What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-07 · 170 added, 322 removed, 158 unchanged (76% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) to “Seaport Entertainment Group,” “SEG,” the “Company,” “we,” “us,” or “our” shall mean the assets, liabilities, and operating activities related to the Seaport Entertainment division of Howard Hughes Holdings Inc.

(“HHH”) that was transferred to Seaport Entertainment Group Inc.

on July 31, 2024 in connection with SEG’s separation from HHH (the “Separation”), as well as the assets, liabilities, and operating activities of Seaport Entertainment Group Inc.

The following discussion should be read as a supplement to and should be read in conjunction with our Unaudited Condensed Consolidated and Combined Financial Statements for the three months ended September 30, 2024, and September 30, 2023, and nine months ended September 30, 2024, and September 30, 2023 (“Unaudited Condensed Consolidated and Combined Financial Statements”) and the related notes which are included elsewhere in this quarterly report on Form 10-Q (“Quarterly Report”).

This discussion contains forward-looking statements that involve risks, uncertainties, assumptions, and other factors, including those described in the section entitled “Risk Factors” and elsewhere in this Quarterly Report.

on July 31, 2024 in connection with the Company’s separation from HHH (the “Separation”), as well as the assets, liabilities, and operating activities of Seaport Entertainment Group Inc.

The following discussion should be read as a supplement to and should be read in conjunction with our Unaudited Consolidated and Combined Financial Statements (“Unaudited Consolidated and Combined Financial Statements”) and the related notes included elsewhere in this quarterly report on Form 10-Q (“Quarterly Report”).

This discussion contains forward-looking statements that involve risks, uncertainties, assumptions, and other factors, including those described elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024.

Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of these factors.

1 unchanged sentence

We are not obligated to update this information, whether as a result of new information, future events or otherwise, except as may be required by law.

All references to numbered Notes are specific to Notes to our Unaudited Condensed Consolidated and Combined Financial Statements included in this Quarterly Report.

All references to numbered Notes are specific to Unaudited Notes to the Consolidated and Combined Financial Statements included in this Quarterly Report.

Capitalized terms used, but not defined, in this MD&A have the same meanings as in such Notes.

Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our combined financial statements, and then rounded to the nearest million.

Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our Unaudited Consolidated and Combined Financial Statements and then rounded to the nearest million.

Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.

1 unchanged sentence

The Company was formed to own, operate, and develop a unique collection of assets positioned at the intersection of entertainment and real estate.

Our existing portfolio encompasses a wide range of leisure and recreational activities, including live concerts, fine dining, professional sports, and high-end and experiential retail.

Our existing portfolio encompasses a wide range of leisure and recreational activities, including live concerts, fine dining, nightlife, professional sports, and high-end and experiential retail.

We primarily analyze our portfolio of assets through the lens of our three operating segments:

(1) Landlord Operations, (2) Hospitality, and (3) Sponsorships, Events, and Entertainment, and are focused on realizing value for shareholders primarily through dedicated management of existing assets, expansion of partnerships, strategic acquisitions, and completion of development and redevelopment projects.

(1) Hospitality, (2) Entertainment (previously Sponsorships, Events, and Entertainment), and (3) Landlord Operations, and are focused on realizing value for stockholders primarily through dedicated management of existing assets, expansion of partnerships, strategic acquisitions, and completion of development and redevelopment projects.

Hospitality represents our ownership interests in various food and beverage operating businesses and sponsorship agreements related to these businesses.

We own, either wholly or through partnerships with third parties, and operate, including license and management agreements, fine dining and casual dining restaurants, cocktail bars, nightlife and entertainment venues (The Fulton, Mister Dips, Carne Mare, Malibu Farm and Gitano), as well as the Tin Building by Jean-Georges, which offers a variety of culinary experiences, including restaurants, bars, grocery markets, retail, and private dining, and our unconsolidated venture, the Lawn Club.

These businesses are all our tenants and are part of our Landlord Operations.

We also have a 25% interest in Jean-Georges Restaurants.

Creative Culinary Management Company (“CCMC”), a wholly owned indirect subsidiary of Jean-Georges Restaurants and a related party of the Company, provides management services for certain retail and food and beverage businesses in the Seaport.

On January 1, 2025, as the Company’s initial step to internalize food and beverage operations at most of its wholly owned and joint venture-owned restaurants at the Seaport, we hired and onboarded employees of CCMC and entered into a services agreement with CCMC.

We aim to capitalize on opportunities in the food and beverage space to leverage growing consumer appetite for unique restaurant experiences as a catalyst to further expand the Company’s culinary footprint.

Our Hospitality-related period-over-period comparisons do not adjust for operational revisions to our asset strategies from period to period, such as opening or closing restaurant concepts or redirecting operations to use space for private events and/or concerts.

Entertainment

Entertainment includes the Las Vegas Aviators Triple-A Minor League Baseball team (the “Aviators”) and the Las Vegas Ballpark, our interest in and to the Fashion Show Mall Air Rights, events at The Rooftop at Pier 17, and sponsorship agreements related to these venues.

The Aviators are a Triple-A affiliate of the Oakland Athletics and play at the Las Vegas Ballpark, a 10,000-person capacity ballpark located in Downtown Summerlin.

The Rooftop at Pier 17 is a premier outdoor concert venue that hosts a popular Summer Concert Series featuring emerging and established musicians alike.

Commencing in the fourth quarter of 2025, we plan to launch year-round concerts and events for The Rooftop at Pier 17 utilizing a seasonal floor-to-ceiling glass enclosure for the winter months.

We see The Rooftop at Pier 17 as an opportunity to continue to drive events and entertainment growth as we believe that the demand for live music is strong and accelerating.

Landlord Operations

3 unchanged sentences

the Tin Building, a mixed-use building containing a culinary destination featuring a variety of experiences including restaurants, bars, grocery markets, retail, and private dining;

the Fulton Market Building, a mixed-use building containing office and retail spaces, including a movie theater and an experiential retail concept focused on “classic lawn games” and cocktails;

the Fulton Market Building, a mixed-use building containing office and retail spaces, including a movie theater and the Lawn Club, an experiential retail concept focused on “classic lawn games” and cocktails;

the Historic District retail and other locations which include the Museum Block, Schermerhorn Row, and more;

1 unchanged sentence

85 South Street, an eight-story residential building.

Our assets included in the Landlord Operations segment primarily sit under a long-term ground lease from the City of New York with an amendment that was executed giving the Company extension options for an additional 49 years from its current expiration in 2071 until 2120.

Our assets included in the Landlord Operations segment primarily sit under a long-term ground lease from the City of New York with extension options through 2120.

We are focused on continuing to fill vacancies in our Landlord Operations portfolio and believe this to be an opportunity to drive incremental segment growth.

Hospitality represents our ownership interests in various food and beverage operating businesses.

We own, either wholly or through partnerships with third parties, and operate, including license and management agreements, fine dining and casual dining restaurants, cocktail bars and entertainment venues (The Fulton, Mister Dips, Carne Mare, Malibu Farm and Pearl Alley), as well as our unconsolidated ventures, the Lawn Club and the Tin Building by Jean-Georges, which offers over 15 culinary experiences, including restaurants, bars, grocery markets, retail, and private dining.

These businesses are all our tenants and are part of to our Landlord Operations.

We also have a 25% interest in Jean-Georges Restaurants.

Creative Culinary Management Company (“CCMC”), a wholly owned subsidiary of Jean-Georges Restaurants and a related party of the Company, provides management services for certain retail and food and beverage businesses in the Seaport.

Sponsorships, Events, and Entertainment.

Sponsorships, Events, and Entertainment includes the Las Vegas Aviators Triple-A Minor League Baseball team (the “Aviators”) and the Las Vegas Ballpark, our interest in and to the Fashion Show Mall Air Rights, events at the Rooftop at Pier 17, and all of our sponsorship agreements across both the Las Vegas Ballpark and the Seaport.

