Seaport Entertainment Gr Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2026

Key Takeaways

  • Positive Sentiment: Seaport Entertainment Group achieved positive operating EBITDA of $4.5 million and non-GAAP adjusted net income of $320,000 in Q2 2026, its first-ever profitable quarter on both measures. Adjusted EPS improved to $0.02 from a $0.58 loss a year earlier, although results benefited from favorable timing and the accelerated Nike payment.
  • Positive Sentiment: Management expects more than $20 million of incremental annualized operating EBITDA from approximately 194,000 square feet of new concepts opening over the next 18 months, including Balloon Museum, Flanker Kitchen + Sports Bar, Hidden Boot Saloon, and the Pier 17 event space. The company continues to target initial stabilization of its existing assets in 2028.
  • Positive Sentiment: Cost controls are materially improving profitability: trailing 12-month G&A fell more than 20% to below $27 million, while quarterly G&A declined 20% year over year to $6.6 million. Management expects additional savings in 2027 as legacy contracts expire or are renegotiated.
  • Positive Sentiment: Seaport leasing and event activity remain strong, with less than 50,000 square feet of space left to lease or program, firmer pricing, and continued demand for marquee events. The Pier 17 rooftop hosted 22 second-quarter shows with a 91% sell-through rate, while Sadie’s generated positive operating EBITDA in its first full quarter.
  • Negative Sentiment: Entertainment operating EBITDA declined 23% year over year, primarily due to higher rooftop repair and operating costs and the loss of a legacy Chase sponsorship. Legacy full-service restaurants also experienced softer sales, and earnings from unconsolidated ventures fell as Lawn Club and Jean-Georges operations faced higher costs or ramp-up challenges.
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Earnings Conference Call
Seaport Entertainment Gr Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Greetings. Welcome to the Seaport Entertainment Group second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Jason Wilk, Senior Vice President of Finance. Thank you, Jason. You may begin.

Jason Wilk
Jason Wilk
Senior Vice President of Finance at Seaport Entertainment Group

Thank you operator. 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, quarterly supplemental information, and our most recent investor presentation on our website at seaportentertainment.com. With that, I will turn the call over to Matt.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Jason. Good morning, everyone. On our last earnings call, I described the first quarter as a turning point for our company. I'm excited to start today's call by sharing an important milestone for Seaport Entertainment Group. In the second quarter of 2026, we achieved positive operating EBITDA and positive non-GAAP adjusted net income for the first time in the company's history. This quarter's results reflect continued momentum since our inception, representing our seventh consecutive quarter of double-digit non-GAAP adjusted net income per share improvement. A 103% year-over-year improvement in Q2 is the highest comparable quarter of per-share improvement during our two-year existence. Our progress and improving trajectory towards profitability are a direct reflection of the work our team has been doing since our spin-off to stabilize the company and its operations.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

While we're proud of that financial results are beginning to reflect the hard work put in by our team, we want to maintain balanced expectations. Timing of new tenant openings, scheduling nuances related to our event, concert, and baseball operations, and the general seasonality of our businesses all create variability quarter to quarter. As a result, the next three quarters should show year-over-year improvement, but may not result in the same level of per-share performance we achieved this quarter. As our tenants and new businesses open and stabilize, our events business continues to grow, and we realize the full year benefits of the changes we've made to improve our organizational efficiency. We anticipate an improved earnings profile in 2027, and even more so in 2028.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

This is further supported by the fact we have more than 194,000 sq ft of non-income producing space opening with new concepts in the next 18 months, including the Balloon Museum, Willett's, Flanker Kitchen plus Sports Bar, Hidden Boot Saloon, the new concept from the team behind Public Records, the Pier 17 event space, and The Owl. That is more than $20 million of incremental annualized operating EBITDA that is yet to materialize in our numbers. As we work towards initial stabilization in 2028, we are focused on operating our assets in a way that delivers a more compelling growth profile than a traditional real estate investment company. This means day-to-day placemaking, marquee events, brand and culturally driven activations and sponsorships, and customer engagement that not only brings people into our venues, but drives incremental revenue, percentage rent, and improved leasing spreads.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

This quarter is a reflection of the progress we can continue to create as we emphasize disciplined execution, it gives us conviction in our long-term plan. We're building a set of complementary businesses that we believe are capable of generating sustainable long-term operational cash flow and earnings growth. One of the key contributors to our improved financial performance has been our focus on optimizing our G&A cost structure. We've made meaningful progress this year towards reducing audit fees, technology costs, and the reshaping of our organization. For some context, after adjusting for one-time leadership transition costs, we have reduced our trailing 12-month general and administrative costs by more than 20% over the past nine months. Going from $34 million in trailing 12 months G&A as of Q3 2025 to less than $27 million as of Q2 2026.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

