Seaport Entertainment Group Inc.

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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jason Wilk, Senior Vice President of Finance. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. With me today is our President and Chief Executive Officer, Matt Partridge, and our Interim Chief Financial Officer, Lina Eliwot. 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, and quarterly supplemental information on our website at seaportentertainment.com. With that, I will now turn the call over to Matt.

Thanks, Jason, and good morning, everyone. First, I'd like to begin by thanking our team, board of directors, shareholders, and partners for their support through the company's recent leadership transition. I also want to thank Anton for his contributions during the initial phase of the company's development. I'm honored to be given the opportunity to step into the CEO role, and I'm excited about what the future holds for our company. I'm also thrilled for Lena and the opportunity she has in front of her with her new role. Lena and I have worked together closely since the beginning of Seaport Entertainment Group, including on SEG's separation from Howard Hughes and in developing the company's accounting and financial infrastructure. She has done an exceptional job stepping into the interim CFO role over the past few months, and I expect that to continue as we finalize 2026 budgets and work our way into the new year. As we move forward, it's important that we continue to refine the company's focus and priorities as we seek to stabilize and then optimize our operating models. This includes continuous reassessment of our existing businesses and organizational structure to ensure we're working towards improved efficiency and ultimately positive operating income. We also want to prioritize financial discipline and thoughtful capital deployment. With our existing cash on balance sheet and expected additional cash from the sale of 250 Water Street, we plan to allocate capital in a way that positions the company to deliver long-term value. This strategy will include further reinvestment into our existing assets to fill vacancies, improve space utilization, and drive customer visitation and engagement. Beyond our existing portfolio, we plan to be opportunistic as we look for opportunities to create long-term value and grow that leverages our existing partnerships and real estate-driven hospitality and entertainment platforms. With respect to our current portfolio, let's start with New York. I want to address the recent questions about New York City tourism, and real estate trends and their broader impacts on our business. The New York City market continues to present a mixed picture. On the tourism front, international visitation remains below pre-pandemic levels, currently at about 90% of 2019 volume, and will likely remain soft in the near term. This has impacted higher spending patterns typically associated with international guests. That said, domestic travel remains resilient, and total New York City visitation is projected to reach almost 65 million visitors in 2025. surpassing 2024 levels and approaching pre-pandemic visitation levels. Meanwhile, the Manhattan office market has shown strength. It is one of the few major U.S. cities to exceed pre-COVID office leasing activity, driven by increasing return to office momentum, particularly within the financial services, technology, and media industries. While office leasing in Lower Manhattan hasn't rebounded at the same levels as Midtown, Midtown South, and some of the higher-end corridors, Lower Manhattan office leasing will benefit from taking supply out of the submarket through office to residential conversions. An estimated 10,000 new residential units have recently come to market or are expected to come to market over the next few years, which will further enhance the area's vibrancy and residential density. Since 2010, Lower Manhattan has seen its population grow by nearly 29%, which is the fastest growing district in all of Manhattan and the second fastest growing district in all of New York City behind Brooklyn's CD2, which includes downtown Brooklyn, Dumbo, Brooklyn Heights, and other submarkets that are right across the East River with easy access to the Seaport via the subway, ferry, and Brooklyn Bridge transportation networks. As part of Lower Manhattan's growth, two of the most proximate submarkets to the Seaport, the Financial District and the Seaport neighborhood itself, experienced residential population growth of 45% and 34% respectively, well above New York City's 7.7% growth rate over the same timeframe. Furthermore, the under-18 population in lower Manhattan grew more than 60%, the fastest in all of New York City, and FIDI residents between the ages of 20 and 34 years old have increased by 12.5%, a 60% higher growth rate than Manhattan's 20- to 34-year-old population growth rate. As a result of the office leasing strength in other submarkets, moderating supply from these conversions, and a continued shift to becoming more of a younger residential neighborhood, Incremental demand for commercial space in lower Manhattan should grow faster than most, if not all, submarkets in New York City, which should ultimately help push rents higher over the long term for all commercial uses. In the near term, our opportunity lies in our ability to curate and deliver compelling, high-quality experiences within the seaport, experiences that drive visitation, time spent in neighborhood, and customer spending, regardless of broader market cycles or submarket dynamics. Sticking with New York, I'd like to provide a quick update on the sale of 250 Water Street. In August, we announced we entered into an agreement to sell the 250 Water Street development project for $150.5 million to Tavros, an experienced and active mixed-use New York City-based developer. In September, Tavros exercised its first extension option, and more recently, they exercised their second and final extension option. As a result, the outside closing date for the sale is now December 15. The deposit has increased to $7.5 million, and the sale price has increased to $152 million. Once completed, we estimate the sale will positively improve historical cash burn by more than $7 million as a result of eliminating interest expense through the repayment of the associated land loan and other related carrying costs such as taxes, insurance, and site maintenance expenses. We remain confident in Tavros' ability to execute on the project and continue to believe this will be a terrific addition to Lower Manhattan and the Seaport neighborhood. Hospitality operations during the third quarter and year-to-date have seen top-line demand level off in certain legacy venues, while newer concepts, such as Dutano, which opened in May, and Long Club, which is in its second full year of operation, have both continued to outperform on a relative basis due to strong social and corporate demand. During the quarter, same-store Seaport food and beverage revenues were up 8%, while overall hospitality revenues increased 3% year-over-year, both of which are also sequential improvements from the first