Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) to “Seaport Entertainment Group,” “SEG,” the “Company,” “we,” “us,” or “our” shall mean the assets, liabilities, and operating activities of Seaport Entertainment Group Inc. The following discussion should be read as a supplement to and should be read in conjunction with our Unaudited Consolidated Financial Statements (“Unaudited Consolidated Financial Statements”) and the related notes included elsewhere in this quarterly report on Form 10-Q (“Quarterly Report”). This discussion contains forward-looking statements that involve risks, uncertainties, assumptions, and other factors, including those described elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of these factors. You are cautioned not to place undue reliance on this information which speaks only as of the date of this Quarterly Report. We are not obligated to update this information, whether as a result of new information, future events or otherwise, except as may be required by law.
All references to numbered Notes are specific to the Unaudited Notes to the Consolidated Financial Statements included in this Quarterly Report. Capitalized terms used, but not defined, in this MD&A have the same meanings as in such Notes.
Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our Unaudited Consolidated Financial Statements and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.
Overview
General Overview
The Company owns and operates a unique collection of assets positioned at the intersection of entertainment and real estate. Our existing portfolio encompasses a wide range of leisure and recreational activities, including live concerts, dining, nightlife, professional sports, and experiential retail. We primarily analyze our portfolio of assets through the lens of our three operating segments: (1) Hospitality, (2) Entertainment, and (3) Landlord Operations, and are focused on realizing value for stockholders primarily through dedicated management of existing assets, expansion of partnerships, strategic acquisitions, and completion or monetization of development and redevelopment projects.
Hospitality
Hospitality represents our ownership interests in various food and beverage operating businesses and sponsorship agreements related to these businesses. We own, either wholly or through partnerships with third parties, and operate, including through license and management agreements, fine dining and casual dining restaurants, cocktail bars, nightlife and entertainment venues (The Fulton, Mister Dips, Carne Mare, Sadie’s and Sadie’s Garden Bar) and our unconsolidated venture, the Lawn Club. These businesses are all our tenants and are part of our Landlord Operations. We also have a 25% interest in JG. We aim to capitalize on opportunities in the food and beverage space to leverage growing consumer appetite for unique restaurant experiences as a catalyst to further expand the Company’s culinary footprint. Our Hospitality-related period-over-period comparisons do not adjust for operational revisions to our asset strategies from period to period, such as opening or closing restaurant concepts or redirecting operations to use space for private events and/or concerts.
Entertainment
Entertainment includes the Las Vegas Aviators Triple-A Minor League Baseball team (the “Aviators”) and the Las Vegas Ballpark, our interest in and to the Fashion Show Mall Air Rights, events and concerts at The Rooftop at Pier 17, and sponsorship agreements related to these venues. The Aviators are a Triple-A affiliate of the Athletics Major League Baseball team and play at the Las Vegas Ballpark, a 10,000-person capacity ballpark located in Downtown Summerlin. The Rooftop at Pier 17 is one of the premier concert venues in New York City that hosts a popular Seaport Concert Series featuring emerging and established musicians alike. We see The Rooftop at Pier 17 as an opportunity to continue to drive events and entertainment growth as we believe that the demand for live music and private events is strong and accelerating.
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Landlord Operations
Landlord Operations represents our ownership interests in, and operation of physical real estate assets located in the Seaport, a historic neighborhood in Lower Manhattan on the banks of the East River and within walking distance of the Brooklyn Bridge. Landlord Operations assets include:
·
Pier 17, a mixed-use building containing restaurants, entertainment, retail and office space, and The Rooftop at Pier 17, an outdoor concert venue;
·
the Tin Building, a historic building leased to the Tin Building by Jean-Georges through February 2026. In February 2026, the Company entered into a lease of 100% of the Tin Building with Lux Entertainment to open the Balloon Museum;
·
the Fulton Market Building, a mixed-use building containing office and retail spaces, including a movie theater, and the Lawn Club, an experiential retail concept focused on classic lawn games and cocktails;
·
the Cobblestones retail and other locations which include the Museum Block, Schermerhorn Row, and more;
·
250 Water Street, a full block development site approved for zoning of affordable and market-rate housing, office, retail, and community-oriented gathering space sold by the Company on February 6, 2026 for gross proceeds of $143.0 million; and
·
85 South Street, an eight-story residential building.
Our assets included in the Landlord Operations segment primarily sit under a long-term ground lease from the City of New York with extension options through 2120. We are focused on continuing to fill vacancies in our Landlord Operations portfolio and believe this to be an opportunity to drive incremental segment growth.
