Seaport Entertainment Gr Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2026

Key Takeaways

  • Positive Sentiment: Seaport said it is making meaningful progress on its transformation, highlighted by the sale of 250 Water Street for more than $75 million of liquidity and the continued repositioning of the Tin Building into a leased asset.
  • Positive Sentiment: Q1 adjusted net loss improved 21% year over year, and company-wide operating EBITDA also improved by 21% despite lower revenue, suggesting operating leverage from recent portfolio changes.
  • Positive Sentiment: The newly opened Sadie's Restaurant & Garden Bar and the upcoming Balloon Museum and Meow Wolf projects are expected to increase visitation and support a more durable, experience-led revenue base at the Seaport.
  • Positive Sentiment: The Rooftop at Pier 17 is seeing strong demand, with a record concert lineup of nearly 70 shows, sold-out early performances, and a growing pipeline of marquee activations that should drive traffic and spending.
  • Neutral Sentiment: The company ended Q1 with $105.6 million of net cash and only the $39 million Las Vegas Ballpark loan outstanding, but it also reiterated that it still expects $70 million-$90 million of remaining capital spending through portfolio stabilization.
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Earnings Conference Call
Seaport Entertainment Gr Q1 2026
00:00 / 00:00

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Operator

Good morning, and welcome to Seaport Entertainment Group's first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow today's formal presentation. As a reminder, today's call is being recorded. I would now like to turn the call over to Jason Wilk, Senior Vice President of Finance. Please go ahead.

Jason Wilk
SVP of Finance at Seaport Entertainment Group

Thank you, operator, and good morning, everyone. With me today is our President and Chief Executive Officer, Matt Partridge, and our Chief Financial Officer and Treasurer, Lenah Elaiwat. Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, and quarterly supplemental information on our website at seaportentertainment.com. With that, I will turn the call over to Matt.

Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Jason. Good morning, everyone. Let's start with the headline items from the first four months of 2026, some of which we discussed during our previous earnings call in March, but are still incredibly important accomplishments as we continue to position the organization as a scalable real estate-centric hospitality and entertainment company. To start the year, we completed the sale of 250 Water Street, generating more than $75 million of liquidity and eliminating ongoing carry costs. We leased the Tin Building to Lux Entertainment, the operator of the interactive contemporary art experience, Balloon Museum, transitioning the property to a leased and soon to be cash flowing asset. We opened Sadie's Restaurant & Garden Bar, our self-developed new American restaurant, which has received very positive initial reviews and has exceeded our expectations.

Matt Partridge
President and CEO at Seaport Entertainment Group

We announced our arts, culture, and hospitality-focused partnership with Public Service, the creative and curatorial team behind the highly acclaimed concept Public Records, to develop a new offering for the Seaport. We've developed a comprehensive calendar of seasonal, sporting, cultural, and evergreen programming, which serves as the foundation for guest engagement and increased visitation. During the first quarter, we generated a 21% year-over-year improvement in our non-GAAP adjusted net loss, which adjusts our GAAP net loss for certain non-cash and non-recurring items. These achievements represent significant progress towards improving liquidity and cash flow, stabilizing and optimizing operations, and creating sustainable long-term value for our shareholders, community, and other stakeholders. Said differently, this is the turning point, and as a result of our progress, we believe we are on a path to drive positive long-term operational cash flow and earnings growth.

Matt Partridge
President and CEO at Seaport Entertainment Group

That said, we are still early in building what Seaport Entertainment Group can become. The broader opportunity for strategic positioning of our company is centered on real estate assets with market-specific multi-revenue ecosystems that drive outsized demand to the destinations through integrated experiences and curated placemaking. Consumer wallet share is being structurally reallocated towards time, social connections, and place-based spending. As screens get louder, digital content gets more crowded, and AI makes it harder to know what is real, we believe people will place even greater value on memorable in-person experiences they can feel and share with others. People want human connection, and that is where we are focused. By creating places, events, and activations that bring people together, we are giving them a reason to come back and building lasting value.

