenses		(2,969	)		(2,270	)		(8,382	)		(6,956	)
Depreciation and amortization		(8,094	)		(2,562	)		(21,137	)		(11,441	)
Operating income / (loss)		(5,709	)		441			(10,615	)		(2,807	)
Other expenses		(1,195	)		(1,093	)		(3,205	)		(2,060	)
Loss on disposition of real estate		(4,171	)		—			(4,171	)		—
Net loss	$	(11,075	)	$	(652	)	$	(17,991	)	$	(4,867	)
Equity in loss of unconsolidated    entities (1)	$	(5,535	)	$	(335	)	$	(9,024	)	$	(2,551	)

(1)Equity in loss of unconsolidated entities on the condensed consolidated statements of operations includes basis difference adjustments.

The Company shares in the profits and losses of these unconsolidated entities generally in accordance with the Company’s respective equity interests. In some instances, the Company may recognize profits and losses related to investment in an unconsolidated entity that differ from the Company’s equity interest in the unconsolidated entity. This may arise from impairments that the Company recognizes related to its investment that differ from the impairments the unconsolidated entity recognizes with respect to its assets, differences between the Company’s basis in assets it has transferred to the unconsolidated entity and the unconsolidated entity’s basis in those assets or other items. There were no impairment charges related to the Unconsolidated Properties for the three and nine months ended September 30, 2021 and 2020.

Unconsolidated Entity Management and Related Fees

The Company acts as the operating partner and day-to-day manager for the Mark 302 JV, the West Hartford JV, the UTC JV, and Tech Ridge JV. The Company is entitled to receive certain fees for providing management, leasing, and construction supervision services to certain of its unconsolidated entities. Refer to Note 2 for the Company’s accounting policies. The Company also acted as the development manager for one of the properties in the GGP II JV which entitled the Company to receive certain development fees

which ended as of September 30, 2021. The Company earned $0.2 million and reversed $0.3 million from these services for the three months ended September 30, 2021 and 2020, respectively and $0.6 million and $0.1 million from these services for the nine months ended September 30, 2021 and 2020, respectively.

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Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Note 5 – Leases

Lessor Disclosures

Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of September 30, 2021 are approximately as follows:

(in thousands)	September 30, 2021
Remainder of 2021	$	22,510
2022		85,443
2023		78,755
2024		75,545
2025		74,753
2026		69,768
Thereafter		337,480
Total	$	744,254

The components of lease revenues for the three and nine months ended September 30, 2021 and 2020 were as follows:

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed rental income	$	23,160	$	19,675	$	68,567	$	70,474
Variable rental income		4,652		10,976		16,921		20,195
Total rental income	$	27,812	$	30,651	$	85,488	$	90,669

Lessee Disclosures

The Company has one ground lease and one corporate office lease which are classified as operating leases. As of September 30, 2021, and December 31, 2020, the outstanding amount of right-of-use, or ROU, assets were $17.2 million and $18.8 million, respectively.

The Company recorded rent expense related to leased corporate office space of $0.3 million and $0.5 million for the three months ended September 30, 2021 and 2020, respectively. The Company recorded rent expense related to leased corporate office space of $1.0 million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively. Such rent expense is classified within general and administrative expenses on the condensed consolidated statements of operations.

In addition, the Company recorded ground rent expense of approximately $0.1 million for the three and nine months ended September 30, 2021 and 2020. Such ground rent expense is classified within property operating expenses on the condensed consolidated statements of operations. The ground lease requires the Company to make fixed annual rental payments and expires in 2073 assuming all extension options are exercised.

The following table sets forth information related to the measurement of our lease liabilities as of September 30, 2021:

	September 30, 2021
Weighted average remaining lease term (in years)		10.40
Weighted average discount rate		6.98	%
Cash paid for operating leases (in thousands)	$	1,432

Sale-leaseback Financing Obligations

During the year ended December 31, 2020, the Company completed a sale-leaseback transaction of a property in Hialeah, Florida for $21.0 million which is included in sales-leaseback financing obligations on the condensed consolidated balance sheets. As part of the sale-leaseback transaction, the Company agreed to lease all land and improvements on the land for a fixed term of 25 years at an initial base rent of $1.5 million per annum which will increase by 1.5% per year thereafter. For the initial periods of the sale-leaseback, cash payments are less than the interest expense recognized, which causes the obligation to increase during the initial years of the lease term. The implied interest rate is approximately 7.00%. The Company has a purchase option during years four, five or seven of the

25-year term to reacquire, solely at the Company’s option, the Hialeah property at a predetermined price. The Hialeah property continues to be reflected as a long-lived asset and depreciated over its remaining useful life.

Future sale-leaseback financing obligations as of September 30, 2021 are approximately as follows:

(in thousands)	September 30, 2021
Remainder of 2021	$	363
2022		1,464
2023		1,486
2024		1,508
2025		1,531
2026		1,554
Thereafter		34,022
Interest		(21,315	)
Total	$	20,613

Original Master Lease and Holdco Master Lease

On February 28, 2019, the Company and certain affiliates of Transform Holdco LLC (“Holdco”), an affiliate of ESL Investments, Inc., executed the Holdco Master Lease (the “Holdco Master Lease”) which became effective on March 12, 2019 when the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) issued an order approving the rejection of the Original Master Lease. The Company analyzed this transaction under applicable accounting guidance and determined that the termination of the Original Master Lease and entering into the Holdco Master Lease should be accounted for as a modification. The Holdco Master Lease provided the Company with the right to recapture the space occupied by the tenant at all properties (other than five specified properties) and the right to recapture any automotive care centers which are free-standing or attached as “appendages” to the properties, all outparcels or outlots and certain portions of parking areas and common areas. Under the terms of the Holdco Master Lease, Holdco had the right, at any time, to terminate the Holdco Master Lease with respect to any property upon the payment of a termination fee equal to one year of base rent plus annual taxes and other operating expenses. Sears Holdings exercised termination rights with respect to 87 properties under the Original Master Lease prior to its rejection on March 12, 2019 and Holdco exercised termination rights with respect to all remaining properties under the Holdco Master Lease during the year ended December 31, 2020, with the remaining five properties effective in March 2021.

Revenues from the Holdco Master Lease as amended by the Amendment, and the Original Master Lease for the three months ended September 30, 2021 and 2020 are as follows (in thousands) and excluding straight-line rental income of $0.0 million and $0.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.0 million and $(7.9) million for the nine months ended September 30, 2021 and 2020, respectively.

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed rental income	$	—	$	—	$	—	$	4,288
Variable rental income		—		5,997		4,510		9,416
Total rental income	$	—	$	5,997	$	4,510	$	13,704

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Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

Note 6 – Debt

Term Loan Facility

On July 31, 2018, the Operating Partnership, as borrower, and the Company, as guarantor, entered into a Senior Secured Term Loan Agreement (the “Term Loan Agreement”) providing for a $2.0 billion term loan facility (the “Term Loan Facility”) with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire Hathaway”) as lender and Berkshire Hathaway as administrative agent. The Term Loan Facility provided for an initial funding of $1.6 billion at closing and includes a $400.0 million incremental funding facility (the “Incremental Funding Facility”) subject to certain conditions described below. The Term Loan Facility matures on July 31, 2023.

Funded amounts under the Term Loan Facility bear interest at an annual rate of 7.0% and unfunded amounts under the Incremental Funding Facility are subject to an annual fee of 1.0% until drawn. The Company prepays the annual fee and amortizes the expense to interest expense on the condensed consolidated statements of operations.

As of September 30, 2021, the aggregate principal amount outstanding under the Term Loan Facility was $1.6 billion.

The Company’s ability to access the Incremental Funding Facility is subject to (i) the Company achieving rental income from non-Sears Holdings tenants, on an annualized basis (after giving effect to signed not yet open leases (“SNO Leases”) expected to commence rent payment within 12 months) for the fiscal quarter ending prior to the date of incurrence of the Incremental Funding Facility, of not less than $200 million (ii) the Company’s good faith projection that rental income from non-Sears Holdings tenants (after giving effect to SNO Leases expected to commence rent payment within 12 months) for the succeeding four consecutive fiscal quarters (beginning with the fiscal quarter during which the incremental facility is accessed) will be not less than $200 million, and (iii) the repayment by the Operating Partnership of any deferred interest permitted under the amendment to the Term Loan Agreement dated May 5, 2020 (as further described below). As of September 30, 2021, the Company has not yet achieved the requirements to access the Incremental Funding Facility.

The Term Loan Facility is guaranteed by the Company and, subject to certain exceptions, is required to be guaranteed by all existing and future subsidiaries of the Operating Partnership. The Term Loan Facility is secured on a first lien basis by a pledge of the capital stock of the direct subsidiaries of the Operating Partnership and the guarantors, including its joint venture interests, except as prohibited by the organizational documents of such entities or any joint venture agreements applicable to such entities, and contains a requirement to provide mortgages and other customary collateral upon the breach of certain financial metrics described below, the occurrence and continuation of an event of default and certain other conditions set forth in the Term Loan Agreement. During 2019, mortgages were recorded on a majority of the Company’s portfolio and during the nine months ended September 30, 2021, mortgages were recorded on the remaining unmortgaged properties in all but three locations.

The Term Loan Facility includes certain financial metrics to govern springing collateral requirements and certain covenant exceptions set forth in the Term Loan Agreement, including: (i) a total fixed charge coverage ratio of not less than 1.00 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending September 30, 2021, and not less than 1.20 to 1.00 for each fiscal quarter thereafter; (ii) an unencumbered fixed charge coverage ratio of not less than 1.05 to 1.00 for each fiscal quarter beginning with the fiscal quarter ending September 30, 2018 through the fiscal quarter ending September 30, 2021, and not less than 1.30 to 1.00 for each fiscal quarter thereafter; (iii) a total leverage ratio of not more than 65%; (iv) an unencumbered ratio of not more than 60%; and (v) a minimum net worth of at least $1.2 billion. Any failure to satisfy any of these financial metrics limits the Company’s ability to dispose of assets via sale or joint venture and triggers the springing mortgage and collateral requirements but will not result in an event of default. The Term Loan Facility also includes certain limitations relating to, among other activities, the Company’s ability to: sell assets or merge, consolidate or transfer all or substantially all of its assets; incur additional debt; incur certain liens; enter into, terminate or modify certain material leases and/or the material agreements for the Company’s properties; make certain investments (including limitations on joint ventures) and other restricted payments; pay distributions on or repurchase the Company’s capital stock; and enter into certain transactions with affiliates.