The Aviators are a Triple-A affiliate of the Oakland Athletics and play at the Las Vegas Ballpark, a 10,000-person capacity ballpark located in Downtown Summerlin.

The Rooftop at Pier 17, as mentioned in Landlord Operations above, is a premier outdoor concert venue that hosts a popular Summer Concert Series featuring emerging and established musicians alike, and we are exploring opportunities to potentially host an enclosed concert series during the winter for year-round entertainment.

We see the Rooftop at Pier 17 as an opportunity to continue to drive events and entertainment growth as the demand for live music is strong and accelerating.

Separation from HHH

On July 31, 2024, HHH completed its spin-off of SEG through the pro rata distribution of all the outstanding shares of common stock of SEG to HHH’s stockholders as of the close of business on the record date of July 29, 2024 (the “Separation”).

In connection with the Separation, on July 31, 2024, the Company entered into a separation and distribution agreement and various other agreements with HHH, including a transition services agreement, an employee matters agreement, a tax matters agreement, and a revolving credit agreement.

On July 31, 2024, HHH completed its spin-off of the Company through the pro rata distribution of all the outstanding shares of common stock of SEG to HHH’s stockholders as of the close of business on the record date of July 29, 2024 (the “Separation”).

Additionally, HHH contributed capital of $23.4 million to the Company prior to the Separation to support the operating, investing, and financing activities of the Company.

For additional discussion of the Separation, see Note 1 – Significant Accounting Policies in the Notes to Unaudited Condensed Consolidated and Combined Financial Statements included in this Quarterly Report.

Basis of Presentation

Prior to the Separation, we operated as part of HHH and not as a standalone company.

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 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”).

These statements may not include all expenses that would have been incurred had the Company existed as a separate, stand-alone entity during the periods presented.

These Unaudited Condensed Consolidated and Combined Financial Statements as of December 31, 2023 are presented as if the Company had been carved out of HHH and had been combined for the periods from January 1, 2024 to July 31, 2024 and from January 1, 2023 to September 30, 2023.

The Unaudited Condensed Combined Financial Statements include the attribution of certain assets and liabilities that had been held at HHH but which are specifically identifiable or attributable to the business that was transferred to the Company in connection with the Separation.

For an additional discussion on the basis of presentation of these statements, see Note 1 – Significant Accounting Policies in the Notes to Unaudited Condensed Consolidated and Combined Financial Statements included in this Quarterly Report.

Our financial statements for the periods until the Separation on July 31, 2024 are combined financial statements prepared on a carve-out basis and are derived from the accounting records of HHH.

Our financial statements for the periods beginning on and after August 1, 2024 are consolidated financial statements based on our financial position, results of operations and cash flows as a

standalone company.

Accordingly, the accompanying Unaudited Consolidated Financial Statements as of March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025 have been prepared on a standalone basis and are derived from the accounting records of the Company.

The accompanying Unaudited Combined Financial Statements for the three months ended March 31, 2024 have been prepared on a carve-out basis and are derived from the combined financial statements and accounting records of HHH.

The accompanying Unaudited Consolidated and Combined Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying Unaudited Consolidated and Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the Company’s financial position, results of operations, and cash flows would have been had the Company operated as a standalone company during all of the periods presented.

For an additional discussion on the basis of presentation of the accompanying Unaudited Consolidated and Combined Financial Statements, see Note 1 – Summary of Significant Accounting Policies in the Unaudited Notes to the Consolidated and Combined Financial Statements included in this Quarterly Report.

Key Factors Affecting Our Business

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Quarterly Report titled “Risk Factors.”

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Management Strategies and Operational Changes

As mentioned elsewhere in this Quarterly Report, we historically operated as part of HHH and not as a standalone company.

As discussed elsewhere in this Quarterly Report, we historically operated as part of HHH and not as a standalone company.

Therefore, our historical results prior to the Separation are reflective of the management strategies and operations of the Company based on the direction and strategies of HHH.

Additionally, our historical results reflect the allocation of expenses from HHH associated with certain services prior to the Separation, 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;

Additionally, our historical results reflect the allocation of expenses from HHH associated with certain services prior to the Separation, including (1) certain support functions that were 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, and risk management;

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

As a separate public company, our ongoing costs related to such support functions may differ from, and will potentially exceed, the amounts that have been allocated to us in these financial statements.

The Company’s Unaudited Combined Financial Statements for the three months ended March 31, 2024 reflect an allocation of these costs.

As a standalone public company, our ongoing costs related to such support functions may differ from, and may potentially exceed, the amounts that have been allocated to the Company in the Company’s Unaudited Combined Financial Statements for the three months ended March 31, 2024.

Following the Separation, HHH continues to provide some of these services on a transitional basis in exchange for agreed-upon fees.

In addition to one-time costs to design and establish our corporate functions, we will also incur incremental costs associated with being a stand-alone public company, including additional labor costs, such as salaries, benefits, and potential bonuses and/or stock based compensation awards for staff additions to establish certain corporate functions historically supported by HHH and not covered by the transition services agreement, and corporate governance costs, including board of director compensation and expenses, audit and other professional services fees, annual report and proxy statement costs, SEC filing fees, transfer agent fees, consulting and legal fees and stock exchange listing fees.

Following the Separation, our future results and cost structure may differ based on new strategies and operational changes implemented by our management team, which may include changes to our chosen organizational structure, whether functions are outsourced or performed by the Company employees, and strategic decisions made in areas such as executive leadership, corporate infrastructure, and information technology.

In addition to one-time costs to design and establish our corporate functions, we will also incur incremental costs associated with being a standalone public company, including additional labor costs, such as salaries, benefits, and potential bonuses and/or stock based compensation awards for staff additions to establish certain corporate functions historically supported by HHH and not covered by the transition services agreement, and corporate governance costs, including board of director compensation and expenses, audit and other professional services fees, annual report and proxy statement costs, Securities and Exchange Commission (“SEC”) filing fees, transfer agent fees, consulting and legal fees and stock exchange listing fees.

As a standalone company, our future results and cost structure may differ based on new strategies and operational changes implemented by our management team, which may include changes to our chosen organizational structure, whether functions are outsourced or performed by Company employees, and strategic decisions made in areas such as executive leadership, corporate infrastructure, and information technology.

Tin Building and our Investment in the Tin Building by Jean-Georges

The Company owns 100% of the Tin Building which was completed and placed in service in our Landlord Operations segment during the third quarter of 2022.

The Company leases 100% of the rentable space in the Tin Building to the Tin Building by Jean-Georges joint venture, a Hospitality segment business in which the Company has an equity ownership interest and reports its ownership interest in accordance with the equity method.

Based on capital contribution and distribution provisions for the Tin Building by Jean-Georges joint venture, the Company currently recognizes all of the economic interest in the venture.

The Company recognizes lease payments from the Tin Building by Jean-Georges in Rental revenue within the Landlord Operations segment and recognizes its share of the income or losses from the joint venture in Equity in losses from unconsolidated ventures in the Hospitality segment.

As the Company currently recognizes 100% of operating income or losses from the Tin Building by Jean-Georges, the Tin Building lease has no net impact to the total Company net loss.

However, Landlord Operations Adjusted EBITDA and NOI, as defined below, includes only rental revenue related to the Tin Building lease payments, and does not include the rent expense in Equity in losses from unconsolidated ventures.

The Tin Building by Jean-Georges is managed by CCMC, a related party that is owned by Jean-Georges Restaurants.

The Tin Building by Jean-Georges had a soft opening in August 2022 and a grand opening celebration in late September 2022, with an expanded focus on experiences including in-person dining, retail shopping and delivery.

Operating hours were initially constrained due to labor shortages and the venture incurred elevated operating losses during the early months of operations;

however, during the fourth quarter of 2022, despite continued labor shortages, operating hours were extended to seven days a week.