Basis of Presentation
The accompanying Unaudited Consolidated Financial Statements represent the assets, liabilities, and operations of Seaport Entertainment Group Inc. The accompanying Unaudited Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The accompanying Unaudited Consolidated Financial Statements may not be indicative of the Company’s future performance.
For an additional discussion on the basis of presentation of the accompanying Unaudited Consolidated Financial Statements, see Note 1 – Summary of Significant Accounting Policies in the Unaudited Notes to the Consolidated Financial Statements included in this Quarterly Report.
Key Factors Affecting Our Business
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Tin Building and our Investment in the Tin Building by Jean-Georges
The Company owns 100% of the Tin Building which was completed and placed in service in our Landlord Operations segment during the third quarter of 2022. As of and through February 2026, the Company leased 100% of the rentable space in the Tin Building to the Tin Building by Jean-Georges, a Hospitality segment business. The rental revenue and hospitality costs associated with the lease payments are eliminated in the Consolidated Statements of Operations for the three and six months ended June 30, 2025 and for the six months ended June 30, 2026.
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In February 2026, the Company entered into a lease of 100% of the Tin Building with contemporary art experience creator, Lux Entertainment, to open their U.S. flagship location of the Balloon Museum. In connection with the Balloon Museum lease and the commencement of the Company’s landlord obligations, the Tin Building by Jean-Georges ceased operations in February 2026.
Seasonality
Our operations are highly seasonal and are significantly impacted by weather conditions. Concerts at our outdoor venue and Aviators baseball games primarily occur from May through October, and we typically see increased customer traffic at our restaurants during the summer months when the weather is generally warmer and more favorable, which contributes to higher revenue during these periods. However, weather-related disruptions, such as floods and heavy rains, can negatively impact our summer operations. For instance, outdoor concerts may have to be cancelled or rescheduled due to inclement weather, which can result in lost revenue. Similarly, floods can lead to temporary closures of our restaurants and can disrupt our supply chain, leading to potential revenue losses and increased costs.
During the fall and winter months, our operations tend to slow down due to the colder weather, which results in fewer outdoor events and less foot traffic at our restaurants, and the end of the Aviators baseball season. This seasonality pattern results in lower revenues during these periods. Moreover, severe winter weather conditions, such as snowstorms and freezing temperatures, can further deter customers from visiting our restaurants, further impacting our revenues and cash flow. Our seasonality also results in fluctuations in cash and cash equivalents, accounts receivable, deferred expenses, and accounts payable and other liabilities at different times during the year.
Lease Renewals and Occupancy
As of June 30, 2026 and December 31, 2025, the weighted average remaining term of our retail, office, and other properties leases where we are the lessor was approximately eight years, excluding renewal options. The stability of the rental revenue generated by our properties depends principally on our tenants’ ability to pay rent and our ability to collect rents, renew expiring leases, re-lease space upon the expiration or other termination of leases, lease currently vacant properties, and maintain or increase rental rates at our leased properties. To the extent our properties become vacant, we would forego rental income while remaining responsible for the payment of property taxes and maintaining the property until it is re-leased, which could negatively impact our operating results. As of June 30, 2026, our real estate assets at the Seaport were 89% leased or programmed.
Inflationary Pressures and Other Macroeconomic Trends
Financial results across all our segments may be impacted by inflation. In Landlord Operations, certain of our leases contain rent escalators that increase rent at a fixed amount and may not be sufficient during periods of high inflation. For properties leased to third-party tenants, the impact of inflation on our property and operating expenses is limited as substantially all our leases are net leases, and property-level expenses are generally reimbursed by our tenants. Inflation and increased costs may also have an adverse impact on our tenants and their creditworthiness if the increase in property-level expenses is greater than their increase in revenues. For unleased properties and properties occupied by our restaurants, we are more exposed to inflationary pressures on property and operating expenses. For our Hospitality and Entertainment segments, inflationary pressure has a direct impact on our profitability due to increases in our costs, as well as potential reductions in customers that could negatively impact revenue. Although certain indicators have suggested that inflation has made downward progress, the economy continues to be impacted by elevated inflation rates and faces further inflation risk.