The Term Loan Facility contains customary events of default, including (subject to certain materiality thresholds and grace periods) payment default, material inaccuracy of representations or warranties, and bankruptcy or insolvency proceedings. If there is an event of default, the lenders may declare all or any portion of the outstanding indebtedness to be immediately due and payable, exercise any rights they might have under any of the Term Loan Facility documents, and require the Company to pay a default interest rate on overdue amounts equal to 2.0% in excess of the then applicable interest rate.

As of September 30, 2021, the Company was not in compliance with certain of the financial metrics described above. As a result, the Company must receive the consent of Berkshire Hathaway to dispose of assets via sale or joint venture and, as of September 30, 2021, Berkshire Hathaway had provided such consent for all such transactions submitted for approval. There can be no assurance that the lender will consent to future dispositions of assets. The Company believes it is in compliance with all other terms and conditions of the Term Loan Agreement.

The Company incurred $2.1 million of debt issuance costs related to the Term Loan Facility which are recorded as a direct deduction from the carrying amount of the Term Loan Facility and amortized over the term of the Term Loan Agreement. As of September 30, 2021 and December 31, 2020, the unamortized balance of the Company’s debt issuance costs were $0.8 million and $1.1 million, respectively.

On May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on July 31, 2023; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed

to by the administrative agent under the Term Loan Agreement in its sole discretion). In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the $400.0 million Incremental Funding Facility under the Term Loan Agreement. The Company has paid all interest due under the Term Loan Agreement and has not deferred any interest as permitted under the amendment to the Term Loan Agreement.

Additionally, the amendment to the Term Loan Agreement provides that the administrative agent and the lenders express their continued support for asset dispositions, subject to the administrative agent’s right to approve the terms of individual transactions due to the occurrence of a Financial Metric Trigger Event, as such term is defined under the Term Loan Facility.

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Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 7 – Income Taxes

The Company has elected to be taxed as a REIT as defined under Section 856(c) of the Code for federal income tax purposes and expects to continue to operate to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to currently distribute at least 90% of its adjusted REIT taxable income to its shareholders.

As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT or does not distribute 100% of its taxable income in any taxable year, it will be subject to U.S. federal income tax at regular corporate rates (including for any taxable year ended on or before December 31, 2017, any applicable alternative minimum tax) and any applicable state and local income taxes. In addition, if the Company fails to qualify as a REIT, it may not be able to qualify as a REIT for four subsequent taxable years in some cases.

Even if the Company qualifies for taxation as a REIT, the Company is subject to certain U.S. state, local and Puerto Rico taxes on its income and property, and to U.S. federal income and excise taxes on its undistributed REIT taxable income. The Company’s taxable REIT subsidiaries are subject to U.S. corporate income tax.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 8 – Fair Value Measurements

ASC 820, Fair Value Measurement, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the “exit price”). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels:

Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities

Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data

Level 3 - unobservable inputs used when little or no market data is available

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value.

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our condensed consolidated balance sheets consist of real estate assets that have been written down to estimated fair value and are classified as Level 3 within the fair value hierarchy.

During the three and nine months ended September 30, 2021, in accordance with ASC 360-10, Property, Plant and Equipment, the Company recorded impairment losses of $3.8 million and $70.1 million, respectively, on real estate assets which are included in impairment on real estate assets within the condensed consolidated statements of operations. In the second quarter of 2021, the Company announced an organizational restructuring and in conjunction commenced a portfolio review resulting in the modification of the plan for certain assets. As a result of the foregoing, the Company’s intent, anticipated holding periods and/or projected cash flows with respect to certain assets has evolved. This affected the Company’s view of recoverability of the carrying value of those assets over their respective holding periods. Of the $64.5 million of impairments recorded during the second quarter, approximately $30.6 million resulted from the Company’s decision to monetize additional assets through sales or development joint ventures. The $3.8 million of impairment losses recorded during the three months ended September 30, 2021 relate to five properties, which are being marketed for sale. We continue to evaluate our portfolio, including our development plans and holding periods, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities. Impairment losses of $14.6 million and $16.4 million were recognized for the three and nine months ended September 30, 2020, respectively.

The fair value estimates used to determine the impairment charges were determined primarily by discounted cash flow analyses, market comparable data, and/or third-party appraisals, as applicable. The cash flows utilized in such analyses are comprised of unobservable inputs which include, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates based upon market conditions and future expectations. The capitalization rates and discount rates used in the analysis ranged from 6.0% and 12.0%. Comparable data utilizes comparable sales, listings, sales contracts and letters of intent which are subject to judgment as to comparability to the valued property. Because of these inputs, we have determined that the fair values of these properties are classified within Level 3 of the fair value hierarchy.

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on the condensed consolidated balance sheets include cash equivalents and the term loan facility. The fair value of cash equivalents and restricted cash are classified as Level 1 and the fair value of term loan facility is classified as Level 2. Cash equivalents and restricted cash are carried at cost, which approximates fair value. The fair value of debt obligations is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings. As of September 30, 2021 and December 31, 2020, the estimated fair values of the Company’s debt obligations were $1.7 billion and $1.6 billion, respectively, which approximated the carrying value at such dates as the current risk-adjusted rate approximates the stated rates on the Company’s debt obligations.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9 – Commitments and Contingencies

Insurance

The Company maintains general liability insurance and all-risk property and rental value, with sub-limits for certain perils such as floods and earthquakes on each of the Company’s properties. The Company also maintains coverage for terrorism acts as defined by Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2027.

Insurance premiums are charged directly to each of the properties. The Company will be responsible for deductibles and losses in excess of insurance coverage, which could be material. The Company continues to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, the Company cannot anticipate what coverage will be available on commercially reasonable terms in the future.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or may have arranged for the disposal or treatment of hazardous or toxic substances. As a result, the Company may be liable for certain costs including removal, remediation, government fines and injuries to persons and property.

Under the Original Master Lease and the Holdco Master Lease, Holdco is required to indemnify the Company from certain environmental liabilities at the Consolidated Properties before or during the period in which each Consolidated Property was leased to Holdco, including removal and remediation of all affected facilities and equipment constituting the automotive care center. In addition, an environmental reserve was funded at the closing of the transactions in connection with the Company commencing operations in the amount of approximately $12.0 million. As of September 30, 2021 and December 31, 2020, the balance of the environmental reserve was approximately $9.5 million and $9.5 million, respectively, and is included in accounts payable, accrued expenses and other liabilities in the condensed consolidated balance sheets.

Litigation and Other Matters

In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or discloses the fact that such a range of loss cannot be estimated. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.

On April 18, 2019, at the direction of the Restructuring Sub-Committee of the Restructuring Committee of the Board of Directors of Sears Holdings, Sears Holdings, Sears, Roebuck & Co., Sears Development Co., Kmart Corporation, and Kmart of Washington, LLC filed a lawsuit (the “Litigation”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) against, among others, Edward S. Lampert, ESL Investments, Inc. and certain of its affiliates and investors, Fairholme Capital Management, L.L.C., certain members of the Sears Holdings board of directors, and the Company, the Operating Partnership, and certain of our affiliates and subsidiaries (the Company, the Operating Partnership, and certain of our affiliates and subsidiaries collectively, the “Seritage Defendants”). The Litigation is dual captioned as In re: Sears Holdings Corporation, et al., Case No. 18-23538 (RDD) and Sears Holdings Corporation et al., v. Lampert et al., Case No. 19-08250 (RDD). The Litigation alleges, among

other things, that certain transactions undertaken by Sears Holdings since 2011 constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings. The challenged transactions include the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings. The Litigation alleges, among other things, that the real estate acquired by Seritage from Sears Holdings in July 2015 was worth at least $649 to $749 million more than the purchase price paid. The Litigation seeks as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers and either (i) rescission of the transfers of real estate from Sears Holdings to Seritage in 2015 and return of the proceeds of the transactions between Sears Holdings and Seritage, or, in the alternative, (ii) payment by Seritage to Sears Holdings of damages at least equal to the value of the transferred property.

On October 15, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Modified Second Amended Joint Chapter 11 Plan of Sears Holdings and its affiliated debtors (the “Chapter 11 Plan”). Pursuant to the terms of the Confirmation Order, upon the effective date of the Chapter 11 Plan, a liquidating trust will be formed, and the Litigation will vest in the liquidating trust. The Confirmation Order further provides that, prior to the effective date of the Chapter 11 Plan and the formation of the liquidating trust, the Litigation shall be controlled by five litigation designees selected by Sears Holdings and the Unsecured Creditors’ Committee (the “UCC”). For further information, refer to the Chapter 11 Plan, Confirmation Order and liquidating trust agreement, each of which has been publicly filed with the Bankruptcy Court.

On February 21, 2020, the Seritage defendants filed a partial motion to dismiss seeking dismissal of the claims in the operative complaint in the Litigation relating to the release received in the Sears Holdings derivative litigation, unjust enrichment, and equitable subordination. Briefing and oral argument on the motions have been completed, and the parties are awaiting a decision.

On March 15, 2021, the Court consolidated the Litigation with a case captioned Sears Holding Corp. et al. v. Andrew H. Tish, et al., Case No. 20-07007 (RDD) (the “Shareholder Litigation,” and, together with the Litigation, the “Consolidated Litigation”). The Shareholder Litigation was brought by the UCC, Sears Holdings Corporation, and Sears, Roebuck and Co., against certain shareholders of Sears Holdings or its related companies. Seritage was not named as a defendant in the Shareholder Litigation, which alleges, among other things, that certain transactions undertaken by Sears Holdings since 2014 (including the July 2015 transactions giving rise to Seritage, the execution of the Original Master Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings) constituted actual and/or constructive fraudulent transfers and/or illegal dividends. The Company believes that the claims against the Seritage Defendants in the Consolidated Litigation are without merit and intends to defend against them vigorously.

In addition to the litigation described above, the Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business and due to the current environment. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the condensed consolidated financial position, results of operations, cash flows or liquidity of the Company. As of September 30, 2021, and December 31, 2020, the Company did not record any amounts for litigation or other matters.

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Related Party Disclosure

9 Months Ended

Sep. 30, 2021

Related Party Transactions [Abstract]

Related Party Disclosure

Note 10 – Related Party Disclosure

Edward S. Lampert

Edward S. Lampert is the Chairman and Chief Executive Officer of ESL, which owns Holdco, and was Chairman of Sears Holdings. Mr. Lampert is also the Chairman of Seritage.

As of September 30, 2021, Mr. Lampert beneficially owned a 22.1% interest in the Operating Partnership and approximately 9.3% of the outstanding Class A common shares.

