Seaport Entertainment Group (SEG) risk factors, FY2024 10-K

Risks Related to Our Business and Our Industry

1. 01Our business is dependent on discretionary consumer spending patterns and, as a result, could be materially, adversely impacted by an economic downturn, recession, financial instability, inflation or changes in consumer tastes and preferences
2. 02Downturn in tenants’ businesses may reduce our revenues and cash flows
3. 03We may be unable to renew leases, lease vacant space or re-lease space as leases expire
4. 04The operational results of some of our assets may be volatile, especially the Seaport, which could have an adverse effect on our financial condition and results of operations
5. 05Significant competition could have an adverse effect on our business
6. 06The concentration of our properties in New York City and Las Vegas exposes our revenues and the value of our assets to adverse changes in local economic conditions
7. 07Some of our properties are subject to potential natural or other disasters
8. 08Climate change, as well as scrutiny of climate change and other environmental or social matters may adversely affect our business
9. 09Water and electricity shortages could have an adverse effect on our business, financial condition and results of operations
10. 10If we are unable to make strategic acquisitions and develop and maintain strategic partnerships, our growth may be adversely affected, and we may not realize the expected benefit from acquisitions and partnerships
11. 11Several of our properties and our tenants depend on frequent deliveries of food, alcohol and other supplies, which subjects us to risks of shortages, interruptions and price fluctuations for those goods
12. 12We are exposed to risks associated with the development, redevelopment or construction of our properties, including the potential redevelopment at 250 Water Street and in connection with our Fashion Show Mall Air Rights
13. 13Our development projects may subject us to certain liabilities
14. 14Government housing regulations may limit opportunities at 250 Water Street and any future communities in which we invest, and failure to comply with resident qualification requirements may result in financial penalties or loss of benefits
15. 15Cybersecurity risks and incidents, such as a breach of the Company’s privacy or information security systems, or those of our vendors or other third parties, could compromise our information and expose us to liability, which would cause our business and reputation to suffer
16. 16Global economic and political instability and conflicts, such as the conflict between Russia and Ukraine or in the Middle East, could adversely affect our business, financial condition or results of operations
17. 17Some of our directors are involved in other businesses including real estate activities and public and/or private investments and, therefore, may have competing or conflicting interests with us
18. 18Pershing Square is our largest stockholder and may exert influence over us that may be adverse to our best interests and those of our other stockholders
19. 19Our business is subject to risks associated with our investments in real estate assets and with trends in the real estate industry
20. 20Because real estate is illiquid, we may not be able to sell properties when in our best interest
21. 21Beginning in 2020, the COVID-19 pandemic disrupted our business, as well as the businesses of our tenants, and a resurgence of COVID-19, or any other future pandemic, epidemic or similar health crisis, could have a material adverse effect on our business, financial condition, results of operations, or cash flows

Risks Related to Our Sports Assets

1. 22Our sports assets face intense and wide-ranging competition, which may have a material negative effect on our business and results of operations
2. 23Our business is substantially dependent on the continued popularity and/or competitive success of the Aviators, which cannot be assured
3. 24Baseball decisions made by the parent club, especially those concerning player selection and salaries, may have a material negative effect on our business and results of operations
4. 25The actions of MLB Professional Development Leagues (“MLB PDL”) may have a material negative effect on our business and results of operations
5. 26Injuries to, and illness of, players on our sports team could hinder our success

Financial Risks

1. 27We will be unable to develop, redevelop or expand our properties without sufficient capital or financing
2. 28The agreements governing our existing indebtedness contain restrictions that may limit our ability to operate our business
3. 29Inflation has adversely affected us and may continue to adversely affect us by increasing costs beyond what we can recover through price increases
4. 30Some potential losses are not insured
5. 31We are subject to risks associated with hedging arrangements

