Seaport Entertainment Group Inc.

Greetings. Welcome to the Seaport Entertainment Group's second quarter 2026 earnings call. 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. Please note, this conference is being recorded. I will now turn the conference over to Jason Wilk, Senior Vice President of Finance. Thank you, Jason. You may begin.

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

Thanks, Jason, and good morning, everyone. On our last earnings call, I described the first quarter as a turning point for our company, and I'm excited to start today's call by sharing an important milestone for Seaport Entertainment Group. In the second quarter of 2026, we achieved positive operating EBITDA and positive non-gap adjusted net income for the first time in the company's history. This quarter's results reflect continued momentum since our inception, representing our seventh consecutive quarter of double-digit non-GAAP-adjusted net income per share improvement and a 103% year-over-year improvement in Q2 is the highest comparable quarter of per share improvement during our two-year existence. Our progress and improving trajectory towards profitability are a direct reflection of the work our team has been doing since our spinoff to stabilize the company and its operations. While we're proud of that financial results are beginning to reflect the hard work put in by our team, we want to maintain balanced expectations. Timing of new tenant openings, scheduling nuances related to our event, concert, and baseball operations, and the general seasonality of our businesses all create variability quarter to quarter. As a result, the next three quarters should show year-over-year improvement but may not result in the same level of per share performance we achieved this quarter. As our tenants and new businesses open and stabilize, our events business continues to grow and we realize the full year benefits of the changes we've made to improve our organizational efficiency. We anticipate an improved earnings profile in 2027 and even more so in 2028. This is further supported by the fact we have more than 194,000 square feet of non-income producing space opening with new concepts in the next 18 months, including the Balloon Museum, Willits, Flanker Kitchen and Sports Bar, Hidden Boots Saloon, the new concept from the team behind Public Records, the Pier 17 event space, and Meowl. That is more than $20 million of incremental annualized operating EBITDA that is yet to materialize in our numbers. As we work towards initial stabilization in 2028, we are focused on operating our assets in a way that delivers a more compelling growth profile than a traditional real estate investment company. This means day-to-day placemaking, marquee events, brand and culturally driven activations and sponsorships, and customer engagement that not only brings people into our venues, but drives incremental revenue, percentage rent, and improved leasing spreads. This quarter is a reflection of the progress we can continue to create as we emphasize disciplined execution, and it gives us conviction in our long-term plan. We're building a set of complementary businesses that we believe are capable of generating sustainable long-term operational cash flow and earnings growth. One of the key contributors to our improved financial performance has been our focus on optimizing our G&A cost structure. We've made meaningful progress this year towards reducing audit fees, technology costs, and the reshaping of our organization. For some context, after adjusting for one-time leadership transition costs, we have reduced our trailing 12-month general and administrative costs by more than 20% over the past nine months, going from $34 million in trailing 12-month G&A as of Q3 2025 to less than $27 million as of Q2 2026. We expect this trend to continue as the full-year benefits of the changes we've made are holistically reflected in 2027, and we'll evaluate further opportunities to reduce costs through, among other things, the non-renewal or renegotiation of expiring legacy contracts and service agreements. From a Seaport leasing perspective, activity has slowed a bit this quarter, though for good reason. We've simply leased or programmed most of our available space. At spin, we had roughly 150,000 square feet of space available to lease our program, or just under 200,000 square feet if we factor in the repositioning and leasing of the 10 building. Today, that number stands at less than 50,000 square feet, or just over 10% of the total space on the seaport. The remaining vacant spaces continue to generate strong interest, especially after our recent leasing and programming announcements. However, the remaining spaces are generally smaller footprints with broader appeal, which is leading to more detailed negotiations as we work to identify the right tenants and deal structures for each space. As a result, we expect leasing timelines for the remaining spaces to take a bit longer, though we remain confident in our ability to drive overall leasing and programming demand and improve rent terms. One of the more notable leases we signed earlier this year is with the Balloon Museum. This was an ambitious project from the start, requiring us to deliver a white box to the tenant in less than 120 days, and then working with the tenant towards their planned opening within 60 days thereafter. I'm pleased to say our team delivered on time and is expected to commence later this month. When open, we anticipate the Balloon Museum will be a key driver of additional foot traffic to the Seaport neighborhood, benefiting many of the businesses in the area. As an indoor ticketed experience, we also hope it will partially offset some of the seasonality related to the colder months when pedestrian activity typically slows. Combined with the rooftop at Pier 17 and the upcoming opening of Meow Wolf in 2028, the Balloon Museum adds to the neighborhood's growing roster of culturally relevant entertainment experiences, helping solidify the seaport as one of New York City's premier entertainment destinations. On the rooftop at Pier 17, we are seeing continued strength in our concert business. During the second quarter, the rooftop hosted 22 shows, including 13 sellouts, and achieved a 91% sell-through rate. Demand for our premium upsell offerings, including the Patron Patio, Heineken Silver Zone, and the Liberty Club, continues to build, and we are also seeing a higher average