The Company leases 100% of the rentable space in the Tin Building to the Tin Building by Jean-Georges joint venture, a Hospitality segment business in which we recognized 100% of the economic interest in accordance with the equity method through December 31, 2024.

As of January 1, 2025, in conjunction with the internalization of food and beverage operations, the Company began consolidating the Tin Building by Jean-Georges joint venture within the Hospitality segment.

The Company recognizes lease payments from the Tin Building by Jean-Georges in Rental revenue within the Landlord Operations segment.

As the Company recognizes 100% of operating income or losses from the Tin Building by Jean-Georges, the Tin Building lease has no net impact to the Company’s total net loss.

However, Landlord Operations Adjusted EBITDA, as defined below, includes only rental revenue related to the Tin Building lease payments, and does not include rent expense in Equity in losses from unconsolidated ventures for the three months ended March 31, 2024 or rent expense for the three months ended March 31, 2025 included in Hospitality costs in Hospitality Adjusted EBITDA.

The rental revenue and hospitality costs associated with the lease payments are eliminated in the Unaudited Consolidated Statement of Operations for the three months ended March 31, 2025.

See Note 2 – Investments in Unconsolidated Ventures in the Unaudited Notes to the Consolidated and Combined Financial Statements included in this Quarterly Report for additional details related to the Tin Building by Jean-Georges joint venture and unaudited pro forma information.

The Tin Building by Jean-Georges is managed by CCMC, a related party that is indirectly owned by Jean-Georges Restaurants.

In 2023, the Tin Building by Jean-Georges was open seven days per week, with strong foot traffic and sales.

However, operating losses at the Tin Building by Jean-Georges joint venture remained elevated, as the venture continues to refine its operating model, and the Seaport experienced poor weather conditions throughout 2023 and into the first quarter of 2024.

Performance at the Tin Building improved in the second and third quarters of 2024, primarily due to reductions in operating and labor costs.

As the Company currently funds any operating shortfall and recognizes all of the economic interest in the venture, the future success of the Tin Building by Jean-George may have a significant impact on our results of operations.

However, operating losses at the Tin Building by Jean-Georges joint venture remained elevated, as the venture continues to refine its operating model.

Performance at the Tin Building by Jean-Georges improved in 2024 and into the first quarter of 2025, primarily due to reductions in operating and labor costs.

As the Company currently funds any operating shortfall and recognizes all of the economic interest in the venture, the future success of the Tin Building by Jean-Georges may have a significant impact on our results of operations.

Our operations are highly seasonal and are significantly impacted by weather conditions.

Concerts at our outdoor venue and Aviator’s baseball games primarily occur from May through October, and we typically see increased customer traffic at our restaurants during the summer months when the weather is generally warmer and more favorable, which contributes to higher revenue during these periods.

Concerts at our outdoor venue and Aviators baseball games primarily occur from May through October, and we typically see increased customer traffic at our restaurants during the summer months when the weather is generally warmer and more favorable, which contributes to higher revenue during these periods.

However, weather-related disruptions, such as floods and heavy rains, can negatively impact our summer operations.

1 unchanged sentence

Similarly, floods can lead to temporary closures of our restaurants and can disrupt our supply chain, leading to potential revenue losses and increased costs.

During the fall and winter months, our operations tend to slow down due to the colder weather which results in fewer outdoor events, less foot traffic at our restaurants, and the end of the Aviator’s baseball season.

This seasonality pattern results in lower revenues during these periods.

2 unchanged sentences

Lease Renewals and Occupancy

As of September 30, 2024, and December 31, 2023, the weighted average remaining term of our retail, office, and other properties leases where we are the lessor was approximately seven years, excluding renewal options.

As of March 31, 2025, the average remaining term of our retail, office, and other properties leases where we are the lessor was approximately six years, excluding renewal options.

The stability of the rental revenue generated by our properties depends principally on our tenants’ ability to pay rent and our ability to collect rents, renew expiring leases, re-lease space upon the expiration or other termination of leases, lease currently vacant properties, and maintain or increase rental rates at our leased properties.

To the extent our properties become vacant, we would forego rental income while remaining responsible for the payment of property taxes and maintaining the property until it is re-leased, which could negatively impact our operating results.

As of September 30, 2024, our real estate assets at the Seaport were 68% leased.

This includes one lease at Pier 17 that is set to expire in December 2025 and represents 12% of our total 2023 rental revenues.

In January 2025, the Company entered into a lease with immersive entertainment

and experience creator, Meow Wolf, to occupy approximately 74,000 square feet of vacant space in Pier 17, inclusive of a space currently occupied and expiring in December 2025.

We continue to monitor our lease renewals and occupancy rates.

Inflationary Pressures

As of March 31, 2025, our real estate assets at the Seaport were 83% leased or programmed.

Inflationary Pressures and Other Macroeconomic Trends

Financial results across all our segments may be impacted by inflation.

3 unchanged sentences

For unleased properties and properties occupied by our restaurants, we are more exposed to inflationary pressures on property and operating expenses.

For our Hospitality and Sponsorships, Events, and Entertainment segments, inflationary pressure has a direct impact on our profitability due to increases in our costs, as well as potential reductions in customers that could negatively impact revenue.

For our Hospitality and Entertainment segments, inflationary pressure has a direct impact on our profitability due to increases in our costs, as well as potential reductions in customers that could negatively impact revenue.

Although certain indicators have suggested that inflation has made downward progress, the economy continues to be impacted by elevated inflation rates and faces further inflation risk.

Other adverse economic conditions, including slower economic growth and the potential for a recession, could also have an adverse effect on us, our tenants and consumers.

For example, rapid changes in U.S.

trade policy, new or increased tariffs, retaliatory tariffs and global trade disruptions could negatively impact us or our tenants, including by further aggravating inflation, increasing costs, disrupting supply chains and negatively affecting consumer sentiment and spending.

Significant Items Impacting Comparability

Separation Costs.

The Company incurred pre-tax charges related to the planned separation from HHH, primarily related to legal and consulting costs, of $6.7 million and $23.8 million for the three months and nine months ended September 30, 2024, respectively.

No costs related to the planned separation were incurred or recorded in the Unaudited Condensed Combined Statement of Operations for the three months and nine months ended September 30, 2023.

The Company incurred pre-tax charges related to the planned separation from HHH, primarily related to legal and consulting costs, of $9.2 million for the three months ended March 31, 2024.

No costs related to the Separation were incurred or recorded for the three months ended March 31, 2025.

Shared Service Costs.

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;

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 property management, development, 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 Consolidated and Condensed Combined Financial Statements reflect an allocation of these costs.

The Company’s Unaudited Combined Financial Statements for the three months ended March 31, 2024 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 Company recorded expenses associated with shared services that are not directly attributable to the Company of $5.3 million and $4.5 million for the three months ended September 30, 2024, and 2023, respectively, $12.8 million and $11.3 million for the nine months ended September 30, 2024, and 2023, respectively.

Non-GAAP Measure

Landlord Operations Net Operating Income

In addition to the required presentations using GAAP, we use certain non-GAAP performance measures, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer companies more meaningful.

Management continually evaluates the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

Landlord Operations Net Operating Income (“Landlord Operations NOI”) is a non-GAAP supplemental measure that we believe is useful in measuring the period-over-period performance of our Landlord Operations segment.

As Landlord Operations NOI reflects the revenues and expenses directly associated with owning and operating real estate properties, variances between years in Landlord Operations NOI typically result from changes in rental rates, occupancy, tenant mix, and operating expenses.

We define Landlord Operations NOI as operating revenues (rental income, tenant recoveries, and other revenue) less operating expenses (real estate taxes, repairs and maintenance, marketing, and other property expenses).

