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Item 1. Financial Statements

2024-11-07 compared with 2024-08-22 · 462 added, 189 removed, 405 unchanged (62% of the section changed)

Financial Statements

SEAPORT ENTERTAINMENT DIVISION OF HOWARD HUGHES

Condensed Combined Balance Sheets

SEAPORT ENTERTAINMENT GROUP INC.

Condensed Consolidated and Combined Balance Sheets

September 30,

in thousands except par value amounts

Buildings and equipment

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Commitments and Contingencies (see Note 7)

Preferred stock, $ 0.01 par value, 20,000 shares authorized, none issued or outstanding

Common stock, $ 0.01 par value, 480,000 shares authorized, 5,704 issued and outstanding in 2024 and none issued or outstanding in 2023

Additional paid in capital

Accumulated deficit

Net parent investment

Stockholders' equity

Noncontrolling interest in subsidiary

Total liabilities and equity

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

SEAPORT ENTERTAINMENT DIVISION OF HOWARD HUGHES

Condensed Combined Statements of Operations

Three months ended June 30,

Six months ended June 30,

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

SEAPORT ENTERTAINMENT GROUP INC.

Condensed Consolidated and Combined Statements of Operations

Three months ended September 30,

Nine months ended September 30,

in thousands except share amounts

Sponsorships, events, and entertainment revenue

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Total expenses

Provision for impairment

Other income (loss), net

Operating loss

Interest expense, net

Equity in losses from unconsolidated ventures

Loss before income taxes

Income tax (benefit) expense

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

SEAPORT ENTERTAINMENT DIVISION OF HOWARD HUGHES

Condensed Consolidated Statements of Cash Flows

Six months ended June 30,

Operating income (loss)

Interest income (expense)

Equity in earnings (losses) from unconsolidated ventures

Loss on early extinguishment of debt

Income (loss) before income taxes

Income tax expense (benefit)

Preferred distributions to noncontrolling interest in subsidiary

Net loss attributable to common stockholders

Total weighted average shares

Earnings (loss) per share attributable to common shareholders

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

SEAPORT ENTERTAINMENT GROUP INC.

Condensed Consolidated and Combined Statements of Cash Flows

Nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

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Stock compensation expense

(Gain) loss on extinguishment of debt

Impairment charges

Equity in losses from unconsolidated ventures and distributions

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CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from mortgages payable

Deferred financing costs and bond issuance costs

Principal payments on mortgages payable

Preferred distributions to noncontrolling interest in subsidiary

Net transfers from parent

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Capitalized stock compensation

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

SEAPORT ENTERTAINMENT DIVISION OF HOWARD HUGHES

Condensed Combined Statements of Equity

Balance, March 31, 2024

Net transfers from parent

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

SEAPORT ENTERTAINMENT GROUP INC.

Condensed Consolidated and Combined Statements of Equity

Additional paid

Stockholders'

Noncontrolling

Balance, June 30, 2024

Balance, March 31, 2023

Net income (loss)

Net transfers from parent

Issuance of noncontrolling interests

Reclassification of net parent investment to common stock and additional paid in capital

Preferred distributions to noncontrolling interest in subsidiary

Stock compensation

Balance, September 30, 2024

Balance, June 30, 2023

Net transfers from parent

Balance, September 30, 2023

Balance, December 31, 2023

Net income (loss)

Net transfers from parent

Balance, June 30, 2024

Issuance of noncontrolling interests

Reclassification of net parent investment to common stock and additional paid in capital

Preferred distributions to noncontrolling interest in subsidiary

Stock compensation

Balance, September 30, 2024

Balance, December 31, 2022

Net transfers from parent

Balance, June 30, 2023

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

SEAPORT ENTERTAINMENT DIVISION OF HOWARD HUGHES

Notes to Condensed Combined Financial Statements

Balance, September 30, 2023

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

SEAPORT ENTERTAINMENT GROUP INC.

Notes to Condensed Consolidated and Combined Financial Statements

(Dollars in thousands, unless otherwise stated)

Summary of Significant Accounting Policies

Description of the Company On October 5, 2023, Howard Hughes Holdings Inc.

(“HHH”) announced its intent to form a new division, the Seaport Entertainment division of Howard Hughes (“Seaport Entertainment division”), that includes HHH’s entertainment-related real estate assets and operations, which are primarily in New York and Las Vegas, including the Seaport neighborhood in Lower Manhattan (the “Seaport”), 250 Water Street, a one-acre development site directly adjacent to the Seaport, a 25 % ownership stake in Jean-Georges Restaurants as well as other partnerships, the Las Vegas Aviators Triple-A Minor League Baseball team (the “Aviators”) and the Las Vegas Ballpark, and an interest in and to 80 % of the air rights above the Fashion Show mall in Las Vegas.

HHH intended to separate the Seaport Entertainment division into a stand-alone publicly traded company, Seaport Entertainment Group Inc.

(“SEG” or the “Company”), through the distribution of all of the outstanding shares of common stock of SEG to HHH’s stockholders on a pro rata basis in a distribution intended to be tax-free for U.S.

Description of the Company

On July 31, 2024, the previously announced separation (the “Separation”) of Seaport Entertainment Group Inc.

(“SEG” or the “Company”) from Howard Hughes Holdings Inc.

(“HHH”) was completed.

The Separation was achieved through HHH’s pro rata distribution of 100 % of the then-outstanding shares of SEG common stock to HHH’s stockholders in a distribution intended to be tax-free for U.S.

federal income tax purposes, except for cash received in lieu of fractional shares of common stock (the “Separation”).

On July 31, 2024, the Separation of the Company was completed.

Under the terms of the Separation, each stockholder who held HHH common stock as of the close of business on July 29, 2024, the record date for the distribution, received one share of SEG common stock for every nine shares of HHH common stock held as of the close of business on such date.

SEG common stock began trading on the NYSE American stock exchange on August 1, 2024, under the symbol “SEG”.

Prior to the Separation, the Company’s portfolio consisted of the Seaport Entertainment division of Howard Hughes (the “Seaport Entertainment division”), which included HHH’s entertainment-related real estate assets and operations, which are primarily in New York and Las Vegas, including the Seaport neighborhood in Lower Manhattan (the “Seaport”), 250 Water Street, a one-acre development site directly adjacent to the Seaport, a 25 % ownership stake in Jean-Georges Restaurants as well as other partnerships, the Las Vegas Aviators Triple-A Minor League Baseball team (the “Aviators”) and the Las Vegas Ballpark, and an interest in and to 80 % of the air rights above the Fashion Show mall in Las Vegas.

In connection with the Separation, on July 31, 2024, the Company entered into a separation and distribution agreement with HHH.

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The Revolving Credit Agreement provides for a revolving commitment of $ 5.0 million, with an interest rate of 10.0 % and a term of 1 year , which may be extended for an additional 6 months at the discretion of HHH.

The Company does not currently have any outstanding borrowings under this agreement.

The Company’s obligation under the Revolving Credit Agreement will be unsecured and the agreement provides for the mandatory prepayment of the revolving loans from the net proceeds of the Rights Offering and asset sales by the Company.

The Revolving Credit Agreement requires the Company to comply with a number of customary covenants and includes customary provisions relating to the occurrence of events of default.

Further in connection with certain restructuring transactions to effectuate the Separation, on July 31, 2024, a subsidiary of the Company 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 (the “Series A Preferred Stock”) to HHH in exchange for the contribution by HHH of certain assets.

The Company’s obligation under the Revolving Credit Agreement are unsecured, and the agreement provides for the mandatory prepayment of any revolving loans from the net proceeds of the Rights Offering (defined below) and asset sales by the Company.

The Company does not currently have any outstanding borrowings under this agreement, nor were there any outstanding borrowings at the completion of the Rights Offering.

Further in connection with certain restructuring transactions to effectuate the Separation, on July 31, 2024, a subsidiary of HHH that became the Company’s 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 (the “Series A Preferred Stock”).

The Series A Preferred Stock ranks senior to the Company’s interest in its subsidiary with respect to dividend rights and rights upon liquidation, dissolution and other considerations.

The Series A Preferred Stock has no maturity date and will remain outstanding unless redeemed.

The Series A Preferred Stock is not redeemable by the Company prior to July 11, 2029 except under limited circumstances intended to preserve certain tax benefits for HHH, as defined in the subsidiary’s Amended and Restated Certificate of Incorporation designating the Series A Preferred Stock.

The Company expects to conduct a rights offering (the “Rights Offering”), in the form of a pro rata distribution at no charge to holders of our common stock of transferable subscription rights to purchase up to an aggregate of 7,000,000 shares of its common stock at a cash subscription price of $ 25 per whole share.

In connection with the Rights Offering, the Company has entered into a backstop agreement with Pershing Square, which through investment funds advised by it, is our largest stockholder.

Pursuant to that agreement Pershing Square has agreed to (i) exercise its pro rata subscription right with respect to the Rights Offering at a price of $ 25 per share of the Company’s common stock and (ii) purchase any shares not purchased upon the expiration of the Rights Offering at the Rights Offering price, up to $ 175 million in the aggregate.

The backstop agreement could result in Pershing Square’s affiliated funds owning as much as approximately 72.3 % of the Company’s common stock if no other stockholders participate in the Rights Offering.

Principles of Combination and Basis of Presentation The accompanying Unaudited Condensed Combined Financial Statements represent the assets, liabilities, and operations related to the Seaport Entertainment division of Howard Hughes to be transferred to Seaport Entertainment Group Inc.

as well as the assets, liabilities and operations of Seaport Entertainment Group Inc.