Other adverse economic conditions, including slower economic growth and the potential for a recession, could also have an adverse effect on us, our tenants and consumers. For example, geopolitical conflict, rapid changes in U.S. trade policy, new or increased tariffs, retaliatory tariffs and global trade disruptions could negatively impact us or our tenants, including by further aggravating inflation, increasing costs, disrupting supply chains and negatively affecting consumer sentiment and spending.
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Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table sets forth our operating results:
Three Months Ended June 30,
Change
in thousands except percentages
2026
2025
$
%
REVENUES
Hospitality revenue
$
7,020
$
15,177
$
(8,157)
(54)%
Entertainment revenue
19,639
19,908
(269)
(1)%
Rental revenue
7,053
4,232
2,821
67%
Other revenue
578
484
94
19%
Total revenue
34,290
39,801
(5,511)
(14)%
EXPENSES
Hospitality costs
6,874
17,845
(10,971)
(61)%
Entertainment costs
16,056
15,281
775
5%
Operating costs
6,900
7,684
(784)
(10)%
General and administrative
6,639
8,291
(1,652)
(20)%
Depreciation and amortization
6,818
6,581
237
4%
Total expenses
43,287
55,682
(12,395)
(22)%
OTHER
Provision for impairment
—
—
—
0%
Other income (loss), net
(672)
(126)
(546)
(433)%
Total other
(2,106)
(126)
(1,980)
(1,571)%
Operating loss
(11,103)
(16,007)
4,904
31%
Interest income (expense)
689
801
(112)
14%
Equity in earnings (losses) from unconsolidated ventures
306
782
(476)
61%
Loss before income taxes
(10,108)
(14,424)
4,316
30%
Income tax (benefit) expense
—
—
—
0%
Net loss
(10,108)
(14,424)
4,316
30%
Preferred distributions to noncontrolling interest in subsidiary
(350)
(350)
—
0%
Net loss attributable to common stockholders
$
(10,458)
$
(14,774)
$
4,316
29%
Net loss attributable to common stockholders decreased $4.3 million, or 29%, to $10.5 million for the three months ended June 30, 2026, compared to $14.8 million in the prior-year period, primarily due to a $11.0 million decrease in hospitality costs, a $2.8 million increase in rental revenue, a $1.7 million decrease of general and administrative expense, and a $0.8 million decrease in operating costs, partially offset by a $8.2 million decrease to hospitality revenue, a $0.8 million increase in entertainment costs, a $0.5 million increase in other income (loss), net, and a $0.5 million decrease in equity in earnings (losses) from unconsolidated ventures.
Items Included in Segment Operating EBITDA
Segment Operating EBITDA for each segment includes certain intersegment revenues and expenses that eliminate in the Consolidated Statements of Operations for all periods presented. See “Segment Operating Results” for discussion of significant variances in revenues and expenses included in Segment Operating EBITDA.
Items Excluded from Segment Operating EBITDA
The following includes information on the significant variances in expenses and other items not directly related to segment activities.
General and Administrative . General and administrative costs decreased $1.7 million to $6.6 million for the three months ended June 30, 2026, compared to $8.3 million in the prior-year period, primarily due to a $2.0 million decrease
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in labor costs, and a $0.4 million decrease in legal and consulting costs, partially offset by a $1.2 million increase in executive separation costs.
Depreciation and Amortization . Depreciation and amortization increased $0.2 million to $6.8 million for the three months ended June 30, 2026, compared to $6.6 million in the prior-year period, primarily due to $1.5 million of disposal of assets due to the tenant closures discussed below; partially offset by a $1.2 million decrease resulting from a lower depreciable asset basis.
Interest Income (Expense) . Interest income decreased $0.1 million to $0.7 million for the three months ended June 30, 2026 compared to $0.8 million income in the prior-year period.
Other Income (Loss), net . Other loss, net increased $0.6 million to $0.7 million loss for the three months ended June 30, 2026 compared to $0.1 million loss in the prior-year period. This change was primarily due to $0.2 million increase in restructuring costs primarily related to restaurant closures during the period, as well as $0.3 million increase in pre-opening costs related to new ventures during the period.