Matt Partridge
President and CEO at Seaport Entertainment Group

This should ultimately result in more tenant and concept success, leading to long-term growth in rents and operational cash flow, and in turn, improving overall real estate and organizational value. We know there is still a considerable amount of work to be done, and it's not going to happen overnight. Disciplined execution and a common focus is what will carry our progress forward as we create a financially viable, community-driven destinations that are grounded in live entertainment, food and beverage, arts and culture, and event-based experiences. At the Seaport in New York, many of our recent announcements will be supported by the long-term growth we are seeing in our nearby residential population and the momentum in New York City tourism.

Matt Partridge
President and CEO at Seaport Entertainment Group

Lower Manhattan is home to more than 70,000 residents, continues to be one of the fastest-growing residential districts in New York City, and is set to benefit from nearly 9,000 new units in the pipeline, driven by ongoing office conversions and ground-up development projects. From a tourism perspective, in spite of policy actions and geopolitical events that have created headwinds for growth and visitation, New York City 2026 visitation is expected to grow by more than one million visitors as it benefits from several large events, including the FIFA World Cup and America's 250th anniversary. We plan to leverage both events through a growing programming calendar tied to these unique experiences. Taken all together, these market dynamics reinforce our confidence in the underlying demand trends that support the Seaport.

Matt Partridge
President and CEO at Seaport Entertainment Group

While some of this demand will be transient due to the one-time nature of the associated events, the addition of year-round experience-led anchors like the Balloon Museum opening later this summer and Meow Wolf opening late 2027 or early 2028 will drive consistent visitation even during seasonally slower periods, as well as longer time spent in the neighborhood and increased spending in adjacent businesses. One of our businesses expected to benefit the most from the improved demand trends in our active programming calendar is the recently opened Sadie's Restaurant & Garden Bar. As I mentioned earlier, Sadie's is our first self-developed restaurant concept, which offers an approachable new American menu, including familiar favorites and daily brunch.

Matt Partridge
President and CEO at Seaport Entertainment Group

With it, we opened Sadie's Garden Bar, one of the largest outdoor bars in Manhattan that can accommodate up to 1,000 guests. One of Sadie's differentiators is the scale and flexibility of its space, which is being combined with our robust programming calendar to drive consistent traffic and events to the neighborhood. In April, Sadie's Garden Bar hosted part of the neighborhood-wide New York Jets Draft Night fan fest, bringing thousands of visitors to the Seaport. It also played host to our Kentucky Derby event in early May, resulting in strong attendance, guest engagement, and food and beverage sales. Opening a new restaurant is no small accomplishment, and one on this scale is even more impressive. I couldn't be more proud of the Sadie's team for what they've achieved in such a short period of time.

Matt Partridge
President and CEO at Seaport Entertainment Group

As we look ahead to the summer, we envision Sadie's as the central hub of activity on the historic cobblestones. With its outdoor video wall, we expect to continue our momentum with sporting event watch parties, live music, and other cultural programming, including serving as a key destination for viewing the World Cup. In addition to Sadie's, we recently announced our long-term agreement with Public Service, the team behind Public Records, to open their first experience in Manhattan in approximately 11,000 sq ft of previously vacant space in the cobblestones. For those who are not familiar, Public Records is an experience-driven hospitality and music concept located in Brooklyn that blends food and beverage, live music performances, and art with thoughtfully designed spaces in creating a single cohesive destination.

Matt Partridge
President and CEO at Seaport Entertainment Group

The Public Service team is an incredible group of tastemakers with a strong track record of generating consistent demand through a continuously evolving platform that has helped define culture in New York City. While this new project is expected to open in 2027 and more details will be announced in the coming months, it reflects the continued demand we're seeing for experience-driven destinations and reinforces the Seaport's unique position as a home for these concepts. Speaking of experience-driven concepts, we kicked off the 2026 concert series at The Rooftop at Pier 17 on May 2nd with a sold-out show from MIKA. This year's lineup is our largest ever with nearly 70 confirmed shows, roughly half of which are already on sale and seeing strong demand.