The Series A Preferred Stock is not redeemable by the Company prior to July 11, 2029 except under limited circumstances intended to preserve certain tax benefits for HHH.

On September 23, 2024, the Company commenced a rights offering (the “Rights Offering”), in the form of a pro rata distribution at no charge to holders of SEG common stock of transferable subscription rights to purchase up to an aggregate of 7,000,000 shares of its common stock at a cash subscription price of $ 25.00 per whole share.

In connection with the Rights Offering, and prior to the Separation, the Company entered into a backstop agreement with Pershing Square, which through investment funds advised by it, is SEG’s largest stockholder.

Pursuant to that agreement Pershing Square agreed to (i) exercise its pro rata subscription right with respect to the Rights Offering at a price of $ 25.00 per share of the Company’s common stock and (ii) purchase any shares not purchased upon the expiration of the Rights Offering at the Rights Offering price, up to $ 175 million in the aggregate.

On October 17, 2024, the Company completed the Rights Offering and issued an aggregate 7.0 million shares of common stock at the subscription price of $ 25.00 per whole share for total gross proceeds of $ 175.0 million.

Principles of Combination and Basis of Presentation

The accompanying Unaudited Condensed Consolidated and Combined Financial Statements represent the assets, liabilities, and operations of Seaport Entertainment Group Inc.

as well as the assets, liabilities and operations related to the Seaport Entertainment division of Howard Hughes prior to the Separation that were transferred to Seaport Entertainment Group Inc.

on July 31, 2024 in connection with the Separation.

The results of Seaport Entertainment Group Inc.

are referred to throughout these Unaudited Combined Financial Statements as “Seaport Entertainment Group”, “SEG”, “the Company”, “we”, “us” or “our”.

The accompanying Unaudited Condensed Combined Financial Statements have been prepared on a standalone basis derived from the consolidated financial statements and accounting records of HHH.

These statements reflect the unaudited condensed combined historical results of operations, financial position, and cash flows of Seaport Entertainment Group in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

are referred to throughout these Unaudited Consolidated and Combined Financial Statements as “Seaport Entertainment Group,” “SEG,” “the Company,” “we,” “us” or “our”.

The accompanying Unaudited Condensed Consolidated and Combined Financial Statements as of September 30, 2024 and for the nine and three months ended September 30, 2024 have been prepared on a standalone basis derived from the consolidated financial statements and accounting records of SEG from August 1, 2024 to September 30, 2024 and from the combined financial statements and accounting records of HHH for January 1, 2024 to July 31, 2024.

The accompanying Unaudited Condensed Combined Financial Statements as of December 31, 2023 and for the three and nine months ended September 30, 2023 have been prepared on a standalone basis derived from the combined financial statements and accounting records of HHH.

These statements reflect the unaudited condensed consolidated and combined historical results of operations, financial position, and cash flows of Seaport Entertainment Group in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The unaudited interim financial information included in this quarterly report on Form 10-Q (“Quarterly Report”) reflects all adjustments, all of which are of a normal and recurring nature, that management believes are necessary for a fair statement of the results of operations, financial position, equity, and cash flows for the periods presented.

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The Condensed Combined Balance Sheet information at December 31, 2023 was derived from annual audited financial statements but does not include all disclosures required by GAAP.

The results of operations for the quarter and year-to-date period ended June 30, 2024, are not necessarily indicative of the results to be expected for other interim periods or the full year.

The Unaudited Condensed Combined Financial Statements are presented as if Seaport Entertainment Group had been carved out of HHH and had been combined for all periods presented.

The Unaudited Condensed Combined Financial Statements include the attribution of certain assets and liabilities that have been held at HHH which are specifically identifiable or attributable to the Company.

The results of operations for the quarter and year-to-date period ended September 30, 2024, are not necessarily indicative of the results to be expected for other interim periods or the full year.

The Condensed Combined Balance Sheet as of December 31, 2023, and the Unaudited Condensed Combined Financial Statements for the periods from January 1, 2024 to July 31, 2024 and from January 1, 2023 to September 30, 2023 are presented as if Seaport Entertainment Group had been carved out of HHH.

These Unaudited Condensed Combined Financial Statements include the attribution of certain assets and liabilities that have been held at HHH which are specifically identifiable or attributable to the Company.

The assets and liabilities in the carve-out financial statements have been presented on a historical cost basis.

All significant intercompany transactions within the Company have been eliminated.

All transactions between the Company and HHH are considered to be effectively settled in the Unaudited Condensed Combined Financial Statements at the time the transaction is recorded, other than transactions described in Note 12 – Related-Party Transactions that have historically been settled in cash.

The total net effect of the settlement of these intercompany transactions is reflected in the Unaudited Condensed Combined Statements of Cash Flows as a financing activity and in the Unaudited Condensed Combined Balance Sheets as net parent investment.

These Unaudited Condensed Combined Financial Statements include expense allocations for:

All transactions between the Company and HHH are considered to be effectively settled in the Unaudited Condensed Consolidated and Combined Financial Statements at the time the transaction is recorded, other than transactions described in Note 13 – Related-Party Transactions that have historically been settled in cash.

The total net effect of the settlement of these intercompany transactions is reflected in the Unaudited Condensed Consolidated and Combined Statements of Cash Flows as a financing

activity and in the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2024 as an adjustment to additional paid-in capital and in the Unaudited Condensed Combined Balance Sheet as of December 31, 2023 as net parent investment.

These Unaudited Condensed Consolidated and Combined Financial Statements include expense allocations for:

(1) certain support functions that are provided on a centralized basis within HHH, including, but not limited to property management, development, executive oversight, treasury, accounting, finance, internal audit, legal, information technology, human resources, communications, facilities, and risk management;

and (2) employee benefits and compensation, including stock-based compensation.

These expenses have been allocated to the Company on the basis of direct time spent on Company projects where identifiable, with the remainder allocated on a basis of revenue, headcount, payroll costs, or other

applicable measures.

For an additional discussion and quantification of expense allocations, see Note 13 – Related-Party Transactions .

Management believes the assumptions underlying these Unaudited Condensed Combined Financial Statements, including the assumptions regarding allocated expenses, reasonably reflect the utilization of services provided to or the benefit received by the Company during the periods presented.

Nevertheless, the Unaudited Condensed Combined Financial Statements may not reflect the results of operations, financial position and cash flows had the Company been a standalone company during the periods presented.

Management believes the assumptions underlying these Unaudited Condensed Consolidated and Combined Financial Statements, including the assumptions regarding allocated expenses, reasonably reflect the utilization of services provided to or the benefit received by the Company during the periods presented.

Nevertheless, the Unaudited Condensed Consolidated and Combined Financial Statements may not reflect the results of operations, financial position and cash flows had the Company been a standalone company during the periods presented.

Actual costs that the Company may have incurred had it been a standalone company would depend on several factors, including the chosen organization structure, whether functions were outsourced or performed by its employees and strategic decisions made in areas such as executive leadership, corporate infrastructure, and information technology.

Debt obligations and related financing costs of HHH have not been included in the Unaudited Condensed Combined Financial Statements of the Company, because the Company’s business is not a party to the obligations between HHH and the debt holders.

Further, the Company does not guarantee any of HHH’s debt obligations.

The income tax provision in the Unaudited Condensed Combined Statements of Operations has been calculated as if the Company was operating on a standalone basis and filed separate tax returns in the jurisdictions in which it operates.

Debt obligations and related financing costs of HHH have not been included in the Unaudited Condensed Consolidated and Combined Financial Statements of the Company, because the Company’s business was not a party to the obligations between HHH and the debt holders.

Further, the Company did not guarantee any of HHH’s debt obligations.

The income tax provision in the Unaudited Condensed Consolidated and Combined Statements of Operations has been calculated as if the Company was operating on a standalone basis and filed separate tax returns in the jurisdictions in which it operates.

Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the Company’s actual tax balances prior to or subsequent to the carve-out.

HHH maintains stock-based compensation plans at a corporate level.

The Company’s employees participate in such plans and the portion of the cost of those plans related to the Company’s employees is included in the Unaudited Condensed Combined Statements of Operations.

However, the Unaudited Condensed Combined Balance Sheets do not include any equity issued related to stock-based compensation plans.

The equity balance in these Unaudited Condensed Combined Financial Statements represents the excess of total assets over total liabilities, including intercompany balances between the Company and HHH (net parent investment).

Liquidity and Going Concern The Company historically managed liquidity risk by effectively managing its operations, capital expenditures, development and redevelopment activities, and cash flows, making use of a central treasury function and other shared services provided by HHH.

The Company does not currently have, nor does it expect to generate from operations, adequate liquidity to fund its operations for the next twelve months.

To mitigate such conditions, HHH contributed capital of $ 23.4 million to the Company on July 31, 2024, prior to the Separation to support the operating, investing, and financing activities of the Company.

The Company also expects to receive gross proceeds of $ 175.0 million in the Rights Offering and have additional access to liquidity up to $ 5.0 million under the Revolving Credit Agreement.

Management believes that cash on hand and the contribution of $ 23.4 million of cash by HHH pursuant to the separation and distribution agreement and the capital that will be raised from the Rights Offering, along with amounts available under the Revolving Credit Agreement, will provide sufficient liquidity to meet the Company’s projected obligations for at least twelve months.

The Unaudited Combined Financial Statements for the Company have been prepared on the basis of accounting policies applicable to a going concern.

The Company’s employees participated in such plans prior to the Separation and the portion of the cost of those plans related to the Company’s employees is included in the Unaudited Condensed Combined Statements of Operations from January 1, 2024 to July 31, 2024 and from January 1, 2023 to December 31, 2023.

