Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.27pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.47pp
Lean -
Net-tone change vs last year's 10-K.
MD&A
-0.08pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+20
adverse+12
restated+12
unable+7
litigation+6
Positive rising
able+4
leadership+3
successful+2
attractive+2
profitability+2
Risk Factors (Item 1A)
24,096 words
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are those that we deem currently to be material, and do not represent all of the risks that we face. You should carefully consider the following risks and uncertainties, in addition to the other information contained in this Annual Report and the other documents we file with the SEC. Additional risks and uncertainties not presently known to us or that we currently do not consider material may in the future become material and impair our business, financial condition and results of operations. If any of the following risks actually occur, our business could be materially harmed, our financial condition, results of operations and prospects could be materially and adversely affected, and the value of our securities could decline significantly.
Risk Factors Summary
An investment in our securities is subject to a number of risks, including risks relating to the successful implementation of our strategy and the ability to grow our business. The following list of risk factors is not exhaustive and should be read together with the more detailed risk factors contained below.
Risks Related to Our Business and Our Industry
Our portfolio has experienced, and is expected to continue to experience for the foreseeable future, significant operating cash flow and net . We require substantial cash, and, in the event that our management team is in its business plan quickly enough, we may be to change our business plan, of assets and/or take other actions, which could materially affect our financial condition and results of operations. Such actions could also affect the tax treatment of the distribution to HHH and its stockholders, which could result in a material indemnification obligation pursuant to the tax matters agreement.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+17
ceased+3
negatively+2
adverse+2
disruptions+1
Positive rising
leadership+4
progress+1
MD&A (Item 7)
11,645 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) to “Seaport Entertainment Group,” “SEG,” the “Company,” “we,” “us,” or “our” shall mean the assets, liabilities, and operating activities related to the Seaport Entertainment division of Howard Hughes Holdings Inc. (“HHH”) that was transferred to Seaport Entertainment Group Inc. on July 31, 2024 in connection with SEG’s separation from HHH (the “Separation”), as well as the assets, liabilities, and operating activities of Seaport Entertainment Group Inc. The following discussion should be read in conjunction with our Consolidated and Combined Financial Statements as of December 31, 2025 and 2024, and for the years ended December 31, 2025, 2024 and 2023 (“Consolidated and Combined Financial Statements”) and the related notes filed as part of this annual report on Form 10-K (“Annual Report”). This discussion contains forward-looking statements that involve risks, uncertainties, assumptions, and other factors, including those described in the section entitled “Risk Factors” and in this Annual Report. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of these factors. You are cautioned not to place undue reliance on this information which speaks only as of the date of this Annual Report. We are not obligated to update this information, whether as a result of new information, future events or otherwise, except as may be required by law.
Our business is dependent on discretionary consumer spending patterns and, as a result, could be materially, adversely impacted by an economic downturn, recession, financial instability, inflation or changes in consumer tastes and preferences.
Downturns in tenants’ businesses may reduce our revenues and cash flows.
We may be unable to renew leases, lease vacant space or re-lease space as leases expire.
The operational results of some of our assets may be volatile, especially the Seaport, which could have an adverse effect on our financial condition and results of operations.
Significant competition could have an adverse effect on our business.
The concentration of our assets and operations in New York City and Las Vegas exposes our revenues and the value of our assets to adverse changes in local economic conditions.
Some of our assets are subject to potential natural or other disasters.
Climate change, as well as scrutiny of climate change and other environmental or social matters may adversely affect our business.
Several of our properties and our tenants depend on frequent deliveries of food, alcohol and other supplies, which subjects us to risks of shortages, interruptions and price fluctuations for those goods.
We are exposed to risks associated with the development, redevelopment or construction of our properties in connection with our Fashion Show Mall Air Rights.
Our development projects may subject us to certain liabilities.
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Risks Related to Our Sports Assets
Our sports assets face intense and wide-ranging competition, which may have a material negative effect on our business, financial condition and results of operations.
Our business is dependent, in part, on the continued popularity and/or competitive success of the Aviators, which cannot be assured.
Financial Risks
We will be unable to develop, redevelop or expand our properties without sufficient capital or financing.
As of December 31, 2025, we had outstanding indebtedness of approximately $99.6 million, and in the future we may incur additional indebtedness. This indebtedness and changing interest rates could adversely affect our business, prospects, financial condition or results of operations and prevent us from fulfilling our financial obligations.
Inflation has adversely affected us and may continue to adversely affect us by increasing costs beyond what we can recover through price increases.
Regulatory, Legal and Environmental Risks
We are subject to extensive governmental regulation and our failure to comply with these regulations could adversely affect our business, prospects, financial condition or results of operations.
Development of properties entails a lengthy, uncertain and costly entitlement process.
Government regulations and legal challenges may delay the start or completion of the development of our properties, increase our expenses or limit our building or other activities.
Risks Related to Our Separation From and Relationship with HHH
Prior to the Spin-Off, we had no history of operating as a separate, publicly traded company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.
We may not achieve some or all of the expected benefits of the separation, and the separation may adversely affect our business.
If the Spin-Off failed to qualify as a distribution under Section 355 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), HHH stockholders could incur significant adverse tax consequences, and we could be required to indemnify HHH for certain tax consequences that could be material pursuant to indemnification obligations under the tax matters agreement.
Risks Related to our Common Stock
We cannot be certain that an active trading market for our common stock will be sustained, and the price of our common stock may fluctuate significantly.
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Risks Related to Our Business and Our Industry
Our portfolio has experienced, and is expected to continue to experience for the foreseeable future, significant negative operating cash flow and net losses. We require substantial cash, and, in the event that our management team is unsuccessful in achieving its business plan quickly enough, we may be forced to change our business plan, dispose of assets and/or take other actions, which could materially adversely affect our financial condition and results of operations. Such actions could also affect the tax treatment of the distribution to HHH and its stockholders, which could result in a material indemnification obligation pursuant to the tax matters agreement.
We have a history of incurring net losses, and we currently expect to experience negative operating cash flow for the foreseeable future. For the years ended December 31, 2025, 2024 and 2023, we incurred net losses of $116.7 million, $153.2 million, and $838.1 million ($128.6 million excluding an impairment charge of $672.5 million for our assets and $37.0 million for unconsolidated ventures), respectively. We had negative operating cash flows of $49.7 million, $52.7 million, and $50.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. Historically, our portfolio required support in the form of contributions from HHH to fund our operations and meet our obligations, with net transfers from HHH of $169.5 million and $125.3 million for the years ended December 31, 2024 and 2023, respectively. Following our Spin-Off from HHH, we no longer receive funding from HHH.
Additionally, our business model is cash intensive. The campus nature of our Seaport portfolio requires a higher level of overhead because expenses like cleaning and security are not directly correlated to the occupancy in one building. Instead, overhead costs are largely correlated to the activation of the entire district for retail, events, sponsorships and food and beverage operations. In addition, our management’s business plan depends significantly on leasing up our existing Seaport assets, which we expect will involve significant capital expenditures. For instance, the portfolio of assets within Landlord Operations at the Seaport was 90% leased or programmed and 55% occupied as of December 31, 2025, and we are focused on leasing this space. As of December 31, 2025, approximately 100% of our existing office space was leased or programmed and 92% was occupied in the Seaport. We are actively seeking to lease the remaining vacant space, which may involve converting space from office to hospitality uses. We are also focused on leasing other available retail space at the Seaport, of which 89% was leased or programmed and 51% was occupied as of December 31, 2025. Such leasing activities will require significant capital expenditures in addition to the substantial capital expenditures necessary for the ongoing operation of our portfolio.
We cannot offer any assurance as to our future financial results, and, as noted above, we currently expect to experience significant negative operating cash flow and net losses for the foreseeable future. While we believe that our existing cash balances and restricted cash balances will provide adequate liquidity to meet all of our current and long-term obligations when due, including our third-party mortgages payable, and adequate liquidity to fund capital expenditures and redevelopment projects, including our working capital and capital expenditure needs for the next twelve months, we cannot provide assurances that we will be able to secure additional funding on terms acceptable to us, or at all, if and when needed. Our inability to achievepositive cash flow from our current operating plans over time or to raise capital to cover any anticipated shortfall would have a material adverse effect on our business, financial condition, results of operations and ability to implement our business plan, and could have a material adverse effect on our ability to meet our obligations as they become due, which could force us to change our business plans, dispose of assets and/or take other action in order to continue to operate. In addition, such actions could affect the tax treatment of the distribution to HHH and its stockholders, and if so, we could be required to indemnify HHH for certain tax consequences that could be material pursuant to indemnification obligations under the tax matters agreement. See “—Risks Related to the Separation From and Our Relationship with HHH.”
