Seaport Entertainment Group Inc.

anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Partridge, CFO. Thank you. You may begin.

Thank you, operator, and good morning, everyone. Thank you for joining us today for our earnings conference call. With me today is our chairman, president, and CEO, Anton Nicodemus. As outlined in our earnings announcement press release from a few weeks ago and in a similar format to our year-end 2024 earnings conference call in March, we solicited questions ahead of today's call, and we've incorporated many of those questions and answers into our prepared remarks. If you have additional questions after today's call, please contact ir at seaportentertainment.com, and we'll respond to any additional questions accordingly. 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 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 most recent investor presentation on our website at seaportentertainment.com. With that, I'll now turn the call over to Anton.

Thanks, Matt, and good morning, everyone. Before I get into our first quarter performance, I'd like to highlight the priorities and strategies we've outlined during our last call because I think they provide a nice foundation for today's prepared remarks and a framework for our execution in 2025 and beyond. Our main priority is to address the factors contributing to the company's cash burn by implementing strategies to achieve break-even in 2026, profitability in 2027, and a stabilization of the current asset base by 2028. To achieve these milestones, we've emphasized a handful of more specific initiatives that include evolving the TIM building experience to meet guest needs while improving financial performance. by working closely with our partners at John George to leverage what is working well and addressing or fine-tuning what isn't. Programming and leasing the existing vacancy throughout the Seaport neighborhood to drive improved cash flows, frequency of visitation, and customers' length of stay. Monetizing limited or non-cash flowing assets such as 250 Water Street through outright sales or strategic partnerships. optimizing the utilization of the Las Vegas ballpark through unique relationships and special events, and improving our organizational infrastructure to allow us to operate more efficiently. With these priorities as a backdrop, I'm pleased to report we had a productive start to 2025 as we continue to identify and implement best practices and execute on our strategic initiatives designed to improve the performance of our operational assets, build leasing and programming momentum at the seaport, and work through transitional items to stabilize our overall infrastructure. Starting with our hospitality segment during the first quarter, we made a strategic decision to reduce operating hours as many of our restaurants in the seaport, including closing certain outlets. This decision had a negative impact on first quarter hospitality revenues, but allowed for better overall segment profitability during what is our seasonally slowest quarter of the year. Same-store hospitality revenues were down 12% year-over-year during the first quarter, and overall hospitality revenues declined 16%, driven by a 33% reduction at the Tin Building, where performance was impacted by the closure of certain concepts for the entirety of the quarter. The performance of the Tin Building was partially offset by 5% revenue growth from our managed restaurants, including meaningful growth at Lawn Clothes. These results do include the effects of our consolidated hospitality operations, which now include the TIN building and our unconsolidated venues such as the Lawn Club. Even with the revenue declines, we made progress with the financial performance of the TIN building, improving first quarter asset level EBITDA by 7% compared to the first quarter of 2024. As we head into the busiest part of the year, We are working closely with our partners at John George to optimize the operations at the Tin Building while delivering incredible food and beverage experiences that our customers have come to expect from the acclaimed and renowned John George brand. Beyond the Tin Building, a big focus for our team during the quarter was preparing for the opening of Catano New York City at Pier 17, the flagship U.S. location for the Tulum-based Grupa Catano. We soft-opened Gitano New York City in March and recently held a spectacular grand opening event on May 1st. The volume of positive press surrounding the event sets the stage for Gitano to be one of the most sought-after dinner and dancing destinations in New York City, helping draw new customers to the Seaport and providing guests more late-night experiences in the Seaport neighborhood. Turning to our entertainment segment. coinciding with our Gaetano New York City opening party, was the rooftop at Pier 17's first concerts of the year with back-to-back sellouts by DJ Elderbrook. Our team has done a fantastic job putting together our 2025 concert schedule, which features a stellar lineup of fan favorites, such as Amal and the Sniffers, Riley Green, the Kooks, Jack's Mannequin, the Fray, Rilo Kiley, and recent Grammy award-winning