However, the Unaudited Condensed Combined Balance Sheets as of December 31, 2023 do not include any equity issued related to stock-based compensation plans.

Prior to the Separation, the Company established the Seaport Entertainment Group Inc.

2024 Equity Incentive Plan, and subsequent to July 31, 2024, the Company issued stock-based awards pursuant to such plan – see Note 11 – Equity .

The equity balance in these Unaudited Condensed Consolidated and Combined Financial Statements as of December 31, 2023 represents the excess of total assets over total liabilities, including intercompany balances between the Company and HHH (net parent investment).

Liquidity and Going Concern

The Company historically managed liquidity risk by effectively managing its operations, capital expenditures, development and redevelopment activities, and cash flows, making use of a central treasury function and other shared services provided by HHH.

Prior to the Separation, the Company did not have, nor did it expect to generate from operations, adequate liquidity to fund its operations for the next twelve months.

To mitigate such conditions, HHH contributed capital of $ 23.4 million to the Company on July 31, 2024, prior to the Separation, to support the operating, investing, and financing activities of the Company, and the Company launched the Rights Offering, pursuant to which the Company received gross proceeds of $ 175.0 million upon its closing on October 17, 2024.

The Company has additional access to liquidity up to $ 5.0 million under the Revolving Credit Agreement.

Management believes that cash on hand, including the $ 175.0 million of gross proceeds from the Rights Offering, and the contribution of $ 23.4 million of cash by HHH pursuant to the separation and distribution agreement will provide sufficient liquidity to meet the Company’s projected obligations for at least twelve months.

The Unaudited Consolidated and Combined Financial Statements for the Company have been prepared on the basis of accounting policies applicable to a going concern.

The going concern basis presumes that for the foreseeable future, funds will be available to finance future operations and that the realization of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions.

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, 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 estimates and assumptions include, but are not limited to, capitalization of development costs, provision for income taxes, future cash flows used in impairment analysis and fair value used in impairment calculations, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and

intangible assets acquired and the related useful lives of assets upon which depreciation and amortization is based.

Estimates and assumptions have also been made with respect to future revenues and costs.

Actual results could differ from these and other estimates.

Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with maturities at date of purchase of three months or less and deposits with major banks throughout the United States.

Fair Value Measurements

For assets and liabilities accounted for or disclosed at fair value, the Company utilizes the fair value hierarchy established by the accounting guidance for fair value measurements and disclosures to categorize the inputs to valuation techniques used to measure fair value into three levels.

The three levels of inputs are as follows:

Quoted market prices in active markets for identical assets or liabilities.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with maturities at date of purchase of three months or less and deposits with major banks throughout the United States.

Such deposits are in excess of FDIC limits and are placed with high-quality institutions in order to minimize the concentration of counterparty credit risk.

Restricted Cash Restricted cash reflects amounts segregated in escrow accounts in the name of the Company, primarily related to development activity at 250 Water Street and other amounts related to payment of principal and interest on the Company’s outstanding mortgages payable.

Restricted Cash

Restricted cash reflects amounts segregated in escrow accounts in the name of the Company, primarily related to the payment of principal and interest on the Company’s outstanding mortgages payable.

In August 2024, following the final resolution of the 250 Water Street litigation, the escrow amount of $ 40 million related to 250 Water Street was released to the City of New York.

See Note 7 – Commitments and Contingencies for additional information on the 250 Water Street litigation.

Accounts Receivable, net Accounts receivable includes tenant receivables, straight-line rent receivables, and other receivables.

Accounts Receivable, net

Accounts receivable includes tenant receivables, straight-line rent receivables, and other receivables.

On a quarterly basis, management reviews tenant receivables and straight-line rent assets for collectability.

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As required under ASC 326 Financial Instruments – Credit Losses (ASC 326), the Company assesses its exposure to credit loss related to these receivables on a quarterly basis based on historical collection experience and future expectations by portfolio.

As of June 30, 2024, and December 31, 2023, there were no material past due receivables and there have been no material write-offs or recoveries of amounts previously written-off.

The following table represents the components of Accounts receivable, net of amounts considered uncollectible, in the accompanying Unaudited Condensed Combined Balance Sheets as of:

As of September 30, 2024, and December 31, 2023, there were no material past due receivables and there have been no material write-offs or recoveries of amounts previously written-off.

The following table represents the components of Accounts receivable, net of amounts considered uncollectible, in the accompanying Unaudited Condensed Consolidated and Combined Balance Sheets as of:

September 30,

Tenant receivables

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Accounts receivable, net (a)

(a) As of June 30, 2024, and December 31, 2023, the total reserve balance was $ 2.3 million and $ 1.4 million, respectively.

The following table summarizes the impacts of the collectability reserves in the accompanying Unaudited Condensed Combined Statements of Operations:

Three months ended June 30,

Six months ended June 30,

(a) As of September 30, 2024, and December 31, 2023, the total reserve balance was $ 3.5 million and $ 1.4 million, respectively.

The following table summarizes the impacts of the collectability reserves in the accompanying Unaudited Condensed Consolidated and Combined Statements of Operations:

Three months ended September 30,

Nine months ended September 30,

Statements of Operations Location

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Total (income) expense impact

As of June 30, 2024, one related party had an accounts receivable balance of $ 1.1 million, which represented approximately 10.1 % of the Company’s accounts receivable.

As of September 30, 2024, two related parties had accounts receivable balances of $ 2.3 million and $ 1.4 million, which represented approximately 24.5 % and 15.1 % of the Company’s accounts receivable, respectively.

See Note 13 – Related-Party Transactions for additional information.

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See Note 13 – Related-Party Transactions for additional information.

Deferred Offering Costs

Deferred offering costs represent amounts paid for legal, accounting, consulting and other offering expenses in conjunction with the proposed or actual offering of securities and are recorded as a reduction against the gross proceeds of the offering.

Deferred offering costs are included as part of other assets in the Unaudited Condensed Consolidated and Combined Balance Sheets and netted against additional paid-in capital upon closing of the offering.

Stock-Based Compensation

Prior to the Separation on July 31, 2024, certain employees of the Company participated in HHH’s stock-based compensation plans.

Stock-based compensation expense was attributed to the Company based on the awards and terms previously granted to those employees and was recorded in the Unaudited Condensed Consolidated and Combined Statements of Operations.

Subsequent to the Separation, the Company issued stock options, restricted stock and restricted stock units.

Stock-based compensation expense is measured based on the grant date fair value of those awards and is recognized on a straight-line basis over the period during which an employee is required to provide service in exchange

for the award, except for shares of stock granted to non-employee directors which, unless otherwise provided under the applicable award agreement, are fully vested, and are expensed at the grant date.

Stock-based compensation expense is based on awards outstanding, and forfeitures are recognized as they occur.

Stock-based compensation expense is included as part of expenses in the accompanying Unaudited Condensed Consolidated and Combined Statements of Operations.

Earnings (Loss) per Share

For the periods ending after the date of Separation, basic earnings per share (“EPS”) attributable to the Company’s common stockholders is based upon net income (loss) attributable to the Company’s common stockholders divided by the weighted-average number of shares of common stock outstanding during the period.

Diluted EPS reflects the effect of the assumed vesting of restricted stock, restricted stock units and the exercise of stock options only in the periods in which such effect would have been dilutive.

For the periods when a net loss is reported, the computation of diluted EPS equals the basic EPS calculation since common stock equivalents would be antidilutive due to losses from continuing operations.

The Company reviews its long-lived assets (including those held by its unconsolidated ventures) for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value.

The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future economic conditions, such as occupancy, rental rates, capital requirements and sales values that could differ materially from actual results in future periods.

If impairment indicators exist and it is expected that undiscounted cash flows generated by the asset are less than its carrying amount, an impairment provision is recorded to write down the carrying amount of the asset to its fair value.

Impairment indicators include, but are not limited to, significant changes in projected completion dates, stabilization dates, operating revenues or cash flows, development costs, circumstances related to ongoing low occupancy, and market factors.

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, and estimated holding periods for the applicable assets.

Although the estimated fair value of certain assets may be exceeded by the carrying amount, 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.

In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset.

The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset.

Assets that have been impaired will in the future have lower depreciation and cost of sale expenses.

The impairment will have no impact on cash flow.

Revenue Recognition and Related Matters

Sponsorships, Events, and Entertainment Revenue

Sponsorships, events, and entertainment revenue related to contracts with customers is generally comprised of baseball-related ticket sales, concert-related ticket sales, events-related service revenue, concession sales, and advertising and sponsorships revenue.

Baseball season ticket sales are recognized over time as games take place.

Single baseball and concert tickets are recognized at a point in time.

The baseball and concert related payments are made in advance or on the day of the event.

Events-related service revenue is recognized at the time the customer receives the benefit of the service, with a portion of related payments made in advance, as per the agreements, and the remainder of the payment made on the day of the event.

For concession sales, the transaction price is the net amount collected from the customer at the time of service and revenue is recognized at a point in time when the food or beverage is provided to the customer.

In all other cases, the transaction prices are fixed, stipulated in the ticket, and representative in each case of a single performance obligation.

Baseball-related and other advertising and sponsorship agreements allow third parties to display their advertising and products at the Company‘s venues for a certain amount of time and relate to a single performance obligation.

The agreements generally cover a baseball season or other contractual period of time, and the related revenue is generally recognized on a straight-line basis over time, as time elapses, unless a specific performance obligation exists within the sponsorship contract where point-in-time delivery occurs and recognition at a specific performance or delivery date is more appropriate.