Matt Partridge
President and CEO at Seaport Entertainment Group

Some of the more notable acts include Belle & Sebastian, Billy Currington & Kip Moore, Jimmy Eat World, Lupe Fiasco, Passion Pit, and Sam Barber. We are also welcoming back many returning artists this season, which speaks to the exceptional experience our team continues to deliver for both fans and artists. Alongside the expanded lineup, we are continuing to improve the premium experience, growing offerings like the Liberty Club, Heineken Silver Zone, and Patrón Patio, while introducing new social engagement tools designed to enhance the guest experience, expand venue visibility, and increase guest spending. Beyond concerts, our events pipeline continues to grow due to our demonstrated ability to curate, produce, and host large-scale activations such as the New York City Wine & Food Festival and Macy's 4th of July Fireworks.

Matt Partridge
President and CEO at Seaport Entertainment Group

In addition to the return of many of these marquee events, we have a strong pipeline of several high-profile one-off activations being hosted in the Seaport, with a recent standout being Spotify's BTS SWIMSIDE fan experience on The Rooftop at Pier 17 in March. The 2,000 person event marked the group's first U.S. performance in four years and is a powerful example of our ability to attract high-impact experiences from culturally relevant brands. It was recently announced that The Rooftop will host U.S. Soccer's first ever live U.S. Men's National Team World Cup roster reveal and fan celebration later this month. While we have a tremendous amount of momentum in our programming calendar, we continue to make progress on our expanded event space at Pier 17.

Matt Partridge
President and CEO at Seaport Entertainment Group

This remains a priority due to its ability to generate high margin revenue and increase our operational scale, especially given it is a fully enclosed indoor facility with unique market positioning and amenities. We're refining the scope and timing, but we currently expect to have the space operational by mid-2027. On the concept and tenant build-out side of things, execution remains a top priority, and we are making great progress across several material projects. At Pier 17, we recently achieved an important milestone with the delivery of the landlord-required work from Meow Wolf. Meow Wolf will now take the handoff and push forward with their build-out for a late 2027 or early 2028 opening.

Matt Partridge
President and CEO at Seaport Entertainment Group

Work is also ongoing for Flanker Kitchen + Sports Bar and Hidden Boot Saloon, with Flanker expected to open in late 2026 and Hidden Boot Saloon targeting an opening date in early 2027. The Tin Building, the landlord work for the Balloon Museum's flagship U.S. location, is progressing on schedule with delivery to the tenant expected in late June. Current projections have the museum opening this summer. Notably, the exhibition will feature a major installation by Marina Abramović, the renowned contemporary artist who has exhibited across some of the world's most esteemed museums and cultural institutions. Her installation, combined with other notable artists and the museum's interactive curation, will deliver an experience that we believe will be on par with some of the most in-demand cultural experiences in New York City.

Matt Partridge
President and CEO at Seaport Entertainment Group

Against that backdrop and all of the progress we've highlighted, we're encouraged by how our vision for the Seaport is coming together. In Las Vegas, our focus remains on delivering a high-quality guest experience at the Las Vegas Ballpark while continuing to refine our operating model to drive greater efficiency and profitability. A key part of that strategy is leaning into our position as a true local offering, which is differentiated from the Major League sports franchises on the Strip. The Las Vegas Aviators provide a more approachable, family-friendly, and community-oriented experience. This is supported by consistent programming and fan-friendly promotions that drive repeat visitation at an accessible price point. That positioning is being bolstered by continued growth in the Summerlin community and the surrounding area.

Matt Partridge
President and CEO at Seaport Entertainment Group

Today, Summerlin is home to more than 125,000 residents with a long-term plan to reach approximately 200,000 at full build-out, creating a growing and highly engaged customer base near the Ballpark. We remain focused on ticket pacing and pricing, expanding programming through theme nights, in-game experiences, and non-baseball activations, leaning into our robust merchandising strategy and driving operational efficiencies. As we enter our second year operating our holiday activation in Enchant, we expect improved execution and stronger margins as we build on last year's learnings. Looking at the 2026 Las Vegas Aviators season, we're seeing encouraging early results.