Subsidiaries of Holdco, as lessees, and subsidiaries of the Company, as lessors, were parties to the Holdco Master Lease and subsidiaries of Sears Holdings, as lessees, and subsidiaries of the Company, as lessors, were parties to the Original Master Lease (see Note 5).

Unconsolidated Entities

Certain unconsolidated entities have engaged the Company to provide management, leasing, construction supervision and development services at the properties owned by the unconsolidated entities. Refer to Note 2 for the Company’s significant accounting policies.

In addition, as of September 30, 2021, the Company had incurred $0.2 million of development expenditures at properties owned by certain unconsolidated entities for which the Company will be repaid by the respective unconsolidated entities. These amounts are included in tenant and other receivables, net on the Company’s condensed consolidated balance sheets. As of December 31, 2020, the Company had incurred $5.0 million of such development expenditures.

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Non-Controlling Interests

9 Months Ended

Sep. 30, 2021

Noncontrolling Interest [Abstract]

Non-Controlling Interests

Note 11 – Non-Controlling Interests

Partnership Agreement

On July 7, 2015, Seritage and ESL entered into the agreement of limited partnership of the Operating Partnership which was amended and restated on December 14, 2017. Pursuant to this partnership agreement, as the sole general partner of the Operating Partnership, Seritage exercises exclusive and complete responsibility and discretion in its day-to-day management, authority to make decisions, and control of the Operating Partnership, and may not be removed as general partner by the limited partners.

As of September 30, 2021, the Company held a 77.9% interest in the Operating Partnership and ESL held a 22.1% interest. The portions of consolidated entities not owned by the Company are presented as non-controlling interest as of and during the periods presented.

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Shareholders' Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Shareholders' Equity

Note 12 – Shareholders’ Equity

Class A Common Shares

As of September 30, 2021, 43,631,345 Class A common shares were issued and outstanding. Class A shares have a par value of $0.01 per share. During the nine months ended September 30, 2021, 4,647,943 Operating Partnership Units (“OP Units”) were issued and exchanged for an equal number of Class A shares.

Class B Non-Economic Common Shares

As of September 30, 2021, there were no Class B non-economic common shares issued and outstanding.

Series A Preferred Shares

In December 2017, the Company issued 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) in a public offering at $25.00 per share. The Company received net proceeds from the offering of approximately $66.4 million, after deducting payment of the underwriting discount and offering expenses.

The Company may not redeem the Series A Preferred Shares before December 14, 2022, except to preserve its status as a REIT or upon the occurrence of a Change of Control, as defined in the trust agreement addendum designating the Series A Preferred Shares. On and after December 14, 2022, the Company may redeem any or all of the Series A Preferred Shares at $25.00 per share plus any accrued and unpaid dividends. In addition, upon the occurrence of a Change of Control, the Company may redeem any or all of the Series A Preferred Shares for cash within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accrued and unpaid dividends. The Series A Preferred Shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company redeems or otherwise repurchases them or they are converted.

Dividends and Distributions

The Company’s Board of Trustees has not declared dividends on the Company’s Class A common shares during 2021 or 2020.

The Company’s Board of Trustees declared the following dividends on preferred shares during 2021 and 2020:

			Series A
Declaration Date	Record Date	Payment Date	Preferred Share
2021
October 26	December 31	January 14, 2022	$	0.43750
July 27	September 30	October 15		0.43750
April 27	June 30	July 15		0.43750
February 23	March 31	April 15		0.43750
2020
December 17	December 31	January 15, 2021	$	0.43750
September 17	September 30	October 15		0.43750
June 9	June 30	July 15		0.43750
February 18	March 31	April 15		0.43750

As previously disclosed, the Company declared a dividend on the Company’s Class A common shares for the first quarter of 2019 and has not declared dividends on the Company’s Class A common shares since that time, based on our Board of Trustees’ assessment of

the Company’s investment opportunities and its expectations of taxable income for the remainder of 2021. The Company intends to, at a minimum, make distributions to its shareholders to comply with the REIT requirements of the Code, which may be satisfied by dividends on the Company’s Series A Preferred Shares.

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Earnings per Share

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings per Share

Note 13 – Earnings per Share

The table below provides a reconciliation of net income (loss) and the number of common shares used in the computations of “basic” earnings per share (“EPS”), which utilizes the weighted-average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares. Potentially dilutive securities consist of shares of non-vested restricted stock and the redeemable non-controlling interests in the Operating Partnership.

All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing EPS pursuant to the two-class method which specifies that all outstanding non-vested share-based payment awards that contain non-forfeitable rights to distributions are considered participating securities and should be included in the computation of EPS.

Earnings per share has not been presented for Class B shareholders, as they do not have economic rights.

(in thousands except per share amounts)	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator - Basic and Diluted
Net loss		(26,349	)		(72,401	)		(132,586	)		(103,272	)
Net loss attributable to non-controlling interests		5,815			22,348			31,492			32,627
Preferred dividends		(1,225	)		(1,225	)		(3,675	)		(3,675	)
Net loss attributable to common shareholders - Basic    and diluted	$	(21,759	)	$	(51,278	)	$	(104,769	)	$	(74,320	)
Denominator - Basic and Diluted
Weighted average Class A common shares outstanding		43,631			38,645			41,976			38,172
Weighted average Class A common shares    outstanding - Basic		43,631			38,645			41,976			38,172
Restricted shares and share units		—			—			—			—
Weighted average Class A common shares    outstanding - Diluted		43,631			38,645			41,976			38,172
Net loss per share attributable to Class A    common shareholders - Basic	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)
Net loss per share attributable to Class A    common shareholders - Diluted	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)

No adjustments were made to the numerator for the three and nine months ended September 30, 2021 and 2020 because the Company generated a net loss. During periods of net loss, undistributed losses are not allocated to the participating securities as they are not required to absorb losses.

No adjustments were made to the denominator for the three and nine months ended September 30, 2021 and 2020 because (i) the inclusion of outstanding non-vested restricted shares would have had an anti-dilutive effect and (ii) including the non-controlling interest in the Operating Partnership would also require that the share of the Operating Partnership loss attributable to such interests be added back to net loss, therefore, resulting in no effect on earnings per share.

As of September 30, 2021 and December 31, 2020, there were 169,768 and 157,465 shares, respectively, of non-vested restricted shares outstanding.

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Share Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Share Based Compensation

Note 14 – Share-Based Compensation

On July 7, 2015, the Company adopted the Seritage Growth Properties 2015 Share Plan (the “Plan”). The number of shares of common stock reserved for issuance under the Plan is 3,250,000. The Plan provides for grants of restricted shares, share units, other share-based awards, options, and share appreciation rights, each as defined in the Plan (collectively, the “Awards”). Directors, officers, other employees, and consultants of the Company and its subsidiaries and affiliates are eligible for Awards.

Restricted Shares and Share Units

Pursuant to the Plan, the Company has periodically made grants of restricted shares or share units. The vesting terms of these grants are specific to the individual grant and vary in that a portion of the restricted shares and share units vest in equal annual amounts over the subsequent three years (time-based vesting) and a portion of the restricted shares and share units vest on the third, and in some instances, the fourth anniversary of the grants subject to the achievement of certain performance criteria (performance-based and market-based vesting).

In general, participating employees are required to remain employed for vesting to occur (subject to certain limited exceptions). Restricted shares and share units that do not vest are forfeited. Dividends on restricted shares and share units with time-based vesting are paid to holders of such shares and share units and are not returnable, even if the underlying shares or share units do not ultimately vest. Dividends on restricted shares and share units with performance-based vesting are accrued when declared and paid to holders of such shares on the third, and in some instances, the fourth anniversary of the initial grant subject to the vesting of the underlying shares. See Note 2 for valuation information related to the grants of the awards that are subject to market-based vesting conditions.

The following table summarizes restricted share activity for the nine months ended September 30, 2021:

	Nine Months Ended September 30,
				Weighted-
				Average Grant
	Shares			Date Fair Value
Unvested restricted shares at beginning of period		157,465		$	38.73
Share units granted		189,349			21.39
Restricted shares vested		(143,899	)		37.30
Restricted shares forfeited		(33,147	)		29.65
Unvested restricted shares at end of period		169,768			22.38

The Company recognized $0.4 million and $1.4 million in compensation expense related to the restricted shares for the three months ended September 30, 2021 and 2020, respectively and $1.5 million and $3.2 million for the nine months ended September 30, 2021 and 2020, respectively. Compensation expenses related to the restricted shares are included in general and administrative expenses on the Company’s condensed consolidated statements of operations.

As of September 30, 2021, there were approximately $3.2 million of total unrecognized compensation costs related to the outstanding restricted shares which are expected to be recognized over a weighted-average period of approximately 2.1 years. As of September 30, 2020, there were approximately $5.7 million of total unrecognized compensation costs related to the outstanding restricted shares which were expected to be recognized over a weighted-average period of approximately 1.7 years.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, (the “Annual Report”), for the year ended December 31, 2020. Certain footnote disclosures which would substantially duplicate those contained in our Annual Report have been condensed or omitted from this quarterly report. In the opinion of management, all adjustments necessary for a fair presentation (which include only normal recurring adjustments) have been included in this quarterly report. Operating results for the three and nine months ended September 30, 2021 may not be indicative of the results that may be expected for any other interim period or for the year ending December 31, 2021. Capitalized terms used, but not defined in this quarterly report, have the same meanings as set forth in our Annual Report.

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, each of their consolidated properties, and all other entities in which the Company has a controlling financial interest. For entities that meet the definition of a variable interest entity (“VIE”), the Company consolidates those entities when the Company is the primary beneficiary of the entity. The Company is determined to be the primary beneficiary when it possesses both the unilateral power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company continually evaluates whether it qualifies as the primary beneficiary and reconsiders its determination of whether an entity is a VIE upon reconsideration events. As of September 30, 2021, the Company consolidates two VIEs in which we are considered the primary beneficiary, as the Company has the power to direct the activities of the entities, specifically surrounding the development plan. As of September 30, 2021 and December 31, 2021, the Company has several unconsolidated VIEs and does not consolidate these entities because the Company is not the primary beneficiary. All intercompany accounts and transactions have been eliminated.

As of September 30, 2021, the Company holds a 77.9% interest in the Operating Partnership and is the sole general partner which gives the Company exclusive and complete responsibility for the day-to-day management, authority to make decisions, and control of the Operating Partnership. The Company has determined that the Operating Partnership is a VIE as the limited partners in the Operating Partnership, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. The Company consolidates its interest in the Operating Partnership. The assets and liabilities of the Operating Partnership are the same as those of the Company and are presented in the condensed consolidated balance sheets.