Equity in Earnings (Losses) from Unconsolidated Ventures. Equity in earnings (losses) from unconsolidated ventures decreased $0.5 million to earnings of $0.3 million for the three months ended June 30, 2026, compared to earnings of $0.8 million in the prior-year period. This change was primarily due to a $0.3 million decrease in income for the Lawn Club and $0.2 million decrease in income from JG.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table sets forth our operating results:
Six Months Ended June 30,
Change
in thousands except percentages
2026
2025
$
%
REVENUES
Hospitality revenue
$
12,128
$
22,912
$
(10,784)
(47)%
Entertainment revenue
24,137
24,117
20
0%
Rental revenue
9,835
8,021
1,814
23%
Other revenue
927
820
107
13%
Total revenue
47,027
55,870
(8,843)
(16)%
EXPENSES
Hospitality costs
17,101
33,587
(16,486)
(49)%
Entertainment costs
23,344
22,358
986
4%
Operating costs
13,884
15,763
(1,879)
(12)%
General and administrative
14,695
18,073
(3,378)
(19)%
Depreciation and amortization
26,931
14,672
12,259
84%
Total expenses
95,955
104,453
(8,498)
(8)%
OTHER
Loss on assets held for sale
(1,434)
—
(1,434)
(100)%
Provision for impairment
(339)
—
(339)
(100)%
Other income (loss), net
(2,921)
(126)
(2,795)
2218%
Total other
(4,694)
(126)
(4,568)
3625%
Operating loss
(53,622)
(48,709)
(4,913)
(10)%
Interest income (expense)
419
1,795
(1,376)
77%
Equity in earnings (losses) from unconsolidated ventures
(658)
952
(1,610)
169%
Loss before income taxes
(53,861)
(45,962)
(7,899)
17%
Income tax (benefit) expense
—
—
—
0%
Net loss
(53,861)
(45,962)
(7,899)
17%
Preferred distributions to noncontrolling interest in subsidiary
(700)
(700)
—
0%
Net loss attributable to common stockholders
$
(54,561)
$
(46,662)
$
(7,899)
17%
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Net loss attributable to common stockholders increased $7.9 million, or 17%, to $54.6 million for the six months ended June 30, 2026, compared to $46.7 million in the prior-year period, primarily due to a $12.3 million increase in depreciation and amortization, a $10.8 million decrease in hospitality revenue, a $1.0 million increase in entertainment costs, a $2.8 million increase to other (loss), net, a $1.4 million increase to loss on assets held for sale, a $1.4 million decrease in interest income, and a $1.6 million decrease in equity earnings (losses), partially offset by a $16.5 million decrease in hospitality costs, a $1.9 million decrease in operating costs, a $3.4 million decrease in general and administrative expense, and a $1.8 million increase to rental revenue.
Items Included in Segment Operating EBITDA
Segment Operating EBITDA for each segment includes certain intersegment revenues and expenses that eliminate in the Consolidated Statements of Operations for all periods presented. See “Segment Operating Results” for discussion of significant variances in revenues and expenses included in Segment Operating EBITDA.
Items Excluded from Segment Operating EBITDA
The following includes information on the significant variances in expenses and other items not directly related to segment activities.
General and Administrative . General and administrative costs decreased $3.4 million to $14.7 million for the six months ended June 30, 2026, compared to $18.1 million in the prior-year period, primarily due to a $3.8 million decrease in labor costs, and a $1.1 million decrease in legal and consulting costs, partially offset by a $2.6 million increase in severance costs.
Depreciation and Amortization . Depreciation and amortization increased $12.2 million to $26.9 million for the six months ended June 30, 2026, compared to $14.7 million in the prior-year period, primarily due to disposal of assets at several tenants and accelerated depreciation on assets with updated estimated useful lives resulting from the closure of the Tin Building by Jean-Georges in February 2026, partially offset by a decrease resulting from a lower depreciable asset basis.
Interest Income (Expense) . Interest income decreased $1.4 million to $0.4 million for the six months ended June 30, 2026 compared to $1.8 million income in the prior-year period. This change is primarily due to a $1.0 million decrease in interest income earned, and a $0.4 million decrease in amounts capitalized to development assets which increased interest expense .
Other Income (Loss), net . Other loss, net increased $2.8 million to $2.9 million loss for the six months ended June 30, 2026 compared to $0.1 million loss in the prior-year period. This change was due to $2.2 million increase in restructuring costs primarily related to restaurant closures during the period, and a $0.5 million increase in pre-opening costs related to new ventures during the period.
Equity in Earnings (Losses) from Unconsolidated Ventures. Equity in earnings (losses) from unconsolidated ventures decreased $1.6 million to losses of $0.6 million for the six months ended June 30, 2026, compared to earnings of $1.0 million in the prior-year period. This change was primarily due to a $0.8 million decrease in income for the Lawn Club and a $0.8 million decrease in income for JG.