Landlord Operations NOI excludes straight-line rents and amortization of tenant incentives, net;

interest expense, net;

ground rent amortization;

other income (loss);

expenses for concepts that did not proceed to completion;

depreciation and amortization;

development-related marketing costs;

gain on sale or disposal of real estate and other assets, net;

provision for impairment and equity in earnings (losses) from unconsolidated ventures.

Although we believe that Landlord Operations NOI provides useful information to investors about the performance of our Landlord Operations segment, due to the exclusions noted above, Landlord Operations NOI should only be used as an additional measure of the financial performance of such assets and not as an alternative to GAAP net income.

The Company recorded expenses associated with shared services that are not directly attributable to the Company of $3.6 million for the three months ended March 31, 2024.

Tin Building by Jean-Georges.

On January 1, 2025, the Company became the primary beneficiary of the Tin Building by Jean-Georges and began consolidating the Company’s investment in this venture into the Company’s financial statements.

During the three months ended March 31, 2024, the Company recognized 100% of the economic interest in the venture in accordance with the equity method within Equity in earnings (losses) from unconsolidated joint ventures in the Unaudited Consolidated and Combined Statements of Operations.

See Tin Building and our Investment in the Tin Building by Jean-Georges above for additional details.

Results of Operations

Comparison of the Three Months Ended September 30, 2024, and 2023

The following table sets forth our operating results:

Three Months Ended September 30,

in thousands except percentages

Sponsorships, events, and entertainment revenue

Hospitality revenue

Rental revenue

Other revenue

Total revenue

Sponsorships, events, and entertainment costs

Hospitality costs

Operating costs

Provision for doubtful accounts

General and administrative

Depreciation and amortization

Total expenses

Provision for impairment

Other income, net

Operating loss

Interest expense, net

Equity in losses from unconsolidated ventures

Loss on early extinguishment of debt

Loss before income taxes

Income tax (benefit) expense

Preferred distributions to noncontrolling interest in subsidiary

Net loss attributable to common stockholders

Not Meaningful

Net loss attributable to common stockholders decreased $703.7 million, or 96%, to $32.5 million for the three months ended September 30, 2024, compared to $736.2 million in the prior-year period, primarily due to a $672.5 million decrease in impairment charges, a $39.0 million decrease in equity in losses from unconsolidated ventures, and a $5.9 million decrease in depreciation and amortization, partially offset by a $11.1 million increase in general and administrative expenses.

Items Included in Segment Adjusted EBITDA

See Segment Operating Results for discussion of significant variances for revenues and expenses included in Adjusted EBITDA.

Items Excluded from Segment Adjusted EBITDA

The following includes information on the significant variances in expenses and other items not directly related to segment activities.

General and Administrative .

General and administrative costs increased $11.1 million, or 154%, to $18.3 million for the three months ended September 30, 2024, compared to $7.2 million in the prior-year period.

This change was primarily due to a $6.7 million increase in separation costs, a $3.6 million increase in personnel and overhead expenses, and a $0.8 million increase in shared service costs allocated from HHH based on various allocation methodologies.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $5.9 million, or 44%, to $7.7 million for the three months ended September 30, 2024, compared to $13.6 million in the prior-year period.

This change was primarily due to a decrease in depreciation expense following the impairment recognized on the Company’s buildings and equipment in the third quarter of 2023.

Interest Expense, Net .

Interest expense, net increased $2.5 million, or 429%, to $3.1 million for the three months ended September 30, 2024, compared to $0.6 million in the prior-year period.

This change is primarily due to a $2.4 million decrease in amounts capitalized to development assets and a $0.3 million increase in interest expense on secured mortgages payable, partially offset by a $0.2 million increase in interest income.

Equity in Losses from Unconsolidated Ventures.

Equity in losses from unconsolidated ventures decreased $39.0 million, or 84%, to $7.6 million for the three months ended September 30, 2024, compared to $46.6 million in the prior-year period.

This change was primarily due to a $37.0 million impairment recognized in the three months ended September 30, 2023 against the carrying value of the Company’s investments in unconsolidated ventures, which included $30.8 million related to Jean-Georges Restaurants, $5.0 million related to Ssäm Bar, and $1.2 million related to the Tin Building by Jean-Georges.

Excluding the impact of the impairment, equity losses decreased $2.0 million, primarily related to a $0.9 million decrease in losses for the Tin Building by Jean-Georges, a $0.7 million decrease in losses for Ssäm Bar, and a $0.4 million increase in earnings for the Lawn Club, which opened in the fourth quarter of 2023.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table sets forth our operating results:

Nine Months Ended September 30,

Three Months Ended March 31,

in thousands except percentages

Sponsorships, events, and entertainment revenue

Hospitality revenue

Entertainment revenue

Rental revenue

1 unchanged sentence

Total revenue

Sponsorships, events, and entertainment costs

Hospitality costs

Entertainment costs

Operating costs

Provision for (recovery of) doubtful accounts

General and administrative

1 unchanged sentence

Total expenses

Provision for impairment

Other income, net

Operating loss

Interest expense, net

Equity in losses from unconsolidated ventures

Loss on early extinguishment of debt

Interest income (expense)

Equity in earnings (losses) from unconsolidated ventures

Loss before income taxes

2 unchanged sentences

Net loss attributable to common stockholders

1 Not Meaningful

Net loss attributable to common stockholders decreased $690.5 million, or 86%, to $111.6 million for the nine months ended September 30, 2024, compared to $802.1 million in the prior-year period, primarily due to a $672.5 million decrease in impairment charges, a $43.9 million decrease in equity in losses from unconsolidated ventures, and an $18.9 million decrease in depreciation and amortization, partially offset by a $33.8 million increase in general and administrative costs.

Net loss attributable to common stockholders decreased $12.2 million, or 28%, to $31.9 million for the three months ended March 31, 2025, compared to $44.1 million in the prior-year period, primarily due to a $6.8 million decrease in general and administrative expenses and a $3.5 million increase in interest income.

The decrease in equity in losses from unconsolidated ventures and changes in hospitality revenue, rental revenue, and hospitality costs are primarily due to the consolidation of the Tin Building by Jean-Georges as of January 1, 2025.

Items Included in Segment Adjusted EBITDA

See Segment Operating Results for discussion of significant variances for revenues and expenses included in Adjusted EBITDA.

Segment Adjusted EBITDA for each segment includes certain intersegment revenues and expenses that eliminate in the Consolidated Statements of Operations for all periods presented.

See “Segment Operating Results” for discussion of significant variances in revenues and expenses included in Adjusted EBITDA.

Items Excluded from Segment Adjusted EBITDA

1 unchanged sentence

General and Administrative .

General and administrative costs increased $33.8 million, or 171%, to $53.5 million for the nine months ended September 30, 2024, compared to $19.7 million in the prior-year period.

This change was primarily due to a $23.8 million increase in separation costs, a $10.1 million increase in personnel and overhead expenses, and a $1.5 million increase in shared service costs allocated from HHH based on various allocation methodologies.

These increases were partially offset by a $1.6 million decrease in expenses related to the development of the Company’s e-commerce platform in the prior-year period that did not occur in the current period.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $18.9 million, or 47%, to $21.1 million for the nine months ended September 30, 2024, compared to $40.0 million in the prior-year period.

This change was primarily due to a decrease in depreciation expense following the impairment recognized on the Company’s buildings and equipment in the third quarter of 2023.

Interest Expense, Net .

Interest expense, net increased $7.1 million, or 381%, to $8.9 million for the nine months ended September 30, 2024, compared to $1.8 million in the prior-year period.

This change is primarily due to a $5.9 million decrease in amounts capitalized to development assets and a $1.7 million increase in interest expense on secured mortgages payable, partially offset by a $0.5 million increase in interest income.

Equity in Losses from Unconsolidated Ventures.

Equity in losses from unconsolidated ventures decreased $43.9 million, or 64%, to $24.4 million for the nine months ended September 30, 2024, compared to $68.3 million in the prior-year period.