To the extent such variable interests are in entities that are not evaluated under the VIE model, the Company evaluates its interests using the voting interest entity model.

Certain prior period amounts, if any, have been reclassified to conform to the current period's presentation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant assumptions and estimates relate to real estate impairment assessments and assessing the recoverability of accounts receivable. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. Management evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from these estimates.

Real Estate Investments

Real Estate Investments

Real estate assets are recorded at cost, less accumulated depreciation and amortization.

Expenditures for ordinary repairs and maintenance will be expensed as incurred. Significant renovations which improve the property or extend the useful life of the assets are capitalized. As real estate is undergoing redevelopment activities, all amounts directly associated with and attributable to the project, including planning, development and construction costs, interest costs, personnel costs of employees directly involved, and other miscellaneous costs incurred during the period of redevelopment, are capitalized. The capitalization period begins when redevelopment activities are underway and ends when the project is substantially complete.

Depreciation of real estate assets, excluding land, is recognized on a straight-line basis over their estimated useful lives which generally range between:

Buildings:	25 – 40 years
Site improvements:	5 – 15 years
Tenant improvements:	shorter of the estimated useful life or non-cancelable term of lease

The Company amortizes identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired, generally the remaining non-cancelable term of a related lease.

The Company, on a periodic basis, assesses whether there are indicators, including macroeconomic conditions, that the value of the real estate assets may be impaired. If an indicator is identified, management will estimate the real estate asset recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real estate asset. In estimating the fair value of an asset, various factors are considered, including expected future operating income, trends and leasing prospects and the effects of demand, competition, and other economic factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value.

Real Estate Dispositions

When the Company disposes of all or a portion of a real estate asset, it recognizes a gain or loss on sale of real estate as the difference between the carrying value and consideration received. Consideration consists of cash proceeds received and in certain circumstances, non-cash consideration which is typically in the form of equity and is reported in equity in loss of unconsolidated entities on the Company’s condensed consolidated statements of operations. Refer to Note 4 for more information on the Company’s unconsolidated entity transactions.

The following table summarizes our gain on sale of real estate, net during the three and nine months ended September 30, 2021 and 2020 (in millions):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
Contributions to unconsolidated entities
Gross proceeds	$	—	$	27.0		$	—	$	27.0
(Loss) gain on sale of real estate, net		—		(1.5	)		—		(1.5	)
Dispositions to third parties
Gross proceeds	$	76.8	$	62.8		$	203.7	$	221.7
Gain on sale of real estate, net (1)		22.8		16.8			65.1		91.5
Total gains on contributions and dispositions, net	$	22.8	$	15.3		$	65.1	$	90.0

(1) Excludes loss of $30.0 million related to the revaluation of Mark 302 JV to adjust the gain from $38.8 million to $8.8 million as further described in Note 4 below.

Real Estate Held for Sale

Real Estate Held for Sale

When a real estate asset is identified by management as held for sale, the Company ceases depreciation of the asset and estimates its fair value, net of estimated costs to sell. If the estimated fair value, net of estimated costs to sell, of an asset is less than its net carrying value, an adjustment is recorded to reflect the estimated fair value. Properties classified as real estate held for sale generally represent properties that are under contract for sale and are probable to close within a year.

In evaluating whether a property meets the held for sale criteria, the Company makes a determination as to the point in time that it is probable that a sale will be consummated. Given the nature of all real estate sales contracts, it is not unusual for such contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other

matters critical to the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period or at all.

As of September 30, 2021, one property was classified as held for sale with assets of $12.3 million and no liabilities, and, as of December 31, 2020, one property was classified as held for sale with assets of $1.9 million and no liabilities.

Investments in Unconsolidated Joint Ventures

Investments in Unconsolidated Entities

The Company accounts for its investments in unconsolidated entities using the equity method of accounting as the Company exercises significant influence but does not have a controlling financial interest. These investments are initially recorded at cost and are subsequently adjusted for cash contributions, cash distributions, and earnings which are recognized in accordance with the terms of the applicable agreement.

On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions, that the value of the Company’s investments in unconsolidated entities may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. No such impairment losses were recognized for the three and nine months ended September 30, 2021 and 2020.

Restricted Cash

Restricted Cash

As of September 30, 2021, restricted cash represents cash collateral for a letter of credit.

Rental Revenue Recognition and Tenant Receivables

Rental Revenue Recognition and Tenant Receivables

Rental income is comprised of base rent and reimbursements of property operating expenses. The Company commences rental revenue recognition when the lessee takes control of the physical use of the leased asset based on evaluation of several factors. Base rent is recognized on a straight-line basis over the non-cancelable terms of the related leases. For leases that have fixed and measurable base rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded as straight-line rent receivable and included as a component of tenant and other receivables on the condensed consolidated balance sheets. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

The Company periodically reviews its receivables for collectability, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. Tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectability of substantially all future lease payments from a specified lease is not probable of collection, at which point, the Company will begin recognizing revenue on a cash basis, based on actual amounts received. Any receivables that are deemed to be uncollectable are recognized as a reduction to rental income in the Company’s condensed consolidated statements of operations. If future circumstances change such that the Company believes that it is reasonably certain that the Company will collect all rental income remaining on such leases, the Company will resume accruing rental income and recognize a cumulative catch up for previously written-off receivables. The Company also recognizes a general reserve, as a reduction to rental income, for its portfolio of operating lease receivables which are not expected to be fully collectable.

The Company recorded a reduction to rental income of $0.5 million and $2.3 million during the three months ended September 30, 2021 and 2020, respectively, as a result of the Company’s evaluation of collectability, and the Company recorded an increase to rental income of $0.1 million and a reduction to rental income of $6.1 million during the nine months ended September 30, 2021 and 2020, respectively. In addition, the Company recorded a reduction of income of previously recorded straight-line rent of $0.4 million and $0.3 million for the three and nine months ended September 30, 2021, respectively. No adjustments were recorded to straight-line rent for the three months ended September 30, 2020. Straight-line rent reversals of $4.7 million were recorded for the nine months ended September 30, 2020. During the three and nine months ended September 30, 2021, the Company recorded a reduction to rental income of $0.4 million and an increase to rental income of $0.2 million related to the allowance for deferral agreements.

Due to the COVID-19 pandemic, the Company has entered into amendments to existing leases with certain tenants (the “Rent Deferral Agreements”), that provide for the deferral of all or some portion of rental payments due during the period which such tenant was affected by the COVID-19 pandemic (“Deferred Rent”). The Rent Deferral Agreements typically provide for repayment of the Deferred Rent within six to 12 months following the end of the rent deferral period and, in many instances, waive certain other conditions in favor of the Company while Deferred Rent is outstanding. Deferred Rent generally becomes immediately due and

payable under the Rent Deferral Agreements if the tenant does not make the minimum contractual payments or otherwise defaults on the lease. We recognize lease concessions related to the COVID-19 pandemic such as rent deferrals and abatements in accordance with the Lease Modification Q&A issued by the Financial Standards Accounting Board, (“FASB”), in April 2020, which provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. As a result, the Company has not adjusted accrued rental revenues or the portion of accrued rental revenues related to the straight-line method for the portion which has been deferred. When the Deferred Rents are repaid, the Company will relieve the accrual in tenant and other receivables.

In leasing tenant space, the Company may provide funding to the lessee through a tenant allowance. In accounting for a tenant allowance, the Company will determine whether the allowance represents funding for the construction of leasehold improvements and evaluate the ownership of such improvements. If the Company is considered the owner of the improvements for accounting purposes, the Company will capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the improvements or the related lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered a lease incentive and is recognized over the lease term as a reduction of rental revenue on a straight-line basis.

Tenant and Other Receivables

Tenant and Other Receivables

Tenant and other receivables includes unpaid amounts billed to tenants, accrued revenues for future billings to tenants for property expenses, and amounts arising from the straight-lining of rent, as discussed above. Tenant and other receivables also includes management fees receivable for services performed for the benefit of certain unconsolidated entities. In the event that the collectability of a management fee receivable is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific receivable will be made.

Management and Other Fee Income

Management and Other Fee Income

Management and other fee income represents property management, construction, leasing and development fees for services performed for the benefit of certain unconsolidated entities.

Property management fee income is reported at 100% of the revenue earned from such unconsolidated properties in management and other fee income on the condensed consolidated statements of operations. The Company’s share of management expenses incurred by the unconsolidated entities is reported in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Leasing and development fees are initially reported at the portion of revenue earned attributable to outside ownership of the related unconsolidated entities. The Company’s share in leasing and development fee income is recognized over the useful life of the associated development project, in the case of development fees, or lease term, in the case of leasing fees, as the associated asset is depreciated over the same term and included in equity in loss of unconsolidated entities on the condensed consolidated statements of operations and in other expenses in the combined financial data in Note 4.

Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation. For property and asset management services, the Company is typically compensated for its services through a monthly management fee earned based on a specified percentage of monthly rental income or rental receipts generated from the property under management. For construction and development services, the Company is typically compensated for planning, administering and monitoring the design and construction of projects within our unconsolidated entities based on a percentage of project costs or a fixed fee. Revenues from such management contracts are recognized over the life of the applicable contract.

Conversely, leasing services are considered to be performance obligations, satisfied as of a point in time. The Company’s leasing fee is typically paid upon the occurrence of certain contractual event(s) that may be contingent and the pattern of revenue recognition may differ from the timing of payment. For these services, the obligations are typically satisfied at lease execution and tenant opening date, and revenue is recognized in accordance with the related agreement at the point in time when the obligation has been satisfied.

Concentration of Credit Risk

Concentration of Credit Risk

Concentrations of credit risk arise when a number of operators, tenants, or obligors related to the Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. Management believes the Company’s portfolio is reasonably diversified and does not contain any significant concentrations of credit risk. As of September 30, 2021, the Company has one tenant that comprises 13.1% of annualized based rent, with no other tenants

exceeding 10.0% of annualized based rent. The Company’s portfolio of 146 Consolidated Properties and 24 Unconsolidated Properties was diversified by location across 38 states and Puerto Rico.

Earnings per Share

Earnings per Share

The Company has three classes of common stock. The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A common shares and Class C non-voting common shares are identical, except with respect to voting. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. The net earnings (loss) per share amounts are the same for Class A and Class C common shares because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. As of August 29, 2018, all outstanding Class C common shares had been exchanged for Class A common shares and there are currently no Class C common shares outstanding.