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Our business depends in part on discretionary consumer spending patterns and, as a result, could be materially, adversely impacted by an economic downturn, recession, financial instability, inflation or changes in consumer tastes and preferences.
Our business depends in part on consumers spending discretionary dollars at our assets. Consumer spending has in the past declined, and may in the future decline at any time, for reasons beyond our control, including as a result of economic downturns or recessions, unemployment and consumer income levels, financial market volatility, credit conditions and availability, inflation, rising or elevated interest rates, tariffs and international trade policy, increases in theft or other crime, pandemics or other public health concerns and changes in consumer preferences. The risks associated with our businesses and described herein may become more acute in periods of a slowing economy or recession. In addition, instability and weakness in the U.S. and global economies, including due to the effects caused by disruptions to financial markets, high inflation, high interest rates, tariffs, recession, high unemployment, geopolitical events and the negative effects on consumer confidence and consumers’ discretionary spending, have in the past negatively affected, and may in the future materially negatively affect, our business and operations. For example, the restaurant and hospitality industries are highly dependent on consumer confidence and discretionary spending. Economic, political or social conditions or events that adversely impact consumers’ ability or willingness to dine out could, in turn, adversely impact our revenues related to JG and the Seaport. If such conditions or events were to persist for an extended period of time or worsen, our overall business, financial condition and results of operations may be adversely affected.
Downturns in tenants’ businesses may reduce our revenues and cash flows.
A tenant may experience a downturn in its business, due to a variety of factors including inflation, higher interest rates or supply chain issues, including those potentially caused from global trade uncertainty or tariffs, which may weaken its financial condition and result in its failure to make timely rental payments or result in defaults under our leases. The rate of defaults may increase from historical levels due to tenants’ businesses being negatively impacted by higher interest rates. In the event of default by a tenant, we may experience delays in enforcing our rights as the landlord and may incur substantial costs in protecting our investment. Tenant defaults, restructurings, rent deferrals, or requests for abatements could reduce our cash flows and cause us to incur costs associated with workout negotiations, litigation or re-tenanting.
We may be unable to renew leases, lease vacant space or re-lease space as leases expire.
We cannot provide any assurance that existing leases will be renewed, that we will be able to lease vacant space or re-lease space as leases expire or that our rental rates will be equal to or above current rental rates. The assets within Landlord Operations at the Seaport were 90% leased or programmed as of December 31, 2025, and we are focused on improving occupancy levels at these assets; however, no assurance can be given that we will be successful in leasing this space. If the average rental rates for our properties decrease, existing tenants do not renew their leases, vacant space is not leased or available space is not re-leased as leases expire, our financial condition, results of operations, cash flows, the trading price of our securities and our ability to satisfy our debt service obligations at the affected properties could be adversely affected.
We are subject to risks related to the Tin Building.
In February 2026, the Company, through a wholly owned indirect subsidiary, entered into a lease with Lux Entertainment, a contemporary art experience creator, to open its U.S. flagship location of the Balloon Museum in the Tin Building. In connection with entering into the lease and the commencement of the Company’s landlord obligations, The Tin Building by Jean-Georges ceased operations in February 2026. Although we, through a wholly owned indirect subsidiary, have entered into a lease with Lux Entertainment to occupy the Tin Building, Lux Entertainment will not be obligated to commence paying rent to us until after we have completed a substantial renovation of the Tin Building. Until such renovations are completed and Lux Entertainment begins paying rent, we will not receive rental income from the affected space. This period of reduced rental income could be longer than we currently anticipate and could have a material adverse effect on our cash flows, financial condition, and results of operations.
We may encounter unanticipated costs, delays, or other complications in connection with the renovation of the Tin Building. Construction and renovation projects are subject to a number of risks, including, without limitation: cost overruns
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resulting from inflation, supply chain disruptions, labor shortages, or increases in the cost of building materials; delays in obtaining or the inability to obtain necessary zoning, land use, building, occupancy, and other governmental permits and authorizations; changes in applicable laws, regulations, or building codes that may require modifications to the renovation plans or increase costs; discovery of structural deficiencies, hazardous materials, or other unforeseen conditions requiring remediation; disputes with or defaults by contractors, subcontractors, or other third parties involved in the renovation; adverse weather conditions or force majeure events that cause delays; and the potential for the project to take significantly longer than anticipated to complete. Any of these risks could result in increased costs, significant delays, or both, which could further extend the period during which we receive no rental income from the Tin Building and could materially and adversely affect our financial condition, results of operations, and cash flows.
In addition, the Tin Building is in close proximity to our other assets located in the Seaport. The closure of operations by the Tin Building by Jean-Georges could have a negative impact on our other assets in the Seaport. During the renovation and transition period, our other assets in the Seaport may also experience reduced foot traffic, diminished visibility, or other adverse effects that could impact the performance of those assets or the operations of the tenants at those assets. These factors could negatively impact our financial results.
Finally, although we have entered into a lease with Lux Entertainment, there can be no assurance that Lux Entertainment will ultimately occupy the Tin Building or perform its obligations under the lease, including the payment of rent. Lux Entertainment may experience adverse changes in its financial condition, business operations, or strategic priorities prior to or following the commencement of its lease term, which could result in a default under, or termination of, the lease. If Lux Entertainment fails to take occupancy of the Tin Building, defaults under its lease, or seeks to renegotiate the terms of its lease, we may be required to find another replacement tenant, which could result in additional renovation costs to re-configure the space, further periods of vacancy and reduced or no rental income, and potentially less favorable lease terms than those currently in place. We may also be unable to recover the capital invested in the renovations. Any such outcome could have a material adverse effect on our financial condition, results of operations, and cash flows.
The operational results of some of our assets may be volatile, especially the Seaport, which could have an adverse effect on our financial condition and results of operations.
The Seaport’s operational results have been and may in the future be volatile. The volatility is largely the result of: (i) seasonality; (ii) potential sponsorship revenue; (iii) potential event revenue; (iv) demand for rentable space; and (v) business operating risks from various start-up businesses. We own, either wholly or through joint ventures, and in some instances operate, several start-up businesses in the Seaport. As a result, the revenues and expenses of these businesses directly impact the net operating income of the Seaport, which could have an adverse effect on our financial condition and results of operations.
For example, seasonality has a significant impact on our Seaport business due to weather conditions, New York City tourism and other factors, with the majority of the Seaport’s revenue generated between May and October. Similarly, in Las Vegas, we are significantly impacted by the baseball season, with a significant portion of our Entertainment (previously Sponsorship, Events, and Entertainment) segment revenue generated between April and September. As a result, our total revenues tend to be higher in the second and third quarters, and our quarterly results for any one quarter or in any given fiscal year may not be indicative of results to be expected for any other quarter or year. Additionally, during periods of extreme temperatures (either hot or cold) or precipitation, we may experience significant reductions in consumer traffic, which could adversely affect our assets and our business as a whole.
Attendance, ticket sales, and ancillary spend at our venues and attractions are subject to seasonal patterns and are vulnerable to adverse weather, extreme heat, storms, wildfire smoke, flooding, and other climate-related events. Venues and attractions located in coastal, desert, forest, or high-altitude geographies face heightened exposure to climate-related disruptions, potential operating restrictions, increased insurance costs, and capital expenditures for resilience. Severe weather or natural disasters can lead to cancellations, reduced capacity, property damage, supply chain interruptions, and business interruption that may not be fully recoverable through insurance.
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Our operational results depend in part on our ability to secure attractive events, programming and content for certain of our venues and attractions .
Our operational results depend in part on our ability to secure attractive events, programming and content for certain of our venues and attractions. If we fail to source compelling live events, exhibitions, promoters, touring productions, artists or other offerings on commercially reasonable terms, or if our content underperforms audience expectations, our utilization, average ticket prices, attendance and revenues may decline. Shifts in consumer preferences, the availability and pricing of alternative entertainment options, labor actions affecting content creation or touring and the cost and complexity of producing and operating experiential formats could adversely impact our event mix and profitability.
Significant competition could have an adverse effect on our business.