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Segment Operating Results
Hospitality
Segment Operating EBITDA
The following table presents Operating EBITDA for Hospitality:
Three Months Ended
Six Months Ended
Hospitality Operating EBITDA
June 30,
Change
June 30,
Change
in thousands except percentages
2026
2025
$
%
2026
2025
$
%
Hospitality revenue (a)
$
7,051
$
15,197
$
(8,146)
(54)%
$
12,169
$
22,933
$
(10,764)
(47)%
Other revenue
133
—
133
100%
262
—
262
100%
Total revenues
7,184
15,197
(8,013)
(53)%
12,431
22,933
(10,502)
(46)%
Hospitality costs (b)
(8,333)
(23,079)
14,746
64%
(21,014)
(43,508)
22,494
52%
Total operating expenses
(8,333)
(23,079)
14,746
64%
(21,014)
(43,508)
22,494
(52)%
Operating EBITDA
$
(1,149)
$
(7,882)
$
6,600
85%
(8,845)
(20,575)
11,730
57%
(a) Hospitality revenue includes amounts related to intercompany transactions that eliminate in the Consolidated Statement of Operations.
(b) Hospitality costs include amounts related to intercompany leases that eliminate in the Statement of Operations.
For the three months ended June 30, 2026
Hospitality Operating EBITDA increased $6.6 million compared to the prior-year period primarily due to the following:
Hospitality Revenue
Hospitality revenue decreased $8.1 million to $7.1 million for the three months ended June 30, 2026, compared to $15.2 million in the prior-year period. This change was primarily due to a decrease as a result of the closure of the Tin Building by Jean-Georges in February 2026 as well as the closure of Malibu Farms, partially offset by the openings at Sadie’s and Sadie’s Garden Bar.
Hospitality Costs
Hospitality costs decreased $14.8 million to $8.3 million for the three months ended June 30, 2026, compared to $23.1 million in the prior-year period. This is primarily resulting from the closure of the Tin Building by Jean-Georges in February 2026 as well as the closure of Malibu Farms, partially offset by the new openings of Sadie’s and Sadie’s Garden Bar.
For the six months ended June 30, 2026
Hospitality Operating EBITDA increased $11.7 million compared to the prior-year period primarily due to the following:
Hospitality Revenue
Hospitality revenue decreased $10.8 million to $12.1 million for the six months ended June 30, 2026, compared to $22.9 million in the prior-year period. This change was primarily due to a decrease as a result of the closure of the Tin Building by Jean-Georges in February 2026 as well as Malibu Farms, partially offset by the new openings at Sadie’s and Sadie’s Garden Bar.
Hospitality Costs
Hospitality costs decreased $22.5 million to $21.0 million for the six months ended June 30, 2026, compared to $43.5 million in the prior-year period. This is primarily resulting from the closure of the Tin Building by Jean-Georges in February 2026 as well as Malibu Farms, partially offset by the new openings of Sadie’s and Sadie’s Garden Bar.
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Entertainment
Segment Operating EBITDA
The following table presents Operating EBITDA for Entertainment:
Entertainment Operating EBITDA
Three Months Ended June 30,
Change
Six Months Ended June 30,
Change
in thousands except percentages
2026
2025
$
%
2026
2025
$
%
Entertainment revenue (a)
$
19,823
$
20,118
$
(295)
(1)%
$
24,321
$
24,327
$
(6)
0%
Total revenues
19,823
20,118
(295)
(1)%
24,321
24,327
(6)
0%
Entertainment costs (b)
(16,169)
(15,411)
(758)
(5)%
(23,459)
(22,488)
(971)
(4)%
Total operating expenses
(16,169)
(15,411)
(758)
(5)%
(23,459)
(22,488)
(971)
(4)%
Operating EBITDA
$
3,654
$
4,707
$
(1,053)
(22)%
$
862
$
1,839
$
(977)
(53)%
(a) Entertainment revenue includes amounts related to intercompany transactions that eliminate in the Consolidated Statement of Operations.
(b) Entertainment costs include amounts related to intercompany transactions that eliminate in the Consolidated Statement of Operations.
For the three months ended June 30, 2026
Entertainment Operating EBITDA decreased $1.1 million compared to the prior-year period primarily due to the following:
Entertainment Revenue
Entertainment revenue decreased $0.3 million to $19.8 million for the three months ended June 30, 2026 compared to $20.1 million in the prior-year period. This change was primarily due to decrease in sponsorship revenue at the Seaport as well as a decrease in revenues at the Aviators due to fewer games compared to the prior period, partially offset by an increase in special events held at the Las Vegas Ballpark.