Regulatory, Legal and Environmental Risks

1. 32Development of properties entails a lengthy, uncertain and costly entitlement process
2. 33Government regulations and legal challenges may delay the start or completion of the development of our properties, increase our expenses or limit our building or other activities
3. 34We may be subject to increased compliance costs to comply with new and contemplated government regulations relating to energy standards and climate change
4. 35We may be subject to potential costs to comply with environmental laws
5. 36also regulate the operation and removal of underground storage tanks. In connection with our ownership, operation and management of certain properties, we could be held liable for the costs of remedial action with respect to these regulated substances or tanks or related claims
6. 37Tax increases, changes in tax rules and challenges by tax authorities to our tax positions may adversely affect our financial results
7. 38Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited
8. 39Compliance with the Americans with Disabilities Act may be a significant cost for us

Risks Related to Our Separation From and Our Relationship with HHH

1. 40Prior to the Spin-Off, we had no history of operating as a separate, publicly traded company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results
2. 41As a separate, publicly traded company, we may not enjoy the same benefits that we did as a part of HHH
3. 42Future sales of our common stock, or the perception that such sales may occur, could depress our common stock price
4. 43sales of our common stock made pursuant to registration rights could similarly cause the trading price of our common stock to drop significantly. Any of the foregoing also could impede our ability to raise future capital
5. 44Our suppliers or other companies with whom we conduct business may conclude that our financial stability as a separate, publicly traded company is insufficient to satisfy their requirements for doing or continuing to do business with them
6. 45Potential indemnification obligations to HHH pursuant to the Separation Agreement (as defined herein) could materially and adversely affect our business, financial condition, results of operations and cash flows
7. 46Certain of our executive officers and directors may have actual or potential conflicts of interest because of their equity interests in HHH
8. 47We may not achieve some or all of the expected benefits of the separation, and the separation may adversely affect our business
9. 48following the separation, we are more susceptible to market fluctuations and other adverse events than if we were still a part of HHH
10. 49We may have received better terms from unaffiliated third parties than the terms we will receive in our agreements with HHH
11. 50We or HHH may fail to perform under the various agreements we executed as part of the separation or we may fail to have necessary systems and services in place when certain of the agreements expire
12. 51Following the Spin-Off, we are dependent on HHH to provide us with certain transition services, which may be insufficient to meet our needs, and we may have difficulty finding replacement services or be required to pay increased costs to replace these services after our transition services agreement with HHH expires
13. 52If the Spin-Off failed to qualify as a distribution under Section 355 of the Code, HHH stockholders could incur significant adverse tax consequences, and we could be required to indemnify HHH for certain tax consequences that could be material pursuant to indemnification obligations under the tax matters agreement
14. 53To comply with the tax matters agreement, we might not be able to engage in certain transactions

Risks Related to Our Common Stock

1. 54We cannot be certain that an active trading market for our common stock will be sustained, and the price of our common stock may fluctuate significantly
2. 55We are an emerging growth company and the information we provide stockholders may be different from information provided by other public companies
3. 56If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected
4. 57We do not expect to pay any dividends for the foreseeable future
5. 58Your percentage ownership in us may be diluted in the future
6. 59Anti-takeover provisions in our Certificate of Incorporation, our Bylaws, Delaware law, the Investor Rights Agreement and certain other agreements may prevent or delay an acquisition of us, which could decrease the trading price of our common stock
7. 60of our corporate and governance matters. The board designation and related rights are also contained in our Certificate of Incorporation

General Risks

1. 61Loss of key personnel could adversely affect our business and operations
2. 62Actual or threatened terrorist activity and other acts of violence or civil unrest, or the perception of a heightened threat of such risks, could adversely affect our financial condition and results of operations
3. 63Weakness or instability in the general economy, our markets or our results of operations could result in future asset impairments, which would increase our reported loss or reduce our reported earnings and net worth
4. 64We are, and may in the future be, subject to legal proceedings or investigations, the resolution of which could negatively affect our business, financial condition or results of operations
5. 65or activities. In addition, awards against and settlements by our competitors or publicity associated with our current litigation could incentivize parties to bring additional claims against us