and second quarters. We expect a moderation in food and beverage revenue growth during the fourth quarter as we prioritize flow-through and profitability, potentially at the expense of revenue growth. But we believe the recently announced additions of Flanker Kitchen and Sports Bar and Hidden Boots Saloon will help drive momentum at Pier 17 in the back half of 2026. We believe that top-line softness we are experiencing in certain legacy venues is due to structural challenges, such as the type of offering or price point, and we intend to address those issues as part of our ongoing repositioning efforts. Those repositioning efforts will also include a full assessment and go-forward plan for the 10 building, which we intend to provide along with our broader hospitality strategy during our next earnings call. And finally, before moving on from our hospitality segment, I'm pleased to share that we have now completed a number of technology initiatives including fully centralizing our point of sale and procurement systems across all of our hospitality businesses. This integration enhances our purchasing power, financial visibility, and reporting accuracy, enabling us to better optimize performance and margins across the portfolio. This represents a significant milestone for our company, and I want to take a moment to thank our team for the tremendous work over the past year to bring these projects to completion. As we previously disclosed, we made the decision not to move forward with the rooftop winter structure. Despite its strong appeal as a way to transform the rooftop into a year-round venue, as capital costs and operational complexities rose, the project became less feasible. Despite this change, we remain excited and committed to the rooftop at Pier 17 as one of the preeminent outdoor entertainment and event venues in New York City. All-Star's third quarter worldwide top 200 club rankings place the rooftop at Pier 17 seventh by gross ticket sales among venues of its size, a five-spot improvement from last year's position. This achievement underscores the venue's continued growth, global recognition, and strength of our live entertainment programming. In the third quarter, we hosted 35 concerts, including 22 performances that were at or near sellout capacity. The sell-through rate, or the number of tickets sold relative to overall show capacity, was 86%, driving nearly 100,000 people to the seaport. We're encouraged by the performance of two newly introduced add-on experiences for this year's concert season. a Patron patio, a two-level offering with a dedicated bar that provides elevated views of the performances, and Liberty Club, an enclosed lounge area with seating, a dedicated bar, and all-inclusive food offerings. Both initiatives create meaningful upsell opportunities and deliver unique experiences that drive incremental spending and improve the guest's experience. In addition to the concert series, we hosted several unique events on the rooftop of Pier 17. Among them was the NBC broadcasted 49th annual Macy's 4th of July fireworks celebration, Nike's The One Global Finals held under the Jordan brand banner, which showcased some of the top youth basketball players worldwide, and the North American premiere of the M&M's documentary, Stands, featuring a special appearance by Marshall Mathers. The benefit of hosting these events and experiences is best represented by the Macy's 4th of July fireworks celebration, which helped drive the single highest grossing revenue day in SEG's history. We achieved this through multiple buyouts across our dining venues and through our partnership with Macy's, while also working with New York City to provide thousands of free tickets and viewing opportunities for city residents. In addition to the fireworks, in October, we hosted the New York City Wine and Food Festival with Chef Jean-Georges acting as culinary host. The five-day festival, which included an opening party at the 10 building, drew more than 35,000 visitors across a variety of events, driving significant awareness to the seaport. The experience showcased some of the world's most celebrated chefs creating a truly one-of-a-kind culinary event. These events, among others hosted at the Seaport this year, have further validated our conviction in our ability to deliver marquee events that drive substantial visitation to the neighborhood and position us as a premier destination for cultural experiences in New York City. As mentioned previously and highlighted in our press release last week, we were pleased to announce Flanker Kitchen and Sports Bar and Hidden Boots Saloon, two concepts from Carver Road Hospitality. The award-winning Flanker brand currently includes locations in Salt Lake City, Glendale, and Las Vegas, and we're excited to welcome their East Coast flagship location to the Seaport. These concepts will occupy over 14,000 square feet at Pier 17. Flanker Kitchen and Sports Bar will offer an elevated cocktail-focused sports and dining experience, with Hidden Boots Saloon offering live music and country-style atmosphere, both with private event spaces. This new venue introduces fresh, differentiated concepts that will be a complement to the recently opened dining and nightlife venue in Tutano, as well as to our existing restaurant portfolio in the neighborhood. Our Seaport Neighborhood Merchandising Plan, which also includes Meow Wolf and the aforementioned Tutano and Lawn Club, should appeal to the more social and sometimes younger demographic that is becoming increasingly prevalent in Lower Manhattan. Overall, with more than 110,000 square feet of space leased or programmed over the past 12 months, Our plan for the seaport should build momentum in the coming years as our concepts further support lower Manhattan's increasing residential density and evolving population. Finally, I want to congratulate the Las Vegas Aviators on a historic season as Pacific Coast League champions, celebrating the franchise's first PCL title since 1988. While we didn't take home the championship title, the team narrowly lost the AAA National Championship game by way of walk-off home run in the bottom of the ninth inning, We're extremely proud of their achievements. Our team in Las Vegas is now in the midst of transforming the Las Vegas ballpark to Enchant, a winter wonderland activation complete with ice rink and other festive activities, which opens later this month and runs through the holiday season. This year, we made the decision to bring the operations in-house, which required upfront investment and startup costs, but we believe it will prove to be a worthwhile endeavor as it should strengthen guest engagement, introduce new audiences to the venue, and allow us to cross-market to a broader customer base. We anticipate more than 175,000 guests will visit this season, driving revenue to the ballpark during baseball's offseason. With that, I want to again thank the entire SEG team for their extraordinary effort to date as we continue to drive improvement quarter to quarter. I'm so appreciative of their commitment and enthusiasm, and I know we'll deliver further progress over the coming months as we get into 2026. I'll now turn it over to Leah.