Executive Summary / Key Takeaways

• Seaport Entertainment Group (SEG) is undergoing a significant transformation, repositioning its unique portfolio of entertainment and real estate assets in New York City and Las Vegas to drive long-term profitability and shareholder value.
• The company is aggressively addressing historical cash burn through strategic asset optimization, including the internalization of food and beverage operations at the Tin Building and the planned sale of the 250 Water Street development site, which is expected to reduce cash burn by over $7 million annually.
• SEG is enhancing its competitive moat through technological integration, having centralized point-of-sale and procurement systems across its hospitality businesses to boost purchasing power, financial visibility, and margins.
• Strategic leasing initiatives, such as the 20-year lease with Meow Wolf at Pier 17, are projected to dramatically increase visitation to the Seaport by over 1 million people annually, significantly benefiting adjacent hospitality and retail operations.
• Management aims to achieve operational breakeven by 2026, profitability by 2027, and asset base stabilization by 2028, underpinned by new tenant openings, G&A efficiencies, and a focus on high-quality, experiential offerings.

The Genesis of an Experiential Powerhouse

Seaport Entertainment Group Inc. (SEG) emerged in 2024 as an independent, publicly traded entity, spun off from Howard Hughes Holdings Inc. (HHH) to unlock the inherent value in a collection of high-quality, yet historically underperforming, entertainment-related assets. This strategic separation, completed on July 31, 2024, established SEG with a focused mandate: to leverage an operations-centric approach to hospitality and entertainment, primarily across its key markets in New York City and Las Vegas. The company's portfolio includes the iconic Seaport in Lower Manhattan, a 25% interest in Jean-Georges Restaurants, the Las Vegas Aviators Triple-A baseball team, and the Las Vegas Ballpark. SEG's common stock, initially trading on the NYSE American, uplisted to the New York Stock Exchange (NYSE) on June 30, 2025, a move anticipated to enhance visibility and trading volume for shareholders.

The company's overarching strategy centers on transforming its assets into premier experiential destinations. This involves a multi-faceted approach: optimizing existing operations, strategically filling vacancies with compelling concepts, and pursuing opportunistic growth that leverages its real estate-driven hospitality and entertainment platforms. This vision is particularly critical in the dynamic New York City market, where international tourism, while recovering, remains below pre-pandemic levels, impacting higher-spending patterns. However, resilient domestic travel is projected to drive total New York City visitation to 65 million in 2025, surpassing 2024 levels and approaching pre-pandemic volumes. Lower Manhattan, in particular, is undergoing a demographic shift, with its population growing nearly 29% since 2010—the fastest in Manhattan—and a significant increase in younger residents. This evolving landscape creates a fertile ground for SEG's strategy of curating high-quality, unique experiences that can thrive irrespective of broader market cycles.

Technological Edge and Operational Innovation

A cornerstone of SEG's strategy to enhance efficiency and drive profitability is its commitment to technological integration. The company has successfully completed a number of technology initiatives, notably fully centralizing its point-of-sale and procurement systems across all hospitality businesses. This integration provides tangible benefits, including enhanced purchasing power, improved financial visibility, and greater reporting accuracy. These capabilities enable SEG to better optimize performance and margins across its diverse hospitality portfolio. For investors, this technological differentiation translates directly into a stronger competitive moat, as it allows for more efficient cost management and agile operational adjustments, directly supporting the company's goal of reducing cash burn and achieving profitability.

Beyond hospitality, SEG also leverages technology in its entertainment segment. The Las Vegas Aviators, for instance, utilize technology and analytics to drive earlier ticket sales, aiming to mitigate sales volatility during summer months when weather and competing events can influence attendance. This strategic use of data helps stabilize revenue streams and optimize operational planning.

Segment Performance and Strategic Repositioning

SEG operates through three core segments: Hospitality, Entertainment, and Landlord Operations, each contributing uniquely to the company's transformation.

Hospitality: Optimizing for Profitability

The Hospitality segment, which includes venues like The Fulton, Malibu Farm, Gitano, and the Tin Building by Jean-Georges, has been a focal point for operational refinement. For the three months ended September 30, 2025, Hospitality revenue increased by $7.70 million, primarily due to the consolidation of the Tin Building by Jean-Georges as of January 1, 2025, and the opening of new concepts. However, hospitality costs also rose by $12.10 million due to this consolidation. Management has observed top-line demand leveling off in certain legacy venues, while newer concepts like Gitano (opened May 2025) and The Lawn Club (in its second full year) have outperformed due to strong social and corporate demand.