This change was primarily due to a $37.0 million impairment recognized in the nine months ended September 30, 2023 against the carrying value of the Company’s investments in unconsolidated ventures, which included $30.8 million related to Jean-Georges Restaurants, $5.0 million related to Ssäm Bar, and $1.2 million related to the Tin Building by Jean-Georges.

Excluding the impact of the impairment, equity losses decreased $7.0 million, primarily related to a $5.0 million decrease for the Tin Building by Jean-Georges, a $1.2 million decrease in losses for Ssäm Bar, which closed in the third quarter of 2023, and a $0.5 million decrease in losses for Jean Georges.

General and administrative costs decreased $6.8 million to $9.8 million for the three months ended March 31, 2025, compared to $16.6 million in the prior-year period, primarily due to a $9.2 million decrease in separation costs, partially offset by a $2.4 million increase in personnel and overhead expenses.

Interest Income (Expense) .

Interest income increased $3.5 million to $1.0 million for the three months ended March 31, 2025, compared to a net expense of $2.5 million in the prior-year period.

This change is primarily due to a $1.5 million increase in interest income, a $1.0 million increase in amounts capitalized to development assets and a $1.0 million decrease in interest expense on secured mortgages payable.

Segment Operating Results

Landlord Operations

Segment Adjusted EBITDA

The following table presents segment Adjusted EBITDA for Landlord Operations:

The following table presents segment Adjusted EBITDA for Hospitality:

Three Months Ended

Nine Months Ended

Landlord Operations Adjusted EBITDA

September 30,

Hospitality Adjusted EBITDA (a)

in thousands except percentages

Rental revenue

Other revenue

Hospitality revenue

Total revenues

Operating costs

Provision for doubtful accounts

Hospitality costs (b)

Total operating expenses

1 unchanged sentence

Total expenses

Equity in earnings (losses) from unconsolidated ventures

Adjusted EBITDA

For the three months ended September 30, 2024

Landlord Operations Adjusted EBITDA loss decreased $0.4 million compared to the prior-year period primarily due to the following:

Rental Revenue .

Rental revenue increased $0.9 million, or 16%, to $6.2 million for the three months ended September 30, 2024, compared to $5.3 million in the prior-year period.

This change was primarily driven by a $2.0 million increase in rental revenue at the Fulton Market Building due to the commencement of the Alexander Wang lease at the end of 2023.

This increase was partially offset by a $1.2 million decrease at Schermerhorn Row.

Operating Costs .

Operating costs increased $0.5 million, or 6%, to $9.1 million for the three months ended September 30, 2024, compared to $8.6 million in the prior year period.

This change was primarily due to a $0.4 million increase in state business tax, a $0.3 million increase in professional services fees, and a $0.1 million increase in insurance expenses, partially offset by a $0.3 million decrease in marketing and advertising expenses.

For the nine months ended September 30, 2024

Landlord Operations Adjusted EBITDA loss increased $0.9 million compared to the prior-year period primarily due to the following:

Rental Revenue .

Rental revenue increased $2.4 million, or 15%, to $18.9 million for the nine months ended September 30, 2024, compared to $16.5 million in the prior-year period.

This change was primarily driven by a $4.5 million increase in rental revenue at the Fulton Market Building due to the commencement of the Alexander Wang lease at the end of 2023.

This increase was partially offset by a $1.6 million decrease at Schermerhorn Row, a $0.5 million decrease at Pier 17, and a $0.2 million decrease at the Tin Building.

Operating Costs .

Operating costs increased $3.0 million, or 13%, to $27.2 million for the nine months ended September 30, 2024, compared to $24.2 million in the prior year period.

This change was primarily due to a $1.5 million in professional services fees, $0.8 million in utilities and maintenance costs, and a $0.4 million increase in state business tax.

Provision for Doubtful Accounts .

Provision for doubtful accounts increased to $0.4 million for the nine months ended September 30, 2024, compared to an immaterial amount in the prior-year period, primarily due to a tenant reserve established during the nine months ended September 30, 2024.

Non-GAAP Measure

Landlord Operations Net Operating Income

Refer to the Non-GAAP Measure discussion above for additional information and disclosure on the usefulness, relevance, limitations, and calculation of Landlord Operations Net Operating Income.

A reconciliation of Landlord Operations Adjusted EBITDA to Landlord Operations NOI is presented in the table below.

Reconciliation of Landlord Operations Adjusted EBITDA to Landlord Operations NOI:

Three Months Ended

Nine Months Ended

Landlord Operations NOI

September 30,

in thousands except percentages

Landlord Operations Adjusted EBITDA

Impact of straight-line rent

Landlord Operations NOI

For the three months ended September 30, 2024

Landlord Operations NOI losses decreased $0.9 million compared to the prior-year period, primarily due to increased revenue, partially offset by increased operating costs as mentioned above.

For the nine months ended September 30, 2024

Landlord Operations NOI losses increased $0.6 million compared to the prior-year period, primarily due to increased operating costs and provision for doubtful accounts, partially offset by the increase in rental revenue as mentioned above.

(a) Period-over-period comparability is impacted by the consolidation of the Tin Building by Jean-Georges as of January 1, 2025.

For prior periods in 2024, the Tin Building by Jean-Georges was an unconsolidated joint venture accounted for under the equity method in the Equity in earnings (losses) from unconsolidated ventures within our Hospitality segment.

(b) Hospitality costs include amounts related to intercompany leases that eliminate in the Statement of Operations.

Hospitality Adjusted EBITDA increased $1.4 million compared to the prior-year period primarily due to the following:

Hospitality Revenue

Hospitality revenue increased $3.6 million to $7.7 million for the three months ended March 31, 2025, compared to $4.1 million in the prior-year period.

This change was primarily due to a $4.5 million increase as a result of consolidating the Tin Building by Jean-Georges as of January 1, 2025, offset by decreased revenue across various restaurants within the Seaport as a result of reduced operating hours during the three months ended March 31, 2025.

Hospitality Costs

Hospitality costs increased $12.6 million to $20.4 million for the three months ended March 31, 2025, compared to $7.8 million in the prior-year period.

The increase is primarily due to the consolidation of the Tin Building by Jean-Georges as of January 1, 2025, partially offset by reduced expenses across various restaurants within the Seaport as a result of reduced operating hours during the three months ended March 31, 2025.

Equity in Earnings (Losses) from Unconsolidated Ventures

Equity in earnings (losses) from unconsolidated ventures increased $10.4 million to $0.2 million for the three months ended March 31, 2025, compared to losses of $10.2 million in the prior-year period.

This change was primarily due to a $9.6 million decrease in losses as a result of consolidating the Tin Building by Jean-Georges as of January 1, 2025, a $0.5 million increase in earnings from Jean-Georges Restaurants, and a $0.3 million increase in earnings for the Lawn Club.

Entertainment

Segment Adjusted EBITDA

The following table presents segment Adjusted EBITDA for Hospitality:

Three Months Ended

Nine Months Ended

Hospitality Adjusted EBITDA

September 30,

The following table presents segment Adjusted EBITDA for Entertainment:

Entertainment Adjusted EBITDA

Three Months Ended March 31,

in thousands except percentages

Hospitality revenue

Entertainment revenue

Total revenues

Hospitality costs

Operating costs

Provision for doubtful accounts

Entertainment costs

Total operating expenses

2 unchanged sentences

Adjusted EBITDA

1 Not Meaningful

For the three months ended September 30, 2024

Hospitality Adjusted EBITDA increased $3.0 million compared to the prior-year period primarily due to the following:

Hospitality Revenue .

Hospitality revenue decreased $1.9 million, or 17%, to $8.8 million for the three months ended September 30, 2024, compared to $10.7 million in the prior-year period.

This change was primarily due to a $0.6 million decrease at the Greens, a $0.6 million decrease at Garden Bar, a $0.3 million decrease at Cobble & Co, and a $0.3 million decrease at the Fulton.