Matt Partridge
President and CEO at Seaport Entertainment Group

Coming off of our 2025 Pacific Coast League championship, the Aviators are once again sitting in first place in the PCL, and I'm proud to say our Las Vegas Ballpark will once again host the Triple-A Minor League championship game this fall for the fifth year in a row. In March, we hosted two sold-out games between the Athletics and the Los Angeles Angels, welcoming more than 20,000 attendees and driving year-over-year growth in ticket revenue. We're seeing that demand continue across both group and season ticket sales for the Aviators, supported by a full calendar of themed promotions and fan-focused programming, with solid pacing for individual ticket sales for many of the upcoming games. This strong start reflects the consistent demand in the market and aligns with our position as one of the top-performing teams in Minor League Baseball.

Matt Partridge
President and CEO at Seaport Entertainment Group

To wrap it up, we've had a very productive first quarter. We're entering the rest of the year from the strongest position since our inception. We are very excited about the momentum we are building, which will carry into 2027 and ultimately stabilize our existing assets in 2028. I want to recognize our entire team for their hard work and commitment. Our results and continuing improvement are a product of their energy and dedication. They should be incredibly proud of what they've accomplished. With that, I'll turn it over to Lenah to talk through our first quarter financial performance in detail.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Thanks, Matt. Before walking through our Q1 results, I want to highlight a change to our segment reporting that was implemented at the start of the year, in an effort to improve clarity and better reflect how we view the operations of the business. Beginning with the first quarter of 2026, our segment reporting measure used for reporting the performance of the hospitality, entertainment, and landlord operation segments is operating EBITDA. We define operating EBITDA as earnings before interest, taxes, depreciation, amortization, other income or loss, gains or losses from the sale of assets, equity and earnings or losses from unconsolidated ventures, provisions for impairment, G&A expenses, and any intercompany transactions between segments. We believe that because operating EBITDA excludes non-recurring and below-the-line income and expenses, it's a more comparable representation of the core performance of our operating businesses.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

For the quarter ending March 31st, 2026, total operating EBITDA of the company improved by $3.1 million or 21% year-over-year to a loss of $11.8 million despite a 21% reduction in revenue. The majority of the company's EBITDA improvement year-over-year is a result of progress made within the hospitality segment. Hospitality operating EBITDA improved by $2.9 million or 36% year-over-year, driven by the closures of the Tin Building and Malibu Farm. While hospitality operating EBITDA improved, revenue within the hospitality segment decreased 34% or $2.6 million year-over-year, primarily driven by the closures of the Tin Building and Malibu Farm, which together accounted for approximately $3.1 million of the decline.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

This was partially offset by favorable year-over-year comparison at GITANO, which operated for a full quarter in 2026. Excluding the impact of Tin Building, Malibu Farm, and GITANO, hospitality revenue declined 22% year-over-year, primarily driven by inclement weather, including extended periods of below freezing temperatures and two major snowstorms that reduced operating hours and overall foot traffic this winter across our restaurants. Additionally, we strategically closed Mister Dips for the winter, and we'll reopen the concept in conjunction with our concert season, and we suspended or limited lunch service at numerous other venues for most of the period. These actions reflect our focus on optimizing the financial outcomes of the businesses.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

While the Tin Building repositioning and closure of Malibu Farm will continue to result in decreases in hospitality revenue as we progress through 2026, we've only realized a small portion of the EBITDA benefit expected from these changes. These actions are part of our broader effort to reposition key parts of the portfolio into new high-potential concepts. Staying in New York, landlord operating EBITDA remained flat year-over-year. Rental revenue decreased $1 million or 27%, driven by a straight-line rent adjustment related to the iPic's long-term lease of approximately $800,000 following its Chapter 11 filing in February. We received Q1 cash rent in full and will continue recording rent received on a cash basis until bankruptcy proceedings are completed.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Excluding the iPic non-cash adjustment, Q1 rental revenue decreased 4% year-over-year on a consolidated basis, primarily reflecting the expiration of the ESPN lease in Q3 of 2025, partially offset by Nike termination fees recognized in the current quarter. The decrease in revenue is offset by expense savings of $1.1 million or 14%, achieved through a focus of driving cost efficiencies within our landlord operations. We expect these savings to build throughout the year, further supported by additional cost reduction initiatives and efficiencies. Looking ahead, we expect incremental improvements to rental revenue as the year progresses. Effective April 1st, we transitioned GITANO NYC from an internally managed hospitality venue to a third-party lease agreement.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