A critical strategic shift in this segment is the internalization of food and beverage operations. Effective January 1, 2025, SEG brought its operations team in-house, acquiring 100% interest in the Tin Building joint venture and transitioning from management agreements to license agreements with Jean-Georges Restaurants. This move aims to simplify offerings, consolidate underperforming concepts, and improve efficiencies to meaningfully reduce the Tin Building's historical cash burn. While this decision negatively impacted Q1 2025 hospitality revenues due to reduced operating hours and outlet closures, it led to better overall segment profitability during the seasonally slowest quarter. Management anticipates a moderation in Q4 2025 food and beverage revenue growth as it prioritizes flow-through and profitability over top-line expansion.

Entertainment: High-Impact Events and Year-Round Activation

The Entertainment segment, encompassing The Rooftop at Pier 17 Concert Series and the Las Vegas Aviators, demonstrates SEG's ability to drive significant visitation and revenue through high-impact events. For the three months ended September 30, 2025, Entertainment revenue decreased by $0.70 million, largely due to fewer concerts at The Rooftop at Pier 17, though this was partially offset by increased rooftop events and Aviators revenue. Entertainment costs increased by $0.90 million, reflecting higher event expenses and Aviators operating costs.

The Rooftop at Pier 17 continues to gain prominence, ranking seventh globally by gross ticket sales among venues of its size in Q3 2025, a five-spot improvement from the prior year. The venue hosted 35 concerts in Q3 2025, with an 86% sell-through rate, drawing nearly 100,000 people to the Seaport. New add-on experiences like The Patron Patio and Liberty Club have created meaningful upsell opportunities and improved guest experiences. Marquee events, such as the Macy's Fourth of July fireworks celebration, generated the single highest grossing revenue day in SEG's history. While the planned rooftop winter structure was abandoned due to escalating costs, SEG remains committed to year-round activation, with new concepts like Flanker Kitchen and Sports Bar and Hidden Boots Saloon expected to drive momentum at Pier 17 in 2026. In Las Vegas, the Aviators celebrated a historic season as Pacific Coast League champions, and the Las Vegas Ballpark is being transformed into "Enchant," a winter wonderland activation, with operations brought in-house to strengthen guest engagement and drive off-season revenue.

Landlord Operations: Strategic Leasing and Asset Monetization

The Landlord Operations segment focuses on SEG's real estate assets in the Seaport, including Pier 17, the Tin Building, and the Cobblestones. For the three months ended September 30, 2025, rental revenue increased by $0.20 million, driven by decreased reserves and termination fee revenue. Operating costs decreased by $1.90 million due to lower marketing, insurance, and other landlord-specific expenses.

A key strategic move is the planned sale of the 250 Water Street development site. In August 2025, SEG announced an agreement to sell the property for $150.5 million to Tavros, with the price later increasing to $152 million and a closing date set for December 15, 2025. This divestiture is expected to significantly improve historical cash burn by over $7 million annually by eliminating interest expenses and carrying costs. The site's qualification under the expired 421-a tax abatement program makes it particularly attractive in the Manhattan multifamily market.

Leasing momentum at the Seaport is strong, with over 110,000 square feet of space leased or programmed in the past twelve months. A significant win was the 20-year lease with immersive art and entertainment creator Meow Wolf for nearly 75,000 square feet at Pier 17, which is projected to attract over 1 million visitors annually, a five-fold increase over the Rooftop Concert Series' draw. This is expected to provide a substantial benefit to SEG's restaurants, tenants, and the broader Seaport neighborhood. As of September 30, 2025, the Seaport's real estate assets were 83% leased or programmed.

Financial Performance and Liquidity

SEG's financial performance in the nine months ended September 30, 2025, reflects the early stages of its strategic transformation. The net loss attributable to common stockholders decreased by $31.70 million, or 28%, to $79.90 million, compared to $111.60 million in the prior-year period. This improvement was primarily driven by a $17.50 million decrease in general and administrative (G&A) expenses, a $10.60 million increase in interest income/expense, and a $5.20 million decrease in operating costs. However, the company also recognized a $4 million loss on assets held for sale related to 250 Water Street and a $7.20 million decrease in other income/expense, net.

Cash used in operating activities decreased by $21.40 million to $26.60 million for the nine months ended September 30, 2025, indicating improving operational efficiency. Cash used in investing activities decreased by $61.10 million to $21.10 million, largely due to the consolidation of the Tin Building. Cash provided by financing activities, however, shifted to a use of $3.40 million, a $117.50 million decrease from the prior year, primarily due to the elimination of net transfers from HHH post-spin-off.

As of September 30, 2025, SEG maintained a strong liquidity position with cash and cash equivalents totaling $106.20 million and restricted cash of $10.60 million. Long-term debt outstanding remained at $101.40 million, unchanged from year-end 2024, excluding regular amortization of the Las Vegas Ballpark loan. The company's net debt to gross assets was negative 2% at quarter-end, reflecting a robust balance sheet. This strong cash position, bolstered by the $166.80 million net proceeds from its October 2024 rights offering, provides adequate liquidity for current and long-term obligations, capital expenditures, and development projects.