The nature and extent of the competition we face depend on the type of asset. Because a significant portion of our existing portfolio consists of entertainment-related assets, these assets compete for consumers and their discretionary dollars with other forms of entertainment, leisure and recreational activities. This competition is particularly intense in Manhattan and in the Las Vegas area, where all of our assets are located. The success of our business depends in part on our ability to anticipate and respond quickly to changing consumer tastes, preferences and purchasing habits. Many of the entities operating competing businesses are larger and have greater financial resources, have been in business longer, or have greater name recognition, and as a result may be able to invest greater resources than we can in attracting consumers. Certain of our assets will depend on our ability to attract concerts and other events to our venues, and in turn the ability of performers to attract strong attendance.
JG, in which we own a 25% stake, competes in the restaurant industry with national, regional and locally-owned or operated restaurants, an industry characterized by the continual introduction of new concepts and subject to rapidly changing consumer preferences, tastes, trends and eating and purchasing habits. A substantial number of restaurants compete with JG for customers, consumer dollars, restaurant locations and qualified management and other restaurant staff.
Numerous residential and commercial developers, some with greater financial and other resources, compete with us in seeking resources for development and prospective purchasers and tenants. Competition from other real estate developers may adversely affect our ability to attract and retain experienced real estate development personnel or obtain construction materials and labor. These competitive conditions can adversely affect our results of operations and financial condition.
Additionally, there are numerous shopping facilities that compete with our operating retail properties in attracting retailers to lease space. In addition, retailers at these properties face continued competition from other retailers, including internet retailers. Competition of this type could adversely affect our results of operations and financial condition. In addition, we compete with other major real estate investors and developers, many of whom have lower costs of, and superior access, to capital for attractive investment and development opportunities.
The concentration of our assets and operations in New York City and Las Vegas exposes our revenues and the value of our assets to adverse changes in local economic conditions.
Our operations are concentrated in a limited number of geographic regions, largely Manhattan and the Las Vegas area. Our current and future assets and operations in these areas are generally subject to significant fluctuations caused by various factors that are beyond our control such as the regional and local economies, which may be negatively impacted by material relocation by residents, industry slowdowns, increased unemployment, lack of availability of consumer credit, levels of consumer debt, adverse weather conditions, natural disasters, climate change and other factors, as well as the local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods and the availability and creditworthiness of current and prospective tenants.
In addition, some of our assets and operations are subject to various other factors specific to those geographic areas. For example, tourism is a major component of the local economies in lower Manhattan and in the Las Vegas area, so our assets and operations in those areas are susceptible to factors that affect travel and tourism related to these areas, including
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cost and availability of air services and the impact of any events that disrupt air travel to and from these regions. Moreover, these assets and operations may be affected by risks such as acts of terrorism and natural disasters, including major wildfires, floods, droughts and heat waves, as well as severe or inclement weather, which could also decrease tourism activity.
Given that the majority of our revenue comes from the Seaport in New York City, we are also particularly vulnerable to adverse events (including acts of terrorism, threats to public safety, natural disasters, epidemics, pandemics, weather conditions, labor market disruptions and government actions) and economic conditions in New York City and the surrounding areas. For example, the Seaport’s operations and operating results were materially impacted by the COVID-19 pandemic and New York state and city laws and regulations regarding lockdowns and capacity restrictions. Declines or disruptions in certain industries, for example, the financial services or media sectors, may also have a significant adverse effect on the New York City economy or real estate market, which could disproportionately impact on our business.
Further, our assets and operations in the Las Vegas area are to some degree dependent on the gaming industry, which could be adversely affected by changes in consumer trends and preferences and other factors over which we have no control. The gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including online gaming platforms, online and land-based casinos, video lottery, sweepstakes and poker machines, many of which are located outside of Las Vegas. Such increased competition could have a negative impact on the local Las Vegas economy and result in an adverse effect on our assets and operations in the Las Vegas area. The success of our assets and operations in the Las Vegas area may also be negatively impacted by changes in temperature due to climate change, increased stress on water supplies caused by climate change and population growth and other factors over which we have no control.
If any or all of the factors discussed above were to occur and result in a decrease in the revenue derived from our assets and operations in any of these geographic regions, it would likely have a material adverse effect on our business, financial condition and results of operations.
Our Seaport assets primarily sit under a long-term ground lease from the City of New York.
Our Seaport assets primarily sit under a long-term ground lease from the City of New York that provides for an extension option that would extend its expiration from 2071 to 2120. The long-term success of our Seaport assets is largely based on our ability to maintain the ground lease in effect. If we fail to maintain the ground lease with the City of New York, our operations would be disrupted and it would likely have a material adverse effect on our business, financial condition and results of operations.
Some of our assets are subject to potential natural or other disasters.
Our assets are located in areas which are subject to natural or other disasters, including hurricanes, floods, wildfires, heat waves and droughts. We cannot predict the extent of damage that may result from such adverse weather events, which depend on a variety of factors beyond our control. Whether such events are caused or exacerbated by global climate changes or other factors, our assets in Manhattan, a coastal region, could be affected by increases in sea levels, the frequency or severity of hurricanes and tropical storms, or environmental disasters, and our assets in the Las Vegas area could be negatively impacted by changes in temperature or increased stress on water supplies. Additionally, adverse weather events can cause widespread property damage and significantly depress the local economies in which we operate and have an adverse impact on our business, financial condition and operations.
Climate change, as well as scrutiny of climate change and other environmental or social matters, may adversely affect our business.
As a result of climate change, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage or a decrease in demand for our assets located in the areas affected by these conditions. Should the impact of climate change be material in nature or occur for lengthy periods of time, our financial condition and results of operations would be adversely affected. In addition, many state and local governments are adopting or considering adopting regulations requiring that property owners and developers include in their development or
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redevelopment plans resiliency measures to address climate-change or other environmental or social risks. We may be required to incur substantial costs if such regulations apply to any of our properties. There is also increasing scrutiny of climate, human capital and other sustainability matters from various investors, consumers and other stakeholders, and our actual or perceived sustainability performance and disclosures may impact these stakeholders’ interest in our company or our real estate. Moreover, various policymakers, including the State of New York, have adopted or are considering adopting laws requiring disclosure of certain climate-related information, which may require additional costs for us to comply. However stakeholder, including regulator, expectations are not uniform and, at times, conflict. Any failure to successfully navigate stakeholder expectations, including compliance with laws or interpretations of such requirements, may result in reputational harm, loss of customers or employees, investor or regulatory engagement, or other adverse business impacts. Our tenants and suppliers may be subject to similar risks, which may indirectly impact us as well.
Water and electricity shortages could have an adverse effect on our business, financial condition and results of operations.
Drought conditions and increased temperatures—particularly in Las Vegas—could cause our assets to experience water and electricity shortages. The lack or reduced availability of electricity or water may make it more difficult or expensive for us to operate our businesses and obtain approvals for new developments and could limit, impair or delay our ability to develop or sell, or increase the cost of developing, our assets in the relevant areas.
If we are unable to make strategic acquisitions and develop and maintain strategic partnerships, our growth may be adversely affected. Even if we are able to make acquisitions or develop partnerships , we may not realize the expected benefit from such acquisitions and partnerships.
As part of our long-term business strategy, we intend to opportunistically seek out acquisitions and utilize strategic partnerships. There are no assurances, however, that attractive acquisition or strategic partnership opportunities will arise, or if they do, that they will be consummated, or that any needed additional financing for such opportunities will be available on satisfactory terms when required. Further, we may incur significant costs in connection with an acquisition or partnership, or in connection with any delay in completing an acquisition or entering into a partnership or termination of the applicable acquisition or partnership agreement, and the investment of such upfront costs may not be profitable.
Even if we are able to make acquisitions or develop partnerships, there is risk that such acquisitions or partnerships may not perform in accordance with our expectations, including results relating to: correctly assessing the quality of assets being acquired or the partnership being entered into; the cost, time and complexities required to complete the integration successfully; potential unknown liabilities associated with an acquisition or a partnership, including but not limited to those related to taxation issues; pending or threatenedlitigation or regulatory matters; performance shortfalls as a result of the diversion of management’s attention caused by completing an acquisition or entering into a partnership; or any expectation of benefit from certain operating synergies and/or efficiencies, including those related to the elimination of duplicative costs and the spreading of fixed costs across a larger asset base.