Consideration terms for these services are fixed in each respective agreement and paid in accordance with individual contractual terms.

Sponsorships, events, and entertainment revenue is disclosed net of any refunds, which are settled and recorded at the time of an event cancellation.

The Company does not accrue or estimate any obligations related to refunds.

Hospitality Revenue

Hospitality revenue is generated by the Seaport restaurants.

The transaction price is the net amount collected from the customer and is recognized as revenue at a point in time when the food or beverage is provided to the customer.

These transactions are ordinarily settled with cash or credit card over a short period of time.

Rental Revenue

Rental revenue is associated with the Company’s Landlord Operations assets and is comprised of minimum rent, percentage rent in lieu of fixed minimum rent, tenant recoveries, and overage rent.

Minimum rent revenues are recognized on a straight-line basis over the terms of the related leases when collectability is reasonably assured and the tenant has taken possession of, or controls, the physical use of the leased asset.

Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants.

Minimum rent revenues also include amortization related to above and below-market tenant leases on acquired properties.

Rent payments for landlord assets are due on the first day of each month during the lease term.

Recoveries from tenants are stipulated in the leases, are generally computed based upon a formula related to real estate taxes, insurance, and other real estate operating expenses, and are generally recognized as revenues in the period the related costs are incurred.

Overage rent is recognized on an accrual basis once tenant sales exceed contractual thresholds contained in the lease and is calculated by multiplying the tenant sales in excess of the minimum amount by a percentage defined in the lease.

If the lease provides for tenant improvements, the Company determines whether the tenant improvements are owned by the tenant or by the Company.

When the Company is the owner of the tenant improvements, rental revenue begins when the improvements are substantially complete.

When the tenant is the owner of the tenant improvements, any tenant allowance funded by the Company is treated as a lease incentive and amortized as an adjustment to rental revenue over the lease term.

Other Revenue

Other revenue is comprised of parking revenue and other miscellaneous revenue.

Other revenue is recognized at a point in time, at the time of sale when payment is received, and the customer receives the good or service.

In all cases, the transaction prices are fixed, stipulated in the contract or product, and representative in each case of a single performance obligation.

Recently Issued or Adopted Accounting Standards

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

2023-07, Improvement to Reportable Segment Disclosures.

This ASU aims to improve segment disclosures through enhanced disclosures about significant segment expenses.

The standard requires disclosure of significant expense categories and amounts for such expenses, including those segment expenses that are regularly provided to the chief operating decision maker, easily

computable from information that is regularly provided, or significant expenses that are expressed in a form other than actual amounts.

It does not change the definition of a segment, the method for determining segments, the criteria for aggregating operating segments into reportable segments, or the current specifically enumerated segment expenses that are required to be disclosed.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the guidance and its impact on the Company’s Condensed Consolidated and Combined Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, a final standard on improvements to income tax disclosures which applies to all entities subject to income taxes.

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2024.

The Company is currently evaluating the guidance and its impact on the Company’s Condensed Consolidated and Combined Financial Statements.

Investments in Unconsolidated Ventures

In the normal course of business, the Company enters into partnerships and ventures with an emphasis on investments associated with businesses that operate at the Company’s real estate assets and other entertainment-related investments.

The Company does not consolidate the investments in the periods presented below as it does not have a controlling financial interest in these ventures.

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Six months ended

Nine months ended

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in thousands except percentages

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The Lawn Club (b)

Tin Building by Jean-Georges (b) (d)

Tin Building by Jean-Georges (b) (d) (f)

Jean-Georges Restaurants

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(e) Other equity investments represent investments not accounted for under the equity method.

As of June 30, 2024, Other equity investments consist of $ 10.0 million of warrants, which represents cash paid by the Company for the option to acquire additional ownership interest in Jean-Georges Restaurants.

The Company elected the measurement alternative as this investment does not have readily determinable fair value.

As of September 30, 2024, Other equity investments consist of $ 10.0 million of warrants, which represents cash paid by the Company for the option to acquire additional ownership interest in Jean-Georges Restaurants.

The Company elected the measurement

alternative as this investment does not have readily determinable fair value.

There was no impairment , or upward or downward adjustment to the carrying amount of this security either during the current year, or cumulatively.

Refer to discussion below for additional detail.

The Lawn Club In 2021, the Company formed HHC Lawn Games, LLC with The Lawn Club NYC, LLC (“Endorphin Ventures”), to construct and operate an immersive indoor and outdoor restaurant that includes an extensive area of indoor grass, a stylish clubhouse bar, and a wide variety of lawn games.

(f) These investments were impaired as part of the Seaport impairment recognized in 2023.

Refer to specific investment discussion below and Note 3 – Impairment for additional information.

The Lawn Club

In 2021, the Company formed HHC Lawn Games, LLC with The Lawn Club NYC, LLC (“Endorphin Ventures”), to construct and operate an immersive indoor and outdoor restaurant that includes an extensive area of indoor grass, a stylish clubhouse bar, and a wide variety of lawn games.

This concept opened in the fourth quarter of 2023.

Under the terms of the initial agreement, the Company funded 80 % of the cost to construct the restaurant, and

Endorphin Ventures contributed the remaining 20 %.

Under the terms of the initial agreement, the Company funded 80 % of the cost to construct the restaurant, and Endorphin Ventures contributed the remaining 20 %.

In October 2023, the members executed an amended LLC agreement, in which the Company will fund 90 % of any remaining capital requirements, and Endorphin Ventures will contribute 10 %.

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The Company also entered into a lease agreement with HHC Lawn Games, LLC pursuant to which the Company agreed to lease 20,000 square feet of the Fulton Market Building to this venture.

Ssäm Bar In 2016, the Company formed Pier 17 Restaurant C101, LLC (“Ssäm Bar”) with MomoPier, LLC (“Momofuku”) to construct and operate a restaurant and bar at Pier 17 in the Seaport, which opened in 2019.

In 2016, the Company formed Pier 17 Restaurant C101, LLC (“Ssäm Bar”) with MomoPier, LLC (“Momofuku”) to construct and operate a restaurant and bar at Pier 17 in the Seaport, which opened in 2019.

The Company recognized its share of income or loss based on the joint venture’s distribution priorities, which could fluctuate over time.

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The Company received a liquidating distribution of its share of the venture’s remaining assets during the third quarter of 2024.

Tin Building by Jean-Georges In 2015, the Company, together with VS-Fulton Seafood Market, LLC (“Fulton Partner”), formed Fulton Seafood Market, LLC (“Tin Building by Jean-Georges”) to operate a 53,783 square foot culinary marketplace in the historic Tin Building.

Tin Building by Jean-Georges

In 2015, the Company, together with VS-Fulton Seafood Market, LLC (“Fulton Partner”), formed Fulton Seafood Market, LLC (“Tin Building by Jean-Georges”) to operate a 53,783 square foot culinary marketplace in the historic Tin Building.

The Fulton Partner is a wholly owned subsidiary of Jean-Georges Restaurants.

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Upon return of the Company’s contributed capital and a preferred return to the Company, distribution and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest.

As of June 30, 2024, the Tin Building by Jean-Georges is classified as a VIE because the equity holders, as a group, lack the characteristics of a controlling financial interest.

As of September 30, 2024, the Tin Building by Jean-Georges is classified as a VIE because the equity holders, as a group, lack the characteristics of a controlling financial interest.

The Company further concluded that it is not the primary beneficiary of the VIE as it does not have the power to direct the restaurant-related activities that most significantly impact its economic performance.

As the Company is unable to quantify the maximum amount of additional capital contributions that may be funded in the future associated with this investment, the Company’s maximum exposure to loss is currently equal to the $ 6.5 million carrying value of the investment as of June 30, 2024.

The Company funded capital contributions of $ 11.6 million for the six months ended June 30, 2024, and $ 48.1 million for the year ended December 31, 2023.

The Company’s investment in the Tin Building by Jean-Georges meets the threshold for disclosure of summarized financials for the six months ended June 30, 2024, and 2023.

As the Company is unable to quantify the maximum amount of additional capital contributions that may be funded in the future associated with this investment, the Company’s maximum exposure to loss is currently equal to the $ 4.3 million carrying value of the investment as of September 30, 2024.

The Company funded capital

contributions of $ 16.8 million for the nine months ended September 30, 2024, and $ 48.1 million for the year ended December 31, 2023.

The Company’s investment in the Tin Building by Jean-Georges meets the threshold for disclosure of summarized financials for the nine months ended September 30, 2024, and 2023.

Relevant financial statement information is summarized as follows:

September 30,

Balance Sheet

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Income Statement

Jean-Georges Restaurants In March 2022, the Company acquired a 25 % interest in JG Restaurant HoldCo LLC (“Jean-Georges Restaurants”) for $ 45.0 million from JG TopCo LLC (“Jean-Georges”).

Jean-Georges Restaurants

In March 2022, the Company acquired a 25 % interest in JG Restaurant HoldCo LLC (“Jean-Georges Restaurants”) for $ 45.0 million from JG TopCo LLC (“Jean-Georges”).

Jean-Georges Restaurants currently has over 40 hospitality offerings and a pipeline of new concepts.

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The warrant became exercisable on March 2, 2022, subject to automatic exercise in the event of dissolution or liquidation and will expire on March 2, 2026.

As of June 30, 2024, this warrant had not been exercised.

As of September 30, 2024, this warrant had not been exercised.

The Company elected the measurement alternative for this purchase option as the equity security does not have a readily determinable fair value.

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The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above- or below-market rate of return.

No impairment charges were recorded during the three and six months ended June 30, 2024 and 2023.