Hospitality Costs .

Hospitality costs decreased $0.1 million, or 1%, to $8.4 million for the three months ended September 30, 2024, compared to $8.5 million in the prior-year period.

Other Income, Net .

Other income, net was $4.5 million for the three months ended September 30, 2024, compared to an immaterial amount in the prior-year period.

This Other income primarily represents reimbursements from CCMC received in the current quarter relating to prior period operating expenses.

For the nine months ended September 30, 2024

Hospitality Adjusted EBITDA increased $2.4 million compared to the prior-year period primarily due to the following:

Hospitality Revenue .

Hospitality revenue decreased $3.9 million, or 15%, to $21.7 million for the nine months ended September 30, 2024, compared to $25.6 million in the prior-year period.

This change was primarily due to a $2.1 million decrease related to reduced restaurant performance, primarily at The Fulton, Carne Mare, and Malibu Farms, and a $1.6 million decrease related to small popups and short-term activations in the Cobble & Co and Garden Bar spaces in the nine months ended September 30, 2023, with no similar activity in 2024.

The reduced restaurant performance was primarily related to poor weather conditions in the first quarter of 2024.

Hospitality Costs .

Hospitality costs decreased $1.7 million, or 7%, to $22.3 million for the nine months ended September 30, 2024, compared to $24.0 million in the prior-year period, primarily due to decreases in variable costs such as food and beverage costs and labor costs, which are generally in line with the decrease in Hospitality revenue.

Other Income, Net .

Other income, net was $4.5 million for the nine months ended September 30, 2024, compared to an immaterial amount in the prior-year period.

This Other income primarily represents reimbursements from CCMC received in the current quarter relating to prior period operating expenses.

Sponsorships, Events, and Entertainment

Entertainment Adjusted EBITDA decreased $0.1 million compared to the prior-year period primarily due to the following:

Entertainment Revenue

Entertainment revenue increased $0.6 million to $4.2 million for the three months ended March 31, 2025, compared to $3.6 million in the prior-year period.

This change was primarily due to a $0.4 million increase in Aviators ticket revenue and a $0.2 million increase in sponsorship revenue related to the concert series at the Seaport.

Entertainment Costs

Entertainment costs increased $0.7 million to $7.1 million for the three months ended March 31, 2025, compared to $6.4 million in the prior-year period.

This change was primarily due to a $0.5 million increase in breakdown and removal costs associated with the seasonal Winterland Skating concept at the Seaport as well as a $0.2 million increase in costs at the Las Vegas Ballpark, primarily due to higher cost of sales and labor costs as expected with additional games.

Landlord Operations

Segment Adjusted EBITDA

The following table presents segment Adjusted EBITDA for Sponsorships, Events, and Entertainment:

Sponsorships, Events, and Entertainment Adjusted EBITDA

Three Months Ended September 30,

Nine Months Ended September 30,

The following table presents segment Adjusted EBITDA for Landlord Operations:

Three Months Ended

Landlord Operations Adjusted EBITDA

in thousands except percentages

Sponsorships, events, and entertainment revenue

Rental revenue (a)

Other revenue

Total revenues

Sponsorships, events, and entertainment costs

Operating costs

Provision for doubtful accounts

Total operating expenses

2 unchanged sentences

Adjusted EBITDA

1 Not Meaningful

For the three months ended September 30, 2024

Sponsorships, Events, and Entertainment Adjusted EBITDA decreased $2.0 million compared to the prior-year period primarily due to the following:

Sponsorships, Events, and Entertainment Revenue .

Sponsorships, events, and entertainment revenue increased $0.2 million, or 1%, to $24.7 million for the three months ended September 30, 2024, compared to $24.5 million in the prior-year period.

This change was primarily due to a $0.9 million increase in Aviators ticket revenue, primarily related to higher attendance in the current quarter, and a $0.5 million increase in concert series revenue at the Seaport, primarily related to the timing of concerts with 42 shows held during the third quarter of 2024, compared to 41 shows held during the third quarter of 2023.

These increases were partially offset by a $1.0 million decrease in special event revenue at the Las Vegas Ballpark, primarily due to fewer events held in the current quarter.

Sponsorships, Events, and Entertainment Costs .

Sponsorships, events, and entertainment costs increased $2.0 million, or 13%, to $18.2 million for the three months ended September 30, 2024, compared to $16.2 million in the prior-year period.

This change was primarily due to a $1.0 million increase in costs associated with the concert series at the Seaport, primarily due to the timing of concerts with additional concerts held during the current period, and a $1.3 million increase in costs at the Las Vegas Ballpark, primarily due to higher cost of sales and labor costs as expected with higher attendance.

These increases were partially offset by a $0.4 million decrease in costs associated with special events at the Las Vegas Ballpark, primarily due to decreased variable costs associated with lower special event revenue in the current quarter.

Operating Costs .

Operating costs increased $0.1 million, or 7%, to $1.7 million for the three months ended September 30, 2024, compared to $1.6 million in the prior-year period.

This change was primarily due to a $0.5 million increase in insurance expense, a $0.1 million increase in real estate and sales and use tax, and a $0.1 million increase in marketing and advertising costs, partially offset by a $0.5 million decrease in other operating costs.

Provision for Doubtful Accounts .

Provision for doubtful accounts increased to $0.2 million for the three months ended September 30, 2024, compared to $0.1 million in the prior-year period, primarily due to a $0.3 million reserve associated with events at the Las Vegas Ballpark established during the three months ended September 30, 2024.

Other Income, Net .

Other income, net increased to $0.3 million for the three months ended September 30, 2024, compared to an immaterial amount in the prior-year period, primarily due to $0.3 million of other income associated with rooftop concessions at the Seaport during the three months ended September 30, 2024.

For the nine months ended September 30, 2024

Sponsorships, Events, and Entertainment Adjusted EBITDA decreased $3.9 million compared to the prior-year period primarily due to the following:

Sponsorships, Events, and Entertainment Revenue .

Sponsorships, events, and entertainment revenue decreased $3.1 million, or 6%, to $47.5 million for the nine months ended September 30, 2024, compared to $50.6 million in the prior-year period.

This change was primarily due to a $2.2 million decrease in concert series revenue at the Seaport, primarily related to the timing of concerts with 53 shows held during the first three quarters of 2024, compared to 60 shows held during the first three quarters of 2023.

Additionally, there was a $2.2 million decrease in concession sales at the Las Vegas Ballpark, primarily related to reduced attendance.

These decreases were partially offset by a $0.4 million increase in special event revenue at the Las Vegas Ballpark, a $0.3 million increase in sponsorship revenue at the Seaport due to the execution of four new sponsorship agreements in the first half of 2024, and a $0.5 million increase in private event revenue at the Seaport.

Sponsorships, Events, and Entertainment Costs .

Sponsorships, events, and entertainment costs decreased $1.4 million, or 4%, to $35.6 million for the nine months ended September 30, 2024, compared to $37.0 million in the prior-year period.

This change was primarily due to a $1.4 million decrease in costs associated with the Las Vegas Ballpark, primarily due to lower cost of sales and labor costs as expected with lower attendance and lower concessions revenue, a $0.3 million decrease in costs associated with the concert series at the Seaport, primarily due to the timing of concerts with fewer concerts held during the current period, and a $0.3 million decrease in breakdown and removal costs associated with the seasonal Winterland Skating concept at the Seaport.

These decreases were partially offset by a $0.6 million increase in costs associated with special events at the Las Vegas Ballpark primarily due to increased variable costs associated with higher special event revenue in the current period.

(a) Rental revenue includes amounts related to intercompany leases that eliminate in the Company’s Statement of Operations.