Entertainment Costs
Entertainment costs increased $0.8 million to $16.2 million for the three months ended June 30, 2026 compared to $15.4 million in the prior-year period. This change was primarily due to increased operating costs at The Rooftop at Pier 17, partially offset by decreased operating costs at the Aviators due to fewer games compared to the prior period.
For the six months ended June 30, 2026
Entertainment Operating EBITDA decreased $1.0 million compared to the prior-year period primarily due to the following:
Entertainment Revenue
Entertainment revenue remained unchanged at $24.3 million for the six months ended June 30, 2026 compared to $24.3 million in the prior-year period.
Entertainment Costs
Entertainment costs increased $1.0 million to $23.5 million for the six months ended June 30, 2026 compared to $22.5 million in the prior-year period. This change was primarily due to increased field replacement costs at the Aviators, as well as increased rooftop event operating costs.
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Landlord Operations
Segment Operating EBITDA
The following table presents Operating EBITDA for Landlord Operations:
Three Months Ended
Six Months Ended
Landlord Operations Operating EBITDA
June 30,
Change
June 30,
Change
in thousands except percentages
2026
2025
$
%
2026
2025
$
%
Rental revenue (a)
$
8,456
$
9,287
$
(831)
(9)%
$
13,640
$
17,751
$
(4,111)
(23)%
Other revenue
446
484
(38)
(8)%
735
820
(85)
(10)%
Total revenues
8,902
9,771
(869)
(9)%
14,375
18,571
(4,196)
(23)%
Operating costs (b)
(6,947)
(7,739)
792
10%
(13,932)
(15,818)
1,886
12%
Total operating expenses
(6,947)
(7,739)
792
10%
(13,932)
(15,818)
1,886
12%
Operating EBITDA
$
1,955
$
2,032
$
(77)
(4)%
$
443
$
2,753
$
(2,310)
84%
(a) Rental revenue includes amounts related to intercompany leases that eliminate in the Consolidated Statement of Operations.
(b) Operating costs include amounts related to intercompany transactions that eliminate in the Consolidated Statement of Operations.
For the three months ended June 30, 2026
Landlord Operations Operating EBITDA decreased $0.1 million compared to the prior-year period primarily due to the following:
Rental Revenue
Rental revenue decreased $0.8 million to $8.5 million for the three months ended June 30, 2026, compared to $9.3 million in the prior-year period. This change was primarily driven by a decrease due to the closure of the Tin Building by Jean-Georges in February 2026, which reduced intercompany rental revenue, partially offset by current period lease termination income and accelerated rents associated with one lease termination as well as increased rental fees from events on Pier 17.
Other Revenue
Other revenue decreased $0.1 million to $0.4 million for the three months ended June 30, 2026, compared to $0.5 million for the prior-year period as a result of a decrease in sponsorship revenues attributable to landlord operations.
Operating Costs
Operating costs decreased $0.8 million to $6.9 million for the three months ended June 30, 2026, compared to $7.7 million in the prior year period. This change was due to decreases in marketing, maintenance, insurance, and other landlord specific costs period over period.
For the six months ended June 30, 2026
Landlord Operations Operating EBITDA decreased $2.3 million compared to the prior-year period primarily due to the following:
Rental Revenue
Rental revenue decreased $4.1 million to $13.6 million for the six months ended June 30, 2026, compared to $17.7 million in the prior-year period. This change was primarily driven by a decrease due to the closure of the Tin Building by Jean-Georges in February 2026, which reduced intercompany rental revenue, partially offset by current period lease termination income and accelerated rents associated with one lease termination in the quarter.
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Other Revenue
Other revenue decreased $0.1 million to $0.7 million for the six months ended June 30, 2026, compared to $0.8 million for the prior-year period as a result of a decrease in sponsorship revenues attributable to landlord operations.
Operating Costs
Operating costs decreased $1.9 million to $13.9 million for the six months ended June 30, 2026, compared to $15.8 million in the prior year period. This change was due to decreases in marketing, maintenance, insurance, and other landlord specific costs period over period.
Liquidity and Capital Resources
As of June 30, 2026 and December 31, 2025, our cash and cash equivalents were $117.8 million and $77.8 million, respectively. As of June 30, 2026 and December 31, 2025, our restricted cash was $9.2 million and $9.6 million, respectively. Restricted cash is segregated in escrow accounts related to payment of principal and interest on the Company’s outstanding mortgages payable as well as the escrow funds related to post-closing obligations related to the sale of the 250 Water Street.