If we are unable to successfully integrate our acquisitions or partnerships into our business, we may never realize their expected benefits. With each acquisition or partnership, we may discover unexpected costs, liabilities for which we are not indemnified, delays, lower than expected cost savings or synergies, or incurrence of other significant charges, such as impairment of goodwill or other intangible assets and asset devaluation. We also may be unable to successfully integrate the diverse company cultures, retain key personnel, apply our expertise to new competencies, or react to adverse changes in industry conditions.
It is possible that the integration process related to acquisitions or partnerships could result in the disruption of our ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect our ability to maintain relationships with key counterparties. Integration efforts could divert management attention and resources, which could have an adverse effect on our financial condition and results of operations. Additionally, the operation of any acquired businesses or partnerships may adversely affect our existing profitability, and we may not be able to manage growth resulting from the acquisition or partnership effectively.
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Additionally, acquisition transactions and partnerships are frequently the subject of litigation or other legal proceedings, including actions allegingbreaches of fiduciary or other duties. If litigation or other legal proceedings are brought against us or against our board of directors in connection with any acquisition or partnership, we might not be successful in defendingagainst such proceedings. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our business, results of operations or financial condition, including through the possible diversion of our resources or distraction of key personnel.
We are party to numerous joint venture arrangements with strategic partners, and our business strategy may include entering into new joint venture arrangements, as well as expanding relationships with our existing strategic partners. Our joint venture arrangements expose us to risks related to control, conflicts of interest, financial reporting and counterparty risks.
We currently have entered and may enter into additional joint venture partnerships, such as with respect to (a) our 25% interest in JG, (b) the Lawn Club, and (c) the Fashion Show Mall Air Rights. Our joint venture partners may bring local market knowledge and relationships, development experience, industry expertise, financial resources, financing capabilities, brand recognition and credibility or other competitive advantages. In the future, we may not have sufficient resources, experience and/or skills to locate desirable partners, including in the event that we determine to expand our operations outside of our current locations in New York and Las Vegas. We also may not be able to identify and attract partners who want to conduct business in the locations where our operations are located or may be located in the future, and who have the assets, reputation or other characteristics that would enhance our growth strategies.
While we generally participate in making decisions for our jointly owned properties and assets, we might not always have the same objectives as the partner in relation to a particular asset, and we might not be able to formally resolve any issues that arise. In addition, actions by a partner may subject assets owned by the joint venture to liabilities greater than those contemplated by the joint venture agreements, be contrary to our instructions or requests or result in adverse consequences. In many instances we do not exercise control over decisions made with respect to our joint ventures or their assets, and decisions may be made that are detrimental to our interests. Furthermore, we have made, and expect to continue to make, investments in unconsolidated ventures that we do not control and account for under the equity method. We rely on the information, including financial information, prepared by these ventures to monitor our investments and prepare our financial statements. Errors in the financial statements or other information provided to us could lead to errors in our financial statements.
The bankruptcy or, to a lesser extent, financial distress of any of our joint venture partners could materially and adversely affect the relevant asset or assets. If this occurred, we would be precluded from taking some actions affecting the estate of the other investor without prior court approval which would, in most cases, entail prior notice to other parties and a hearing. At a minimum, the requirement to obtain court approval may delay the actions we would or might want to take. If the relevant joint venture through which we have invested in an asset has incurred recourse obligations, the discharge in bankruptcy of one of the other partners might result in our ultimate liability for a greater portion of those obligations than would otherwise be required.
Several of our assets and our tenants depend on frequent deliveries of food, alcohol and other supplies, which subjects us to risks of shortages, interruptions and price fluctuations for those goods.
The ability of several of our assets, including JG, and some of our tenants to maintain consistent quality service depends in part on their ability to acquire fresh, quality products from reliable sources. If there were any major shortages, interruptions or significant price fluctuations for certain fresh, quality products or if suppliers were unable to perform adequately or fail to distribute products or supplies to our properties or the properties of our tenants, or terminate or refuse to renew any contract with them, our business and results of operations could be adversely affected.
In addition, certain of our tenants purchase beer, wine and spirits from distributors who own the exclusive rights to sell such alcoholic beverage products in the geographic areas in which we are located. The continued ability to purchase certain brands of alcoholic beverages depends upon maintaining relationships with those distributors, of which there can be no assurance. If any of our or our tenants’ alcohol beverage distributors cease to supply them, they may be forced to
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offer brands of alcoholic beverage which have less consumer appeal, which could adversely affect our business and results of operations.
We are exposed to risks related to third-party ticketing platforms and payment processors.
We may rely on third-party ticketing platforms and payment processors for sales, settlement, marketing and data insights. Outages, integration failures, fee disputes, chargebacks or changes to platform policies could disrupt ticket sales and erode customer satisfaction. Refund policies and practices, particularly for cancellations or postponements, can expose us to liquidity pressures and reputational risk. Legislative or regulatory scrutiny of ticketing fees, resale markets, all-in pricing and disclosure practices could require changes to pricing or commercial terms that adversely affect our business, results of operations and financial condition.
Cybersecurity risks and incidents, such as a breach of the Company’s privacy or information security systems, or those of our vendors or other third parties, could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners and personally identifiable information of our employees on our networks. The collection and use of personally identifiable information are governed by federal and state laws and regulations. Privacy and information security laws continue to evolve and may be inconsistent from one jurisdiction to another. Compliance with all such laws and regulations may increase our operating costs and adversely impact our ability to market our properties and services.
Additionally, we rely on our information technology systems to be able to monitor and control our operations, adjust to changing market conditions and implement strategic initiatives. We own and manage some of these systems but also rely on third parties for a range of products and services. Any disruptions in or the failure of our own systems, or those managed and operated by third parties, to operate as expected could adversely affect our ability to access and use certain applications and could, depending on the nature and magnitude of the problem, adversely affect our operating results by limiting our ability to effectively monitor and control our operations, adjust to changing market conditions and implement strategic initiatives. The security measures that we and our vendors put in place cannot provide absolute security, and the information technology infrastructure we and our vendors use may be vulnerable to criminal cyber-attacks or data security incidents.
Any such incident could compromise our networks or our vendors’ networks (or the networks or systems of third parties that facilitate our business activities or our vendors’ business activities), and the information we or our vendors store could be accessed, misused, publicly disclosed, corrupted, lost or stolen, resulting in fraud, including wire fraud related to our assets, or other harm. Moreover, if a data security incident or breach affects our systems or our vendors’ systems, whether through a breach of our systems or a breach of the systems of third parties, or results in the unauthorized release of personally identifiable information, our reputation and brand could be materially damaged and we may be exposed to a risk of loss or litigation and possible liability, including, without limitation, loss related to the fact that agreements with our vendors, or our vendors’ financial condition, may not allow us to recover all costs related to a cyber-breach for which they alone are responsible or for which we are jointly responsible, which could result in a material adverse effect on our business, results of operations and financial condition.
Like many companies, we and our third-party vendors have been impacted by security incidents in the past and will likely experience security incidents of varying degrees. Privacy and information security risks have generally increased in recent years because of the proliferation of new technologies, such as ransomware, and the increased sophistication and activities of perpetrators of cyber-attacks. Further, there has been a surge in widespread cyber-attacks during and since the COVID-19 pandemic, and the use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches. There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls and procedures, will be fully implemented, complied with or effective in protecting our systems and information, and that we will not suffer a significant data security incident in the future, that unauthorized parties will not gain access to sensitive data stored on our systems or that any such incident will be discovered in a timely manner. Any failure in or breach of our information security systems, those of third-party service
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providers or a breach of other third-party systems that ultimately impacts our operational or information security systems as a result of cyber-attacks or information security breaches could result in a substantial harm to our business and results of operations.
Additionally, cyber-attacks perpetratedagainst our tenants, including unauthorized access to customers’ credit card data and other confidential information, could diminish consumer confidence and spending at our tenants, or negatively impact consumer perception of shopping at, dining at and otherwise utilizing our properties, all of which could materially and adversely affect our business, financial condition and results of operations.
Artificial intelligence and other machine learning techniques could increase competitive, operational, legal and regulatory risks to our business in ways that we cannot predict.
The use of AI by us and others, and the overall adoption of AI throughout society, may exacerbate or create new and unpredictable competitive, operational, legal and regulatory risks to our business. There is substantial uncertainty about the extent to which AI will result in dramatic changes throughout the world, and we may not be able to anticipate, prevent, mitigate or remediate all of the potential risks, challenges or impacts of such changes. These changes could potentially disrupt, among other things, our business model, strategies and operational processes. Some of our competitors may be more successful than us in the development and implementation of new technologies, including services and platforms based on AI, to improve their operations. If we are unable to adequately advance our capabilities in these areas, or do so at a slower pace than others in our industry, we may be at a competitive disadvantage.
