Seaport Entertainment Group Inc. Q3 FY2025 earnings call

• Thanked the team, Board of Directors, shareholders, and partners for their support during the leadership transition. - Addressed New York market situation: international tourism visitation below pre-pandemic levels but domestic travel resilient; Manhattan office market strong, Lower Manhattan residential growth rapid. - Provided update on sale of 250 Water Street: sale to Tavros extended, deposit and price increased, sale to improve cash burn. - Discussed hospitality operations: legacy venues had top-line softness, newer concepts outperformed; same-store food and beverage revenues up 8%, overall hospitality revenues up 3% y/y; plan to reposition legacy venues and assess TIN Building. - Completed technology initiatives in hospitality, centralizing point of sale and procurement systems. - Mentioned Las Vegas Aviators season and winter activation at Las Vegas Ballpark, brought operations in-house.

In the Hospitality segment, same-store Seaport Food and Beverage revenues were up 8% during the quarter, while overall hospitality revenues increased 3% year over year. In the Entertainment segment, revenues declined 5% year-over-year primarily due to hosting seven fewer concerts at the rooftop at Pier 17 compared to the prior year. In the Landlord segment, rental revenue drove most of the consolidated revenue increase in the third quarter, rising 56% year-over-year on a pro forma basis.

• Expect moderation in food and beverage revenue growth during the fourth quarter as prioritize flow-through and profitability. - Believe newly announced additions of Flanker Kitchen and Sports Bar and Hidden Boots Saloon will help drive momentum at Pier 17 in 2026. - Will finalize 2026 budgets and work on new year plans.

• Market fluctuations impacting tourism and leasing. - Leasing progress not meeting expectations. - Operational cost control challenges.

Q: Hey, guys. Good morning. Thanks for taking the question and congrats on the continued improvement. You know, as we look to profitability, what do you think are the biggest levers that you guys can pull, you know, to drive that path forward?

A: Hey, Matt. Good to hear from you. It's a good question, and, obviously, it's a pertinent one. Because we have made a lot of progress. But most of the leasing that we've done, if not all of the leasing that we've done other than Jatano, hasn't rent commenced or started operating. So I think getting some of these tenants open and operating and paying rent, the remaining vacancy, which continuing the momentum on the leasing front to fill up if we include the Nike space that we'll get back in 2027, it's about 100,000 square feet left to program or lease. And then I think focusing on the operational model and the G&A to try to create some efficiencies with what we've already done, but there's more room to go, is really going to be the path to get us to breakeven and then profitability.

Q: Got it. That's helpful. And then, you know, following up on the leasing, could you talk a little bit about the demand that you guys are experiencing down there and I guess the mix of tenants that are looking at your prospective spaces?

A: Yeah. I think demand's been really strong. There's plenty of articles out there speaking to demand for restaurant space over the last few months in New York City. We've obviously had a lot of success with food and beverage operators, in getting them in the space, whether that's Jatano or Flanker or Cork or Willett. So I think the food and beverage has been strong. We're now starting to focus a little bit more on the more traditional retail tenants while filling out some of our legacy F&B spaces. So we're not short on demand. We're more focused on finding the right partners, the right experiences, and the right tenants for the diverse community and customer base that we're trying to serve.

Q: Good morning. Thanks again for having the call. Could you focus specifically, you talked a little bit in your queue about the restructuring with Jean-Georges. Do you think you'll hit a breakeven with that cash-wise in '26? Let me start off with that. Thanks.

A: Morning, Ross. When you say hit a breakeven in '26, are you talking about specifically in the hospitality segment or something else?

Q: Jean-Georges, the Tin Building. That's what I'm referring to.

A: Oh, for the Tin Building? Yeah. You know, I'm not in a position today to give forward guidance on what the Tin Building will do in '26. We've spent a lot of time on it. And as we mentioned in the prepared remarks, it's a big focus for us, and we plan to be able to outline that plan on the next earnings call. So I'd say give us a couple of months to finalize the budget process, and we'll make sure to appropriately lay out our plans for that building. Call it early March.