We expect this trend to continue as the full year benefits of the changes we've made are holistically reflected in 2027, we'll evaluate further opportunities to reduce costs through, among other things, the non-renewal or renegotiation of expiring legacy contracts and service agreements. From a Seaport leasing perspective, activity has slowed a bit this quarter, though for good reason. We've simply leased or programmed most of our available space. At Spin, we had roughly 150,000 sq ft of space available to lease or program, or just under 200,000 sq ft if we factor in the repositioning and leasing of the Tin Building. Today, that number stands at less than 50,000 sq ft or just over 10% of the total space on the Seaport. The remaining vacant spaces continue to generate strong interest, especially after our recent leasing and programming announcements.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

The remaining spaces are generally smaller footprints with broader appeal, which is leading to more detailed negotiations as we work to identify the right tenants and deal structures for each space. We expect leasing timelines for the remaining spaces to take a bit longer, though we remain confident in our ability to drive overall leasing and programming demand and improve rent terms. One of the more notable leases we signed earlier this year is with the Balloon Museum. This was an ambitious project from the start, requiring us to deliver a white box to the tenant in less than 120 days, then working with the tenant towards their planned opening within 60 days thereafter. I'm pleased to say our team delivered on time, rent is expected to commence later this month.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

When open, we anticipate the Balloon Museum will be a key driver of additional foot traffic to the Seaport neighborhood, benefiting many of the businesses in the area. As an indoor ticketed experience, we also hope it will partially offset some of the seasonality related to the colder months, when pedestrian activity typically slows. Combined with the rooftop at Pier 17 and the upcoming opening of Meow Wolf in 2028, the Balloon Museum adds to the neighborhood's growing roster of culturally relevant entertainment experiences, helping solidify the Seaport as one of New York City's premier entertainment destinations. On the rooftop at Pier 17, we are seeing continued strength in our concert business. During the second quarter, the rooftop hosted 22 shows, including 13 sellouts, and achieved a 91% sell-through rate.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Demand for our premium upsell offerings, including the Patrón Patio, Heineken Silver Zone, and the Liberty Club, continues to build. We are also seeing a higher average food and beverage spend per attendee. With more than 40 shows remaining in the 2026 season, the concert series continues to perform well, and a growing demand for event-driven experiences on the rooftop reinforces the increasing value of the venue beyond concerts for our company and the broader community. I spoke about the growth of our events pipeline last quarter. Demand has continued with several high-profile events that have helped maintain the Seaport's position as a premier destination for sports, music, entertainment, and cultural events.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Some of our recent event highlights at the Seaport include hosting the first-ever live U.S. Men's National Team World Cup roster reveal and fan celebration in advance of the 2026 FIFA World Cup, which we previewed during our last earnings call. HBO Max's premiere screening of the newest season of "House of the Dragon," TNT Sports' first-ever Roland-Garros Experience, which was an immersive three-day fan experience with custom-built tennis courts celebrating the iconic French Open, THE AUSSIE BBQ, an annual music festival featuring Australian talent and culture, which relocated to the Seaport this year from Central Park's SummerStage, and lululemon's summer series, which kicked off their New York residency on the rooftop at Pier 17 with a packed Pilates session followed by a performance by DJ Kaskade. Part of what has helped drive increased event activity is our new restaurant concept, Sadie's and Sadie's Garden Bar.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

We previously shared that we envisioned Sadie's as the central hub of activity on the cobblestones this summer, serving as a destination for sporting events, watch parties, live music, happy hours, and cultural programming. That vision played out even better than we expected. One key driver behind the outperformance was the New York Knicks' historic NBA championship run, which brought thousands of fans to Sadie's and Sadie's Garden Bar, Lawn Club, and other businesses throughout the Seaport for every postseason game. The excitement culminated with multiple game five watch parties that stretched from the Heineken Riverdeck on Pier 17 to the cobblestones at Sadie's, bringing more than 10,000 people to the Seaport. It was an unforgettable moment for New York City. We're proud that Sadie's became a place for New Yorkers to experience the excitement together.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