If the data we, or third parties whose services we rely on, use in connection with the possible development or deployment of AI is incomplete, inadequate or biased in some way, the performance of our business could suffer. In addition, recent technological advances in AI both present opportunities and pose risks to us. Data in technology that uses AI may contain a degree of inaccuracy and error, which could result in flawed algorithms in various models used in our business. The volume and reliance on data and algorithms also make AI more susceptible to cybersecurity threats, including data poisoning and the compromise of underlying models, training data or other intellectual property. Our personnel or the personnel of our service providers could, without being known to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities. This could reduce the effectiveness of AI technologies and adversely impact us and our operations to the extent that we rely on the AI’s work product.
There is also a risk that AI may be misused or misappropriated by third parties we engage. For example, a user may input confidential information, including material non-public information or personally identifiable information, into AI applications, resulting in the information becoming a part of a dataset that is accessible by third-party technology applications and users, including our competitors. Further, we may not be able to control how third-party AI that we choose to use is developed or maintained, or how data we input is used or disclosed. The misuse or misappropriation of our data could have an adverse impact on our reputation and could subject us to legal and regulatory investigations or actions or create competitive risk.
In addition, the use of AI by us or others may require compliance with legal or regulatory frameworks that are not fully developed or tested, and we may face litigation and regulatory actions related to our use of AI. There has been increased scrutiny, including from global regulators, regarding the use of “big data,” diligence of data sets and oversight of data vendors. Our ability to use data to gain insights into and manage our business may be limited in the future by regulatory scrutiny and legal developments.
We are subject to health, safety and security risks in connection with our live entertainment offerings and venue operations.
Live entertainment and venue operations involve health, safety and security risks, including crowd management, alcohol-related incidents, onsite injuries and public safety threats. Any significant incident, whether occurring at our properties or within the broader industry, can reduce demand, prompt regulatory scrutiny, increase insurance and security costs and lead to litigation. We may face heightened expectations for safety technologies, training and protocols, and failure to implement or enforce robust measures could result in liability and reputational damage.
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Our brand and reputation could be harmed by negative publicity.
Our brand and reputation are critical to guest acquisition, sponsor relationships and talent partnerships. Negative publicity related to guest safety, pricing practices, accessibility, cancellations, data security or perceived insensitivity to community concerns could rapidly propagate, including via social media, and result in lost demand and stakeholder dissatisfaction. Our marketing effectiveness depends on third-party platforms and evolving algorithms, and restrictions on targeted advertising or changes in platform policies could reduce reach or increase acquisition costs.
We are subject to risks related to intellectual property.
We have in the past and will likely continue to rely on third-party intellectual property and licensing agreements in connection with our business. We may be unable to renew licenses on acceptable terms, or licensors may impose operating or standards that increase our costs. Allegations of intellectual property infringement, misappropriation or breach of license could result in litigation, damages or restrictions on our operations.
Global economic and political instability and conflicts, such as the conflicts in Venezuela, between Russia and Ukraine or in the Middle East, could adversely affect our business, financial condition or results of operations.
Our business could be adversely affected by unstable economic and political conditions within the U.S. and foreign jurisdictions and geopolitical conflicts, such as the conflicts in Venezuela, between Russia and Ukraine, and in the Middle East. While we do not have any customer or direct supplier relationships in these regions, the current military conflicts, and related sanctions, as well as export controls or actions that may be initiated by nations (e.g., potential cyberattacks, disruption of energy flows, etc.) and other potential uncertainties could adversely affect our supply chain by causing shortages or increases in costs for materials necessary for construction and/or increases to the price of gasoline and other fuels. In addition, such events could cause higher interest rates, inflation or general economic uncertainty, which could negatively impact our business partners, employees or customers, or otherwise adversely impact our business.
Some of our directors are involved in other businesses including real estate activities and public and/or private investments and, therefore, may have competing or conflicting interests with us.
Certain of our directors have and may in the future have interests in other real estate business activities and may have control or influence over these activities or may serve as investment advisors to, or directors or officers of other businesses. These interests and activities, and any duties to third parties arising from such interests and activities, could divert the attention of such directors from our operations. Additionally, certain of our directors are engaged in investment and other activities in which they may learn of real estate and other related opportunities in their non-director capacities. Our Code of Business Conduct and Ethics expressly provides, as permitted by Section 122(17) of the Delaware General Corporation Law (the “DGCL”), that our non-employee directors are not obligated to limit their interests or activities in their non-director capacities or to notify us of any opportunities that may arise in connection therewith, even if the opportunities are complementary to our businesses, provided that such opportunities are not in direct competition with our businesses. Accordingly, we have no expectation that we will be able to learn of or participate in such opportunities. If any potential business opportunity is expressly presented to a director exclusively in his or her director capacity, the director will not be permitted to pursue the opportunity, directly or indirectly through a controlled affiliate in which the director has an ownership interest, without the approval of a majority of the independent members of our board of directors.
Pershing Square is our largest stockholder and may exert influence over us that may be adverse to our best interests and those of our other stockholders.
As of December 31, 2025, Pershing Square Capital Management, L.P. (“Pershing Square”), through investment funds advised by it, beneficially owned approximately 39.3% of our outstanding common stock based on their Schedule 13F-HR filed on February 17, 2026. Accordingly, Pershing Square has the ability to influence our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, amendments to our Amended and Restated Certificate of Incorporation and amended and restated bylaws (the “Bylaws”) and the entering into of extraordinary transactions, and its interests may not in all cases be aligned with other stockholders’ interests.
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In the future, Pershing Square could acquire additional shares of our common stock. If Pershing Square’s ownership of our common stock increases to more than 50%, we would be considered a “controlled company” under the corporate governance rules of the NYSE, which would allow us to opt out of certain NYSE corporate governance requirements, including the requirements that: (1) a majority of the board of directors consist of independent directors; (2) the compensation of our officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors; and (3) director nominees be selected or recommended by a majority of the independent directors or by a nominating committee composed solely of independent directors. In addition, Pershing Square would be able to control virtually all matters requiring stockholder approval, including the election of our directors.
Pursuant to the Investor Rights Agreement, as long as Pershing Square owns at least 10% of the total outstanding shares of our common stock, Pershing Square will be entitled to nominate at least one director to our board of directors and, if we increase the size of the board to larger than five directors, as many nominees as represent at least 20% of the total number of directors then on the board. These board nomination rights are also contained in our Amended and Restated Certificate of Incorporation. Additionally, we have granted a waiver of the applicability of the provisions of Section 203 of the DGCL such that Pershing Square, which owned approximately 39.3% of the outstanding shares of our common stock as of December 31, 2025, may increase its position in our common stock without being subject to Section 203’s restrictions on business combinations. See “—Risks Related to Our Common Stock—Anti-takeover provisions in our Amended and Restated Certificate of Incorporation, our Bylaws, Delaware law, the Investor Rights Agreement and certain other agreements may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.”
This concentration of ownership, and the potential for further concentration of ownership, of our outstanding common stock held by Pershing Square, as well as its rights under the Investor Rights Agreement and the Amended and Restated Certificate of Incorporation, could make certain transactions more difficult or impossible without its support. The interests of Pershing Square, or any of its respective affiliates could conflict with or differ from the interests of our other stockholders. For example, the concentration of ownership held by Pershing Square could allow it to influence our policies and strategy and could delay, defer or prevent a change of control or impede a merger, takeover or other business combination that may otherwise be favorable to us and our other stockholders. Pershing Square or an affiliate thereof may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. This control may also adversely affect the market price of our common stock.
Our business is subject to risks associated with our investments in real estate assets and with trends in the real estate industry.
Our economic performance and the value of our real estate assets are subject to the risk that our properties may not in the future generate revenues sufficient to meet our operating expenses or other obligations, which has been the case with our portfolio in recent years. A future deficiency of this nature would adversely impact our financial condition, results of operations, cash flows, the trading price of our securities and our ability to satisfy our debt service obligations.
Because real estate is illiquid, we may not be able to sell properties when in our best interest.
Real estate investments generally cannot be sold quickly. The capitalization rates at which properties may be sold could be higher than historic rates, thereby reducing our potential proceeds from the sale. Consequently, we may not be able to alter our portfolio promptly in response to changes in economic or other conditions. All of these factors reduce our ability to respond to changes in the performance of our investments and could adversely affect our business, financial condition and results of operations.