We also had a new tenant, Cork, a local wine bar, open their doors in April. They will be followed by Willett's and the Balloon Museum rent commencements in the coming months. Moving to entertainment, operating EBITDA improved by 3% compared to the prior year as the suspension of The Rooftop Pier 17 ice rink more than offset accelerated Q1 expenses related to the Las Vegas operations and the concert series. As Matt mentioned earlier, Las Vegas had a great start to the year. Las Vegas revenue grew by 8%, driven by two sold-out games between the Athletics and the Los Angeles Angels during Big League Weekend, with over 20,000 people in attendance, resulting in strong growth in ticket and concession revenues versus prior year. The Aviators hosted four regular season games in Q1 compared to three in the prior year.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Las Vegas year-over-year expenses were up 26% and were unfavorably impacted by PCL replacement following our Enchant holiday activation and certain front-loaded costs of the season, such as sponsorship signage, as well as costs incurred as a result of the additional home game in Q1 2026. Concerts: The Rooftop at Pier 17 stage is typically constructed in April and is a Q2 cost when referencing prior years. This year, the stage was built in March to accommodate the Spotify x BTS event, pulling some production costs forward into Q1. As mentioned in our previous earnings call, we referenced Q4 2025 as a baseline for what our general and administrative expenses can be going forward, with certain quarter-to-quarter fluctuations. Total G&A for Q1 2026 is $8.1 million.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Excluding $1.4 million of restructuring costs related to the Tin Building and corporate restructurings, in the quarter, G&A totaled $6.7 million, generally in line with the prior quarter reference point. On a year-over-year basis, G&A improved by $1.7 million inclusive of restructuring costs, or an improvement of $3.1 million or 31%, excluding these restructuring costs. Underscoring our focus on finding savings within our corporate infrastructure while continuing to effectively support the business. Excluding current quarter's restructuring costs, savings were primarily driven by year-over-year payroll reductions, lower legal and consulting fees as we continue to work towards stabilization post-spin, along with broader cost discipline across the company. In Q1, we announced a change in auditor from KPMG to Grant Thornton, which we expect to contribute to further reductions in G&A expense.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

In the quarter, we recorded $20.1 million of depreciation and amortization expense, resulting in a $12 million year-over-year increase, mainly driven by a $14 million impact from write-offs related to the Tin Building repositioning as we complete our landlord obligations under the Balloon Museum lease. Within other income or loss, we recognized a $2.2 million net expense in Q1, primarily driven by restructuring costs and pre-opening expenses. Of this, $2 million of restructuring costs were predominantly related to the Tin Building transition to the Balloon Museum. The remaining impact included pre-opening expenses largely associated with the ramp-up of the newly opened Sadie's Restaurant & Garden Bar. Separately, in conjunction with the Tin Building closure, we recorded an approximate $340,000 provision for impairment related to unamortized artwork specific to the business.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Moving to interest income and expense, we experienced an unfavorable swing with net interest expense of $0.3 million in the quarter compared to net interest income of approximately $1 million in the comparative quarter of the prior year. This change was driven by the capitalization of interest related to 250 Water Street in the prior year period, whereas in 2026, we incurred interest expense through the date of closing, along with lower interest earned on invested cash balances. Within equity and earnings or losses from unconsolidated ventures, both Lawn Club and Jean-Georges Restaurant Group were negatively impacted by the inclement weather and snowstorms in Q1, a trend seen across the broader New York City hospitality sector, resulting in an approximate $1 million loss for the quarter.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

The Lawn Club was further impacted by a 10-day closure in January due to waterline repairs, as well as higher depreciation expense compared to the prior year quarter. First quarter net loss attributable to common stockholders was $44.1 million, an increase of $12.2 million in loss or 38% year-over-year. Net loss per share was $3.47 compared to $2.51 in the prior year, representing a $0.96 per share increase in loss or 38%. The key drivers, as stated earlier, were the accelerated depreciation resulting from the repositioning of the Tin Building, restructuring costs, and the inclement weather in New York venues, both in hospitality and unconsolidated ventures.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