That celebratory spirit rolled right into FIFA World Cup, driving strong visitation to the neighborhood from locals and tourists alike. Sadie's Garden Bar in particular benefited from consistent soccer programming, making it a go-to destination for fans looking for a great atmosphere to catch their favorite game. In addition to the 2026 activities driven by the FIFA World Cup, we also benefited from events tied to America 250th anniversary. On July 4th, Pier 17 welcomed two tall ships as part of the international Sail 250 celebration that took over the New York waterfront. We also hosted the 50th anniversary of the Macy's Fourth of July fireworks, including the NBC broadcast of the event on the rooftop at Pier 17, with Sadie's hosting a sold-out Fourth of July block party as part of the broader holiday celebrations.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Also as part of the America 250 celebrations, the South Street Seaport Museum is hosting The Promise of Liberty, a limited time exhibition featuring several of the nation's original founding documents, including the Declaration of Independence, the United States Constitution, and an advanced copy of Dr. Martin Luther King Jr.'s I Have a Dream speech delivered during the March on Washington. It has truly been a special summer for the Seaport to play such a central role in the celebrations around this milestone anniversary. As one of New York City's oldest neighborhoods and a place deeply connected to the nation's early history, the Seaport provides a fitting backdrop for celebrating America's founding. The visibility and visitation our events and programming brings to the Seaport are invaluable, and the financial benefits they bring have been a key catalyst to our improvement.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

We look forward to continuing the momentum with an ongoing slate of activities, which includes the return of Seaport Cinema, our popular outdoor movie series at Pier 17, Bastid's BBQ, a hip hop music and food festival which will take over Sadie's Garden Bar and the cobblestones this weekend, the expansion of the Seaport Racquet Club in celebration of tennis' US Open, and the second year of New York City Wine and Food Festival, among many others. Moving west, the momentum is just as strong out in Las Vegas. The Aviators opened the season in first place in the Pacific Coast League, and I'm excited to report they held that position through the first half of the season. As a result, they've secured their spot in the playoffs this fall. Additionally, in April, the team held its highest attended regular season game in franchise history with more than 11,000 fans.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

The Las Vegas Ballpark also hosted a sold-out six-game series with the Athletics, drawing more than 50,000 fans and three sold-out games of Banana Ball, the fast-paced, high-energy version of baseball made popular by the Savannah Bananas. These non-Aviator events resulted in the highest grossing one-day food and beverage sales and the highest grossing one-day merchandise sales in the history of the ballpark. Combined with an increasing focus on expense management, we're encouraged by the progress made by our team in Las Vegas as they continue to deliver an amazing in-ballpark experience across multiple event types. Overall, everything I've discussed comes back to progress. We're making progress organizationally, operationally, and financially.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

We said we were entering the year from the strongest position since our inception, that we expect our momentum will carry through 2027 with continued operating efficiency and cash flow improvement, allowing us to achieve initial stabilization of our existing assets by 2028. This quarter's results, our first with positive operating EBITDA in all segments, along with positive non-GAAP adjusted net income, show that improving trajectory remains firmly intact. I'm optimistic about where we're headed and our opportunities for future growth. None of this happens without our team, and I want to thank everyone across the organization for their continued commitment and hard work as we keep moving forward. With that, I'll turn it over to Lenah to walk through our second quarter financial performance in more detail.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Thanks, Matt, and good morning, everyone. As you've likely gathered from Matt's remarks, it's been a busy quarter. Our results show the meaningful progress we've made, reflecting the exceptional execution, hard work, and dedication of our team. Before I walk through our Q2 results in detail, I want to remind everyone that we changed our segment reporting at the start of the year to better reflect how we view the business. We use operating EBITDA to report the overall performance of our three operating segments, Landlord Operations, Hospitality, and Entertainment. We think the revised definition we shared during our last call gives a clearer, more comparable picture of how each operating business is performing. Unless we know otherwise, all operating EBITDA figures discussed today are net of intercompany transactions.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

For the quarter ending June 30th, 2026, total operating EBITDA improved by $5.6 million from a loss of $1.1 million in the same quarter prior year to positive operating EBITDA of $4.5 million, with all business segments generating positive results. The improvement was driven primarily by the benefits recognized from closing the Tin Building operations in Q1 of 2026 and the early termination of the Nike lease at Pier 17, along with several operational improvements that I'll outline shortly. As we previously disclosed in 2025, Nike exercised the lease termination option that revised their lease term to expire in Q1 of 2027, three years ahead of the original contractual end date. At that time, we received $2 million of termination fees with another $2 million due in Q1 of 2027, we were continuing to receive contractual rent through the duration of this revised lease period.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

