Seaport Entertainment Group's Q3 2025: Contradictions Emerge on Profitability Timeline, Tin Building Restructuring, Leasing Momentum, and Capital Expenditures

Business Commentary:

* Revenue and Financial Performance: - Seaport Entertainment Group reported total consolidated revenues of $45.1 million in Q3 2025, a 1% year-over-year increase compared to pro forma Q3 2024. - The growth was driven by increased rental revenue, particularly from private event activity, and the sale of the 250 Water Street development project.

• Hospitality Segment Performance:
• The company's hospitality revenues declined 4% year-over-year in Q3 2025.

• This decline was primarily due to lower revenues at the Tin Building and softness in certain legacy standalone restaurants.

• Entertainment Segment Growth:

• Entertainment revenues declined 5% year-over-year in Q3 2025, mainly due to hosting fewer concerts at the Rooftop at Pier 17 compared to the prior year.

• The decrease was partially offset by revenue from the Macy's 4th of July broadcast and the Las Vegas Aviators' post-season run.

• Leasing and Vacancy Strategy:

• Approximately 100,000 sq ft of space is left to program or lease, including the Nike space expected back in 2027.
• The company is focused on filling vacancies and improving space utilization to drive customer visitation and engagement, which should contribute to increased profitability.
  

Contradiction Point 1

Profitability Timeline

It involves the estimated timeline for achieving profitability, which is a key indicator for investors and stakeholders.

What are the key drivers of profitability? - Matthew Erdner (Jones Trading)

2025Q3: We expect to be profitable in 2027. - Matt Partridge(CEO)

What are Seaport Entertainment Group's 2025 priorities and strategies? - Anton Nikodemus (Chairman, President and CEO, Seaport Entertainment Group)

2025Q1: Our priority is to stabilize the asset base and address factors contributing to cash burn by achieving break-even in 2026, profitability in 2027. - Anton Nikodemus(CEO)

Contradiction Point 2

Tin Building Restructuring and Financial Impact

It involves the restructuring of the Tin Building and its expected financial impact, which is crucial for the company's financial performance and recovery.

Will the restructuring with Jean-Georges reach break-even by 2026? - Ross Haberman (RLH Investments)

2025Q3: Not providing forward guidance on Tin Building's 2026 performance. Focus is on finalizing budget processes, and plans will be outlined in early March. Restructuring allowed bringing the employee base in-house, reducing management fees. - Matt Partridge(CEO)

None - None

2025Q2: Structural changes to internalize food and beverage operations and significant interest in the 250 Water Street project. - Anton D. Nikodemus(CEO)

Contradiction Point 3

Leasing Momentum and Vacancy Filling

It involves the expected pace of leasing and filling vacancies, which are critical for revenue generation and asset stabilization.

Can you discuss demand for space and the tenant mix? - Matthew Erdner (Jones Trading)

2025Q3: Leasing momentum is expected to pick up in the back half of 2026. - Matt Partridge(CEO)

What progress has been made in the real estate ownership and landlord operations segment? - Anton Nikodemus (Chairman, President and CEO, Seaport Entertainment Group)

2025Q1: We are working on programming and leasing opportunities in the Seaport neighborhood. - Anton Nikodemus(CEO)

Contradiction Point 4

Capital Expenditures

It involves the timing and allocation of capital expenditures, which are crucial for understanding the company's investment strategy and financial health.

What are the capital expenditures plans for Q4? - Ross Haberman (RLH Investments)

2025Q3: Capital expenditures likely to be light in Q4 due to deep focus on Meow Wolf landlord work and some retail tenant projects. - Matt Partridge(CEO)

What are the company's plans for capital expenditures and debt management? - Matthew Partridge (CFO, Seaport Entertainment Group)

2025Q1: Capital expenditures in Q1 2025 totaled $16.5 million, primarily for Gitano and Meow Wolf. - Matthew Partridge(CFO)