The Company evaluates each investment in an unconsolidated venture discussed in Note 2 – Investments in Unconsolidated Ventures periodically for recoverability and valuation declines that are other-than-temporary.

If the decrease in value of an investment is deemed to be other-than-temporary, the investment is reduced to its estimated fair value.

No impairment charges were recorded during the three and six months ended June 30, 2024 and 2023.

During the three months ended September 30, 2023, the Company recorded a $ 709.5 million impairment charge related to Seaport properties in the Landlord Operations segment and investments in the Hospitality segment.

The Company recognized the impairment due to decreases in estimated future cash flows due to significant uncertainty of future performance as stabilization and profitability are taking longer than expected, pressure on the current cost structure, decreased demand for office space, as well as an increase in the capitalization rate and a decrease in restaurant multiples used to evaluate future cash flows.

The Company used a discounted cash flow analysis to determine fair value, with capitalization rates ranging from 5.5 % to 6.75 %, discount rates ranging from 8.5 % to 13.3 %, and restaurant multiples ranging from 8.3 to 11.8 .

The assumptions and estimates included in the Company’s impairment analysis require significant judgment about future events, market conditions, and financial performance.

Actual results may differ from these assumptions.

There can be no assurance that these estimates and assumptions will prove to be an accurate prediction of the future.

There were no impairments recorded in the nine months ended September 30, 2024.

The following table summarizes the pre-tax impacts of the impairment mentioned above to the Combined Statements of Operations for the year ended December 31, 2023.

Statements of Operations Line Item

Building and equipment

Provision for impairment

Net investments in real estate

Investments in unconsolidated ventures

Equity in losses from unconsolidated ventures

Total impairment (a)

(a) Impairment charges relate to the Company’s investments in Jean-Georges Restaurants, Ss äm Bar, and Tin Building by Jean-Georges unconsolidated ventures.

See Note 2 – Investments in Unconsolidated Ventures for additional information.

Other Assets and Liabilities

Other Assets, net The following table summarizes the significant components of Other assets, net:

Other Assets, net

The following table summarizes the significant components of Other assets, net:

September 30,

Security and other deposits

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Other assets, net

Accounts Payable and Other Liabilities The following table summarizes the significant components of Accounts payable and other liabilities:

Accounts Payable and Other Liabilities

The following table summarizes the significant components of Accounts payable and other liabilities:

September 30,

Deferred income

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Mortgages Payable, Net

Mortgages Payable Mortgages payable, net are summarized as follows:

Mortgages Payable

Mortgages payable, net are summarized as follows:

September 30,

Fixed-rate debt

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Mortgages payable, net

As of June 30, 2024, land, buildings and equipment, developments, and other collateral with an aggregate net book value of $ 197.4 million have been pledged as collateral for the Company’s debt obligations.

Secured mortgages payable are without recourse to the Company and HHH at June 30, 2024.

Secured Mortgages Payable The Company’s outstanding mortgages are collateralized by certain of the Company’s real estate assets.

As of September 30, 2024, land, buildings and equipment, developments, and other collateral with an aggregate net book value of $ 237.8 million have been pledged as collateral for the Company’s debt obligations.

Secured mortgages payable are without recourse to the Company at September 30, 2024.

Secured Mortgages Payable

The Company’s outstanding mortgages are collateralized by certain of the Company’s real estate assets.

The Company’s fixed-rate debt obligation requires semi-annual installments of principal and interest, and the Company’s variable-rate debt requires monthly installments of only interest.

As of June 30, 2024, the Company’s secured mortgage loans did not have any undrawn lender commitment available to be drawn for property development.

As of September 30, 2024, the Company’s secured mortgage loans did not have any undrawn lender commitment available to be drawn for property development.

The following table summarizes the Company’s secured mortgages payable:

June 30, 2024

September 30, 2024

December 31, 2023

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December 15, 2039

Variable rate (b)

September 1, 2026

Variable rate (b) (c)

September 1, 2026

Secured mortgages payable

(a) The Company has one fixed-rate debt obligation as of June 30, 2024, and December 31, 2023.

(a) The Company has one fixed-rate debt obligation as of September 30, 2024, and December 31, 2023.

The interest rate presented is based upon the coupon rate of the debt.

(b) The Company has one variable-rate debt obligation as of June 30, 2024, and December 31, 2023.

The interest rate presented is based on the applicable reference interest rate as of June 30, 2024, and December 31, 2023.

During the six months ended June 30, 2024, the Company’s mortgage activity included repayments of $ 0.9 million and there were no refinancings or additional draws.

In connection with the Separation, on July 31, 2024, the variable rate mortgage related to 250 Water Street was refinanced, with HHH paying down $ 53.7 million of the outstanding principal balance and SEG refinancing the remaining $ 61.3 million at an interest rate of SOFR plus a margin of 4.5 % and scheduled maturity date of July 1, 2029.

(b) The Company has one variable-rate debt obligation as of September 30, 2024, and December 31, 2023.

The interest rate presented is based on the applicable reference interest rate as of September 30, 2024, and December 31, 2023.

At September 30, 2024, the assumed rate of the indebtedness associated with our variable-rate debt obligation is based on SOFR + 4.5 % , which is the combination of the interest rates on two instruments:

(i) the variable-rate debt obligation, pursuant to which the Company is obligated to pay the lender an amount equal to SOFR + 5.0 % , and (ii) the total return swap, pursuant to which the Company is entitled to receive 0.5 % from the lender.

The cash flows from this total return swap does not vary based on any underlying and there is no net settlement, as such, it is not considered to meet the criteria of ASC 815 “Derivatives and Hedging” and determined to not be a derivative.

During the nine months ended September 30, 2024, the Company’s mortgage activity included a $ 0.9 million repayment of our fixed rate debt.

In connection with and prior to the Separation, on July 31, 2024, the variable rate mortgage related to 250 Water Street was refinanced, with HHH paying down $ 53.7 million of the outstanding principal balance and SEG refinancing the remaining $ 61.3 million at an interest rate of SOFR plus a margin of 4.5 % and scheduled maturity date of July 1, 2029.

ASC 820 Fair Value Measurement (ASC 820), emphasizes that fair value is a market-based measurement that should be determined using assumptions market participants would use in pricing an asset or liability.

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The following table presents the fair value measurement hierarchy levels required under ASC 820 for the estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis:

June 30, 2024

September 30, 2024

December 31, 2023

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Variable-rate debt (b)

(a) Accounts receivable, net is shown net of an allowance of $ 2.3 million at June 30, 2024 and $ 1.4 million at December 31, 2023, respectively.

(a) Accounts receivable, net is shown net of an allowance of $ 3.5 million at September 30, 2024 and $ 1.4 million at December 31, 2023, respectively.

Refer to Note 1 - Summary of Significant Accounting Policies for additional information on the allowance.

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The fair value of fixed-rate debt in the table above was estimated based on a discounted future cash payment model, which includes risk premiums and risk-free rates derived from the SOFR or U.S.

Treasury obligation interest rates as of

June 30, 2024.

Treasury obligation interest rates as of September 30, 2024.

Refer to Note 5 - Mortgages Payable, Net for additional information.

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Commitments and Contingencies

Litigation In the normal course of business, from time to time, the Company is involved in legal proceedings relating to the ownership and operations of its properties.

In management’s opinion, the liabilities, if any, that may ultimately result from normal course of business legal actions are not expected to have a material effect on the Company’s combined financial position, results of operations, or liquidity.

250 Water Street In 2021, the Company received the necessary approvals for its 250 Water Street development project, which includes a mixed-use development with affordable and market-rate apartments, community-oriented spaces, and office space.

In the normal course of business, from time to time, the Company is involved in legal proceedings relating to the ownership and operations of its properties.

In management’s opinion, the liabilities, if any, that may ultimately result from normal course of business legal actions are not expected to have a material effect on the Company’s consolidated and combined financial position, results of operations, or liquidity.

250 Water Street

In 2021, the Company received the necessary approvals for its 250 Water Street development project, which includes a mixed-use development with affordable and market-rate apartments, community-oriented spaces, and office space.

In May 2021, the Company received approval from the New York City Landmarks Preservation Commission (“LPC”) on its proposed design for the 250 Water Street site.

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A separate lawsuit was filed in July 2022 again challenging the Landmarks Preservation Commission approval.

In January 2023, a Court ruled in favor of the petitioners vacating the Certificate of Appropriateness (“COA”) issued by the LPC.

In January 2023, a Court ruled in favor of the petitioners vacating the Certificate of Appropriateness (“COA”) issued by the

The Company immediately appealed this decision to the New York State Supreme Court’s Appellate Division and on June 6, 2023, an Appellate Division panel of five judges unanimously reversed the lower Court’s decision, reinstating the COA.

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The petitioners have no options for further appeal and the judgment is final.

Operating Leases The Company leases land or buildings at certain properties from third parties, which are recorded in Operating lease right-of-use assets, net, and Operating lease obligations on the Unaudited Condensed Combined Balance Sheets.

Operating Leases

The Company leases land or buildings at certain properties from third parties, which are recorded in Operating lease right-of-use assets, net, and Operating lease obligations on the Unaudited Condensed Consolidated and Combined Balance Sheets.

See Note 10 – Leases for additional information.

Contractual rental expense was $ 1.6 million for the three months ended June 30, 2024 and 2023, and $ 3.7 million for the six months ended June 30, 2024, and 2023.

The amortization of straight‑line rents included in the contractual rent amount was $ 0.6 million for the three months ended June 30, 2024 and 2023, and $ 1.2 million for the six months ended June 30, 2024, and 2023.