Competitive Positioning and Strategic Differentiation

SEG operates in a competitive landscape against a diverse set of players, from large-scale integrated resort operators like MGM Resorts International (MGM) and Caesars Entertainment (CZR) in Las Vegas, to global live events giants like Live Nation Entertainment (LYV), and specialized real estate investment trusts such as Vornado Realty Trust (VNO) in New York City.

SEG's market positioning is as a niche player in urban entertainment and real estate, emphasizing localized, integrated offerings. While it may not match the sheer scale or global reach of an MGM or Live Nation, SEG's strength lies in its ability to curate unique, community-focused experiences that blend hospitality and entertainment within its owned real estate assets. For instance, The Rooftop at Pier 17's strong performance against similar-sized venues nationally underscores its competitive edge in live entertainment. The integration of new dining and nightlife concepts like Gitano, Flanker Kitchen and Sports Bar, and Hidden Boots Saloon, alongside immersive experiences like Meow Wolf, differentiates the Seaport as a destination.

Against real estate-focused competitors like Vornado, SEG's diversified revenue streams from hospitality and entertainment, integrated directly into its properties, offer a unique value proposition beyond traditional leasing. This allows SEG to capture a larger share of consumer spending within its ecosystem. The company's focus on enhancing the "guest experience" through initiatives like the Patron Patio and Liberty Club at concerts further strengthens its appeal and pricing power.

However, SEG faces vulnerabilities due to its relatively smaller scale compared to industry behemoths, which could lead to higher operational costs in certain areas. While its technological integration for POS and procurement is a strength, larger competitors like Live Nation possess more advanced digital capabilities for ticketing and event management that SEG may need to further develop. The company's concentration of assets in New York City and Las Vegas also exposes it to regional economic fluctuations and real estate conditions.

Outlook and Risks

Management has clearly articulated its forward-looking strategy, aiming for operational breakeven by 2026, profitability by 2027, and stabilization of the current asset base by 2028. This outlook is predicated on several key assumptions:

• 250 Water Street Sale: The completion of the 250 Water Street sale by December 15, 2025, is expected to significantly reduce cash burn.
• New Tenant Openings: The phased opening of new tenants like Cork, Willett, Flanker Kitchen and Sports Bar, and Hidden Boots Saloon, with significant velocity expected in the latter half of 2026, is crucial for driving rental income and visitation.
• Tin Building Optimization: A comprehensive go-forward plan for the Tin Building is expected by early March, focusing on operational efficiencies and reduced cash burn.
• G&A Efficiencies: Following some one-time technology-related expenses in late 2025, corporate G&A is expected to improve in 2026.
• Increased Visitation: Meow Wolf is projected to drive over 1 million annual visitors to the Seaport, significantly boosting foot traffic and spending across the neighborhood.

Despite this optimistic outlook, SEG faces several risks. Macroeconomic conditions, including inflation, elevated interest rates, and potential recession, could impact consumer spending and tenant creditworthiness. Changes in discretionary consumer spending patterns or preferences also pose a risk to hospitality and entertainment revenues. The capital-intensive nature of development and redevelopment projects means the company's ability to secure favorable financing terms remains critical. Furthermore, supply chain disruptions, labor shortages, and extreme weather conditions could adversely affect operations. The decision to abandon the rooftop winter structure due to rising capital costs highlights the inherent complexities and financial sensitivities of large-scale development projects.

Conclusion

Seaport Entertainment Group is in the midst of a profound transformation, shedding its legacy as a collection of disparate assets to emerge as a cohesive, operations-centric leader in experiential real estate and entertainment. The company's strategic focus on optimizing its New York City and Las Vegas properties, coupled with a disciplined approach to capital allocation and a commitment to technological integration, forms the bedrock of its investment thesis. By addressing historical inefficiencies, attracting high-impact tenants and events, and leveraging its unique physical assets, SEG is actively building a differentiated competitive position.

The path to profitability by 2027 and asset stabilization by 2028 is ambitious but appears grounded in concrete initiatives, from the monetization of non-core assets like 250 Water Street to the operational overhaul of the Tin Building and the strategic leasing of Pier 17. Investors should closely monitor the successful execution of these initiatives, particularly the ramp-up of new tenant operations and the continued improvement in G&A. SEG's ability to consistently deliver compelling, high-quality experiences, supported by its integrated technology and strong balance sheet, will be paramount in realizing its long-term value creation potential within a dynamic and competitive market.