Class B non-economic common shares are excluded from earnings per share computations as they do not have economic rights. As of December 31, 2020, all outstanding Class B common shares have been surrendered and there are currently no Class B common shares outstanding.

All outstanding non-vested shares that contain non-forfeitable rights to dividends are considered participating securities and are included in computing earnings per share pursuant to the two-class method which specifies that all outstanding non-vested share-based payment awards that contain non-forfeitable rights to distributions are considered participating securities and should be included in the computation of earnings per share.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

The Company has not adopted any Accounting Standards Updates (“ASUs”) issued by the FASB during the three and nine months ended September 30, 2021. Any other recently issued accounting standards or pronouncements not disclosed have been excluded as they either are not applicable to the Company, or they are not expected to have a material effect on the condensed consolidated financial statements of the Company. 

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Estimated Useful Lives

Depreciation of real estate assets, excluding land, is recognized on a straight-line basis over their estimated useful lives which generally range between:

Buildings:	25 – 40 years
Site improvements:	5 – 15 years
Tenant improvements:	shorter of the estimated useful life or non-cancelable term of lease

Schedule Of Gain On Sale Of Real Estate

The following table summarizes our gain on sale of real estate, net during the three and nine months ended September 30, 2021 and 2020 (in millions):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
Contributions to unconsolidated entities
Gross proceeds	$	—	$	27.0		$	—	$	27.0
(Loss) gain on sale of real estate, net		—		(1.5	)		—		(1.5	)
Dispositions to third parties
Gross proceeds	$	76.8	$	62.8		$	203.7	$	221.7
Gain on sale of real estate, net (1)		22.8		16.8			65.1		91.5
Total gains on contributions and dispositions, net	$	22.8	$	15.3		$	65.1	$	90.0

(1) Excludes loss of $30.0 million related to the revaluation of Mark 302 JV to adjust the gain from $38.8 million to $8.8 million as further described in Note 4 below.

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Lease Intangible Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Summary of Lease Intangible Assets

The following tables summarize the Company’s lease intangible assets (acquired in-place leases, above-market leases and below-market ground leases) and liabilities (acquired below-market leases, which is included in accounts payable, accrued expenses and other liabilities on the consolidate balance sheets), net of accumulated amortization, as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021
	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	32,571	$	(18,113	)	$	14,458
Above-market leases, net		3,925		(2,413	)		1,512
Total	$	36,496	$	(20,526	)	$	15,970

December 31, 2020
	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	73,169	$	(56,369	)	$	16,800
Above-market leases, net		4,139		(2,344	)		1,795
Total	$	77,308	$	(58,713	)	$	18,595

Summary of Lease Intangible Liabilities

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	6,626	$	(2,765	)	$	3,861
Total	$	6,626	$	(2,765	)	$	3,861

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	6,626	$	(2,440	)	$	4,186
Total	$	6,626	$	(2,440	)	$	4,186

Schedule of Future Amortization of Acquired Leases

Future amortization of these leases intangibles is set forth below (in thousands):

	(Above) / below market leases, net			Below market ground lease		In-place leases
Remainder of 2021	$	(13	)	$	51	$	699
2022		(43	)		203		2,787
2023		6			203		1,921
2024		27			203		1,385
2025		97			203		1,077
2026		190			203		724
Thereafter		2,084			9,433		5,866

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Investments in Unconsolidated Entities (Tables)

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Summary of Company's Investments in Unconsolidated Entities

As of September 30, 2021, the Company had investments in ten unconsolidated entities as follows:

		Seritage %	# of	Total
Unconsolidated Entities	Entity Partner(s)	Ownership	Properties	GLA
GS Portfolio Holdings II LLC    ("GGP I JV")	Brookfield Properties Retail    (formerly GGP Inc.)	50.0%	3		402,900
GS Portfolio Holdings (2017) LLC    ("GGP II JV")	Brookfield Properties Retail    (formerly GGP Inc.)	50.0%	3		474,100
MS Portfolio LLC    ("Macerich JV")	The Macerich Company	50.0%	7		1,266,600
SPS Portfolio Holdings II LLC    ("Simon JV")	Simon Property Group, Inc.	50.0%	5		872,200
Mark 302 JV LLC    ("Mark 302 JV")	An investment fund managed    by Invesco Real Estate	50.0%	1		103,000
SI UTC LLC    ("UTC JV")	A separate account advised by    Invesco Real Estate	50.0%	1		226,200
SF WH Joint Venture LLC    ("West Hartford JV")	An affiliate of First Washington    Realty	50.0%	1		163,700
GGCAL SRG HV LLC    ("Cockeysville JV")	An affiliate of    Greenberg Gibbons	50.0%	1		160,200
Tech Ridge JV Holding LLC    ("Tech Ridge JV")	An affiliate of    RD Management	50.0%	1		—
J&J Baldwin Park LLC    ("Carson Investment")	An affiliate of NewMark Merrilll Companies and other entities	20.0%	1		182,200
			24		3,851,100

Summary of Properties Contributed In Unconsolidated Entities

		September 30, 2021
Unconsolidated Entities	Contribution Date	Contribution Value		Gain (Loss)
2018
Mark 302 JV (1)	March 20, 2018	$	60.0	$	8.8
2019
Cockeysville JV (2)	March 29, 2019	$	12.5	$	3.8
Tech Ridge JV (3)	September 27, 2019		3.0		0.1

(1)The Mark 302 JV was subject to a revaluation which resulted in the Company adjusting the Contribution Value down to $60.0 million and reduced the Gain (Loss) by $30.0 million. As of September 30, 2021, the amended determination date, there has been no change to the adjusted Contribution Value and the final Contribution Value is $60.0 million.

(2)The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the joint venture which was conditioned on certain milestones being met with respect to entitling the Additional Land Parcel for residential use. The Additional Land Parcel has been entitled for residential use. The Company has not reflected the contribution value of the Additional Land Parcel in the value of its investment in the Cockeysville JV based on uncertainty related to a potential alternative transaction with respect to the Additional Land Parcel. The Company will record an increased investment in the Cockeysville JV and additional gain in an amount equal to 50% of the fair value of the Additional Land Parcel at the earlier of when it becomes probable that the Additional Land Parcel will be contributed or upon an alternate outcome.

(3)The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. The Contribution Value cannot be less than $2.75 million.

Summary of Combined Condensed Financial Data of Unconsolidated Entities

The following tables present combined condensed financial data for the Company’s unconsolidated entities (in thousands):

	September 30, 2021			December 31, 2020
ASSETS
Investment in real estate
Land	$	318,540		$	318,540
Buildings and improvements		505,793			492,973
Accumulated depreciation		(90,454	)		(81,730	)
		733,879			729,783
Construction in progress		216,479			222,663
Net investment in real estate		950,358			952,446
Cash and cash equivalents		25,881			16,094
Investment in unconsolidated entities		47,184			24,686
Tenant and other receivables, net		2,544			4,104
Other assets, net		35,789			38,196
Total assets	$	1,061,756		$	1,035,526
LIABILITIES AND MEMBERS' INTERESTS
Liabilities
Mortgage loans payable, net	$	52,942		$	34,672
Accounts payable, accrued expenses and other liabilities		34,771			48,405
Total liabilities		87,713			83,077
Members' Interest
Additional paid in capital		989,811			964,868
Retained earnings (accumulated deficit)		(15,768	)		(12,419	)
Total members' interest		974,043			952,449
Total liabilities and members' interest	$	1,061,756		$	1,035,526

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Total revenue	$	5,354		$	5,273		$	18,904		$	15,590
Property operating expenses		(2,969	)		(2,270	)		(8,382	)		(6,956	)
Depreciation and amortization		(8,094	)		(2,562	)		(21,137	)		(11,441	)
Operating income / (loss)		(5,709	)		441			(10,615	)		(2,807	)
Other expenses		(1,195	)		(1,093	)		(3,205	)		(2,060	)
Loss on disposition of real estate		(4,171	)		—			(4,171	)		—
Net loss	$	(11,075	)	$	(652	)	$	(17,991	)	$	(4,867	)
Equity in loss of unconsolidated    entities (1)	$	(5,535	)	$	(335	)	$	(9,024	)	$	(2,551	)

(1)Equity in loss of unconsolidated entities on the condensed consolidated statements of operations includes basis difference adjustments.

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Schedule of Future Minimum Rental Receipts excluding Variable Payments and Tenant Reimbursements of Expenses Under Non-cancelable Operating Leases

Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of September 30, 2021 are approximately as follows:

(in thousands)	September 30, 2021
Remainder of 2021	$	22,510
2022		85,443
2023		78,755
2024		75,545
2025		74,753
2026		69,768
Thereafter		337,480
Total	$	744,254

Components of Lease Revenues

The components of lease revenues for the three and nine months ended September 30, 2021 and 2020 were as follows:

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed rental income	$	23,160	$	19,675	$	68,567	$	70,474
Variable rental income		4,652		10,976		16,921		20,195
Total rental income	$	27,812	$	30,651	$	85,488	$	90,669

Information Related to Measurement of Lease Liabilities

The following table sets forth information related to the measurement of our lease liabilities as of September 30, 2021:

	September 30, 2021
Weighted average remaining lease term (in years)		10.40
Weighted average discount rate		6.98	%
Cash paid for operating leases (in thousands)	$	1,432

Schedule of Future Sale-Leaseback Financing Obligations

Future sale-leaseback financing obligations as of September 30, 2021 are approximately as follows:

(in thousands)	September 30, 2021
Remainder of 2021	$	363
2022		1,464
2023		1,486
2024		1,508
2025		1,531
2026		1,554
Thereafter		34,022
Interest		(21,315	)
Total	$	20,613

Summary of Revenue from Master Lease

(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed rental income	$	—	$	—	$	—	$	4,288
Variable rental income		—		5,997		4,510		9,416
Total rental income	$	—	$	5,997	$	4,510	$	13,704

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Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2021

Series A Preferred Shares [Member]

Class of Stock [Line Items]

Summary of Dividends and Distributions

The Company’s Board of Trustees declared the following dividends on preferred shares during 2021 and 2020:

			Series A
Declaration Date	Record Date	Payment Date	Preferred Share
2021
October 26	December 31	January 14, 2022	$	0.43750
July 27	September 30	October 15		0.43750
April 27	June 30	July 15		0.43750
February 23	March 31	April 15		0.43750
2020
December 17	December 31	January 15, 2021	$	0.43750
September 17	September 30	October 15		0.43750
June 9	June 30	July 15		0.43750
February 18	March 31	April 15		0.43750

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Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Reconciliation of Net Income (Loss) and Number of Common Shares Used in Computations of Basic Earnings Per Share

Earnings per share has not been presented for Class B shareholders, as they do not have economic rights.