Contractual rental expense was $ 1.3 million and $ 1.9 million for the three months ended September 30, 2024 and 2023, respectively, and $ 5.0 million and $ 5.6 million or the nine months ended September 30, 2024, and 2023, respectively.

The amortization of straight‑line rents included in the contractual rent amount was $ 0.2 million and $ 0.6 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.4 million and $ 1.9 million for the nine months ended September 30, 2024, and 2023, respectively.

The Company’s tax provision for interim periods is determined using an estimate of its annual current and deferred effective tax rates, adjusted for discrete items.

The Company generated operating losses in the interim periods presented.

The income tax benefit recognized related to this loss was zero for the three and six months ended June 30, 2024, and 2023, after an assessment of the available positive and negative evidence, which causes the Company’s effective tax rate to deviate from the federal statutory rate.

The income tax benefit recognized related to this loss was zero for the three and nine months ended September 30, 2024, and 2023, after an assessment of the available positive and negative evidence, which causes the Company’s effective tax rate to deviate from the federal statutory rate.

Revenues from contracts with customers (excluding lease-related revenues) are recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following presents the Company’s revenues disaggregated by revenue source:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Revenues from contracts with customers

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Total revenues

Contract Assets and Liabilities Contract assets are the Company’s right to consideration in exchange for goods or services that have been transferred to a customer, excluding any amounts presented as a receivable.

Contract Assets and Liabilities

Contract assets are the Company’s right to consideration in exchange for goods or services that have been transferred to a customer, excluding any amounts presented as a receivable.

Contract liabilities are the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration.

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Consideration received during the period

Balance at June 30, 2023

Balance at September 30, 2023

Balance at December 31, 2023

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Consideration received during the period

Balance at June 30, 2024

Remaining Unsatisfied Performance Obligation The Company’s remaining unsatisfied performance obligations represent a measure of the total dollar value of work to be performed on contracts executed and in progress.

Balance at September 30, 2024

Remaining Unsatisfied Performance Obligation

The Company’s remaining unsatisfied performance obligations represent a measure of the total dollar value of work to be performed on contracts executed and in progress.

These performance obligations primarily relate to the completion of the 2024 Aviators baseball season and 2024 concert series, as well as performance under various sponsorship agreements.

The aggregate amount of the transaction price allocated to the Company’s remaining unsatisfied performance obligations from contracts with customers as of June 30, 2024, is $ 24.1 million.

The aggregate amount of the transaction price allocated to the Company’s remaining unsatisfied performance obligations from contracts with customers as of September 30, 2024, is $ 17.5 million.

The Company expects to recognize this amount as revenue over the following periods:

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The Company’s remaining performance obligations are adjusted to reflect any known contract cancellations, revisions to customer agreements, and deferrals, as appropriate.

During the three months ended June 30, 2024, and 2023, no customers accounted for greater than 10% of the Company’s revenue.

During the six months ended June 30, 2024, and 2023, revenue from one customer accounted for approximately 12.0 % and 11.6 % of the Company’s total revenue, respectively, through a related-party transaction.

During the three months ended September 30, 2024, and 2023, no customers accounted for greater than 10% of the Company’s revenue.

During the nine months ended September 30, 2024, revenue from one customer accounted for approximately 10.1 % of the Company’s total revenue, respectively, through a related-party transaction.

See Note 13 – Related-Party Transactions for additional information.

Lessee Arrangements The Company determines whether an arrangement is a lease at inception.

Operating leases are included in Operating lease right-of-use assets, net, and Operating lease obligations on the Unaudited Condensed Combined Balance Sheets.

During the nine months ended September 30, 2023, no customers accounted for greater than 10% of the Company’s revenue.

Lessee Arrangements

The Company determines whether an arrangement is a lease at inception.

Operating leases are included in Operating lease right-of-use assets, net, and Operating lease obligations on the Unaudited Condensed Consolidated and Combined Balance Sheets.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

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The Company does not have any finance leases.

The Company elected the practical expedient to not separate lease components from non-lease components of its lease agreements for all classes of underlying assets.

The Company elected the practical expedient to not separate lease components from non-lease components of its lease agreements for all classes

of underlying assets.

Certain of the Company’s lease agreements include non-lease components such as fixed common area maintenance charges.

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The Company’s leased assets and liabilities are as follows:

September 30,

Operating lease right-of-use assets, net

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Operating lease cost

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Total lease cost

Future minimum lease payments as of June 30, 2024, are as follows:

Future minimum lease payments as of September 30, 2024, are as follows:

Operating Leases

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Supplemental Unaudited Condensed Combined Statements of Cash Flows Information

Six months ended June 30,

Nine months ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows on operating leases

September 30,

Other Information

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Operating leases

Lessor Arrangements The Company receives rental income from the leasing of retail, office, multi-family, and other space under operating leases, as well as certain variable tenant recoveries.

Lessor Arrangements

The Company receives rental income from the leasing of retail, office, multi-family, and other space under operating leases, as well as certain variable tenant recoveries.

Operating leases for our retail, office, and other properties are with a variety of tenants and have a remaining average term of approximately seven years .

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Minimum rent revenues related to operating leases are as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Total minimum rent payments

Total future minimum rents associated with operating leases are as follows as of June 30, 2024:

Total future minimum rents associated with operating leases are as follows as of September 30, 2024:

Total Minimum

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Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants.

Minimum rent revenues reported on the Unaudited Condensed Combined Statements of Operations also include amortization related to above and below‑market tenant leases on acquired properties.

Minimum rent revenues reported on the Unaudited Condensed Consolidated and Combined Statements of Operations also include amortization related to above and below‑market tenant leases on acquired properties.

Stock-Based Compensation

Prior to and in connection with the Separation, the Company established the Seaport Entertainment Group Inc.

2024 Equity Incentive Plan (the “Plan”) with the purpose of attracting, retaining and motivating officers, employees, non-employee directors, and consultants providing services to the Company and promoting the success of the Company’s business by providing the participants of the Plan with equity incentives.

In addition, the Plan is intended to govern awards granted pursuant to or resulting from the adjustment and/or conversion of awards originally granted prior to the Separation under the Howard Hughes Corporation 2020 Equity Incentive Plan and under the Howard Hughes Corporation Amended and Restated 2010 Incentive Plan in accordance with the terms of the employee matters agreement entered into in connection with the Separation.

The Plan was approved prior to the Separation by HHH, at the time the Company’s sole stockholder, and is administered by the compensation committee of the board of directors (the “Committee”).

The Plan authorizes the Committee to grant stock-based compensation awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards, to eligible participants.

The Committee has the full power to interpret and administer the Plan and award agreements, subject to the limitations set forth in the Plan.

A total of 6.8 million shares of Class A common stock were initially reserved for issuance under the Plan.

At September 30, 2024, approximately 5.9 million shares remained available to be issued.

Restricted Shares and Restricted Stock Unit Awards

In connection with the Separation, shares of HHH restricted stock subject to time-based and performance-based vesting that were previously awarded to certain grantees under the Howard Hughes Corporation 2020 Equity Incentive Plan or the Howard Hughes Corporation Amended and Restated 2010 Incentive Plan were adjusted and converted into shares of restricted stock of the Company that vest in the same percentages, on the same dates and schedule as any shares of HHH restricted stock held by such grantees that were unvested and outstanding immediately prior to the Separation.

This conversion resulted in the issuance of total restricted stock awards subject to time-based vesting of 69,997 to non-executive employees and 111,682 to executive officers with fair values of $ 2.0 million and $ 3.2 million, respectively.

Also in August 2024, the Company separately issued 76,641 restricted stock unit awards subject to time-based vesting to non-executive employees and a consultant and 168,660 restricted stock unit awards subject to time-based vesting to executive officers, with fair values of $ 2.0 million and $ 4.5 million, respectively.

Each restricted stock unit award represents a contingent right to receive one share of the Company’s common stock at vesting.

The restricted stock unit awards issued under the Plan generally vest over requisite service periods of one to three years , except for the award to one of the Company’s executive officers that cliff vests on August 1, 2029 subject to continued service through that date.

A summary of the activity related to the Company’s restricted stock and restricted stock unit awards are as follows:

Weighted-Average

Grant Fair Value

Unvested at August 1, 2024

Unvested at September 30, 2024

Restricted stock and restricted stock unit awards issued during the nine-months ended September 30, 2024 were valued at $ 11.6 million and the weighted average per share or unit value was $ 27.24 .

At September 30, 2024, unrecognized share-based compensation costs for restricted stock and restricted stock unit awards was $ 11.1 million which is expected to be recognized over a weighted average period of 3.0 years.

Non-Qualified Stock Options

Non-qualified stock option awards issued under the Plan generally cliff vest over a requisite service period of three to five years and have a term of ten years from the grant date.

The weighted average fair value of non-qualified stock options and the related assumptions used in the Black Scholes model to calculate grant date fair value of the awards are as follows:

September 30, 2024

Weighted-average fair value

Dividend yield

Expected volatility of stock

Risk-free interest rate

3.9 % to 4.0 %

Expected option life (in years)

Weighted-average exercise price per share

A summary of the activity related to the Company’s non-qualified stock options is as follows:

Weighted-Average

Remaining Contractual

Aggregate Intrinsic

Exercise Price

Value ( in thousands )

Outstanding at August 1, 2024

Forfeited or expired

Outstanding at September 30, 2024

Non-qualified stock option awards issued during the nine-months ended September 30, 2024 were valued at $ 6.9 million.