During the second quarter of this year, we entered into an agreement with Nike to terminate the lease effective April 30th, 2026, concurrently received the remaining termination payment and a payment for the majority of the remaining rent due under the lease. The full effects of these payments, as well as our write-off of our straight-line rent balance related to this lease, were recognized into rental income this quarter for a net effect of an additional $2.7 million in rental revenue year-over-year when compared to Nike's contractual rent revenue in prior year. Overall, rental revenue for the quarter increased $2.8 million or 67% year-over-year, mainly due to this transaction. This is a positive outcome for us as Nike's surrender of this space allows us to begin the construction of our planned event space in Pier 17 sooner than we originally anticipated.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Additionally, year-over-year event-driven rental revenue increased across the property as demand for marquee events and activations has strengthened the Seaport's reputation as an entertainment destination. That growth, along with the start of Gitano's lease in April and Cork's opening that same month, fully offset the loss of rental income from the ESPN lease, which ended in the third quarter of 2025. I also want to share an update on the former iPic Theaters located in the Seaport. Blue Fox Entertainment, a global film distribution and film sales company, acquired the 46,000 sq ft lease through iPic's bankruptcy process, paying all outstanding balances. Blue Fox Entertainment plans to reimagine and rebrand the space to enhance the movie theater experience, and we look forward to working with their team. Within the landlord segment, operating costs continue to improve, down about $800,000 or 10% versus the prior year.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

The largest savings came from insurance premium reductions, along with reduced spending on cleaning, security, and technology. Operating EBITDA for the quarter was $600,000, which improved by $3.6 million year-over-year. When excluding the effects of the Nike lease in both periods, landlord operating EBITDA improved by 23% over Q2 of prior year. Moving on to hospitality. This quarter also marks two important milestones within the segment. First, hospitality generated positive operating EBITDA of approximately $280,000, an improvement of $3.1 million year-over-year, driven primarily by a full quarter benefit of the closure of the Tin Building, which in prior year impacted EBITDA with a loss of $2.8 million. Second, Sadie's, our first internally developed and operated restaurant concept, generated positive operating EBITDA in its first full quarter of operation, which speaks to the strength of the concept and our team's execution.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Further, Sadie's Garden Bar generated a 125% increase in year-over-year revenue compared to prior year, when the outdoor bar at the center of the cobblestones was not managed directly by SEG. While Sadie's has exceeded expectations, fueled in large part by the Knicks championship run and World Cup activity, our legacy full-service restaurants have faced softer top-line sales. In response, the hospitality team is continuing to evaluate opportunities to strengthen performance, including menu optimization, expanded programming, and targeted marketing to build awareness and drive visitation. Turning to entertainment, operating EBITDA declined $1 million or 23% year-over-year, driven mainly by the concert series on the rooftop at Pier 17. In Q2 of 2026, we incurred increased repair and maintenance expenses, as well as increased operating expenses related to the rooftop.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Concerts EBITDA was also affected by decreased sponsorship revenue compared to prior year following the non-renewal of a legacy sponsor. While replacing sponsorship partners is a longer-term proposition, it also opens the door to diversified opportunities that align with our entertainment-focused strategy and customer base. In Las Vegas, the team delivered higher operating EBITDA year-over-year, despite hosting seven fewer Aviators home games. Those results came from a focused strategy of disciplined cost management, matching game-day expenses to attendance to continue improving operating costs. Las Vegas operating EBITDA also benefited from hosting the sold-out three-day Banana Ball series, as well as the six-game sold-out Athletics run. The Athletics games drove an increase in quarterly merchandise sales of over 50% year-over-year. When excluding merchandise sold during the Athletics games at Las Vegas Ballpark, the Aviators retail sales increased 8% year-over-year despite seven fewer games.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Increasing merchandise sales has been a focus of the team this season. The family-friendly nature of the ballpark and Summerlin community allows the team to find fun and creative ways to engage the community with theme nights and related merchandise. Looking ahead, the remainder of the Aviator season promises plenty of excitement, including another chance at the Pacific Coast League championship this September. In looking at G&A, a continued key initiative has been reducing our corporate cost structure towards stabilization, and we are seeing those efforts reflected in our quarterly results. General and administrative expense totaled $6.6 million in the second quarter, a $1.7 million or 20% improvement compared to $8.3 million in the second quarter of last year.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