(in thousands except per share amounts)	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator - Basic and Diluted
Net loss		(26,349	)		(72,401	)		(132,586	)		(103,272	)
Net loss attributable to non-controlling interests		5,815			22,348			31,492			32,627
Preferred dividends		(1,225	)		(1,225	)		(3,675	)		(3,675	)
Net loss attributable to common shareholders - Basic    and diluted	$	(21,759	)	$	(51,278	)	$	(104,769	)	$	(74,320	)
Denominator - Basic and Diluted
Weighted average Class A common shares outstanding		43,631			38,645			41,976			38,172
Weighted average Class A common shares    outstanding - Basic		43,631			38,645			41,976			38,172
Restricted shares and share units		—			—			—			—
Weighted average Class A common shares    outstanding - Diluted		43,631			38,645			41,976			38,172
Net loss per share attributable to Class A    common shareholders - Basic	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)
Net loss per share attributable to Class A    common shareholders - Diluted	$	(0.50	)	$	(1.33	)	$	(2.50	)	$	(1.95	)

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Share Based Compensation (Tables)

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Summary of Restricted Share

The following table summarizes restricted share activity for the nine months ended September 30, 2021:

	Nine Months Ended September 30,
				Weighted-
				Average Grant
	Shares			Date Fair Value
Unvested restricted shares at beginning of period		157,465		$	38.73
Share units granted		189,349			21.39
Restricted shares vested		(143,899	)		37.30
Restricted shares forfeited		(33,147	)		29.65
Unvested restricted shares at end of period		169,768			22.38

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Organization - Additional Information (Detail) $ in Thousands, ft² in Millions		9 Months Ended
	Jul. 07, 2015 USD ($) JointVenture	Sep. 30, 2021 USD ($) ft² a State Property	Sep. 30, 2020 USD ($)
Organization And Basis Of Presentation [Line Items]
Number of properties interested in the portfolio | Property		170
Number of states in properties located | State		38
Net cash (used in) provided by operating activities		$ 85,566	$ 25,300
Net cash (used in) provided by investing activities		$ 95,820	$ (9,697)
COVID-19 Pandemic [Member]
Organization And Basis Of Presentation [Line Items]
Expected future rent, description		Company had collected 97% of
Net cash (used in) provided by operating activities		$ 85,600
Net cash (used in) provided by investing activities		$ 95,800
COVID-19 Pandemic [Member] | March 2021 [Member]
Organization And Basis Of Presentation [Line Items]
Percent of contractual rental income collected		97.00%
Percent of tenant contractual rental income collected		1.00%
Sears Holdings Corporation [Member]
Organization And Basis Of Presentation [Line Items]
Business acquisition fair value, purchase price	$ 2,700,000
Interests in joint ventures acquired	50.00%
Number of joint venture acquired | JointVenture	3
Unconsolidated Properties [Member]
Organization And Basis Of Presentation [Line Items]
Area of real estate property (in square feet) | ft²		4.0
Number of acres held under development | a		600
Consolidated Properties [Member] | Holdco Master Lease [Member]
Organization And Basis Of Presentation [Line Items]
Number of consolidated properties | Property		5
Real Estate Investment Trust [Member]
Organization And Basis Of Presentation [Line Items]
Area of real estate property (in square feet) | ft²		10.0
Real Estate Investment Trust [Member] | Unconsolidated Properties [Member]
Organization And Basis Of Presentation [Line Items]
Area of real estate property (in square feet) | ft²		10.0
Number of acres | a		850

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Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) Property State shares	Sep. 30, 2020 USD ($) shares	Sep. 30, 2021 USD ($) Property JointVenture State Tenant Entity shares	Sep. 30, 2020 USD ($) shares	Dec. 31, 2020 USD ($) Property	Dec. 31, 2019 shares	Aug. 29, 2018 shares
Summary Of Significant Accounting Policies [Line Items]
Number of VIEs consolidated | Entity			2
Number of properties classified | Property	1		1		1
Real estate held for sale, assets	$ 12,273,000		$ 12,273,000		$ 1,864,000
Real estate held for sale, liabilities	0		0		$ 0
Impairment loss	0	$ 0	0	$ 0
Reduction to rental revenue	500,000	2,300,000	100,000	6,100,000
Reversal of straight line rent	$ 400,000	$ 0	$ 300,000	$ 4,700,000
Revenue performance obligation satisfied over time method used description			Management determined that property and asset management and construction and development management services each represent a series of stand-ready performance obligations satisfied over time with each day of service being a distinct performance obligation.
Number of tenant | Tenant			1
Annualized based rent			13.10%
Number of consolidated properties acquired | Property			146
Number of entities acquired | JointVenture			24
Number of states in properties located | State	38		38
Class C Common Shares [Member]
Summary Of Significant Accounting Policies [Line Items]
Common shares, outstanding | shares							0
Class B Common Shares [Member]
Summary Of Significant Accounting Policies [Line Items]
Common shares, outstanding | shares	0	0	0	0		1,243,000
Management and Other Fee Income [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of revenue earned from unconsolidated joint ventures			100.00%
Rent Deferral Agreements [Member]
Summary Of Significant Accounting Policies [Line Items]
Allowance to tenant	$ 400,000		$ 200,000
Operating Partnership [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of operating partnership interest held by parent	77.90%		77.90%

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Summary of Significant Accounting Policies - Summary of Estimated Useful Lives (Detail)	9 Months Ended
	Sep. 30, 2021
Minimum [Member] | Building [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	25 years
Minimum [Member] | Site Improvement [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Maximum [Member] | Building [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	40 years
Maximum [Member] | Site Improvement [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	15 years

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Summary of Significant Accounting Policies - Schedule of Gain on Sale of Real Estate (Detail) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Contributions to unconsolidated entities
Gross proceeds			$ 27.0		$ 27.0
(Loss) gain on sale of real estate, net			(1.5)		(1.5)
Dispositions to third parties
Gross proceeds		$ 76.8	62.8	$ 203.7	221.7
Gain on sale of real estate, net	[1]	22.8	16.8	65.1	91.5
Total gains on contributions and dispositions, net		$ 22.8	$ 15.3	$ 65.1	$ 90.0

[1] Excludes loss of $30.0 million related to the revaluation of Mark 302 JV to adjust the gain from $38.8 million to $8.8 million as further described in Note 4 below.

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Summary of Significant Accounting Policies - Schedule of Gain on Sale of Real Estate (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2021 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Loss (gain) on revaluation of Mark 302 JV	$ 30,000,000.0
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Gain or loss on sale of real estate based on final contribution value	38,800,000
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Gain or loss on sale of real estate based on final contribution value	$ 8,800,000

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Lease Intangible Assets and Liabilities - Summary of Lease Intangible Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Gross Asset	$ 36,496	$ 77,308
Accumulated Amortization	(20,526)	(58,713)
Balance	15,970	18,595
In-Place Leases, Net [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Asset	32,571	73,169
Accumulated Amortization	(18,113)	(56,369)
Balance	14,458	16,800
Above-Market Leases, Net [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Asset	3,925	4,139
Accumulated Amortization	(2,413)	(2,344)
Balance	$ 1,512	$ 1,795

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Lease Intangible Assets and Liabilities - Summary of Lease Intangible Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Below Market Lease Net [Abstract]
Gross Liability	$ 6,626	$ 6,626
Accumulated Amortization	(2,765)	(2,440)
Balance	$ 3,861	$ 4,186

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Lease Intangible Assets and Liabilities - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Additional property expense	$ 0.1	$ 0.1	$ 0.2	$ 0.2
Amortization of below-market leases, net of above-market leases	0.1	1.5	0.1	1.5
In-Place Leases, Net [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense of intangible assets	$ 0.8	$ 11.0	$ 2.4	$ 42.0

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Lease Intangible Assets and Liabilities - Schedule of Future Amortization of Intangibles (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
(Above)/ Below Market Leases, Net [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2021	$ (13)
2022	(43)
2023	6
2024	27
2025	97
2026	190
Thereafter	2,084
Below market ground lease [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2021	51
2022	203
2023	203
2024	203
2025	203
2026	203
Thereafter	9,433
In-Place Leases, Net [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2021	699
2022	2,787
2023	1,921
2024	1,385
2025	1,077
2026	724
Thereafter	$ 5,866

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Investments in Unconsolidated Entities - Summary of Company's Investments in Unconsolidated Entities (Detail)	9 Months Ended
	Sep. 30, 2021 ft² Property
Income Statement Equity Method Investments [Line Items]
Number of Properties	24
Total GLA | ft²	3,851,100
Brookfield Properties Retail I [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	3
Total GLA | ft²	402,900
Brookfield Properties Retail II [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	3
Total GLA | ft²	474,100
The Macerich Company [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	7
Total GLA | ft²	1,266,600
Simon Property Group Inc [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	5
Total GLA | ft²	872,200
Invesco Real Estate [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	1
Total GLA | ft²	103,000
Invesco Real Estate II [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	1
Total GLA | ft²	226,200
First Washington Realty [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	1
Total GLA | ft²	163,700
Greenberg Gibbons [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	1
Total GLA | ft²	160,200
RD Management [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	50.00%
Number of Properties	1
New Mark Merrilll Companies And Other Entities [Member]
Income Statement Equity Method Investments [Line Items]
Seritage % Ownership	20.00%
Number of Properties	1
Total GLA | ft²	182,200

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Investments in Unconsolidated Entities - Summary of Properties Contributed In Unconsolidated Entities (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2021 USD ($)
Mark 302 JV [Member]
Related Party Transaction [Line Items]
Contribution Date	Mar. 20, 2018	[1]
Contribution Value	$ 60.0	[1]
Gain (Loss)	$ 8.8	[1]
Cockeysville JV [Member]
Related Party Transaction [Line Items]
Contribution Date	Mar. 29, 2019	[2]
Contribution Value	$ 12.5	[2]
Gain (Loss)	$ 3.8	[2]
Tech Ridge JV [Member]
Related Party Transaction [Line Items]
Contribution Date	Sep. 27, 2019	[3]
Contribution Value	$ 3.0	[3]
Gain (Loss)	$ 0.1	[3]

[1] The Mark 302 JV was subject to a revaluation which resulted in the Company adjusting the Contribution Value down to $60.0 million and reduced the Gain (Loss) by $30.0 million. As of September 30, 2021, the amended determination date, there has been no change to the adjusted Contribution Value and the final Contribution Value is $60.0 million.