Our business is subject to risks associated with sponsorships.
Our sponsorship business can be cyclical and sensitive to brand safety concerns, market conditions and the performance of our events or assets. Shifts in advertiser priorities, the reallocation of advertiser budgets to digital channels or reputational considerations could reduce renewals or pricing, which could adversely affect our business, financial condition and results of operations. If our event reach or demographics are less attractive to sponsors over time, we may face higher activation costs, lower revenues or lost customers.
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We are exposed to risks associated with the development, redevelopment or construction of our properties, including in connection with our Fashion Show Mall Air Rights.
One of our assets is the Fashion Show Mall Air Rights, which is a contractual right to form a joint venture to hold an 80% managing member interest in a to-be-formed entity that would own the air rights above the Fashion Show mall in Las Vegas, as well as the exclusive right to develop such air rights. Various local, state and federal statutes, ordinances, rules and regulations concerning building, health and safety, site and building design, environment, zoning, sales and similar matters apply to and/or affect the real estate development industry. Initiation of development activities in connection with Fashion Show Mall Air Rights are complex processes and subject to numerous factors and contingencies, including market conditions, financing and additional approvals. We are currently evaluating all strategic alternatives before proceeding further with any development activities. There can be no guarantee of when or if this potential development will be completed or, if it is completed, reach subsequent stabilization or achieveprofitability.
Our development, redevelopment and construction activities, including in connection with our Fashion Show Mall Air Rights, expose us to risks such as:
inability to obtain construction financing for the development or redevelopment of properties;
inability to obtain or renew permits or approvals, and the continued effectiveness of permits already granted or approvals already obtained;
increased construction costs for a project that exceeded our original estimates due to increases in materials, labor or other costs, which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increased construction costs;
supply chain issues and increased difficulty for workforce recruitment which may lead to construction delays and increased project development costs;
costs and delays associated with compliance with legal and regulatory requirements;
claims for construction defects after a property has been developed;
poor performance or nonperformance by any of our joint venture partners or other third parties on whom we rely;
health and safety incidents and site accidents;
compliance with environmental laws and land use controls;
easement restrictions which may impact our development costs and timing;
compliance with building codes and other local regulations;
delays and increased expenses as a result of legal challenges, whether brought by governmental authorities, our competitors, local residents or private parties;
changes to tax rules, regulations and/or incentives; and
the inability to secure tenants necessary to support commercial projects.
For example, we have in the past been, and may again in the future become, subject to various lawsuits in connection with our development activities. We cannot guarantee that the outcome of any litigation related any of our development, redevelopment and construction activities will not result in substantial costs or delays, divert our management’s attention and resources or otherwise harm our business.
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In connection with any pursuit of development of the Fashion Show Mall Air Rights, we may encounter additional risks in addition to the foregoing risks. These additional risks may include, among others: the inability to reach agreement with our counterparty on the contractual terms of the proposed joint venture that would formalize the ownership structure of the air rights; unwillingness of the owner of the Fashion Show mall to comply with the terms of existing contractual agreements and/or cooperate with such development; the inability to develop such rights based upon then-existing conditions relating to the structure of the existing Fashion Show mall, rights or potential rights (whether known or unknown) of tenants or other parties in possession of any portion of the Fashion Show mall or otherwise, which may require negotiation and further costs; costs and delays associated with the required cooperation between the parties, which may contribute to potential development being considered economically infeasible; and costs and delays associated with, or the inability to successfully obtain, the legal subdivision of the development rights from the fee ownership interest in the real property.
If any of the aforementioned risks were to occur during the development, redevelopment or construction of our properties, including in connection with our Fashion Show Mall Air Rights, it could have a substantial negative impact on the project’s success and result in a material adverse effect on our financial condition or results of operations.
Our development projects may subject us to certain liabilities.
We may hire and supervise third-party contractors to provide construction, engineering and various other services for wholly-owned development projects or development projects undertaken by real estate ventures in which we hold an equity interest. Certain of these contracts are structured such that we are the principal rather than the agent. As a result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction defects, negligent performance of work or other similar actions by third parties we have engaged.
Adverse outcomes of disputes or litigation could negatively impact our business, results of operations and financial condition, particularly if we have not limited the extent of the damages to which we may be liable, or if our liabilities exceed the amounts of the insurance that we carry. Moreover, our tenants may seek to hold us accountable for the actions of contractors because of our role even if we have technically disclaimed liability as a legal matter, in which case we may determine it necessary to participate in a financial settlement for purposes of preserving the tenant or customer relationship or to protect our corporate brand. Acting as a principal may also mean that we pay a contractor before we have been reimbursed by our tenants or have received the entire purchase price of a condominium unit from the purchaser. This exposes us to additional risks of collection in the event of a bankruptcy, insolvency or a default by a tenant, contractor or vendor. The reverse can occur as well, where a contractor we have paid files for bankruptcy protection or commits fraud with the funds before completing a project which we have funded in part or in full.
A pandemic, epidemic or health crisis, such as the COVID-19 pandemic could have a material adverse effect on our business, financial performance and condition, operating results and cash flows.
Beginning in 2020, the COVID-19 pandemic disrupted our business, as well as the businesses of our tenants, and any future pandemic, epidemic or similar health crisis, could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
The COVID-19 pandemic negatively impacted our business in 2020 across all of our operations. Landlord Operations were negatively impacted by delayed leasing of vacant space as well as rental abatements from existing tenants. Additionally, certain of our tenants were forced to permanently close. Our Entertainment (previously Sponsorship, Events, and Entertainment) and Hospitality segments were significantly impacted by measures put in place by New York City that were intended to control the spread of disease, including mandated closures and restrictions upon opening, and the timing of the peak of the pandemic resulted in the full cancellation of our Summer Concert Series in 2020. Our sponsorship business was also negatively impacted by disruptions to our hospitality and events businesses, as sponsors were unable to fulfill their contractual obligations. As a result, many agreements were negotiated and extended during this time.
Our sports operations were also materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and MLB. The success of our baseball operations relies heavily on ticket sales and attendance figures. Attendance further impacts our concession and merchandise revenue and indirectly influences the number of
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events hosted at the Las Vegas Ballpark, as well as sponsor growth and engagement. MLB first postponed and eventually cancelled the minor league baseball season as a result of the COVID-19 pandemic, and, as a result, our business operations related to the Aviators were suspended. Our related special events and sponsorships were also negatively impacted. Our sports operations continued to be impacted by government-mandated assembly restrictions during fiscal year 2021 and temporary declines in attendance related to COVID-19 during certain months of fiscal year 2022.
Our and our tenants’ businesses have been, and could in the future be, materially and adversely affected by the risks, or the public perception of the risks, related to pandemics or other health emergencies, like the COVID-19 pandemic, and the government’s reaction thereto, especially if there is a negative impact on customers’ willingness or ability to frequent such businesses. Our business is also particularly sensitive to discretionary business and consumer spending. A pandemic such as COVID-19, or the fear of another pandemic or other public health emergency, has in the past, and could in the future, impede economic activity in impacted regions or globally over the long-term, leading to a decline in discretionary spending on entertainment and leisure activities, including declines in domestic and international tourism, which would result in long-term effects on our business. To the extent a pandemic, epidemic or other similar health crisisadversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risks Factors” section and elsewhere in this Annual Report.
Risks Related to Our Sports Assets
Our sports assets face intense and wide-ranging competition, which may have a material negative effect on our business, financial condition and results of operations.
The success of a sports business, like baseball-related assets, is dependent upon the performance and/or popularity of its franchise. The Aviators compete, in varying respects and degrees, with other live sporting events, and with sporting events delivered over television networks, radio, the internet and online services, streaming devices and applications and other alternative sources. For example, the Aviators compete for attendance and advertising with a wide range of alternatives available in the Las Vegas metropolitan area. During some or all of the baseball season, the Aviators face competition, in varying respects and degrees, from professional football (including the NFL’s Las Vegas Raiders), professional hockey (including the NHL’s Las Vegas Golden Knights), professional soccer (including the USL’s Las Vegas Lights), collegiate sporting events such as UNLV athletic teams and other NCAA competitions, women’s professional basketball (including the WNBA Las Vegas Aces), other sporting events held in the Las Vegas metropolitan area, and other leisure-time activities and entertainment options in Las Vegas (including concerts, music festivals and other live performances).
