Seritage Growth Properties Announces Completion of REIT Election

NEW YORK–(BUSINESS WIRE)–Seritage Growth Properties (NYSE: SRG) (the “Company”), a nationwide owner and developer of 162 commercial, residential and mixed-use properties, today announced that its Board of Directors has approved a plan to to terminate its election to be treated as a real estate investment trust (“REIT”) for tax purposes and to convert the Company to a C corporation. The termination of the REIT election will be effective retroactively to January 1, 2022. has received all necessary approvals to terminate its election.

On March 1, 2022, the Company announced that its Board of Directors had begun a process to review a wide range of strategic alternatives to enhance shareholder value and created a special committee to oversee the process. After consulting with its financial, tax and legal advisors, and with the recommendation of the Special Committee, the Board has determined that electing to be treated as a C corporation for tax purposes would provide the company with increased flexibility to effectively pursue a variety of potential alternative activities to maximize the value of the Company’s diversified portfolio of assets, including a potential sale or series of sales of assets. In reaching this decision, the Board considered, among other things, the potential time and transaction limits that would be imposed on the Company if it remained subject to the REIT tax rules, the large tax base that the company has in its assets and net operating losses.

Company CEO Andrea Olshan said:After careful analysis, we have determined that the conversion to a C corporation for tax purposes is the appropriate next step to allow Seritage’s Board to conduct a thorough and comprehensive review of strategic alternatives. With this conversion, we will have greater flexibility in the types of trades we can perform and when. We remain confident in the considerable value inherent in our portfolio and are focused on continuing to pursue the right course of maximizing this value from our assets for the benefit of all shareholders.

Seritage’s full board strategic review process continues and the company does not intend to comment further on the process until the Special Committee and the board decide on the best way forward.

Appointment of Adam Metz

Additionally, the Company today announced that Adam Metz has been appointed to the Company’s Board of Directors as an Independent Trustee, effective immediately. Mr. Metz will serve on the board’s audit committee and has been added to the board’s special committee overseeing the strategic review process.

Ms Olshan said: “On behalf of the other directors, we are very pleased to welcome Adam Metz to Seritage’s Board of Directors. As we move forward with our review of strategic alternatives, we are confident that Adam’s extensive transactional experience and significant real estate expertise will be extremely valuable in the boardroom.

About Adam Metz

Mr. Metz is currently a non-executive director of Hammerson plc, a UK-based real estate investment trust, since July 2019, four business development companies advised by MS Capital Partners Adviser Inc., a wholly owned subsidiary of Morgan Stanley, from October 2019, and Galata Acquisition Corporation, from July 2021. Mr. Metz was Managing Director and Head of International Real Estate at Carlyle Group from September 2013 to April 2018. Prior to Carlyle Group, Mr. Metz was Senior Advisor with Groupe Immobilier of TPG Capital. Previously, Mr. Metz served as Managing Director of General Growth Properties (“GGP”), where he led GGP through its restructuring and emergence from bankruptcy. Prior to joining GGP, Mr. Metz was co-founder of Polaris Capital LLC, which partnered with the Blackstone Group to own a portfolio of commercial real estate assets across the United States. Mr. Metz has also held positions at Rodamco, Urban Shopping Centers, JMB Realty and The First National Bank of Chicago. Previously, he served as an independent director on numerous boards, including Forest City, Parkway Properties and Howard Hughes Corporation. He also sits on the advisory boards for the real estate programs at Cornell University and Northwestern University and is Vice Chairman of the Board of Trustees of the Smithsonian’s Hirshhorn Museum and Sculpture Garden. Mr. Metz holds a Masters in Management from Northwestern University and a Bachelor of Arts in History from Cornell University.

About Serage Growth Properties

Seritage is primarily engaged in the ownership, development, redevelopment, management, sale and leasing of diversified and mixed-use properties across the United States. As of December 31, 2021, the Company’s portfolio consisted of interests in 162 properties comprising approximately 19.2 million square feet of GLA or custom leased area (approximately 17.2 million in share), of which approximately 3.9 million are held by non-consolidated companies. entities (approximately 1.9 million in equity), approximately 600 acres owned or under development and approximately 9.4 million square feet of GLA or approximately 800 acres to be disposed of.

Forward-looking statements

This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions regarding matters that are not historical facts. In some cases, you can identify forward-looking statements by using forward-looking words such as “may”, “should”, “expect”, “intend”, “plan”, “anticipate”, “believe”. “, “estimates”, “predicts” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed in any forward-looking statement. Factors that could cause or contribute to such differences include, but are not limited to: declines in retail, real estate, and general economic conditions; competition and related challenges in the real estate and retail industries and the ability of the Company’s major tenants to successfully operate their businesses; failure to achieve forecast occupancy and/or rent levels on schedule or at all; the company’s historical exposure to Sears Holdings and the effects of its previously announced bankruptcy filing; litigation against the Company and other defendants in Sears Holdings’ adversarial proceedings pending in bankruptcy court; risks associated with redevelopment activities and the potential acquisition or disposition of properties; the process and results of the Company’s review of strategic alternatives; the impact of ongoing negative operating cash flow on the Company’s ability to fund ongoing operations and development; contingencies at the commencement of rent under leases; environmental, health, safety and land use laws and regulations; the Company’s debt conditions and the availability or sources of liquidity; possible acts of war, terrorist activity or other acts of violence or cybersecurity interests; the Company’s relatively limited history as an operating company; the impact of the COVID-19 pandemic on the business of tenants and the Company’s business, revenue, cash flow, results of operations, financial condition, liquidity, outlook, ability to insure the servicing of the Company’s debts and its ability to pay dividends and other distributions to shareholders. For a further discussion of these and other applicable risks, assumptions and uncertainties, see the “Risk Factors” and forward-looking statements contained in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report. the Company on Form 10-K for the year ended December 31, 2021. While the Company believes its forecasts and assumptions to be reasonable, the Company cautions that actual results may differ materially. The Company intends that forward-looking statements speak only as of the date they are made and does not undertake to update or revise them as more information becomes available, except as required by law. requires it.

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