When excluding restructuring-related severance costs and leadership transition costs, second quarter G&A improved by $2.9 million or 35% when compared to prior year, and $1.2 million or 18% when sequentially compared to Q1 of 2026, as we have continued to streamline our cost structure. In other income or loss, we recorded a net expense of approximately $700,000 in the second quarter, mainly reflecting certain non-recurring items such as pre-opening costs for Sadie's, Tin Building wind-down costs, and certain legal expenses. In Q2 of 2026, we also recorded an additional $1.4 million loss on the sale of 250 Water Street. This loss is related to the estimated post-closing obligations required under the purchase and sale agreement and will be funded by the escrow that was set up at closing.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

During the quarter, we recorded net interest income of approximately $700,000, down approximately $100,000 or 14% from prior year, reflecting a lower interest rate environment. Equity and earnings or losses from unconsolidated ventures declined approximately half a million dollars or 61% year-over-year, reflecting lower EBITDA from Lawn Club and reduced earnings from the Jean-Georges Restaurant Group. At Lawn Club, revenue grew year-over-year, though higher operational costs resulted in lower net income. At Jean-Georges Restaurant Group, performance has been challenged thus far in 2026 as new restaurants ramp up. Their team continues to focus on driving value through increased license and management fee income while improving existing restaurant operations. Second quarter net loss attributable to common stockholders improved 29% year-over-year to $10.5 million, while net loss per share improved to $0.82 from $1.16 loss in the second quarter of 2025.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

These year-over-year improvements reflect the benefits of stronger operational execution across multiple businesses, the Tin Building closure, termination revenue from Nike, and continued progress on our G&A cost initiatives. On the balance sheet, capital expenditures totaled $14.8 million in the second quarter, with the majority invested in landlord work related to Balloon Museum, Flanker Kitchen plus Sports Bar, Hidden Boot Saloon, and other maintenance projects. We completed landlord work and delivered the Tin Building space to the Balloon Museum in June of 2026, and as Matt mentioned, we expect the museum to open soon and rent to commence concurrently with opening. At quarter end, we held a net cash position of $88.9 million with $127 million of cash equivalents, and restricted cash as of June 30, 2026. Of note, during the quarter, we received $20.8 million of the $27.8 million escrow related to the 250 Water Street post-closing obligations.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Our only outstanding debt remains the $38.1 million Las Vegas Ballpark loan. We paid approximately $1 million of recurring principal payments during the quarter. We continue to maintain a strong balance sheet, which gives us flexibility as we deploy capital and keep improving operations. Before we open the call for questions, I wanted to close with a milestone mentioned earlier, positive non-GAAP adjusted net income of $320,000. This represents an improvement of $7.7 million year-over-year from a non-GAAP adjusted net loss of $7.4 million. On a per share basis, non-GAAP adjusted net income attributable to common stockholders was $0.02, compared to a loss of $0.58 per share a year ago. As we've noted, this quarter's results benefited from the accelerated Nike payment and other favorable timing items.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

They also reflect the progress we've made over the past two years stabilizing operations, corporate costs, and repositioning our assets since spin. With that, we'll go ahead and start the Q&A portion of the call.

Operator

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Our first question comes from Matthew Erdner with Jones Trading. Please go ahead.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Hey, good morning, guys. Congrats on the continued progress. Thanks for taking my question. You guys still have a pretty strong cash position. I'm just trying to get a scope of what you guys are thinking for continued CapEx or investment into the properties as you continue to re-tenant it. Is it still kind of that $70 million-$90 million range?

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Hey, Matt. Good morning. That $70 million-$90 million, we've spent about $20 million over the first half of the year. We're thinking that $50 million-$70 million remaining is still the right number for a lot of the projects and committed capital we have already announced.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Got it. That's helpful. Could you speak about the event space and what you guys are putting in there now that you have your hands back on that actual space? What you guys are thinking, how are you looking to program that out?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Hey, Matt. Thanks for the questions. We're really excited about the event space. It's going to have a dedicated entrance on the ground floor of Pier 17 with dedicated elevator transportation up to both the second, third, and fourth floor of the pier. All three floors will have sweeping views of the Manhattan skyline, the Brooklyn Bridge, the Brooklyn skyline, the East River. It's pretty unique space. The way that we're designing it is to be as flexible as possible, because in our minds, we can have everything from traditional corporate off-sites to small convention style programming, to product launches and consumer facing opportunities. We're designing some elements of it to factor in the consumer facing, consumer engagement side of things. It's going to be able to accommodate a lot of different program types.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