As a result of the large number of options available, we face strong competition for the Las Vegas metropolitan area sports fan base. We must compete with these other sports teams and sporting events, in varying respects and degrees, including on the basis of the quality of the team we field, its success in the leagues in which it competes, our ability to provide an entertaining environment at our games, prices we charge for tickets and the viewing availability of our team’s games on multiple media alternatives. Given the nature of sports, there can be no assurance that we will be able to compete effectively, including with companies that may have greater resources than us, and as a consequence, our business and results of operations may be materially negatively affected.
Additionally, on November 16, 2023, the thirty owners of MLB teams unanimously voted to approve the move by the Athletics to Las Vegas in 2028. In April 2024, the Athletics announced that they had signed a lease to play the 2025 through 2027 seasons in Sacramento before their planned move to Las Vegas beginning in the 2028 season. There can be no assurance that the Athletics will move to Las Vegas at all or that we will achieve any potential benefits of such a move. A major league baseball team located in Las Vegas or Summerlin could also compete with the Aviators for their existing fans. As a result, the Athletics’ move could even result in a material negative impact on the Aviators if this competition results in a decline in Aviators attendance.
The success of our business is dependent on our ability to attract attendance to the Aviators’ home games. Our business also competes with other leisure-time activities and entertainment options in the Las Vegas metropolitan area, such as television, motion pictures, concerts, music festivals and other live performances, restaurants and nightlife venues, casinos,
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the internet, social media and social networking platforms and online and mobile services, including sites for online content distribution and online gambling, video on demand and other alternative sources of entertainment.
Our business is dependent, in part, on the continued popularity and/or competitive success of the Aviators, which cannot be assured.
Our financial results depend in part on the Aviators remaining popular with their fan base, and, in varying degrees, on the team achieving on-field success, which can generate fan enthusiasm that results in sustained ticket, premium seating, suite, sponsorship, food and beverage and merchandise sales during the season. In addition, success in the regular season may qualify the Aviators for participation in post-season playoffs, which provides us with additional revenue by increasing the number of games played by the Aviators and, more importantly, by generating increased excitement and interest in the Aviators, which can help drive a number of our revenue streams, including by improving attendance and sponsorships, in subsequent seasons. In addition, league, team and/or player actions or inactions, including protests, may impact the popularity of the Aviators or the league in which it plays. There can be no assurance that the Aviators will maintain continued popularity or compete in post-season play in the future.
Baseball decisions made by the parent club, especially those concerning player selection and salaries, may have a material negative effect on our business and results of operations .
Creating and maintaining the Aviators’ popularity and/or on-field competitiveness is relevant to the success of our business. The Aviators are an affiliate of the Athletics and get their players designated to them by the Athletics (as the parent club) from among the various players under contract with the parent club. Accordingly, efforts to improve our revenues and earnings from operations from period-to-period may be secondary to actions that the parent club’s management believes will generate long-term growth and asset value creation. The competitive position of the Aviators depends primarily on the Athletics’ ability to obtain, develop and retain talented players, coaches and team executives, for whom it competes with other MLB teams and over which the Aviators have no control. The Athletics’ efforts in this regard may include, among other things, trading for highly compensated players, signing draft picks, free agents or current players to new contracts, engaging in salary arbitration or contract renegotiation with existing players, terminating and waiving players and replacing coaches and team executives, and any of these actions can impact the competitive strength of the Aviators.
There can be no assurance that the Aviators (or their parent club) will be able to retain players upon expiration of their contracts or sign and develop talented players to replace those who are called up to the parent club, leave for other teams, retire or are injured, traded or released. Additionally, there can be no assurance that any actions taken by the Athletics will successfully generate and increase long-term growth and asset value creation for the Aviators.
The actions of MLB Professional Development Leagues (“MLB PDL”) may have a material negative effect on our business and results of operations.
The governing body of minor league baseball, MLB Professional Development Leagues, has certain rights under certain circumstances to take actions that they deem to be in the best interests of the league, which may not necessarily be consistent with maximizing our results of operations. Decisions by MLB PDL could have a material negative effect on our business and results of operations. For example:
The Aviators’ affiliation with the Athletics is dependent on maintaining a license from MLB PDL. The current license with MLB PDL expires after the 2030 minor league baseball season, and there is no guarantee that MLB PDL will offer the Aviators an opportunity to renew that license.
MLB PDL may assert control over certain matters, under certain circumstances, that may affect our revenues such as ticket tax, advertising inventory, and the licensing of (and royalty rates paid for) the rights to produce and sell merchandise bearing the logos and/or other intellectual property of the Aviators and the league.
MLB PDL imposes certain rules that define, under certain circumstances, the territories in which the Aviators operate. MLB and MLB PDL have also asserted control over other important decisions, such as the length and
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format of, and the number of games in, the playing season, preseason and playoff schedules, admission of new members, franchise relocations, labor relations with the players associations, etc. Changes to these matters could have a material negative effect on our business and results of operations.
MLB PDL imposes certain restrictions on the ability of owners to undertake certain types of transactions in respect of teams, including a change in ownership. In certain instances, these restrictions could impair our ability to proceed with a transaction that is in the best interest of the Company and its stockholders if we were unable to obtain any required league approvals in a timely manner or at all.
MLB PDL has imposed a number of rules, regulations, guidelines, bulletins, directives, policies and agreements upon its teams. Changes to these provisions may apply to the Aviators and its personnel, and/or the Company as a whole, regardless of whether we agree or disagree with such changes, have voted against such changes or have challenged them through other means. It is possible that any such changes could materially negatively affect our business and results of operations to the extent they are ultimately determined to bind the Aviators. MLB PDL asserts significant authority to take certain actions under certain circumstances. Decisions by MLB PDL, including on the matters described above, may materially negatively affect our business and results of operations. MLB PDL’s governing documents and our agreements with MLB PDL purport to limit the manner in which we may challenge decisions and actions.
Injuries to, and illness of, players on our sports team could hinder our success.
To the degree that our financial results are dependent on the Aviators’ popularity and/or on-field success, the likelihood of achieving such popularity or competitive success may be substantially impacted by serious and/or untimelyinjuries to or illness of key players. Even if we take health and safety precautions and comply with government protocols, our players may nevertheless contract serious illness and, as a result, the Aviators’ ability to participate in games may be substantially impacted.
Financial Risks
As of December 31, 2025, we had outstanding indebtedness of approximately $99.6 million, and in the future we may incur additional indebtedness. This indebtedness and changing interest rates could adversely affect our business, prospects, financial condition or results of operations and prevent us from fulfilling our financial obligations.
As of December 31, 2025, we had outstanding indebtedness of approximately $99.6 million. This indebtedness, and any future indebtedness we incur in the future could have the following consequences:
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, debt service requirements, execution of our business strategy or finance other general corporate requirements;
requiring us to make non-strategic divestitures, particularly when the availability of financing in the capital markets is limited;
requiring a substantial portion of our cash flow to be allocated to debt service payments instead of other business purposes, thereby reducing the amount of cash flow available for working capital, capital expenditures, acquisitions, dividends and other general corporate purposes;
increasing our vulnerability to general adverse economic and industry conditions, including decreases in the market value of pledged assets as well as increases in interest rates, particularly with respect to any variable rate indebtedness;
limiting our ability to capitalize on business opportunities, reinvest in and develop properties and to react to competitive pressures and adverse changes in government regulations;
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placing us at a disadvantage compared to other less leveraged competitors;
limiting our ability, or increasing the costs, to refinance our indebtedness;
restricting our ability to operate our business due to certain restrictions in the debt agreements; and
resulting in an event of default if we fail to satisfy our obligations under our indebtedness, which default could result in all or part of our indebtedness becoming immediately due and payable and, in the case of any secured debt, could permit the lenders to foreclose on our assets securing such debt.
During periods of rising interest rates, such as have been experienced in the recent past, interest expense on our variable rate debt will increase unless we effectively hedge our interest rate exposure. Such increases could be significant, particularly if we incur substantially more variable rate debt, and could materially and adversely affect our financial condition, results of operations, cash flows and ability to service our debt, invest in our business or access additional capital. For additional information about our debt agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources.”
The agreements governing our existing indebtedness contain restrictions that may limit our ability to operate our business.