As of June 30, 2026 and December 31, 2025, we had third-party mortgages payable of $38.1 million and $100.4 million, respectively. These balances included mortgages payable related to our 2 50 Water Street development asset, a variable-rate mortgage which required monthly installments of only interest, and the Las Vegas Ballpark, a fixed-rate mortgage which requires semi-annual installments of principal and interest. In February 2026, the Company paid off the mortgage loan on 250 Water Street in conjunction with the sale of the property. As of June 30, 2026 and December 31, 2025, the Company’s secured mortgage loans did not have any undrawn lender commitment available to be drawn for property development. See Note 4 – Mortgages Payable, Net in the Unaudited Notes to the Consolidated Financial Statements included in this Quarterly Report for additional information.
Additionally, on July 31, 2024, a subsidiary of HHH that became our subsidiary in connection with the Separation, issued 10,000 shares of 14.000% Series A preferred stock, par value $0.01 per share, with an aggregate liquidation preference of $10.0 million.
On March 10, 2026, the Company filed a shelf registration statement on Form S-3 relating to the registration and potential issuance of common stock, preferred stock, warrants, rights, and units with a maximum aggregate offering price of up to $150.0 million (the “Shelf Registration Statement”). The Securities and Exchange Commission declared the Shelf Registration Statement effective on March 16, 2026.
Management believes that our existing cash balances and restricted cash balances, along with access to capital markets, provide (i) adequate liquidity to meet all of our current and long-term (beyond 12 months) obligations when due, including our third-party mortgage payable, and (ii) adequate liquidity to fund capital expenditures and development and redevelopment projects. However, our access to the capital markets and the availability of financing on acceptable terms and conditions in the future will be impacted by many factors, including (1) our credit ratings, including the lowering of any of our credit ratings, or the absence of a credit rating, (2) the liquidity of the overall capital markets, and (3) the current state of the economy and, accordingly, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms in the future, or at all, which could have a negative impact on our liquidity and capital resources.
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Cash Flows
The following table sets forth a summary of our cash flows:
Six Months Ended June 30,
in thousands
2026
2025
Cash used in operating activities
$
(11,763)
$
(21,232)
Cash provided by (used in) investing activities
115,172
(18,751)
Cash used in financing activities
(63,829)
(2,499)
Operating Activities
Cash used in operating activities decreased $9.4 million to $11.8 million in the six months ended June 30, 2026, compared to $21.2 million in the prior-year period. The decrease primarily relates to changes in cash used in operating activities in each of our segments and decreased general and administrative expenses.
Investing Activities
Cash provided by investing activities increased $134.0 million to $115.2 million in the six months ended June 30, 2026, compared to $18.8 million of cash used in investing activities in the prior-year period. The increase in cash provided by investing activities was primarily related to proceeds from the sale of 250 Water Street.
Financing Activities
Cash used in financing activities increased $61.3 million to $63.8 million in the six months ended June 30, 2026, compared to $2.5 million in the prior-year period, primarily due to the payment of the mortgage loan on 250 Water Street.
Contractual Obligations
We have material contractual obligations that arise in the normal course of business.
We have an outstanding mortgage payable related to the Las Vegas Ballpark, which is collateralized by the Las Vegas Ballpark. A summary of our mortgages payable as of June 30, 2026 and December 31, 2025 can be found in Note 4 – Mortgages Payable, Net in the Unaudited Notes to the Consolidated Financial Statements included in this Quarterly Report.
We lease land or buildings at certain properties from third parties. Rental payments are expensed as incurred and have been, to the extent applicable, straight-lined over the term of the lease. Contractual rental expense was $1.8 million and $1.7 million for the three months ended June 30, 2026 and 2025, respectively, and $3.5 million and $3.3 million for the six months ended June 30, 2026 and 2025, respectively. The amortization of straight‑line rents included in the contractual rent amount was $0.5 million and $0.3 million for the three months ended June 30, 2026 and 2025, respectively, and $1.0 million and $1.1 million for the six months ended June 30, 2026 and 2025, respectively. A summary of our lease obligations as of June 30, 2026 and December 31, 2025, can be found in Note 9 – Leases in the Unaudited Notes to the Consolidated Financial Statements included in this Quarterly Report.
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Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires management to make informed judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.