It's going to have all the infrastructure to make it as easy as possible for people to come and activate.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Got it. That's awesome. As it relates to the remaining space, you mentioned a little bit about the discussions there. Have you guys looked or I guess, thought about any internally developed concepts similar to Sadie's that you would put in there, or are you going to just lease that out to somebody over the near term?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

The way we think about internal concepts is we want to operate the stuff that's systemically important. Sadie's being at the center of the cobblestones with the garden bar, putting the LED screen out there for watch parties like the Knicks and World Cup and things like that, combined with the open container district we have associated with it, that's a systemically important operation within the Seaport. Same with the concert venue, same with the event space. The small shop space, some of the smaller remaining restaurant spaces we have, those aren't as systemically important, we'd look to shift the operating execution over to a third-party tenant who's going to live and breathe it every day. A big emphasis that we have from a leasing perspective is getting one of ones down here. We don't want chains.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

We want people who are going to live and breathe their businesses, be entrepreneurial about how they operate them, and provide something unique to the neighborhood and the community and the people who come to the Seaport. That's what, like I said in the prepared comments, that's what's taking longer is finding those right people, understanding how they think about their businesses and the value proposition to the customer base that comes down here. Where we're headed with Balloon Museum opening, Meow Wolf, and the event space.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Right. That makes sense. As it relates to the stuff that's in progress of opening up, have there been any delays in timing or construction, anything like that?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

No, not really. The event space is a bit of a fluid process, just given the negotiations that we had to go through with Nike, we're obviously on the other side of that. I think Balloon Museum has gone as quickly as feasible, given the amount of work that was done in that space. I think we still feel good about the path that Meow Wolf is on. Those are obviously the big ones that are on deck. The restaurants and things like that with Public Records and Flanker and Hidden Boot Saloon, those are all on pace.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Awesome. A couple more from me, then I'll hop out. 85 South Street, are you guys still kind of exploring I guess, selling that?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

We are. We've had some starts and stops. I think as I mentioned on the last call, with 250 Water Street, we were required, given the materiality of the asset, to disclose a little bit more. It puts us at a competitive disadvantage when we're negotiating with different potential buyers. For 85 South Street, like I said, we've had starts and stops, but we'll probably be relatively quiet in terms of progress until we get to a transaction, just to maintain as much negotiating leverage as possible.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Got it. Yeah, that makes sense. Matt, since you've joined, you guys have had a bunch of progress. How does it kind of align with the expectations when you decided to come over versus where you are now? Just kind of put a big picture, at the Seaport.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

I'd love to say this was all planned out and we're right on track. Things ebb and flow. We get lucky here or there. We have setbacks here and there, so it's not a linear path. I can't say enough how proud I am of the team and how much progress we've made, especially over the last, call it, nine, 10 months since I stepped into the seat. Everybody's run really hard towards executing on the strategy. I think, look, we've always said it was going to take three-plus years to stabilize everything, and I think we're right on track with that for 2028 being that initial stabilization year.

Matthew Erdner
Matthew Erdner
Director of Equity Research at Jones Trading

Awesome. Great. Thank you guys. Appreciate it as always.

Jason Wilk
Jason Wilk
Senior Vice President of Finance at Seaport Entertainment Group

Thanks, Matt.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Thanks, Matt.

Operator

Our next question comes from Ross Haberman with RLH Investments. Please go ahead.

Ross Haberman
Principal at RLH Investments

Morning. Nice quarter, Matt. You guys are really coming along here. Lenah, can I go back to the $50 million-$70 million in CapEx, which you referred to? That's over, what? The next two years, is that correct? Yeah. Hey, good morning, Ross. Thank you. Yeah, it's over the next two years. It's until we reach that stabilization point and get through all of the projects we've committed to.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Ross, I would just elaborate that you know how these things go. Dollars typically trail construction progress.

Ross Haberman
Principal at RLH Investments

Right.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Even though something like Meow Wolf may open, late Q4 for 2027, early Q1 2028, dollars will trail that opening just as we close out the projects. To Lenah's point, it's about two years to put us into mid-2028 before we expect all the dollars to get out the door.

Ross Haberman
Principal at RLH Investments

Lenah, in the past, you threw out a number that if all these leases were in place, how much revenue or cash flow they would generate. What is that number today, what you haven't signed?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah, we still have that out there.

Ross Haberman
Principal at RLH Investments

Okay.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

It's in the supplemental. Give me one sec, Ross.