On a non-GAAP adjusted net income basis, results improved by 21% or approximately $4.9 million year-over-year to a loss of $17.9 million or a loss of $1.41 per share. The improvement was driven by the early benefits of the Tin Building repositioning and continued improvements to G&A. Capital expenditures in Q1 totaled $6.1 million, with the majority of investments related to landlord work from Meow Wolf and the continued build-out of Flanker Kitchen + Sports Bar and Hidden Boot Saloon, along with our other projects, including Sadie's and the Public Service concept. As a reminder, the $70 million-$90 million of capital expenditures discussed in our prior earnings call represents our total remaining investment from year-end 2025 through stabilization of the portfolio, which we currently anticipate by 2028 rather than a single year spend.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

This includes tenant improvements and leasing commissions associated with executed leases, landlord work and capital required to activate remaining vacancies, as well as internal build-outs, including the Pier 17 event space and other experiential offerings. Total cash, including restricted cash, increased by $57.3 million from year-end 2025 to $144.7 million as of Q1 2026, mainly as a result of the completion of the sale of 250 Water Street in February of this year. A portion of our restricted cash balance, over $27 million, is held in escrow to complete certain post-closing obligations related to 250 Water Street, where we anticipate the completion of these obligations and receipt of the majority of these proceeds by year-end. With the 250 Water Street loan now repaid, the only outstanding debt of the company is the $39 million Las Vegas Ballpark loan.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

At quarter end, we held a net cash position of $105.6 million as of March 31st, 2026, reinforcing the strength of our balance sheet as we continue executing on our transformation and positioning the company for long-term sustainable growth. With the changes made over the past four months, our efforts to simplify our operating structure through the Tin Building repositioning and sale of 250 Water Street, combined with the grand opening of Sadie's and kickoff of the Aviators and Rooftop at Pier 17 concert seasons, are helping us build momentum on all fronts towards creating authentic experiences for our guests and long-term value for our shareholders. We'll now open the line for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Your first question comes from Matthew with JonesTrading. Please go ahead.

Analyst at JonesTrading

Hey, guys. Good morning. Congrats on all the continued progress. With 250 Water Street behind you guys have an ample amount of cash. I apologize if I missed the number for continued CapEx at the Seaport, but historically, it was in that $70 million-$90 million range. You know, is that still kind of what you guys are expecting? You know, with the cash that's remaining, you know, what should we expect for you guys to look for in terms of deployment?

Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Matt. Yeah, I think the $70 million-$90 million is still the number. We had minimal spend in Q1. I think it was about $6 million. That'll come off of that number, but that's still the right number to get the stabilization. In terms of the rest of the cash, you know, I think we're gonna continue to be opportunistic, right? We have the buyback program in place, which gives us the tool in the toolbox in the event that it makes sense to use. I think we've been pretty consistent in saying that there are some limitations around that until we get past our two-year anniversary mark. You know, beyond that, I think the company is evolving, right?

Matt Partridge
President and CEO at Seaport Entertainment Group

It was a disparate collection of real estate and operating assets, and I think we've rounded it into a more of an experiential platform focused on owning, operating, and activating the destination. You know, we've got hospitality, food and beverage, live entertainment, cultural programming, retail, public activations. It all, it all centers around creating that emotional connectivity that we talked about in the remarks. We'll evaluate different models, whether that's an asset-light model, where we're bringing our special sauce, so to speak, to other real estate owners. We'll evaluate other opportunities as they come our way. You know, capital allocation is a point-in-time decision, and we're gonna evaluate all of our options before we put anything to work.

Analyst at JonesTrading

Got it. That's helpful. Then, you know, as it relates to the event space, you know, what are you guys expecting there in terms of timeline? I know you mentioned kind of that middle of the year 2027. Is there anything that needs to happen before you guys kinda, you know, break ground there?

Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah.

Analyst at JonesTrading

And start construction?