[2] The Cockeysville JV is subject to revaluation if an affiliate of Greenberg Gibbons contributes another adjacent parcel of land (the “Additional Land Parcel”) to the joint venture which was conditioned on certain milestones being met with respect to entitling the Additional Land Parcel for residential use. The Additional Land Parcel has been entitled for residential use. The Company has not reflected the contribution value of the Additional Land Parcel in the value of its investment in the Cockeysville JV based on uncertainty related to a potential alternative transaction with respect to the Additional Land Parcel. The Company will record an increased investment in the Cockeysville JV and additional gain in an amount equal to 50% of the fair value of the Additional Land Parcel at the earlier of when it becomes probable that the Additional Land Parcel will be contributed or upon an alternate outcome.

[3] The Tech Ridge JV is subject to a revaluation primarily based upon the number of residential units constructed by the Tech Ridge JV. The Contribution Value cannot be less than $2.75 million.

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Investments in Unconsolidated Entities - Summary of Properties Contributed In Unconsolidated Entities (Parenthetical) (Detail) - USD ($)		9 Months Ended		12 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Sep. 27, 2019	Mar. 20, 2018
Related Party Transaction [Line Items]
Gain on sale of real estate		$ 65,079,000	$ 59,959,000
Maximum [Member]
Related Party Transaction [Line Items]
Gain or loss on sale of real estate based on final contribution value		38,800,000
Minimum [Member]
Related Party Transaction [Line Items]
Final contribution value					$ 2,750,000
Gain or loss on sale of real estate based on final contribution value		$ 8,800,000
Mark 302 JV [Member]
Related Party Transaction [Line Items]
Contribution Date	[1]	Mar. 20, 2018
Invesco Real Estate [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Final contribution value		$ 60,000,000.0
Gain or loss on sale of real estate based on final contribution value				$ 30,000,000.0
Invesco Real Estate [Member] | Santa Monica, CA [Member] | Mark 302 JV [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Final contribution value						$ 60,000,000.0

[1] The Mark 302 JV was subject to a revaluation which resulted in the Company adjusting the Contribution Value down to $60.0 million and reduced the Gain (Loss) by $30.0 million. As of September 30, 2021, the amended determination date, there has been no change to the adjusted Contribution Value and the final Contribution Value is $60.0 million.

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Investments in Unconsolidated Entities - Summary of Combined Condensed Financial Data of Unconsolidated Entities (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Investment in real estate
Land		$ 516,488		$ 516,488			$ 592,770
Accumulated depreciation		(159,347)		(159,347)			(142,206)
Net investment in real estate		1,746,927		1,746,927			1,910,872
Cash and cash equivalents		153,378	$ 118,227	153,378	$ 118,227		143,728		$ 139,260
Investment in unconsolidated entities		464,244		464,244			457,033
Total assets	[1]	2,494,706		2,494,706			2,648,943
Liabilities
Total liabilities	[1]	1,743,017		1,743,017			1,766,216
Members' Interest
Retained earnings (accumulated deficit)		(625,491)		(625,491)			(528,637)
Total equity		751,689	939,795	751,689	939,795	$ 774,889	882,727	$ 1,011,962	$ 1,043,370
Total liabilities and shareholders' equity		2,494,706		2,494,706			2,648,943
Total revenue		29,003	33,707	88,158	88,843
Loss on disposition of real estate		22,774	(14,706)	65,079	59,959
Net loss		(26,349)	(72,401)	(132,586)	(103,272)
Unconsolidated Entities [Member]
Investment in real estate
Land		318,540		318,540			318,540
Buildings and improvements		505,793		505,793			492,973
Accumulated depreciation		(90,454)		(90,454)			(81,730)
Investment in real estate, gross		733,879		733,879			729,783
Construction in progress		216,479		216,479			222,663
Net investment in real estate		950,358		950,358			952,446
Cash and cash equivalents		25,881		25,881			16,094
Investment in unconsolidated entities		47,184		47,184			24,686
Tenant and other receivables, net		2,544		2,544			4,104
Other assets, net		35,789		35,789			38,196
Total assets		1,061,756		1,061,756			1,035,526
Liabilities
Mortgage loans payable, net		52,942		52,942			34,672
Accounts payable, accrued expenses and other liabilities		34,771		34,771			48,405
Total liabilities		87,713		87,713			83,077
Members' Interest
Additional paid in capital		989,811		989,811			964,868
Retained earnings (accumulated deficit)		(15,768)		(15,768)			(12,419)
Total equity		974,043		974,043			952,449
Total liabilities and shareholders' equity		1,061,756		1,061,756			$ 1,035,526
Total revenue		5,354	5,273	18,904	15,590
Property operating expenses		(2,969)	(2,270)	(8,382)	(6,956)
Depreciation and amortization		(8,094)	(2,562)	(21,137)	(11,441)
Operating income / (loss)		(5,709)	441	(10,615)	(2,807)
Other expenses		(1,195)	(1,093)	(3,205)	(2,060)
Loss on disposition of real estate		(4,171)		(4,171)
Net loss		(11,075)	(652)	(17,991)	(4,867)
Equity in loss of unconsolidated entities	[2]	$ (5,535)	$ (335)	$ (9,024)	$ (2,551)

[1] The Company's condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). See Note 2. The condensed consolidated balance sheets, as of September 30, 2021, include the following amounts related to our consolidated VIEs, excluding the Operating Partnership: $6.6 million of land, $3.9 million of building and improvements, $(0.9) million of accumulated depreciation and $4.3 million of other assets included in other line items. The Company's condensed consolidated balance sheets as of December 31, 2020, do not include assets and liabilities of consolidated variable interest entities.

[2] Equity in loss of unconsolidated entities on the condensed consolidated statements of operations includes basis difference adjustments.

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Investments in Unconsolidated Entities - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Schedule Of Equity Method Investments [Line Items]
Impairment charges related to unconsolidated properties	$ 0	$ 0	$ 0	$ 0
West Hartford JV [Member]
Schedule Of Equity Method Investments [Line Items]
Income earned from servicing activities	200	200	600	600
Reverse Servicing Fees Amount	$ 300	$ 300	$ 100	$ 100

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Leases - Schedule of Future Minimum Rental Receipts excluding Variable Payments and Tenant Reimbursements of Expenses Under Non-cancelable Operating Leases (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
Leases [Abstract]
Remainder of 2021	$ 22,510
2022	85,443
2023	78,755
2024	75,545
2025	74,753
2026	69,768
Thereafter	337,480
Total	$ 744,254

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Leases - Components of Lease Revenues (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Lessor Disclosure [Abstract]
Fixed rental income	$ 23,160	$ 19,675	$ 68,567	$ 70,474
Variable rental income	4,652	10,976	16,921	20,195
Total rental income	$ 27,812	$ 30,651	$ 85,488	$ 90,669

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Leases - Additional Information (Detail)	1 Months Ended	3 Months Ended		9 Months Ended
	Dec. 31, 2020 USD ($)	Sep. 30, 2021 USD ($) Property	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) Property	Sep. 30, 2020 USD ($)
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Number of properties subject to ground lease | Property		1		1
Number of properties subject to corporate office lease | Property		1		1
ROU assets	$ 18,800,000	$ 17,200,000		$ 17,200,000
Operating leases expiration year				2073
Sales-leaseback financing obligations	20,425,000	20,613,000		$ 20,613,000
Reversal of straight line rent		400,000	$ 0	300,000	$ 4,700,000
Original And Holdco Master Lease [Member]
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Reversal of straight line rent		0.0	0.0	$ 0.0	(7,900,000)
Sears Holdings Corporation [Member]
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Number of real estate properties acquisition exercised | Property | Property				87
Hialeah [Member]
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Sales-leaseback financing obligations	$ 21,000,000.0
Sale leaseback term	25 years
Sale leaseback Interest rate	7.00%
Sale leaseback base rent	$ 1,500,000
Percentage of increase in annual rent	1.50%
Sale leaseback description	The Company has a purchase option during years four, five or seven of the 25-year term to reacquire, solely at the Company’s option, the Hialeah property at a predetermined price
Holdco Master Lease [Member] | Original And Holdco Master Lease [Member]
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Lease termination, description				Under the terms of the Holdco Master Lease, Holdco had the right, at any time, to terminate the Holdco Master Lease with respect to any property upon the payment of a termination fee equal to one year of base rent plus annual taxes and other operating expenses. Sears Holdings exercised termination rights with respect to 87 properties under the Original Master Lease prior to its rejection on March 12, 2019 and Holdco exercised termination rights with respect to all remaining properties under the Holdco Master Lease during the year ended December 31, 2020, with the remaining five properties effective in March 2021.
General and Administrative Expenses [Member]
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Rent expense		300,000	500,000	$ 1,000,000.0	1,300,000
Property Operating Expense [Member]
Schedule Of Operating Leases Future Minimum Payments Receivable [Line Items]
Rent expense		$ 100,000	$ 100,000	$ 100,000	$ 100,000

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Leases - Information Related to Measurement of Lease Liabilities (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Lessee Disclosure [Abstract]
Weighted average remaining lease term (in years)	10 years 4 months 24 days
Weighted average discount rate	6.98%
Cash paid for operating leases (in thousands)	$ 1,432

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Leases - Schedule of Future Sale-Leaseback Financing Obligations (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
Leases [Abstract]
Remainder of 2021	$ 363
2022	1,464
2023	1,486
2024	1,508
2025	1,531
2026	1,554
Thereafter	34,022
Interest	(21,315)
Total	$ 20,613

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Leases - Summary of Revenue from Master Lease (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Property Subject to or Available for Operating Lease [Line Items]
Fixed rental income	$ 23,160	$ 19,675	$ 68,567	$ 70,474
Original And Holdco Master Lease [Member]
Property Subject to or Available for Operating Lease [Line Items]
Fixed rental income				4,288
Variable rental income		(5,997)	4,510	9,416
Total rental income		$ (5,997)	$ 4,510	$ 13,704