At September 30, 2024, unrecognized share-based compensation costs for non-qualified stock option awards was $ 6.7 million which is expected to be recognized over a weighted average period of 4.6 years.

Stock-based compensation expense for restricted stock, restricted stock units and non-qualified stock options is generally recognized straight-line over the vesting term of the award, which typically provides for graded or cliff vesting subject to continued employment with the Company.

Stock-based compensation is classified in the same financial statement line items as cash compensation.

The following table presents the location of stock-based compensation expense on the Unaudited Condensed Consolidated and Combined Statements of Operations (amounts in thousands):

Three months ended

Nine months ended

September 30,

Sponsorships, events, and entertainment costs

Hospitality costs

Operating costs

General and administrative

Total stock-based compensation expense

Earnings Per Share

Earnings per share is calculated by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares outstanding during the period.

Stock-based payment awards are included in the calculation of diluted income using the treasury stock method if dilutive.

On the date of Separation, immediately prior to the Separation, there were 5,521,884 shares that were issued and outstanding .

This share amount is being utilized for the calculation of basic earnings (loss) per share for all periods in 2023 because the Company was not a standalone public company prior to the date of Separation and there was no stock trading information available to calculate earnings (loss) per share.

In addition, for all periods in 2023, the computation of diluted earnings per share equals the basic earnings (loss) per share calculation since there was no stock trading information available to compute dilutive effect of shares issuable under share-based compensation plans needed under the treasury method in accordance with ASC Topic 260 and since common stock equivalents were antidilutive due to losses from operations.

For the three and nine months ended September 30, 2024 and 2023, earnings (loss) per share is computed as follows (amounts in thousands, except per share amounts):

Three months ended September 30

Nine months ended September 30

Numerator - Basic

Preferred distributions to noncontrolling interest in subsidiary

Net loss attributable to common stockholders - basic and diluted

Weighted average shares outstanding - basic

Effect of dilutive securities

Weighted average shares outstanding - diluted

Earnings (loss) per share - basic and dilutive

The calculation of diluted earnings per share excluded the following shares that could potentially dilute basic earnings per share in the future because their inclusion would have been antidilutive.

Three months ended

Nine months ended

September 30, 2024

Shares issuable upon exercise of restricted stock and restricted stock units

Shares issuable upon exercise of stock options

Noncontrolling Interest in Subsidiary

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.

The Series A Preferred Stock ranks senior to the Company’s interest in our subsidiary with respect to dividend rights and rights upon liquidation, dissolution and other considerations.

The Series A Preferred Stock has no maturity date and will remain outstanding unless redeemed.

The Series A Preferred Stock is not redeemable by the Company prior to July 11, 2029 except under limited circumstances intended to preserve certain tax benefits for HHH.

Upon consolidation, the issued and outstanding preferred share interest is shown as Noncontrolling interest in subsidiary in our Unaudited Condensed Consolidated Balance Sheet as of September 30, 2024 and the related dividends are reflected as Preferred share distributions in our Condensed Consolidated Statements of Operations during the three and nine months ended September 30, 2024.

The Company has three business segments that offer different products and services.

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Entertainment

Three months ended June 30, 2024

Three months ended September 30, 2024

Total revenues

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Equity in losses from unconsolidated ventures

Provision for impairment

Loss on early extinguishment of debt

Corporate expenses and other items

1 unchanged sentence

Income tax benefit (expense)

Three months ended June 30, 2023

Three months ended September 30, 2023

Total revenues

4 unchanged sentences

Equity in losses from unconsolidated ventures

Provision for impairment

Loss on early extinguishment of debt

Corporate expenses and other items

3 unchanged sentences

Entertainment

Six months ended June 30, 2024

Nine months ended September 30, 2024

Total revenues

4 unchanged sentences

Equity in losses from unconsolidated ventures

Provision for impairment

Loss on early extinguishment of debt

Corporate expenses and other items

1 unchanged sentence

Income tax benefit (expense)

Six months ended June 30, 2023

Nine months ended September 30, 2023

Total revenues

4 unchanged sentences

Equity in losses from unconsolidated ventures

Provision for impairment

Loss on early extinguishment of debt

Corporate expenses and other items

2 unchanged sentences

The following represents assets by segment and the reconciliation of total segment assets to Total assets in the Unaudited Condensed Combined Balance Sheets as of:

September 30,

Landlord Operations

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Related-Party Transactions

The Company has not historically operated as a standalone business and has various relationships with HHH whereby HHH provides services to the Company.

Prior to the Separation, the Company had not historically operated as a standalone business and had various relationships with HHH whereby HHH provided services to the Company.

The Company also engages in transactions with CCMC and generates rental revenue by leasing space to equity method investees, which are related parties, as described below.

Net Transfers from Parent As discussed in Note 1 – Summary of Significant Accounting Policies in the basis of presentation section and below, net parent investment is primarily impacted by allocation of expenses for certain services related to shared functions provided by HHH and contributions from HHH which are the result of net funding provided by or distributed to HHH.

Net Transfers from Parent

As discussed in Note 1 – Summary of Significant Accounting Policies in the basis of presentation section and below, net parent investment is primarily impacted by allocation of expenses for certain services related to shared functions provided by HHH prior to the Separation and contributions from HHH which are the result of net funding provided by or distributed to HHH.

The components of net parent investment are:

Three months ended

Six months ended

Nine months ended

September 30,

Net transfers from Parent as reflected in the Unaudited Condensed Combined Statements of Cash Flows

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Net transfers from Parent as reflected in the Unaudited Condensed Combined Statements of Equity

Corporate Overhead and Other Allocations HHH provides the Company certain services, including (1) certain support functions that are provided on a centralized basis within HHH, including, but not limited to executive oversight, treasury, accounting, finance, internal audit, legal, information technology, human resources, communications, and risk management;

Corporate Overhead and Other Allocations

Prior to the Separation, HHH provided the Company certain services, including (1) certain support functions that were provided on a centralized basis within HHH, including, but not limited to executive oversight, treasury, accounting, finance, internal audit, legal, information technology, human resources, communications, and risk management;

and (2) employee benefits and compensation, including stock-based compensation.

The Company’s Unaudited Condensed Combined Financial Statements reflect an allocation of these costs.

The Company’s Unaudited Condensed Consolidated and Combined Financial Statements reflect an allocation of these costs.

When specific identification or a direct attribution of costs based on time incurred for the Company’s benefit is not practicable, a proportional cost method is used, primarily based on revenue, headcount, payroll costs or other applicable measures.

The allocation of expenses, net of amounts capitalized, from HHH to the Company were reflected as follows in the Unaudited Condensed Combined Statements of Operations:

Three months ended June 30,

Six months ended June 30,

The allocation of expenses, net of amounts capitalized, from HHH to the Company were reflected as follows in the Unaudited Condensed Consolidated and Combined Statements of Operations:

Three months ended September 30,

Nine months ended September 30,

Operating costs

1 unchanged sentence

Other income, net

Allocated expenses recorded in operating costs, general and administrative expenses, and other income, net in the table above primarily include the allocation of employee benefits and compensation costs, including stock compensation expense, as well as overhead and other costs for shared support functions provided by HHH on a centralized basis.

Operating costs as provided in the table above include immaterial expenses recorded to hospitality costs and sponsorships, events, and entertainment costs with the remainder recorded to operating costs.

During the six months ended June 30, 2024, the Company capitalized costs of $ 0.3 million and $ 0.2 million that were incurred by HHH for the Company’s benefit in Developments and Buildings and equipment, respectively.

During the six months ended June 30, 2023, the Company capitalized costs of $ 1.0 million and $ 0.2 million that were incurred by HHH for the Company’s benefit in Developments and Building and equipment, respectively.

The financial information herein may not necessarily reflect the combined financial position, results of operations, and cash flows of the Company in the future or what they would have been had the Company been a separate, standalone entity during the periods presented.

During the nine months ended September 30, 2024, the Company capitalized costs of $ 0.3 million and $ 0.2 million that were incurred by HHH for the Company’s benefit in Developments and Buildings and equipment, respectively.

During the nine months ended September 30, 2023, the Company capitalized costs of $ 1.8 million and $ 0.4 million that were incurred by HHH for the Company’s benefit in Developments and Building and equipment, respectively.

Management believes that the methods used to allocate expenses to the Company are reasonable;

however, the allocations may not be indicative of actual expenses that would have been incurred had the Company operated as an independent, publicly traded company for the periods presented.

however, the allocations may not be indicative of actual expenses that would have been incurred had the Company operated as an independent, publicly traded company prior to the date of Separation.

Actual costs that the Company may have incurred had it been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by the Company employees and strategic decisions made in areas such as executive leadership, corporate infrastructure, and information technology.

Unless otherwise stated, these intercompany transactions between the Company and HHH have been included in these Unaudited Condensed Combined Financial Statements and are considered to be effectively settled at the time the transaction is recorded.

Stock Compensation The Company’s employees participate in HHH’s stock-compensation plan and the Company is allocated a portion of stock compensation expense based on the services provided to the Company.

The non-cash stock compensation expense (income) for employee services directly attributable to the Company totaled ($ 0.6 ) million for the three months ended June 30, 2024, and $ 0.1 million for the six months ended June 30, 2024, compared to $ 0.2 million for the three months ended June 30, 2023, and $ 0.5 million for the six months ended June 30, 2023, and is included within general and administrative expenses in the Unaudited Condensed Combined Statements of Operations and included in the table above.

These expenses are presented net of ($ 0.1 ) million and $ 0.1 million capitalized to development projects during the three months ended June 30, 2024, and 2023, respectively, and $ 0.3 million and $ 0.3 million capitalized to development projects during the six months ended June 30, 2024, and 2023, respectively.