Matt Partridge
President and CEO at Seaport Entertainment Group

I'll let Lenah talk about how we've gotten back control of some of that space. You know, we're in design. We're largely through design, now we're getting into sort of the nuts and bolts of scope and timing and all of those things. I think mid-2027 is a pretty safe timeline. Hopefully, we're ready to go earlier than that because we wanna start booking events as soon as we can.

Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Yeah, Matt. Earlier we had said, you know, the Nike lease didn't expire until February of 2027, which was a part of our planned event space. So the timing was a little uncertain. We've actually recently been able to negotiate an agreement with Nike to get back the space early, finalize the termination of the lease, and accelerate the payments of the past due rent and termination fee. That happened really recently, so it'll be a Q2 event. We have the space back now, and we're able to start the planning and build out of that space.

Analyst at JonesTrading

Awesome. Appreciate the color there. You know, it looks like the largest space that you guys kinda still have to lease up at the Seaport is One Seaport Plaza. You know, what have the talks been like there? You know, what are the possible tenants? You know, do you think you guys could foresee splitting that box up to do something similar to what you've already done at the Seaport in terms of smaller tenants?

Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah, you're right, Matt. That is the largest space remaining. It's two floors, about 20,000 sq ft, give or take. I think it can be split up. Previously, it was an Abercrombie and a Superdry, some more traditional retail. We've had a lot of conversations around it. I think what we're trying to do is figure out the phasing of it. It arguably has some of the best visibility of space that we have 'cause it sits right on the corner of Fulton and Water Street, and there's a lot of foot traffic and driving traffic that go by it. Just finding the right tenant and then playing off of that right tenant who has that corner visibility is really where our focus is for that.

Analyst at JonesTrading

Got it. That's helpful. You know, looking on, slide 15 of the supplemental, could you kinda walk me through the differences of, you know, what an operating and license structure is and how that kinda, you know, impacts the model?

Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah, no, it's a, it's a good question, and GITANO's a good reference point. When we launched GITANO, we wanted to get it open as soon as we could for the season, and so we operated the space under their brand while they went through the liquor license approval process. They've recently gotten their liquor license approval process, as Lenah mentioned in the prepared remarks, we've transitioned that from a license to a lease. We'll probably make mid- to high-six figures more cash flow this year than last year, just given the ramp-up of the business and some of the pre-opening costs related to that. For us, you know, the owner of that business is gonna operate it more entrepreneurially, and they're gonna live and breathe the concept.

Matt Partridge
President and CEO at Seaport Entertainment Group

You know, we're gonna ship the execution risk to them and just purely get the rental income. I think that rental income approach applies to Meow Wolf, to Willett's, to Cork, the Public Records, I'm sorry to the Balloon Museum. All of those have percentage rent lease structures, so if they do better than their projections, we should get additional rent beyond what's contractual. And then things like Flanker, and the Public Service, Public Records concept, you know, those are license agreements where we'll either operate the concept or they'll manage it for us, which is very similar to how we work with The Fulton, where we operate The Fulton, but it's a Jean-Georges concept, or Carne Mare, where it's an Andrew Carmellini concept, but they operate it on our behalf.

Matt Partridge
President and CEO at Seaport Entertainment Group

Each one's a little bit different. On the license deals, those are gonna have more operational leverage on them because the full impact of the P&L, both revenues and operating expenses, is gonna be on our P&L. Whereas obviously the leases are gonna come through the landlord operation side, and they'll be pretty high flow through, but less revenue to flow through.

Analyst at JonesTrading

Got it. Yeah, that's helpful there. Then touching on the Tin Building and kind of the Balloon Museum, has, I think you kind of mentioned June, July-ish there for the opening. You know, were there any setbacks that you guys kind of experienced as you went through the process or, you know, that you foresee that could delay that opening a little bit?

Matt Partridge
President and CEO at Seaport Entertainment Group

I mean, opening's gonna be dependent on the Balloon Museum fitting out their space. We're on target and on track to deliver to them as expected in the lease when we negotiated it. There's always moving parts, especially when we're doing the amount of work that we're doing in the timeframe that we're doing it. Our team's done a great job working through some of the challenges that pop up, and we're still on schedule to hand it over to Balloon Museum.

