Seaport Entertainment Group Inc.

Basis of preparation:

FY2021–FY2023: are carve-out ("combined") statements of the Seaport Entertainment Division of Howard Hughes (S-1/A 2024).

FY2024: combines pre-spin carve-out results (to 31 July 2024) with stand-alone results.

FY2025: is the first full stand-alone year.

Comparability is impaired by three factors: the FY2023 impairments, the change in the Tin Building's consolidation, and HHH cost allocations before the spin. Figures are in USD M unless stated.

Income statement

Sources: S-1/A 2024 (FY2021–FY2023 revenue); FY2025 10-K (FY2023 net loss of USD 838.1 M, including the USD 672.5 M asset impairment and USD 37.0 M JV impairment); Q4/FY2025 release (FY2024–FY2025). FY2024 is shown on the recast basis. The originally reported FY2024 revenue was USD 111.1 M; originally reported FY2024 G&A (USD 63.3 M) and D&A (USD 34.8 M) match the recast figures.

Other FY2025 items:

• Loss on assets held for sale (250 Water Street): USD 11.0 M.

• Leadership transition costs, added back in the non-GAAP measure: USD 12.2 M.

• Net interest income: USD 0.5 M, versus net interest expense of USD 6.8 M in FY2024.

• Equity earnings from unconsolidated ventures: +USD 2.4 M, versus a loss of USD 42.1 M in FY2024, which included the USD 10.0 M JG warrant impairment and Tin Building JV losses.

• Loss on extinguishment of debt: USD 1.6 M in FY2024.

Margins and growth

All derived. FY2024 growth is versus FY2023 on mixed bases; on an originally reported basis it was -3.9% (Q4 2024 release).

Revenue CAGR (derived):

• FY2021–FY2025 (4 years): 12.1%. The rate is flattered by the COVID-depressed FY2021 base.

• FY2022–FY2025 (3 years): 3.1%.

• On a pro forma basis, management characterized FY2025 revenue as flat versus 2024 (Q4 2025 call).

Commentary.

The five-year revenue line describes a portfolio that recovered from COVID in 2022 (+44%) and then stagnated near USD 110–120 M. The FY2025 jump to USD 130.4 M is mostly an accounting effect of consolidating the Tin Building rather than organic growth.

The real inflection is in costs. G&A fell 32% to USD 42.8 M in FY2025 as separation costs rolled off. Non-GAAP adjusted net loss halved to USD 54.1 M.

GAAP operating loss nonetheless widened to USD 118.2 M. The reasons were:

• fully consolidated Tin Building operating losses (hospitality costs of USD 71.3 M against hospitality revenue of USD 51.7 M);

• the USD 11.0 M held-for-sale loss on 250 Water Street;

• USD 12.2 M of CEO transition costs.

H1 2026 shows the next phase:

• Revenue fell 15.8% as the Tin Building closed.

• Hospitality costs fell 49% to USD 17.1 M.

• G&A fell a further 18.7% to USD 14.7 M.

• Q2 2026 non-GAAP adjusted net income was positive at USD 0.3 M (USD 0.02 per share), the first such quarter.

H1 2026 GAAP net loss widened to USD 53.9 M because of USD 26.9 M of D&A in H1 2026 versus USD 14.7 M in H1 2025. The increase reflects accelerated depreciation of Tin Building improvements, which was concentrated in Q1 2026.

Balance sheet

Source: Q4/FY2025 release balance sheet. Additional notes: - Debt split: SEG presents an unclassified balance sheet and no current-portion split was disclosed. At 31 Dec 2025, USD 61.3 M of the USD 99.6 M carrying value was mortgage debt tied to assets held for sale (250 Water Street) and was repaid in February 2026. Gross principal was USD 100.4 M at an effective weighted-average rate of 6.95%. 39% was fixed at 4.9%; 61% was floating at 10.8%, reduced to 8.3% after a total return swap.

• Goodwill and intangibles are not separately disclosed in the releases reviewed.

• Working capital is not meaningful on an unclassified real-estate balance sheet.

• Noncontrolling interest is a USD 9.9 M preferred interest in a subsidiary, carrying USD 1.4 M a year of distributions.

Latest balance sheet (30 Jun 2026, Q2 2026 release):

Proceeds of USD 8.25 M from the 85 South Street sale (29 Sep 2026) will add to liquidity in Q3 2026, net of costs that were not disclosed.

Cash flow

Sources: FY2025 10-K risk factors (operating cash flow and HHH transfers); Q4 2024 release (rights offering). Management said capex would ramp in 2026, with about USD 50 M committed to announced projects (Q3 2025 call, per the Quartr summary). Of the rights-offering proceeds, about USD 89.0 M had been used for working capital by end-2025 (FY2025 10-K, per Stock Titan summary).

Commentary. The business has burned about USD 50 M a year of operating cash in each of FY2023–FY2025. Before the spin, HHH funded this. Since then it has been funded first by the USD 166.8 M rights offering and then by asset sales:

• 250 Water Street: USD 76.1 M net proceeds after repaying USD 61.3 M of debt and paying costs.

• 85 South Street: USD 8.25 M gross.

Cash rose from USD 77.8 M at end-2025 to USD 117.8 M at mid-2026 despite an H1 operating loss, because of the 250 Water Street proceeds.