food and beverage spend per attendee. With more than 40 shows remaining in the 2026 season, the concert series continues to perform well, and a growing demand for event-driven experiences on the rooftop reinforces the increasing value of the venue beyond concerts for our company and the broader community. I spoke about the growth of our events pipeline last quarter, and demand has continued with several high-profile events that have helped maintain the Seaport's position as a premier destination for sports, music, entertainment, and cultural events. Some of our recent event highlights at the Seaport include hosting the first-ever live U.S. Men's National Team World Cup roster reveal and fan celebration, in advance of the 2026 FIFA World Cup, which we previewed during our last earnings call. HBO Max's premiere screening of the newest season of House of the Dragon. TNT Sports' first ever Roland Garros experience, which was an immersive three-day fan experience with custom-built tennis courts celebrating the iconic French Open. Aussie Barbecue, an annual music festival featuring Australian talent and culture, which relocated to the seaport this year from Central Park's summer stage. and Lululemon's Summer Series, which kicked off their New York residency on the rooftop at Pier 17 with a packed Pilates session followed by a performance by DJ Cascade. Part of what has helped drive increased event activity is our new restaurant concept, Sadie's and Sadie's Garden Bar. We previously shared that we envisioned Sadie's as the central hub of activity on the cobblestones this summer, serving as a destination for sporting events, watch parties, live music, happy hours, and cultural programming. That vision played out even better than we expected. One key driver behind the outperformance was the New York Knicks' historic NBA championship run, which brought thousands of fans to Sadie's and Sadie's Garden Bar, Lawn Club, and other businesses throughout the Seaport for every postseason game. The excitement culminated with multiple Game 5 watch parties that stretched from the Heineken River Deck on Pier 17 to the cobblestones at Sadie's, bringing more than 10,000 people to the Seaport. It was an unforgettable moment for New York City, And we're proud that Sadie's became a place for New Yorkers to experience the excitement together. That celebratory spirit rolled right into FIFA World Cup, driving strong visitation to the neighborhood from locals and tourists alike. Sadie's Garden Bar in particular benefited from consistent soccer programming, making it a go-to destination for fans looking for a great atmosphere to catch their favorite game. In addition to the 2026 activities driven by the FIFA World Cup, we also benefited from events tied to America's 250th anniversary. On July 4th, Pier 17 welcomed two tall ships as part of the international Sail 250 celebration that took over the New York waterfront. We also hosted the 50th anniversary of the Macy's 4th of July fireworks, including the NBC broadcast of the event on the rooftop at Pier 17, with Sadie's hosting a sold-out 4th of July block party as part of the broader holiday celebrations. Also as part of the America 250 celebrations, the South Street Seaport Museum is hosting the Promise of Liberty, a limited time exhibition featuring several of the nation's original founding documents, including the Declaration of Independence, the United States Constitution, and an advanced copy of Dr. Martin Luther King Jr.'s I Have a Dream speech delivered during the March on Washington. It has truly been a special summer for the seaport to play such a central role in the celebrations around this milestone anniversary. As one of New York City's oldest neighborhoods and a place deeply connected to the nation's early history, the Seaport provides a fitting backdrop for celebrating America's founding. The visibility and visitation our events and programming brings to the Seaport are invaluable, and the financial benefits they bring have been a key catalyst to our improvement. We look forward to continuing the momentum with an ongoing slate of activities, which includes the return of Seaport Cinema, our popular outdoor movie series at Pier 17, Bassett's Barbecue, a hip-hop music and food festival which will take over Sadie's Garden Bar in the Cobblestones this weekend, the expansion of the Seaport Racquet Club in celebration of tennis' U.S. Open, and the second year of New York City Wine and Food Festival, among many others. Moving west, the momentum is just as strong out in Las Vegas. The Aviators opened the season in first place in the Pacific Coast League, and I'm excited to report they held that position through the first half of the season. As a result, they've secured their spot in the playoffs this fall. Additionally, in April, the team held its highest attended regular season game in franchise history with more than 11,000 fans. The Las Vegas ballpark also hosted a sold-out six-game series with the Athletics, drawing more than 50,000 fans in three sold-out games of banana ball, the fast-paced, high-energy version of baseball made popular by the Savannah Bananas. These non-aviator events resulted in the highest-grossing one-day food and beverage sales and the highest-grossing one-day merchandise sales in the history of the ballpark. Combined with an increasing focus on expense management, we're encouraged by the progress made by our team in Las Vegas as they continue to deliver an amazing and ballpark experience across multiple event types. Overall, everything I've discussed comes back to progress. We're making progress organizationally, operationally, and financially. We said we were entering the year from the strongest position since our inception and that we expect our momentum will carry through 2027 with continued operating efficiency and cash flow improvement. allowing us to achieve initial stabilization of our existing assets by 2028. This quarter's results, our first with positive operating EBITDA in all segments along with positive non-GAAP adjusted net income, show that improving trajectory remains firmly intact. I'm optimistic about where we're headed in our opportunities for future growth, but none of this happens without our team, and I want to thank everyone across the organization for their continued commitment and hard work as we keep moving forward. With that, I'll turn it over to Lena to walk through our second quarter financial performance in more detail.