Landlord Operations Adjusted EBITDA increased $0.9 million compared to the prior-year period primarily due to the following:

Rental Revenue

Rental revenue increased $0.4 million to $8.5 million for the three months ended March 31, 2025, compared to $8.1 million in the prior-year period.

This change was primarily driven by an increase in rent escalation revenue as well as an increase in revenue generated by variable-rent leases.

Operating Costs

Operating costs increased $0.4 million, or 9%, to $4.7 million for the nine months ended September 30, 2024, compared to $4.3 million in the prior-year period.

This change was primarily due to a $0.5 million increase in insurance expense and a $0.1 million increase in marketing and advertising costs.

Provision for Doubtful Accounts .

Provision for doubtful accounts increased to $2.0 million for the nine months ended September 30, 2024, compared to an immaterial amount in the prior-year period, primarily due to a $1.0 million reserve associated with the Winterland Skating concept at the Seaport, a $0.5 million reserve associated with special events at the Las Vegas Ballpark, and a $0.4 million reserve associated with events at the Las Vegas Ballpark, which were established during the nine months ended September 30, 2024.

Other Income, Net .

Other income, net increased to $0.2 million for the nine months ended September 30, 2024, compared to an immaterial amount in the prior-year period, primarily due to $0.3 million of other income associated with rooftop concessions at the Seaport during the nine months ended September 30, 2024.

Operating costs decreased $0.5 million to $8.1 million for the three months ended March 31, 2025, compared to $8.6 million in the prior year period.

This change was primarily due to decreases in payroll and marketing costs period over period.

Liquidity and Capital Resources

Prior to the Separation, we operated as a division within HHH’s consolidated structure, which uses a centralized approach to cash management and financing of our operations.

This arrangement is not reflective of the manner in which we would have financed our operations had we been an independent, publicly traded company during the periods presented.

The cash and cash equivalents held by HHH at the corporate level are not specifically identifiable to us and, therefore, have not been reflected in our Unaudited Condensed Consolidated and Combined Financial Statements.

As of September 30, 2024, and December 31, 2023, our cash and cash equivalents were $23.7 million and $1.8 million, respectively.

As of September 30, 2024, and December 31, 2023, our restricted cash was $4.0 million and $42.0 million, respectively.

As of March 31, 2025 and December 31, 2024, our cash and cash equivalents were $129.9 million and $165.7 million, respectively.

As of March 31, 2025 and December 31, 2024, our restricted cash was $2.1 million and $2.2 million, respectively.

Prior to the Separation, we operated as a division within HHH’s consolidated structure, which used a centralized approach to cash management and financing of our operations.

This arrangement is not reflective of the manner in which we would have financed our operations had we been a standalone, publicly traded company during the three months ended March 31, 2024 and during the full year ended December 31, 2024.

Restricted cash is segregated in escrow accounts related to 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 in the Notes to Unaudited Condensed Consolidated and Combined Financial Statements, included in this Quarterly Report for additional information on the 250 Water Street litigation.

HHH’s third-party long-term debt and the related interest expense have not been allocated to us for any of the periods presented as we were not the legal obligor nor were we a guarantor of such debt.

As of September 30, 2024, and December 31, 2023, we have third-party mortgages payable of $102.5 million and $155.6 million, respectively, related to our 250 Water Street development and the Las Vegas Ballpark.

As of September 30, 2024, and December 31, 2023, the Company’s secured mortgage loans did not have any undrawn lender commitment available to be drawn for property development.

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.

As of each of March 31, 2025 and December 31, 2024, we had third-party mortgages payable of $102.4 million related to our 250 Water Street development, a variable-rate mortgage which requires monthly installments of only interest, and the Las Vegas Ballpark, a fixed-rate mortgage which requires semi-annual installments of principal and interest.

As of each of March 31, 2025 and December 31, 2024, the Company’s secured mortgage loans did not have any undrawn lender commitment available to be drawn for

property development.

On January 1, 2025, the mortgage loan on 250 Water Street was amended, increasing the stated margin rate from 5.0% to 7.0%.

See Note 4 – Mortgages Payable, Net in the Unaudited Notes to the Consolidated and Combined Financial Statements included in this Quarterly Report for additional information.

Following the Separation, our capital structure and sources of liquidity have changed from our historical capital structure because HHH is no longer financing our operations, investments in joint ventures, and development and redevelopment projects.

3 unchanged sentences

Additionally, on July 31, 2024, a subsidiary of HHH that became our subsidiary in connection with the Separation, issued 10,000 shares of 14.000% Series A preferred stock, par value $0.01 per share, with an aggregate liquidation preference of $10.0 million.

Management believes that our existing cash balances, including the proceeds of our Rights Offering described under “Subsequent Financing” below, restricted cash balances, and funds provided by HHH prior to the Separation, along with expected borrowing capacity and access to capital markets Rights Offering, taken as a whole, provide (i) adequate liquidity to meet all of our current and long-term obligations when due, including our third-party mortgages payable, and (ii) adequate liquidity to fund capital expenditures and development and redevelopment projects.

However, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including (1) our credit ratings, including the lowering of any of our credit ratings, or absence of a credit rating, (2) the liquidity of the overall capital markets, and (3) the current state of the economy and, accordingly, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms in the future, or at all, which could have a negative impact on our liquidity and capital resources.

The cash flows presented in our Unaudited Condensed Combined Statement of Cash Flows may not be indicative of the cash flows we would have recognized had we operated as a standalone publicly traded company for the periods presented.

Prior to the Separation, HHH contributed additional cash to the Company in order to fund its operations until a permanent capital structure is finalized.

However, we do not expect HHH to have an ongoing long-term relationship with the Company and HHH will not have any ongoing financial commitments to the Company.

Subsequent Financings

In September 2024, the Company commenced a $175 million Rights Offering.

In connection with the Rights Offering, the Company 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 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.

Nine Months Ended September 30, 2024 and 2023

Management believes that our existing cash balances and restricted cash balances, along with access to capital markets, provide (i) adequate liquidity to meet all of our current and long-term (beyond 12 months) obligations when due, including our third-party mortgages payable, and (ii) adequate liquidity to fund capital expenditures and development and redevelopment projects.

However, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including (1) our credit ratings, including the lowering of any of our credit ratings, or the absence of a credit rating, (2) the liquidity of the overall capital markets, and (3) the current state of the economy and, accordingly, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms in the future, or at all, which could have a negative impact on our liquidity and capital resources.

The cash flows presented in our Unaudited Consolidated and Combined Statement of Cash Flows for the three months ended March 31, 2024 may not be indicative of the cash flows we would have recognized had we operated as a standalone publicly traded company for the period presented.

The following table sets forth a summary of our cash flows:

Nine Months Ended September 30,

Three Months Ended March 31,

Cash used in operating activities

Cash used in investing activities

Cash provided by financing activities

Cash (used in) provided by financing activities

Operating Activities

Cash used in operating activities increased $19.8 million to $48.0 million in the nine months ended September 30, 2024, compared to $28.2 million in the prior-year period.

The increase in cash used in operating activities was primarily due to increased costs incurred in the nine months ended September 30, 2024 related to the Separation from HHH, with no similar activity in the prior-year period, and an increase in cash used in operating activities at our segments.

Sponsorships, Events, and Entertainment Adjusted EBITDA decreased $3.9 million primarily due to decreased ticket revenue, event revenue, and concessions sales;

Landlord Operations Adjusted EBITDA loss increased $0.9 million primarily due to increased operating expenses, partially offset by increased rental revenue;

and Hospitality Adjusted EBITDA increased $2.4 million primarily due to increased other income, net during the current period.

While we have historically used cash in operating activities, we expect that the additional liquidity provided by the Rights Offering will provide sufficient capital to fund operations until such time that we may generate cash from operating activities.

Cash used in operating activities increased $1.7 million to $20.5 million in the three months ended March 31, 2025, compared to $18.8 million in the prior-year period.