The key question is whether the 2026 transition to rent and the cost reset can bring operating cash flow toward breakeven before the roughly USD 50 M of committed capex depletes the cash pile. Q2 2026's positive adjusted net income is the first evidence that this may be possible.

Ratios

Derived from Q4/FY2025 balance sheets and income statements. ROIC, interest coverage and net debt/EBITDA are not meaningful (negative EBIT and EBITDA). The current ratio is not meaningful on an unclassified balance sheet. The cash conversion cycle is not applicable to this business model. Debt to equity at 30 Jun 2026 is 9.0% (USD 37.3 M / USD 413.8 M), consistent with the 9.0% shown by Simply Wall St.

Management guidance (qualitative)

• Year-on-year improvement in non-GAAP adjusted net income per share is expected over the next three quarters (Q3 2026 to Q1 2027), at a lower rate than Q2 2026's 103% (Q2 2026 call).

• Leasing and revenue were expected to accelerate in the second half of 2026 as tenants open (Q3 2025 call).

• About USD 50 M of capex was committed for announced projects in 2026 (Q3 2025 call).

• No numerical revenue or EBITDA guidance has been issued.

Consensus growth expectations

Third-party aggregators as of March 2026 showed no expected GAAP profitability within three years.

Bull case

1. Rent-led margin expansion. Converting loss-making owner-operated F&B into contractual rent changes the margin structure. H1 2026 hospitality costs fell USD 16.5 M, more than the USD 10.8 M drop in hospitality revenue. As Balloon Museum, Meow Wolf, Public Service and the event space open, occupancy could move from 55% toward the 89% leased or programmed level, and Q2 2026's positive adjusted net income could become the run-rate.

2. Asset backing below book. At about 0.8x book, with about USD 80 M of net cash, the market value of the operating portfolio plus options is low:

   • the Rooftop sells about USD 10 M or more of gross tickets a year;

   • Aviators and ballpark revenue is USD 37.8 M;

   • the 80% Fashion Show air rights and the 25% JG stake carry zero earnings today. Benchmarks for real-estate-anchored sports and entertainment, such as Braves Holdings' Mixed-Use segment at about 71% OIBDA margin on USD 97 M of revenue, show what a mature version can earn.

3. Catalyst-rich capital structure. With no debt maturities until 2038, a USD 50 M buyback authorization and a 39% sponsor (Pershing Square) able to add to its position without Section 203 limits, the stock has downside support and potential strategic optionality.

Bear case

1. The loss machine persists. GAAP net loss was USD 116.7 M in FY2025 and USD 54.6 M in H1 2026, and operating cash burn has been about USD 50 M a year for three years. Q2 2026 benefited from one-offs: USD 2.1 M of Nike termination income in the quarter (USD 3.7 M in total cash) and the Tin Building closure. Q1 and Q4 remain structurally loss-making.

2. Capital recycling at a loss. 250 Water Street sold for USD 37 M below HHH's cost and USD 7.5 M below the contract price. The Tin Building, roughly a USD 200 M venture per press reports, was abandoned after under four years. Future value may again be realized below book.

3. Execution and scale risk. Tenants pay no rent until SEG funds buildouts, and the Balloon Museum opening appears to have slipped versus the reported 15 July 2026 date. Capex of about USD 50 M competes with buybacks. Sub-scale G&A (about a third of revenue) leaves little room for error. Two CEO-level transitions in about 13 months (and transition costs again in Q2 2026) raise continuity questions.

Catalysts and monitorables (next 12 months)

Concluding analyst verdict

Seaport Entertainment Group is a restructuring story wrapped in trophy real estate. Its biggest problem has been the business model it inherited, rather than the quality of its assets. HHH built an extraordinary district at the foot of the Brooklyn Bridge and a best-in-class Triple-A franchise. It then layered on a cost-heavy, owner-operated restaurant model that consumed capital. FY2023's USD 672.5 M impairment and the Tin Building's roughly USD 33 M 2025 loss are the evidence. In its first two years as a public company, SEG has spent much of its effort undoing that legacy.

The Partridge-led team, with REIT and CFO DNA rather than casino-operator DNA, has followed a clear recipe:

• sell non-core land (USD 143.0 M for 250 Water Street);

• eliminate floating-rate debt;

• cut G&A by a third;

• swap operating risk for rent (Balloon Museum, Meow Wolf, Public Service).

Q2 2026, the first quarter with positive adjusted net income and all three segments profitable, is the proof of concept. Mid-2026 net cash of about USD 80 M and no maturities until 2038 remove solvency risk for the foreseeable future.

What remains unproven is durable, all-season cash generation. The portfolio still burns cash in Q1 and Q4. Physical occupancy lags signed leases. Committed capex of about USD 50 M will absorb a meaningful share of liquidity before new rent fully arrives. Disclosure is also thin: there is no numerical guidance and limited sell-side coverage.

At about 0.8x book and about 2x EV/TTM sales, the valuation already embeds skepticism. It ascribes little to the Fashion Show air rights or the JG stake. Pershing Square's 39% stake gives the shares a strategic floor and an underappreciated take-private or control optionality, but none is confirmed.

Verdict: a speculative, catalyst-driven special situation suited to patient, value-oriented capital. The risk/reward skews favorably if the 2H 2026 tenant openings occur on schedule. Positions should be sized for execution risk and monitored quarterly against occupancy, operating cash flow and capex discipline.