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Debt - Additional Information (Detail) - Term Loan Facility [Member] - USD ($)		9 Months Ended
	May 05, 2020	Sep. 30, 2021	Dec. 31, 2020	Jul. 31, 2018
Debt Instrument [Line Items]
Principal amount outstanding		$ 1,600,000,000
Berkshire Hathaway [Member]
Debt Instrument [Line Items]
Principal amount outstanding				$ 2,000,000,000.0
Line of credit, maturity date		Jul. 31, 2023
Minimum rental income to achieve from tenants on annual basis to access incremental funding facility		$ 200,000,000
Minimum rental income to achieve from tenants for succeeding four consecutive fiscal quarters to access incremental funding facility		200,000,000
Minimum net worth required for loan documentation		$ 1,200,000,000
Default interest rate on overdue amounts excess of base interest rate	2.00%	2.00%
Debt issuance costs		$ 2,100,000
Unamortized debt issuance costs		$ 800,000	$ 1,100,000
'Deferred interest	$ 400,000,000.0
Berkshire Hathaway [Member] | Minimum [Member]
Debt Instrument [Line Items]
Fixed charge coverage ratio for each fiscal quarter till September 30, 2021		1.00%
Fixed charge coverage ratio for each fiscal quarter after September 30, 2021		1.20%
Unencumbered fixed charge coverage ratio for each fiscal quarter till September 30, 2021		1.05%
Unencumbered fixed charge coverage ratio to each fiscal quarter after September 30, 2021		1.30%
Berkshire Hathaway [Member] | Maximum [Member]
Debt Instrument [Line Items]
Unencumbered fixed charge coverage ratio		60.00%
Maximum leverage ratio		65.00%
Berkshire Hathaway [Member] | Maximum [Member] | Unrestricted cash [Member]
Debt Instrument [Line Items]
Available cash	$ 30,000,000.0
Berkshire Hathaway [Member] | Initial Funding [Member]
Debt Instrument [Line Items]
Principal amount outstanding				1,600,000,000
Debt instrument, base annual interest rate		7.00%
Berkshire Hathaway [Member] | Incremental Funding Facility [Member]
Debt Instrument [Line Items]
Principal amount outstanding				$ 400,000,000.0
Debt instrument, base annual interest rate		1.00%

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Income Taxes - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2021
Minimum [Member]
Income Tax Contingency [Line Items]
Distribution of taxable income to qualify as REIT, percent	90.00%

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Fair Value Measurements - Additional Information (Detail) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) Property	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Asset Impairment Charges [Abstract]
Impairment of real estate assets	$ 3,814		$ 14,594	$ 70,053	$ 16,407
Number of properties marketed for sale | Property				5
Minimum [Member]
Asset Impairment Charges [Abstract]
Fair value inputs capitalization rate				6.00%
Maximum [Member]
Asset Impairment Charges [Abstract]
Fair value inputs capitalization rate				12.00%
Fair Value, Inputs, Level 2 [Member]
Asset Impairment Charges [Abstract]
Debt obligations, fair value	1,700,000			$ 1,700,000		$ 1,600,000
Loss On Impairment | Fair Value, Inputs, Level 3 [Member]
Asset Impairment Charges [Abstract]
Impairment of real estate assets	$ 3,800	$ 64,500	$ 14,600	$ 70,100	$ 16,400
Loss On Impairment | Fair Value, Inputs, Level 2 [Member]
Asset Impairment Charges [Abstract]
Impairment resulting from monetization of assets		$ 30,600

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Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	Apr. 18, 2019	Sep. 30, 2021	Dec. 31, 2020	Jul. 07, 2015
Loss Contingencies [Line Items]
Environmental reserve		$ 9.5	$ 9.5	$ 12.0
Minimum [Member] | Sears Holdings Corporation [Member]
Loss Contingencies [Line Items]
Worth of real estate in excess of purchase price paid	$ 649.0
Maximum [Member] | Sears Holdings Corporation [Member]
Loss Contingencies [Line Items]
Worth of real estate in excess of purchase price paid	$ 749.0

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Related Party Disclosure - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Schedule of Other Related Party Transactions [Line Items]
Property development expenditures receivable	$ 27,499	$ 46,570
Unconsolidated Entities [Member]
Schedule of Other Related Party Transactions [Line Items]
Property development expenditures receivable	$ 200	$ 5,000
Operating Partnership [Member] | Sears Holdings Corporation [Member] | ESL [Member]
Schedule of Other Related Party Transactions [Line Items]
Ownership interest percentage held by related party	22.10%
Operating Partnership [Member] | Sears Holdings Corporation [Member] | Class A Common Shares [Member] | ESL [Member]
Schedule of Other Related Party Transactions [Line Items]
Ownership interest percentage held by related party	9.30%

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Non-controlling Interests - Additional Information (Detail) - Operating Partnership [Member]	Sep. 30, 2021
Noncontrolling Interest [Line Items]
Percentage of operating partnership interest held by parent	77.90%
ESL [Member]
Noncontrolling Interest [Line Items]
Ownership interest percentage held by related party	22.10%

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Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended	9 Months Ended		12 Months Ended
	Dec. 14, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2017	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019	Jul. 07, 2015
Class A Common Shares [Member]
Class of Stock [Line Items]
Common shares, issued		43,631,345	43,631,345				38,896,428
Common shares, outstanding		43,631,345	43,631,345	38,645,000		42,795,000	38,896,428	38,645,000	36,897,000
OP Unit exchanges, shares		836,078	4,647,943	1,650,000
Common shares, par value		$ 0.01	$ 0.01				$ 0.01			$ 0.01
Class B Non-Economic Common Shares [Member]
Class of Stock [Line Items]
Common shares, issued		0	0
Common shares, outstanding		0	0
Series A Cumulative Redeemable Preferred Shares [Member]
Class of Stock [Line Items]
Preferred shares, issued					2,800,000
Percentage of preferred dividend rate					7.00%
Preferred shares public offering price per share					$ 25.00
Net proceeds from public offering					$ 66.4
Series A Cumulative Redeemable Preferred Shares [Member] | Scenario, Forecast [Member]
Class of Stock [Line Items]
Preferred shares redemption price per share plus any accrued and unpaid dividends	$ 25.00
Series A Cumulative Redeemable Preferred Shares [Member] | Scenario, Forecast [Member] | Maximum [Member]
Class of Stock [Line Items]
Preferred shares redemption threshold period	120 days

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Shareholders' Equity - Summary of Preferred Stock Dividends and Distributions (Detail) - $ / shares									3 Months Ended		9 Months Ended
	Oct. 26, 2021	Jul. 27, 2021	Apr. 27, 2021	Feb. 23, 2021	Dec. 17, 2020	Sep. 17, 2020	Jun. 09, 2020	Feb. 18, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Dividends Payable [Line Items]
Preferred dividends declared, per share									$ 0.4375	$ 0.4375	$ 1.3125	$ 1.3125
Series A Preferred Shares [Member]
Dividends Payable [Line Items]
Dividends Payable Date Declared Day Month And Year		Jul. 31, 2027	Apr. 30, 2027	Feb. 28, 2023	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2009	Feb. 28, 2018
Dividends Payable Date Of Record Day Month And Year		Sep. 30, 2030	Jun. 30, 2030	Mar. 31, 2031	Dec. 31, 2031	Sep. 30, 2030	Jun. 30, 2030	Mar. 31, 2031
Dividend Payable Date To Be Paid Day Month And Year		Oct. 31, 2015	Jul. 31, 2015	Apr. 30, 2015	Jan. 15, 2021	Oct. 31, 2015	Jul. 31, 2015	Apr. 30, 2015
Preferred dividends declared, per share		$ 0.43750	$ 0.43750	$ 0.43750	$ 0.43750	$ 0.43750	$ 0.43750	$ 0.43750
Series A Preferred Shares [Member] | Subsequent Event [Member]
Dividends Payable [Line Items]
Dividends Payable Date Declared Day Month And Year	Oct. 31, 2026
Dividends Payable Date Of Record Day Month And Year	Dec. 31, 2031
Dividend Payable Date To Be Paid Day Month And Year	Jan. 14, 2022
Preferred dividends declared, per share	$ 0.43750

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Earnings per Share - Reconciliation of Net Income (Loss) and Number of Common Shares Used in Computations of Basic Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Numerator - Basic and Diluted
Net loss	$ (26,349)	$ (72,401)	$ (132,586)	$ (103,272)
Net loss attributable to non-controlling interests	5,815	22,348	31,492	32,627
Preferred dividends	(1,225)	(1,225)	(3,675)	(3,675)
Net loss attributable to common shareholders - Basic and diluted	$ (21,759)	$ (51,278)	$ (104,769)	$ (74,320)
Denominator - Basic and Diluted
Weighted average common shares outstanding	43,631	38,645	41,976	38,172
Weighted average Class A common shares outstanding - Diluted	43,631	38,645	41,976	38,172
Net loss per share attributable to Class A common shareholders - Basic	$ (0.50)	$ (1.33)	$ (2.50)	$ (1.95)
Net loss per share attributable to Class A common shareholders - Diluted	$ (0.50)	$ (1.33)	$ (2.50)	$ (1.95)
Class A Common Shares [Member]
Denominator - Basic and Diluted
Weighted average common shares outstanding	43,631	38,645	41,976	38,172

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Earnings Per Share - Additional Information (Detail) - shares	Sep. 30, 2021	Dec. 31, 2020
Time Based Restricted Shares and Share Units [Member]
Earning Per Share [Line Items]
Non-vested restricted shares outstanding	169,768	157,465

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Share Based Compensation - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jul. 07, 2015
Time Based Restricted Shares and Share Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Restricted Share [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs	$ 3.2	$ 5.7	$ 3.2	$ 5.7
Unrecognized compensation costs, weighted average expected recognition period			2 years 1 month 6 days	1 year 8 months 12 days
Restricted Share [Member] | General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense recognized	$ 0.4	$ 1.4	$ 1.5	$ 3.2
Seritage Growth Properties 2015 Share Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance					3,250,000

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Share Based Compensation - Summary of Restricted Share (Detail) - Restricted Share [Member]	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested restricted shares at beginning of period | shares	157,465
Share units granted | shares	189,349
Restricted shares vested | shares	(143,899)
Restricted shares forfeited | shares	(33,147)
Unvested restricted shares at end of period | shares	169,768
Weighted-Average Grant Date Fair Value, Unvested restricted shares at beginning of period | $ / shares	$ 38.73
Weighted-Average Grant Date Fair Value, Share units granted | $ / shares	21.39
Weighted-Average Grant Date Fair Value, Restricted shares vested | $ / shares	37.30
Weighted-Average Grant Date Fair Value, Restricted shares forefeited | $ / shares	29.65
Weighted-Average Grant Date Fair Value, Unvested restricted shares at end of period | $ / shares	$ 22.38