Seritage Growth Properties (SRG) risk factors, FY2024 10-K

Risks Related to Ownership of our Securities

1. 01The market price and trading volume of our securities may be volatile
2. 02A lack of active trading market for the Series A Preferred Shares may negatively affect the market value of, and the ability of holders of our Series A Preferred Shares to transfer or sell, their Series A Preferred Shares
3. 42The market price and trading volume of our securities may be volatile
4. 43We have issued 2,800,000 Series A Cumulative Redeemable Preferred Shares, which are senior to our common shares for purposes of distributions or upon liquidation. The Series A Preferred Shares may limit our ability to make distributions to holders of our common shares
5. 44The number of shares available for future sale could adversely affect the market price of Class A common shares
6. 45An active trading market may not develop for the Series A Preferred Shares or, even if it does develop, may not continue, which may negatively affect the market value of, and the ability of holders of our Series A Preferred Shares to transfer or sell, their shares
7. 46The Series A Preferred Shares are subordinate in right of payment to our existing and future debt, and the interests of the holders of Series A Preferred Shares could be diluted by the issuance of additional preferred shares, including additional Series A Preferred Shares, and by other transactions
8. 47Dividends on our preferred shares, including the Series A Preferred Shares, are discretionary. We cannot guarantee that we will be able to pay dividends in the future or what the actual dividends will be for any future period
9. 48Holders of Series A Preferred Shares will have limited voting rights

Risks Related to Our Business and Operations

1. 03There can be no assurance that we will be able to complete any strategic transaction or strategic change on terms satisfactory to the Board of Trustees
2. 04We have experienced challenging market conditions and there can be no assurances that these challenges will abate, which may adversely impact the net Plan of Sale proceeds from our assets
3. 05We cannot assure our shareholders of the amount they will receive in shareholder distributions under the Plan of Sale or when they will receive them
4. 06If we are unable to find buyers for our assets on a timely basis or at our expected sales prices, our shareholder distributions under the Plan of Sale may be delayed or reduced
5. 07Our expected sales prices may be impacted by tenant issues at our properties
6. 08We have ongoing capital needs and may not be able to obtain additional financing or other sources of funding on acceptable terms
7. 09Real estate related taxes may increase, and if these increases are not passed on to tenants, our income will be reduced
8. 10Changes in building and/or zoning laws may require us to update a property or prevent us from fully restoring a property in the event of a substantial casualty loss and/or require us to meet additional or more stringent construction requirements
9. 11Our real estate assets and equity method investments may be subject to impairment charges
10. 12Since identifying these material weaknesses, we have completed the process of remediating them
11. 13Properties in our portfolio may be subject to ground leases; if we are found to be in breach of these ground leases or are unable to renew them, we could be materially and adversely affected
12. 14Certain properties within our portfolio are subject to restrictions pursuant to reciprocal easement agreements, operating agreements, or similar agreements, some of which contain a purchase option or right of first refusal or right of first offer in favor of a third party
13. 15Economic conditions, high interest rates and macroeconomic uncertainty could materially adversely affect our business and/or the net proceeds available from the sale of our assets
14. 16macroeconomic uncertainty, in the U.S. and/or globally, including trade wars or tariffs and the possibility of a recession
15. 17Rising expenses could reduce cash flow
16. 18We may face increased risks and costs associated with volatility in commodity and labor prices or as a result of supply chain or procurement disruptions, which may adversely affect the status of our construction projects
17. 19Compliance with the Americans with Disabilities Act may require us to make expenditures that adversely affect our cash flows
18. 20Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations or otherwise cause us to incur significant costs
19. 21Environmental costs and liabilities associated with contamination at real estate properties owned by us may materially and adversely affect us
20. 22Our business faces potential risks associated with natural disasters, severe weather conditions and climate change and related legislation and regulations, which could have an adverse effect on our cash flow and operating results
21. 23Possible acts of war, terrorist activity or other acts of violence could adversely affect our financial condition and results of operations
22. 24Cybersecurity incidents could cause a disruption to our operations, a compromise of confidential information and damage to our business relationships, all of which could negatively impact our business, financial condition and operating results
23. 25We may incur mortgage indebtedness and other borrowings, which may increase our business risks
24. 26Covenants in our Term Loan Facility may limit our operational flexibility and a covenant breach or default could adversely affect our business and financial condition
25. 27Our rights and the rights of our shareholders to take action against our trustees and officers are limited
26. 28a final judgment based upon a finding of active and deliberate dishonesty by the trustee or officer that was material to the cause of action adjudicated
27. 29Our Declaration of Trust and bylaws and Maryland law contain provisions that may delay, defer or prevent an acquisition of Class A common shares or a change in control
28. 30Additionally, Title 3, Subtitle 8 of the MGCL permits the Board of Trustees, without shareholder approval and notwithstanding any contrary provisions in our Declaration of Trust or bylaws, to implement certain takeover defenses
29. 31We may experience uninsured or underinsured losses, or insurance proceeds may not otherwise be available to us which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expense
30. 32Mr. Lampert may exert substantial influence over us, and his interests may differ from or conflict with the interests of our other shareholders
31. 33Our investments in or redevelopment of properties may be unsuccessful or fail to meet our expectations
32. 34our properties may be subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities
33. 35Current and future redevelopment may not yield expected returns
34. 36vacancies or ability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options
35. 37If members of our management team terminate their employment with us or we are unable to retain talented employees our financial results and/or the Plan of Sale may be adversely affected
36. 38The future outbreak of highly infectious or contagious diseases may materially and adversely impact the business of our tenants and materially or adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations
37. 39We have been, and in the future may be, subject to securities class action, derivative, and other litigation, which may harm our business and results of operations

Risks Related to Our Tax Status

1. 40If we do not qualify to be taxed as a REIT for any taxable year through 2021, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our shareholders
2. 41We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our Class A common shares