Ross Haberman
Principal at RLH Investments

I'm sorry, Mr. Matt. I apologize.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Yeah, it's around $26 million.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

It's just over $26 million, Ross. As we continue to make progress from a leasing standpoint, the additional. As we keep making progress from a leasing standpoint, hopefully that number will increase. Obviously, as things open and as we lap over things like Nike and ESPN no longer being in the historical trailing 12, that number will move around.

Ross Haberman
Principal at RLH Investments

That's a pre-G&A number?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Correct.

Ross Haberman
Principal at RLH Investments

Is there more room? You said you hope to get the G&A down to about $27 million. Is there more room on that to lower that further?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah, I think so. We're going to start budgeting this month for 2027, and that'll continue to be a focus. We inherited some existing service contracts and arrangements that had two, three-year lives on them. We're coming up on the expiration of some of those, where we can either renegotiate them or move on from them. Some of those are related to systems, some of those are related to consultants and other relationships. It'll continue to be an emphasis, but I think we've made a lot of progress, and not all of that progress is reflected in the number in Q2. We'll start to see the full year benefits of that as we get into 2027.

Ross Haberman
Principal at RLH Investments

That's about it. Thank you for the help. The best of luck.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Ross.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Thanks, Ross.

Operator

Our next question comes from Dan Joseph with Apparent Capital. Please go ahead.

Dan Joseph
Principal and Chief Investment Officer at Apparent Capital

Hi, Matt. Hi, Lenah. Congratulations. This was an outstanding quarter. Great progress for the company. Also want to call out your presentation and materials, particularly pages 47 through 49. For me personally, I thought that was incredible progress, very transparent, very good communication, and continues to help me understand the company in a better and better way. Thank you guys for continuing to lean into improving the way that you communicate with us as shareholders.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Dan. Always happy to provide information as we can. I think you know things move around, that limits our ability to be forward-looking. I think we're getting to a better and better stabilization point, where we'll be able to start providing more forward-looking information in the coming months and quarters.

Dan Joseph
Principal and Chief Investment Officer at Apparent Capital

That's great. On that subject, from a stabilization standpoint, as you now are in the cash flow positive realm kind of ahead of expectations. Have your expectations for stabilized EBITDA in 2028 changed at all?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

I wouldn't say they've changed. I think obviously if we can continue to accelerate positive earnings earlier, that's going to help with cash burn. Q1 is obviously a seasonally slower month, that's going to be a harder one to get to a positive place. The event space, Balloon Museum opening, eventually Meow Wolf, and all the other concepts that are in the queue are obviously going to help. How the event space ramps up in terms of business and bookings and things like that, I think is an area where we have different iterations of models. Obviously, we have optimistic models and conservative models related to that. Our team is very focused on putting structure around that and getting that ramped up as quickly as possible.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

I'd say that's probably the most volatile component of what we have in the queue right now, given how operationally involved it'll be.

Dan Joseph
Principal and Chief Investment Officer at Apparent Capital

Got it. Couple questions on some of the challenges that you guys are having. You mentioned the loss of a sponsor at the Rooftop. Could you elaborate on that a little bit?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah. It was Chase. They had historically been a founding sponsor when the Pier and Rooftop concert series were launched. They've had some turnover or change in the team that we were working with, and they've looked to prioritize what I would call more exclusive and unique experiences for their cardholders. We're in active conversations with different groups, whether in the financial services world or entertainment world, or everything in between about replacing that sponsorship income. Those deals don't happen overnight. The team that we have is a terrific team who's got a lot of deep relationships. These are typically multiple-year deals, and so they take a lot longer to negotiate and ultimately replace that cash flow.

Dan Joseph
Principal and Chief Investment Officer at Apparent Capital

Got it. Lawn Club, you mentioned that the EBITDA at the Lawn Club was down. Is there a plan in place to kind of reverse that trend? Do you see upside there? How do you guys look at Lawn Club? Obviously, it's a meaningful contributor.

Lenah Elaiwat
Lenah Elaiwat
CFO and Treasurer at Seaport Entertainment Group

Hey, Dan. Yeah, Lawn Club is certainly a meaningful contributor to us, a part of the decline year-over-year is that in prior year, the Lawn Club operated the Sadie's Garden Bar. That was a tremendous benefit to the Lawn Club at the time that effectively got shifted over to Sadie's. The Lawn Club team is doing a great job in trying to make up that revenue and continuing activations inside and outside the space. We definitely see the progress they're making and, for us, it's more of a shift from one venue to another versus a decline at the Lawn Club that would be a serious issue.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Yeah, Dan, just anecdotally, I think Lawn Club hit an all-time record in revenue for July, they're not slowing down. Obviously the Sadie's Garden Bar, given our comments earlier, has performed better than last year. I think everybody's in the aggregate coming out ahead. It's just shifting where the revenue's coming from, I think Lawn Club will have a very strong back half of the year based on how they've reforecasted and their expectations for the remainder of Q3 and into Q4.