The $ 0.6 million of stock compensation income recognized in the three months ended June 30, 2024, is due to forfeitures of stock awards during the current period and the reversal of previously recognized expense.

Employee benefits and compensation expense, including stock-based compensation expense, related to the HHH employees who provide shared services to the Company have also been allocated to the Company and is recorded in general and administrative expenses in the Unaudited Condensed Combined Statements of Operations and included in the table above.

Related-party Management Fees HHH provides management services to the Company for managing its real estate assets and the Company reimburses HHH for expenses incurred and pays HHH a management fee for services provided.

The amounts outstanding pursuant to the management fee agreement between the Company and HHH are cash settled each month and are reflected in the Unaudited Condensed Combined Balance Sheets as related-party payables to the extent unpaid as of each balance sheet date.

During the six months ended June 30, 2024, and 2023, the Unaudited Condensed Combined Balance Sheets reflects immaterial outstanding payables due to HHH with respect to the landlord management fees.

These landlord management fees amounted to $ 0.1 million for the three months ended June 30, 2024, and 2023, and $ 0.2 million for the six months ended June 30, 2024, and 2023.

Unless otherwise stated, these intercompany transactions between the Company and HHH have been included in these Unaudited Condensed Consolidated and Combined Financial Statements and are considered to be effectively settled at the time the transaction is recorded.

The total net effect of the settlement of these intercompany transactions is reflected in the Unaudited Condensed Consolidated and Combined Statements of Cash Flows as a financing activity and in the Unaudited Condensed Consolidated and Combined Balance Sheets as an adjustment to additional paid-in capital as of September 30, 2024 and net parent investment as of December 31, 2023.

Stock Compensation

Prior to the Separation, the Company’s employees participated in HHH’s stock-compensation plan and the Company is allocated a portion of stock compensation expense based on the services provided to the Company.

The non-cash stock compensation expense (income) for employee services directly attributable to the Company totaled $ 0.2 million for the three months ended September 30, 2024, and $0.3 million for the nine months ended September 30, 2024, compared to $ 0.7 million for the three months ended September 30, 2023, and $ 1.2 million for the nine months ended September 30, 2023, and is included within general and administrative expenses in the Unaudited Condensed Consolidated and Combined Statements of Operations and included in the table above.

These expenses are presented net of zero and $ 0.7 million capitalized to development projects during the three months ended September 30, 2024, and 2023, respectively, and $ 0.3 million and $ 1.1 million capitalized to development projects during the nine months ended September 30, 2024, and 2023, respectively.

Employee benefits and compensation expense, including stock-based compensation expense, related to the HHH employees who provided shared services to the Company following the Separation pursuant to the transition services agreement entered into in connection with the Separation, have also been allocated to the Company and is recorded in general and administrative expenses in the Unaudited Condensed Consolidated and Combined Statements of Operations and included in the table above.

Related-party Management Fees

Prior to the Separation, HHH provided management services to the Company for managing its real estate assets and the Company reimbursed HHH for expenses incurred and paid HHH a management fee for services provided.

The amounts outstanding pursuant to the management fee agreement between the Company and HHH were cash settled each month and are reflected in the Unaudited Condensed Consolidated and Combined Balance Sheets as related-party payables to the extent unpaid as of each balance sheet date.

During the nine months ended September 30, 2024, and 2023, the Unaudited Condensed Consolidated and Combined Balance Sheets reflects immaterial outstanding payables due to HHH with respect to the landlord management fees.

These landlord management fees amounted to $ 0.1 million and $ 0.1 million for the three months ended September 30, 2024, and 2023, and $ 0.3 million and $ 0.3 million for the nine months ended September 30, 2024, and 2023, respectively.

As discussed in Note 2 – Investments in Unconsolidated Ventures , CCMC, a wholly owned subsidiary of Jean-Georges Restaurants, which is a related party of the Company, also provides management services for certain of the Company’s retail and food and beverage businesses, either wholly owned or through partnerships with third parties.

1 unchanged sentence

Pursuant to the various management agreements, CCMC is responsible for employment and supervision of all employees providing services for the food and beverage operations and restaurant as well as the day-to-day operations and accounting for the food and beverage operations.

As of June 30, 2024, and December 31, 2023, the Unaudited Condensed Combined Balance Sheets reflect receivables for funds provided to CCMC to fund operations of $ 2.1 million and $ 1.2 million, respectively and accounts payable of $ 0.4 million and $ 0.2 million, respectively due to CCMC with respect to reimbursable expenses to be funded by the Company.

The Company’s related-party management fees due to CCMC amounted to $ 0.6 million during the three months ended June 30, 2024, and $ 1.1 million during the six months ended June 30, 2024, compared to $ 0.6 million during the three months ended June 30, 2023, and $ 1.1 million during the six months ended June 30, 2023.

Related-party Rental Revenue The Company owns the real estate assets that are leased by Lawn Club and the Tin Building by Jean-Georges.

As of September 30, 2024, and December 31, 2023, the Unaudited Condensed Consolidated and Combined Balance Sheets reflect receivables for funds provided to CCMC to fund operations of $ 1.4 million and $ 1.2 million, respectively and accounts payable of $ 0.9 million and $ 0.2 million, respectively due to CCMC with respect to reimbursable expenses to be funded by the Company.

The Company’s related-party management fees due to CCMC amounted to $ 0.6 million during the three months ended September 30, 2024, and $ 1.8 million during the nine months ended September 30, 2024, compared to $ 0.5 million during the three months ended September 30, 2023, and $ 1.6 million during the nine months ended September 30, 2023.

Related-party Rental Revenue

The Company owns the real estate assets that are leased by Lawn Club and the Tin Building by Jean-Georges.

As discussed in Note 2 – Investments in Unconsolidated Ventures , the Company owns a noncontrolling interest in these ventures and accounts for its interests in accordance with the equity method.

As of June 30, 2024, and December 31, 2023, the Unaudited Condensed Combined Balance Sheets reflect accounts receivable of $ 1.5 million and $ 0.1 million, respectively, due from these ventures generated by rental revenue earned by the Company.

During the three months ended June 30, 2024, and 2023, the Unaudited Condensed Combined Income Statements reflect rental revenue associated with these related parties of $ 3.1 million and $ 3.4 million, respectively.

This is primarily comprised of $ 2.9 million and $ 3.2 million from the Tin Building by Jean-Georges during the three months ended June 30, 2024, and 2023, respectively.

During the six months ended June 30, 2024 and 2023, the Unaudited Condensed Combined Income Statements reflect rental revenue associated with these related parties of $ 6.0 million and $ 6.3 million, respectively.

This is primarily comprised of $ 5.8 million and $ 6.0 million from the Tin Building by Jean-Georges during the six months ended June 30, 2024, and 2023, respectively.

Related-party Other Receivables As of June 30, 2024, and December 31, 2023, the Unaudited Condensed Combined Balance Sheets include a $ 0.1 million and $ 3.1 million receivable related to development costs incurred by the Company, which will be reimbursed by the Lawn Club venture.

As of September 30, 2024, and December 31, 2023, the Unaudited Condensed Consolidated and Combined Balance Sheets reflect accounts receivable of $ 2.6 million and $ 0.1 million, respectively, due from these ventures generated by rental revenue earned by the Company.

During the three months ended September 30, 2024, and 2023, the Unaudited Condensed Consolidated and Combined Income Statements reflect rental revenue associated with these related parties of $ 3.2 million and $ 2.9 million, respectively.

This is primarily comprised of $ 2.9 million and $ 2.7 million from the Tin Building by Jean-Georges during the three months ended September 30, 2024, and 2023, respectively.

During the nine months ended September 30, 2024 and 2023, the Unaudited Condensed Consolidated and Combined Income Statements reflect rental revenue associated with these related parties of $ 9.2 million and $ 9.1 million, respectively.

This is primarily comprised of $ 8.6 million and $ 8.7 million from the Tin Building by Jean-Georges during the nine months ended September 30, 2024, and 2023, respectively.

Related-party Other Receivables

As of September 30, 2024, and December 31, 2023, the Unaudited Condensed Consolidated and Combined Balance Sheets include a $ 0.0 million and $ 3.1 million receivable related to development costs incurred by the Company, which will be reimbursed by the Lawn Club venture.

Subsequent Events

On July 31, 2024, the Separation was completed through HHH’s distribution of one share of the Company’s common stock for every nine shares of HHH common stock to HHH’s shareholders as of the close of business on the record date of July 29, 2024.

On August 1, 2024, the Company began trading as an independent publicly traded company under the stock symbol “SEG” on the New York Stock Exchange American.

Further in connection with the Separation, a subsidiary of the Company issued Series A Preferred Stock to HHH in exchange for the contribution by HHH of certain assets;

the Company entered into the Revolving Credit Agreement with HHH, as lender;

and HHH paid down the existing mortgage related to 250 Water Street and the Company refinanced the remaining $ 61.3 million mortgage payable.

See Note 1 – Summary of Significant Accounting Policies and Note 5 – Mortgages Payable, Net for additional information.

In September 2024, the Company commenced the Rights Offering, in the form of a pro rata distribution at no charge to holders of our common stock of transferable subscription rights to purchase up to an aggregate of 7,000,000 shares of its common stock at a cash subscription price of $ 25.00 per whole share.

On October 17, 2024, the Company completed the Rights Offering and issued an aggregate 7.0 million shares of common stock at the subscription price of $ 25.00 per whole share, for total gross proceeds of $ 175.0 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements