Seaport Entertainment Group Inc.

and welcome to Seaport Entertainment Group's second quarter 2025 earnings call. At this time, all participants are in the listen-only mode. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Partridge, Chief Financial Officer. Please go ahead.

Thank you, Operator, and good morning, everyone. With me today is our Chairman, President, and CEO, Anton Nicodemus. As outlined in our earnings announcement press release from a few weeks ago, 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. 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 report, earnings releases, and more recent investor presentation on our website at seaportentertainment.com. With that, I'll now turn the call over to Anton.

Thanks, Matt. Good morning, everyone. We had a busy second quarter and start to the third quarter as our team has worked diligently to make measurable progress on the priorities we outlined at the beginning of the year. Those priorities include working closely with our partners at John George's to evolve the tent building experience to meet guest needs while improving financial performance, 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. First and foremost, I want to provide an update on the 250 Water Street process. We've had a tremendous amount of interest from potential strategic capital partners, developers, and investors as we explore the long-term path for the project. We're evaluating all options to maximize value for the company, and there are still a number of items to work through before we can disclose potential terms of a transaction. Furthermore, I'll caveat that this is a progress update and not an indication that a transaction will be completed. Having said that, we are optimistic we will be able to provide a further update in the near future. Once completed, this will be another positive step forward in our effort to reduce our cash burn and achieve operational breakeven sometime in 2026. As we seek to create operational efficiencies within the organization, We recently announced a number of structural changes to finalize the internalization of the food and beverage operations at Seaport, which was a key initiative for our long-term strategy. These changes were made in partnership with the John George restaurant team and included finalizing agreements to obtain 100% of John George's interest in the 10 building joint venture, effectively collapsing the JV in the process, and transitioning away from the management agreements with John George for the 10 building and the Fultons. and replacing those with new license agreements, which we believe is a win-win for us as well as the JG team. These changes enable Seaport Entertainment Group to directly manage the hospitality operations where we are strategically focusing on operational efficiencies. For John George Restaurants, in which we continue to hold a 25% ownership stake, these changes allow the company to further leverage the strong platform and proven track record in licensing the renowned John George's brand. Overall, John George Restaurants is an important relationship for us at Seaport, and more broadly through our 25% ownership stake. We look forward to continuing to work with JG Team at the Tin Building and the Fulton, and to finding additional ways to collaborate and partner together in the future. On the leasing front, we continue to make solid progress, increasing occupancy throughout the Seaport neighborhood. Over the past few months, we have signed two long-term leases, one with Willits New York City and the other with Cork Wine Bar, both of which will occupy previously vacant space in the historic Cobblestones District. Willits NYC will deliver a true old-world New York City experience, paying homage to the neighborhood's rich maritime history. The owner is a longtime Seaport resident, and the concept will operate across all day parts, with three distinct experiences, a morning cafe, a tavern for lunch and dinner, and a second floor whiskey-focused bar with live jazz in the evenings. Cork Wine Bar, which has its original location in SoHo, is a neighborhood wine bar that will further expand on the Seaport's food and beverage offerings with its expansive, well-curated wine list. In both instances, we expect these new partners will add to the neighborhood's overall energy and will complement our existing offerings. Beyond these two announcements, we're seeing strong momentum in overall programming, and prospective tenants and partners are very receptive to our vision for the neighborhood. We're seeing interest from a range of exciting concepts, many of which are actively evaluating, so I'm hopeful we'll have more announcements in the coming months. Another leasing-related item I would like to highlight is the recent announcement that Nike exercised their early termination right related to their office space at Pier 17. Their decision changes their lease expiration date from Q1 2030 to Q1 2027 and requires Nike to make a $4 million termination payment, half of which was paid in the second quarter at the time they gave notice to terminate. While we greatly value Nike as a partner, and while we intend to continue to find ways to work together, this early termination creates an opportunity in our shift to a hospitality and entertainment-focused destination by providing greater optionality for us to expand the types of businesses in the neighborhood, which we've outlined as part of our long-term strategy. Moving on to programming updates, we've substantially completed the build-out of Pier 17's new Riverdeck bar. which is located adjacent to Malibu Farm on the north side of the pier. This project represents another clear example of our team's focus on key strategies outlined during our inaugural earnings call by delivering on an emphasis to increase the number of bar seats at Pier 17 to capture the demand while hosting marquee events on seasonally strong weather days and from our acclaimed Seaport Concert Series on the rooftop of Pier 17. We anticipate its formal opening will occur in the next week or two, though we have temporarily opened it to support a few key events, including what is likely to be our largest event this year, the 49th Annual Macy's Fourth of July Fireworks Celebration. The event featured NBC broadcasted performances on the rooftop at Pier 17 with a star-studded lineup, and the night culminated in an unforgettable fireworks display including pyrotechnics launched directly from the Brooklyn Bridge for more than 10,000 people in attendance at the seaport. This event came together thanks to the incredible collaboration across our events, operations, facilities, sponsorship, marketing, and security teams, and in partnership with Macy's and multiple city agencies. We're grateful to the Macy's team for their partnership in bringing one of the city's most iconic celebrations to life right here in the seaport. and I can't thank our team enough for their commitment, effort, and teamwork that made this event such a huge success. We are engaged in numerous discussions to bring more of these large-scale events to Seaport, and the New York City Wine and Food Festival being the next neighborhood-wide event we are excited to host in October. The 2025 New York City Wine and Food Festival will feature more than 60 events with over 300 top chefs, culinary personalities, mixologists, winemakers, content creators, and celebrities. The Seaport will act as the main campus for many of these events, with our very own John George serving as the culinary host of the festival. For us, these events provide a glimpse into the size and depth of the events businesses were focused on scaling, which will leverage our truly unique set of waterfront and rooftop assets which we will be further complemented by the previously announced dedicated event space that is currently planned for Pier 17. As I highlight some of the exciting events in the seaport, it's important we place a spotlight on the rooftop at Pier 17 Concert Series. We are in the midst of a strong summer concert season, having hosted 22 shows during the second quarter, including 15 sold-out performances. The Q2 2025 show count was double that of Q2 2024 and meaningfully contributed to overall neighborhood foot traffic and the strong year-over-year financial performance of our entertainment segment. The number of tickets sold relative to overall show capacity or sell-through rate was over 90% during the second quarter. And based upon our industry comparisons, the rooftop at Pier 17 is outperforming similar-sized venues across the country despite the difficult weather in New York City during that second quarter. We believe this outperformance is being aided by the tremendous artist lineup managed by our partners at Live Nation and the terrific guest experience our team creates on the rooftop night after night. We've been working to leverage the demand with new premium upsell opportunities such as our Liberty Club and our Patron Patios. The Patron Patio opened in July and is a two-level elevated lounge and bar built from a repurposed shipping container. This new offering provides for some of the best views in the entire venue with clear sightlines to the stage and epic panoramic views of the Brooklyn Bridge, Manhattan skyline, and East River. Initial feedback from guests has been overwhelmingly positive and further reinforces our conviction in the long-term value of our investments at the pier. including the previously announced winter enclosure. The winter enclosure remains a key initiative to transform the venue into a year-round destination capable of hosting a variety of corporate, social, and community events and extending concert programming into the colder months. We are working through the final phases of the approval and planning process as we prepare for the initial installation of the temperature-controlled structure in October. We anticipate opening at the end of November to the public and are actively booking concerts and events for the winter season. We look forward to sharing further updates in the coming months. Closing out the performance of the entertainment segment is the Las Vegas Aviators. I'm excited to highlight that the team is currently in second place in the Pacific Coast League and has secured a playoff spot. They will compete in a best of three PCL championship series this September. which adds two additional home games to the schedule and hopefully meaningful financial benefit, one I'd love to plan for every year. As I mentioned during our last call, their success reflects the quality, focus, and dedication of the players and the entire team who support the overall game day experience. The Aviators' game day activations continue to be truly unparalleled. From Ohana night Blippi and Mika appearances to immersive Star Wars and Harry Potter nights, which saw 2,500 themed giveaways gone in just nine minutes. The team is finding fun, creative ways to drive attendance, engage the local community, and offer great value. These efforts also help reduce sales volatility during the summer months, where game-to-game attendance can be more vulnerable to last-minute weather disruptions or competing events. With respect to non-aviator events at the ballpark, we experienced a year-over-year headwind in the second quarter due to the absence of the Savannah Bananas. For those unfamiliar, they're an exhibition baseball team known for their Harlem Globetrotter-style entertainment. They played two games at the ballpark last June, which did not repeat this season. Looking ahead, we're focused on expanding growth opportunities at the ballpark during baseball's off-seasons. One initiative underway is internalizing the operations of Enchant, a highly popular winter holiday event that runs from November through December. It features a multi-acre Christmas light maze, large-scale sculptures, an ice skating rink, and a festive holiday village. By bringing this event in-house, we believe we can create deeper guest engagement by leveraging the ticketing data to communicate more effectively with our local customer base. Finally, in our hospitality segment, we are seeing strong performance from our events business, a trend we expect to continue throughout the remainder of the year, and one that has helped us drive significant momentum in some of our larger venues, Gitano's and Lawn Clubs. Gitano, which had its grand opening on May 1st, was a key contributor to our positive same-store growth during the second quarter. It is a beautifully designed space that has proven to be a valuable complement to to the collection of experiences at Pier 17, attracting a vibrant customer base that continues to grow. Looking ahead, we believe Catano has additional opportunities as it looks to expand its operating hours for lunch and increase the profile of Club Bohemia, its recently launched champagne house and dance lounge. During the quarter, same-store hospitality revenues were up 1%, while overall hospitality revenues declined 4% year-over-year. both of which are notable sequential improvements from the first quarter. As a reminder, these results include all food and beverage venues at the seaport, including the tin building and food and beverage operations for the rooftop at Pier 17 concerts. On a same-store basis, strength in food and beverage operations was driven by the increased number of concerts coupled with the successful introduction of Catanos. which replaced Pearl Alley, and the continued success at Lawn Club. These positive results helped offset same-store revenue declines at the Tin Building and some legacy restaurant concepts. Looking at total hospitality revenue, the key difference between the 1% same-store revenue growth versus the 4% total revenue decline was the impact of certain temporarily closed venues at the Tin Building. Despite the top-line pressure, I'm encouraged by the cost containment initiatives now in effect. The team was able to largely offset the revenue declines through the elimination of certain external fees and improved labor efficiencies, including revamped scheduling practices. Stabilizing the TIN building and reducing its cash burn remains our highest priority. We've been actively developing an amended operating plan with our partners at John George Restaurants and we anticipate sharing more details later this year. Before I turn it over to Matt, I want to acknowledge our team is making meaningful progress across the key initiatives and strategies we've outlined. While we're encouraged by the momentum, we remain acutely aware that the TIN building and our broader space utilization strategy continue to be our top areas of focus, not only for us as operators, but also for our board, our investors, and our seaport neighbors. we anticipate sharing a broader long-term plan for the company in the coming months. I want to sincerely thank our partners and shareholders for their continued support, and I especially want to thank each of our incredible team members for their passion, their resilience, and determination as we work together to build a strong foundation for future success. With that, I'll now turn it over to Matt.