Dan Joseph
Principal and Chief Investment Officer at Apparent Capital

That's helpful. That doesn't feel like a negative. That actually feels like a positive, just given the strength of Sadie's. I mean, as you know, I've been down there and the Sadie's traffic is unbelievable. I look at that from a positive light. One more question, which at the last call you mentioned the board having approved share repurchase program, as well as having a shelf offering, I think for $125 million, for the potential launch when the stock strengthens. Any kind of new news or information that you can share on the share repurchase program or any plans to raise capital? Are you kind of standing put right now on that front?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

No, I wouldn't say there's any new news. We continue to view the shelf and the buyback program as tools. I think as we continue to get clarity in terms of opening timelines and things like that, and capital costs and stuff like that, we'll have a better sense of cash burn as we get into 2027 and ultimately 2028. That will certainly influence whether or not the share buyback program becomes more actionable. Obviously, the performance of the stock will also impact that. I think generally what you investors should expect is that we won't talk about share buybacks until they happen, if they do happen. It, as we've said, it is a tool in the toolbox. I think beyond that, from a capital-raising standpoint, no, we haven't suggested there's any imminent capital raising.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

I think from our standpoint, we're focused on executing and continuing to march towards that 2028 stabilization point with the existing asset base. As I've said in the past, we're going to be opportunistic in evaluating other opportunities. As I've also said, we're not going to race towards something or feel like we have to do something just to put capital to work. We want to do it because it's the right investment decision and the right capital allocation decision for the company long term.

Dan Joseph
Principal and Chief Investment Officer at Apparent Capital

Makes sense. It's really smart. As you know, I think you guys are just doing a great job blocking, tackling, and making really great strategic decisions. Again, congratulations on everything. I don't want to monopolize any more time. Looking forward to seeing the Balloon Museum when it opens up, and continued good work ahead. Thank you.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Dan. Really appreciate it.

Operator

Our next question comes from Ross Haberman with RLH Investments. Please go ahead.

Ross Haberman
Principal at RLH Investments

Sorry, guys, I left out one question. Could you talk in general about leasing rates and prices given the political environment and the city? What are you seeing there? What kind of trends, if there are any?

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

I wouldn't say there's any trends in relation to politics or anything along those lines. I think if you look at the city broadly, there's an inordinate amount of strength in the Midtown Corridor. Office has been red hot during the summer in terms of office leasing, and I think we're starting to see some of that play out downtown. I would say the Seaport's a little bit unique in that there was, including our property, a decent amount of inventory on the market available, and as we continue to chip away at that inventory and fill in the occupancy, that's going to give us more pricing power, and I think we're starting to see that, especially as we make different announcements that are relevant to potential tenants.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

For us, it's not a demand issue, it's a use consideration, and we're trying to be judicious in terms of how we evaluate the tenant mix and the place-making that we're trying to create down here.

Ross Haberman
Principal at RLH Investments

All right. I was just trying to get a general sense if the prices are firmer today or not today or less than they were a year ago or so.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

I would say they're firmer today, broadly speaking, and I think certainly for the Seaport they're firmer, just given all the progress that we've made.

Ross Haberman
Principal at RLH Investments

Thanks again. Best of luck. Bye.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks, Ross.

Operator

We have reached the end of our question and answer session. I would now like to turn the floor back over to Matt Partridge for closing comments.

Matt Partridge
Matt Partridge
President and CEO at Seaport Entertainment Group

Thanks everybody for joining us today. We really appreciate the support and look forward to sharing updates on the progress on the next earnings call in November. Have a great rest of the summer break.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Executives
    • Jason Wilk
      Jason Wilk
      Senior Vice President of Finance
    • Matt Partridge
      Matt Partridge
      President and CEO
    • Lenah Elaiwat
      Lenah Elaiwat
      CFO and Treasurer
Analysts
    • Matthew Erdner
      Director of Equity Research at Jones Trading
    • Ross Haberman
      Principal at RLH Investments
    • Dan Joseph
      Principal and Chief Investment Officer at Apparent Capital
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