artist, Sierra Farrell, just to name a few. We are also still on pace to move forward with our rooftop winter structure for more concerts, live shows, and events, with construction completion expected by the end of November. As we've previously discussed, this enclosure should help us combat seasonality by activating one of our most popular assets year-round, And it also strategically ties into the announcements we made yesterday in our earnings release, which is our intention to develop 17,500 square feet of purpose-built meeting and event space in Pier 17. This event space will be located on the fourth floor of Pier 17, directly below the rooftop at Pier 17 stage. It will have direct connectivity to the rooftop, allowing for year-round use of these two premier facilities, with sweeping panoramic views of the Brooklyn Bridge, East River, and Manhattan, and Brooklyn skylines independently, or combined for larger, one-of-a-kind experiences. As it is currently designed, the fourth floor Pier 17 event space will include a nearly 8,000 square foot main room and will be able to hold up to approximately 800 people. Combined with the rooftop's winter structure, approximately 3,000 person capacity, Pier 17 will offer one of the largest, most unique event spaces in New York City. Events are an important and growing component of our company, and with successes of the Lawn Club events business, our investment in the fourth floor Pier 17 event space, rooftop winter structure, and our talented events team, we are looking forward to establishing Pier 17 in the Seaport more broadly as one of New York City's premier entertainment and event destinations. Shifting to the Las Vegas Aviators, which is the other primary business contributing to our entertainment segment, I'm excited to highlight that the baseball team reached the midpoint of the 2025 season in first place atop the AAA minor league standings. This is a testament to the quality of the players and our management team who support the Aviators and execute on an unparalleled game day experience day in and day out. From a ticket sale and pacing standpoint, our ticket team has done a great job leveraging technology and analytics to put more ticket sales on our books earlier in the year without materially sacrificing price, helping to potentially limit sales volatility in the summer months where game-to-game ticket sales can be more heavily influenced by the weather and competing last-minute events. As for growth opportunities of special events at the Las Vegas Ballpark, The ballpark hosted the Las Vegas College Baseball Classic in February, games between the A's and Diamondbacks as part of the Big League weekend in March, and we have the West Coast Conference Baseball Tournament later this month, all of which had and should have a terrific turnout. We continue to work to add special events and other opportunities in the fourth quarter following the conclusion of the 2025 aviator season. For our last remaining segment, our real estate ownership and landlord operations, I want to touch on the progress we are making with programming and leasing at Seaport. We are working on a number of opportunities that span various structures including traditional leases, management agreements, license agreements, and Seaport occupied offerings with exciting partners to occupy space in Pier 17 or the cobblestones. These opportunities include a combination of retail, food and beverage, and experiential offerings with national partners and hyper-local concepts to ensure we're giving people a variety of reasons to visit the seaport. Our announcement a few months ago about Meow Wolf and the grand opening of Catano New York City are important steps in the right direction to bring life to our vision of making the seaport a true entertainment destination. Beyond those two announcements, we recently began a refurbishment project to bring green space to the north side of Pier 17 with a new riverfront bar. We are obviously excited about our opportunity with the Pier 17 event space, and we look forward to providing more details related to the New York City Wine and Food Festival that we will be hosting in October. Finally, I know one of the more frequent requests we have received was to provide an update on 250 Water Street. We launched the marketing process through our broker, JLL, at the end of March, and interest in the project has been tremendous. We've had over 130 potential buyers or partners express interest. We feel good about how things have progressed to date, and as we previously mentioned, this process will be comprehensive in order to drive the best long-term value for the company, our shareholders, and our other stakeholders. In summary, we have made good progress to start the year with our various priorities and initiatives. While we have a lot of work to do to stabilize our assets and maximize value, the commitment of our team, partners, and other relationships have been tremendous. Our collective focus remains to deliver on our unique opportunity to position Seaport Entertainment Group as a premier hospitality and entertainment company while positively influencing the communities we operate in.