There have been no material changes to our Critical Accounting Estimates as described within “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K Filed with the SEC on March 4, 2026.
Impairments
Methodology
We review our long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount is not expected to be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is expensed to operations and the carrying amount of the asset is reduced. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset.
Judgments and Uncertainties
An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value. The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, pricing, development costs, sales pace and capitalization rates, selling costs, and estimated holding periods for the applicable assets. As such, the evaluation of anticipated cash flows is highly subjective and is based in part on assumptions that could differ materially from actual results in future periods. Unfavorable changes in any of the primary assumptions could result in a reduction of anticipated future cash flows and could indicate property impairment. Uncertainties related to the primary assumptions could affect the timing of an impairment. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.
Variable Interest Entities
Methodology
Our Unaudited Consolidated Financial Statements include all of our accounts, including our majority owned and controlled subsidiaries and variable interest entities (“VIEs”) for which we are the primary beneficiary. If the Company determined it was not the primary beneficiary of a VIE during the three and six months ended June 30, 2026 and 2025, the Company did not consolidate the VIE in which it holds a variable interest.
Judgments and Uncertainties
The Company determines whether it is the primary beneficiary of a VIE upon initial involvement with a VIE and reassesses whether it is the primary beneficiary of a VIE on an ongoing basis. The determination of whether an entity is a VIE and whether the Company is the primary beneficiary of a VIE is based upon facts and circumstances for the VIE and requires significant judgments such as whether the entity is a VIE, whether the Company’s interest in a VIE is a variable interest, the determination of the activities that most significantly impact the economic performance of the entity, whether the Company controls those activities, and whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.
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Investments in Unconsolidated Ventures
Methodology
The Company’s investments in unconsolidated ventures are accounted for under the equity method to the extent that, based on contractual rights associated with the investments, the Company can exert significant influence over a venture’s operations. Under the equity method, the Company’s investment in the venture is recorded at cost and is subsequently adjusted to recognize the Company’s allocable share of the earnings or losses of the venture. Dividends and distributions received by the business are recognized as a reduction in the carrying amount of the investment.
The Company evaluates its equity method investments for significance in accordance with Regulation S-X, Rule 3-09 and Regulation S-X, Rule 4-08(g) and presents separate annual financial statements or summarized financial information, respectively, as required by those rules.
For investments in ventures where the Company has virtually no influence over operations and the investments do not have a readily determinable fair value, the business has elected the measurement alternative to carry the securities at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the issuer.
Judgments and Uncertainties
Generally, joint venture operating agreements provide that assets, liabilities, funding obligations, profits and losses, and cash flows are shared in accordance with ownership percentages. For certain equity method investments, various provisions in the joint venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and preferred returns may result in the Company’s economic interest differing from its stated ownership or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities. For these investments, the Company recognizes income or loss based on the joint venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing percentage.
Capitalization of Development Costs
Methodology
Development costs, which primarily include direct costs related to placing the asset in service associated with specific development properties, are capitalized as part of the property being developed. Construction and improvement costs incurred in connection with the development of new properties, or the redevelopment of existing properties are capitalized before they are placed into service. Costs include planning, engineering, design, direct material, labor and subcontract costs. Real estate taxes, utilities, direct legal and professional fees related to the sale of a specific unit, interest, insurance costs and certain employee costs incurred during construction periods are also capitalized. Capitalization commences when the development activities begin and cease when a project is completed, put on hold or at the date that the Company decides not to move forward with a project. Capitalized costs related to a project where the Company has determined not to move forward are expensed if they are not deemed recoverable. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Demolition costs associated with redevelopments are expensed as incurred unless the demolition was included in the Company’s development plans and imminent as of the acquisition date of an asset. Once the assets are placed into service, they are depreciated in accordance with the Company’s policy. In the event that management no longer has the ability or intent to complete a development, the costs previously capitalized are evaluated for impairment.
Judgments and Uncertainties
The capitalization of development costs requires judgment, and can directly and materially impact our results of operations because, for example, (i) if we do not capitalize costs that should be capitalized, then our operating expenses would be overstated during the development period, and the subsequent depreciation of the developed real estate would be understated, or (ii) if we capitalize costs that should not be capitalized, then our operating expenses would be understated
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during the development period, and the subsequent depreciation of the real estate would be overstated. For the six months ended June 30, 2026 and 2025, we capitalized development costs of $0.0 million and $5.2 million, respectively.