Analyst at JonesTrading

Awesome. That's great. Thank you for the call this morning. I appreciate it as always.

Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Matt.

Operator

Thank you. Your next question comes from Ross with RLH Investment. Please go ahead.

Analyst at RLH Investment

Good morning, Matt. How are you?

Matt Partridge
President and CEO at Seaport Entertainment Group

Hey, Ross.

Analyst at RLH Investment

Quick questions. He hit upon your prior question, he hit upon most of my questions. Going back to page 14 on the remaining vacancies, could you talk about, I guess you touched upon the Pier 17. You think you're gonna be able to use up most of that 7,700 sq ft in the next year or so, or what's your plan for the excess there, as well as, I guess the Schermerhorn Row, the 10,000 sq ft there. Give us some thought on, you know, the lease up for that maybe over the next year or so. What are your potential there? Thank you.

Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah. I touched on One Seaport with Matt. In terms of the rest of the vacancy, Schermerhorn Row and Museum Block are largely smaller spaces and we historically have held back on trying to fill those because that's where we're gonna get the highest rent per square foot, and we wanted to have the anchors in place to allow us a little bit more pricing power. Obviously, with Balloon Museum and Meow Wolf signed up and public, along with some of the restaurant spaces, we've got those anchors in place. Now we're just trying to figure out the right merchandising mix between traditional retail, service-based retail, and everything in between. In terms of the Pier 17, that 7,700 sq ft is largely the Malibu Farm space that we closed at the beginning of the year.

Matt Partridge
President and CEO at Seaport Entertainment Group

We're working with some different partners on different options. I think we'll probably have more to talk about on the next earnings call related to that space, but we're making a lot of progress there.

Analyst at RLH Investment

That, the $31 million you're talking about in EBITDA pro forma, that is just all those names on page 15 and excludes all of the vacancies on page.

Matt Partridge
President and CEO at Seaport Entertainment Group

Correct.

Analyst at RLH Investment

14. Is that correct?

Matt Partridge
President and CEO at Seaport Entertainment Group

That's correct. There's no projections for the vacancy in there, the $31 million is either what we reasonably think will be a year one operating yield, or it's the contractual rent. If the tenants come out of the gate and perform better than expected and there's percentage rent, that would be upside to the $31 million in some of those leases.

Analyst at RLH Investment

Just two last questions. The $6.7 million of corporate quarterly overhead-is that a good ongoing number or would you hope to bring that down to a lesser number in 2027, 2028?

Matt Partridge
President and CEO at Seaport Entertainment Group

I think we're gonna continue to evaluate it. As you very well know, following the story for as long as you have, we've had a lot of moving pieces. Those moving pieces sometimes cost money. I think we'll have fewer moving pieces going forward, which will allow us to get more efficient. My hope is that that number will continue to come down, probably not at the pace that it's come down over the last 12 months, but we should continue to see improvement there over the next 12 months.

Analyst at RLH Investment

Just one final thing. 85 South Street, any new developments there?

Matt Partridge
President and CEO at Seaport Entertainment Group

No, it's on the market. We're having active conversations with buyers, you know, we had to disclose a lot more than we traditionally would with the 250 Water Street process, given the materiality of that asset on our balance sheet. I would say our typical approach is not to talk about transactions until they're done because they put us at a competitive-

Analyst at RLH Investment

Okay.

Matt Partridge
President and CEO at Seaport Entertainment Group

Disadvantage when we're negotiating. It is on the market, and we are having a whole host of conversations with various potential buyers on how to move that process forward.

Analyst at RLH Investment

Okay. The best of luck. Thank you very much.

Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Ross.

Operator

Thank you. Ladies and gentlemen, as a reminder, if you have a question, please press star one. All right. There are no further questions at this time. I will turn the call back over to Matt Partridge. Please go ahead.

Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, operator. I appreciate everybody joining us today. Thank you for the support, and we'll talk to you on the next earnings call.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Jason Wilk
      SVP of Finance
    • Lenah Elaiwat
      CFO and Treasurer
    • Matt Partridge
      President and CEO
Analysts
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