The increase primarily relates to changes in cash used in operating activities in each of our segments and increases in short-term receivables with our unconsolidated joint ventures.

Investing Activities

Cash used in investing activities increased $3.6 million to $82.2 million in the nine months ended September 30, 2024, compared to $78.6 million in the prior-year period.

The increase in cash used in investing activities was primarily related to restricted cash released from escrow related to the 250 Water Street development in the nine months ended September 30, 2024.

Cash used in investing activities decreased $14.1 million to $14.5 million in the three months ended March 31, 2025, compared to $28.6 million in the prior-year period.

The decrease in cash used in investing activities was primarily related to the consolidation of the Tin Building by Jean-Georges joint venture.

Financing Activities

Cash provided by financing activities increased $22.8 million to $114.1 million in the nine months ended September 30, 2024, compared to $91.3 million in the prior-year period, primarily due to an increase in the net transfers provided by HHH to fund the operating and investing activities explained above.

Cash provided by financing activities decreased $48.5 million to cash used in financing activities of $0.9 million in the three months ended March 31, 2025, compared to cash provided by financing activities of $47.7 million in the prior-

year period, primarily due to the elimination of net transfers provided by HHH to fund the operating and investing activities described above.

Contractual Obligations

We have material contractual obligations that arise in the normal course of business.

Contractual obligations entered into prior to the Separation may not be representative of our future contractual obligations profile as an independent, publicly traded company.

Our pre-Separation contractual obligations do not reflect changes that we expect to experience

in the future as a result of the Separation, such as contractual arrangements that we may enter into in the future that were historically entered into by the HHH for shared services.

Contractual obligations entered into prior to the Separation may not be representative of our contractual obligations profile as a standalone, publicly traded company.

Our pre-Separation contractual obligations do not reflect changes that we expect to experience in the future as a result of the Separation, such as contractual arrangements that we may enter into in the future that were historically entered into by HHH for shared services.

We have outstanding mortgages payable related to the 250 Water Street development and Las Vegas Ballpark, which are collateralized by certain of the Company’s real estate assets.

A summary of our mortgages payable as of September 30, 2024, and December 31, 2023 can be found in Note 5 – Mortgages Payable, Net in the Notes to Unaudited Condensed Combined Financial Statements, included in this Quarterly Report.

A summary of our mortgages payable as of March 31, 2025 and December 31, 2024 can be found in Note 4 – Mortgages Payable, Net in the Unaudited Notes to the Consolidated and Combined Financial Statements included in this Quarterly Report.

We lease land or buildings at certain properties from third parties.

Rental payments are expensed as incurred and have been, to the extent applicable, straight-lined over the term of the lease.

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

A summary of our lease obligations as of September 30, 2024, and December 31, 2023, can be found in Note 10 – Leases in the Notes to Unaudited Condensed Combined Financial Statements included in this Quarterly Report.

Contractual rental expense was $1.6 million and $2.1 million for the three months ended March 31, 2025 and 2024, respectively.

The amortization of straight-line rents included in the contractual rent amount was $0.6 million for each of the three months ended March 31, 2025 and 2024.

A summary of our lease obligations as of March 31, 2025 and December 31, 2024, can be found in Note 9 – Leases in the Unaudited Notes to the Consolidated and Combined Financial Statements included in this Quarterly Report.

Critical Accounting Estimates

2 unchanged sentences

Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

We believe that of our significant accounting policies, which are described in Note 1 – Summary of Significant Accounting Policies in the Notes to Unaudited Condensed Combined Financial Statements included in this Quarterly Report, the accounting policies below involves a greater degree of judgment and complexity.

Accordingly, we believe these are the most critical to understand and evaluate fully our financial condition and results of operations.

There have been no material changes to our Critical Accounting Estimates as described within “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K Filed with the SEC on March 10, 2025.

We review our long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

6 unchanged sentences

As such, the evaluation of anticipated cash flows is highly subjective and is based in part on assumptions that could differ materially from actual results in future periods.

Unfavorable changes in any of the primary assumptions could result in a reduction of anticipated future cash flows and could indicate property impairment.

changes in any of the primary assumptions could result in a reduction of anticipated future cash flows and could indicate property impairment.

Uncertainties related to the primary assumptions could affect the timing of an impairment.

1 unchanged sentence

Variable Interest Entities

Our Unaudited Condensed Consolidated and Combined Financial Statements include all of our accounts, including our majority owned and controlled subsidiaries and VIEs for which we are the primary beneficiary.

The Company was not the primary beneficiary of any VIE’s during the nine months ended September 30, 2024, and December 31, 2023, and, therefore, the Company does not consolidate any VIE’s in which it holds a variable interest.

Our Unaudited Consolidated and Combined Financial Statements include all of our accounts, including our majority owned and controlled subsidiaries and variable interest entities (“VIEs”) for which we are the primary beneficiary.

If the Company determined it was not the primary beneficiary of a VIE during the three months ended March 31, 2025 and March 31, 2024, the Company did not consolidate the VIE in which it holds a variable interest.

Judgments and Uncertainties

1 unchanged sentence

The determination of whether an entity is a VIE and whether the Company is the primary beneficiary of a VIE is based upon facts and circumstances for the VIE and requires significant judgments such as whether the entity is a VIE, whether the Company’s interest in a VIE is a variable interest, the determination of the activities that most significantly impact the economic performance of the entity, whether the Company controls those activities, and whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

As of September 30, 2024, the Company had a variable interest in Tin Building by Jean-Georges and as of December 31, 2023, the Company had a variable interest in Tin Building by Jean-Georges and Ssäm Bar.

The Ssäm Bar restaurant closed during the third quarter of 2023, and the venture was liquidated in May 2024.

The Company determined that it is not the primary beneficiary of the VIE’s as of September 30, 2024, and December 31, 2023, as the Company does not have the power to direct the activities of the VIE’s that most significantly impact the VIE’s economic performance.

Therefore, the Company accounts for its investment in the VIE’s in accordance with the equity method.

The Tin Building by Jean-Georges was previously classified as a VIE.

As of January 1, 2025, in conjunction with the internalization of food and beverage operations, the Company, through employing the management team personnel and directing the operating activities that most significantly impact the economic performance of the Tin Building by Jean-Georges, became the primary beneficiary of the VIE and consolidated the VIE on January 1, 2025 and for the three month period ending March 31, 2025.

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

Investments in Unconsolidated Ventures

6 unchanged sentences

Generally, joint venture operating agreements provide that assets, liabilities, funding obligations, profits and losses, and cash flows are shared in accordance with ownership percentages.

For certain equity method investments, various provisions in the joint venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and preferred returns may result in the Company’s economic interest differing from its stated ownership or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities.

on the venture’s distribution priorities.

For these investments, the Company recognizes income or loss based on the joint venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing percentage.

11 unchanged sentences

Judgments and Uncertainties

The capitalization of development costs requires judgment, and can directly and materially impact our results of operations because, for example, (i) if we don't capitalize costs that should be capitalized, then our operating expenses would be overstated during the development period, and the subsequent depreciation of the developed real estate would be understated, or (ii) if we capitalize costs that should not be capitalized, then our operating expenses would be understated during the development period, and the subsequent depreciation of the real estate would be overstated.

For the nine months ended September 30, 2024 and 2023, we capitalized development costs of $46.1 million and $30.6 million, respectively.

The capitalization of development costs requires judgment, and can directly and materially impact our results of operations because, for example, (i) if we do not capitalize costs that should be capitalized, then our operating expenses would be overstated during the development period, and the subsequent depreciation of the developed real estate would be understated, or (ii) if we capitalize costs that should not be capitalized, then our operating expenses would be understated during the development period, and the subsequent depreciation of the real estate would be overstated.

For the three months ended March 31, 2025 and 2024, we capitalized development costs of $2.3 million and $2.4 million, respectively.

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 2. Management’s Discussion and Analysis