We are party to a mortgage with respect to the ballpark. In 2018, in order to finance the Las Vegas Ballpark, Clark County Las Vegas Stadium, LLC (“CCLVS”), then a subsidiary of HHH, entered into a note purchase agreement pursuant to which it issued a 4.92% senior secured note to Wells Fargo Trust Company, National Association, as trustee, in the principal amount of $51.2 million (the “Las Vegas Note Purchase Agreement”). The Las Vegas Note Purchase Agreement is secured by a deed of trust (the “Las Vegas Ballpark Deed of Trust”) and, among other things, a lien on the Las Vegas Ballpark (pursuant to the Las Vegas Ballpark Deed of Trust) and certain of CCLVS’s interests in agreements related to the Las Vegas Ballpark.
Our Las Vegas Ballpark Deed of Trust contains certain restrictions that may limit our ability to operate our business as well as representations and covenants customary for an agreement of this type, including financial covenants related to maintenance of loan-to-value ratios with respect to the collateral. This agreement also contains customary events of default and termination events. These restrictions limit our ability to, among other things:
incur indebtedness or issue equity;
create certain liens;
pay dividends on, redeem or repurchase capital stock or make other restricted payments;
make investments;
consolidate, merge or transfer all, or substantially all, of our assets;
sell-transfer, exchange, assign, pledge or otherwise dispose of equity;
enter into or amend lease or other agreements or transactions without consent;
enter into transactions with our affiliates; and
create, organize or establish subsidiaries.
Additionally, our debt agreements also contain various restrictive covenants, including minimum net worth requirements, minimum liquidity requirements, maximum leverage ratios, limitations on our ability to form subsidiaries
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and limitations on our ability to amend our governing documents. The restrictions under the debt agreements could limit our ability to finance our future operations or capital needs, make acquisitions or pursue available business opportunities.
We may be required to take action to reduce our debt or act in a manner inconsistent with our business objectives and strategies to meet such ratios and satisfy such covenants. Events beyond our control, such as changes in economic and business conditions, may affect our ability to do so. We may not be able to meet the ratios or satisfy the covenants in our debt agreements, and we cannot provide any assurance that our lenders will waive any failure to do so. A breach of any of the covenants in, or our inability to maintain the required financial ratios under, our debt agreements would likely result in a default under such debt agreements, which may accelerate the principal and interest payments of the debt and, if such debt is secured, result in the foreclosure on certain of our assets that secure such debt. Any such defaults could materially impair our financial condition and liquidity. In addition, if the lenders under any of our debt agreements or other obligations accelerate the maturity of those obligations, we cannot assure you that we will have sufficient assets to satisfy our obligations under such obligations.
Inflation has adversely affected us and may continue to adversely affect us by increasing costs beyond what we can recover through price increases.
The U.S. economy has experienced elevated inflation recently. Inflation can adversely affect us by increasing, among other things, the cost of land, and materials and labor, which we have experienced in fiscal years 2024 and 2025 due to elevated inflation rates. Although we believe that sources of supply for raw materials and components are generally adequate, it is difficult to predict what effects price increases may have in the future. In recent years we have experienced increases in the prices of labor and materials above the general inflation rate, especially in New York City with respect to labor costs. Our inability to offset increasing costs due to inflation through price increases to customers could have a material adverse effect on our results of operations, financial conditions and cash flows.
We will be unable to develop, redevelop or expand our properties without sufficient capital or financing.
Our business objectives include potential development, redevelopment and expansion opportunities, including potential significant future development activity in connection with the Fashion Show Mall Air Rights. We will not be able to pursue these initiatives if we cannot obtain sufficient capital or financing, which may include debt capital from lenders or the capital markets (which may be secured or unsecured), additional equity capital, cash from asset sales or government incentives, such as tax increment financing. We may be unable to obtain financing, or obtain financing on economically attractive terms, due to numerous factors, including our financial condition, results of operations or market volatility and uncertainty. Similarly, we may be unable to obtain mortgage lender and property partner approvals that may be required for any such development, redevelopment or expansion opportunity. We may abandon development, redevelopment or expansion activities already underway if we are unable to secure additional attractively priced capital to finance the completion of such activities. This may result in charge-offs of costs previously capitalized. In addition, if development, redevelopment, expansion or reinvestment projects are unsuccessful, our investments in such projects may not be recoverable, in full or in part, from future operations or sales resulting in impairment charges.
Some potential losses are not insured.
We carry comprehensive liability, fire, flood, earthquake, terrorism, cyber, extended coverage and rental loss insurance on all of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are some types of losses, including lease and other contract claims, which generally are not insured. If an uninsuredloss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital invested in a property, as well as the anticipated future revenue from the property. If this happens, we might remain obligated for any mortgage debt or other financial obligations related to the property. In addition, insurance premiums could increase materially, and insurers could attempt to impose conditions or reduce limits following industry losses or regional events.
We are subject to risks associated with hedging arrangements.
We may enter into interest rate swap agreements and other interest rate hedging contracts, including caps and cash settled forward starting swaps, to mitigate or reduce our exposure to interest rate volatility or to satisfy lender requirements.
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These agreements expose us to additional risks, including a risk that counterparties of these hedging and swap agreements will not perform. There also could be significant costs and cash requirements involved to fulfill our obligations under a hedging agreement. In addition, our hedging activities may not have the desiredbeneficial impact on interest rate exposure and have a negative impact on our business, financial condition and results of operations.
Regulatory, Legal and Environmental Risks
We are subject to extensive governmental regulation and our failure to comply with these regulations could adversely affect our business, prospects, financial condition or results of operations.
Our business is subject to the general powers of federal, state and local governments. For example, we hold liquor licenses at certain of our venues and are subject to licensing requirements with respect to the sale of alcoholic beverages in the jurisdictions in which we serve those beverages. Failure to receive or retain, or the suspension of, liquor licenses or permits could interrupt or terminate our ability to serve alcoholic beverages at the applicable venue and could have adversely affect our business, financial condition and results of operations. Additional regulation relating to liquor licenses may limit our activities in the future or significantly increase the cost of compliance, or both. In the jurisdictions in which our venues are located, we are subject to statutes that generally provide that serving alcohol to a visibly intoxicated or minor patron is a violation of the law and may provide for strict liability for certain damages arising out of such violations. Our liability insurance coverage may not be adequate or available to cover any or all such potential liability.
We are also subject to data privacy and protection laws, regulations, policies and contractual obligations that apply to the collection, transmission, storage, processing and use of personal information or personal data, which, among other things, impose certain requirements relating to the privacy and security of personal information. The variety of laws and regulations governing data privacy and protection, and the use of the internet as a commercial medium, are rapidly evolving, extensive and complex, and may include provisions and obligations that are inconsistent with one another or uncertain in their scope or application. The data protection landscape continues to evolve in the United States. As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. Further, there are several legislative proposals in the United States, at both the federal and state level, that could impose new privacy and security obligations. We cannot yet determine the impact that these future laws and regulations may have on our business. As new privacy- and security-related laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for non-compliance with such laws and regulations, may increase. In addition, governmental authorities and private litigants continue to bring actions against companies for online collection, use, dissemination and security practices that are unfair or deceptive. We may incur significant legal expenses or reputational damage for data privacy or security claims regardless of whether we are found to be liable.
Our business is subject to a variety of other laws and regulations, including licensing, permitting and similar requirements; laws related to ticketing practices; working conditions, labor, immigration and employment laws; tax regulations; and health, safety and sanitation requirements. In addition, our business may be subject to future laws and regulations in these and other areas, which may create incremental and new compliance obligations.
Any changes to the legal and regulatory framework applicable to our business could have an adverse impact on our business, and our failure to comply with applicable governmental laws and regulations, or to maintain necessary permits or licenses, could result in liability or government actions that could adversely affect our business and results of operations.
Changes in local political leadership, ballot initiatives and policy priorities could adversely affect our operations.
Changes in local political leadership, ballot initiatives and policy priorities could adversely affect our operations. Our business depends in part on approvals, policies and enforcement practices adopted by city and other local governments, related agencies and other organizations affiliated with or related to such cities and localities. Elections that result in new mayors, city council majorities or agency heads, as well as ballot initiatives and referenda, can lead to changes in permitting standards, licensing conditions, zoning interpretations, enforcement intensity and operating restrictions. Any such changes could interfere with our operations, increase our costs or require changes to our business model. If we are unable to
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anticipate or adapt to these shifts, our business, financial condition and results of operations could be materially adversely affected.
Our business is subject to risks associated with discretionary decisions by local governments, planning commissions and neighborhood bodies.
Our operations require determinations, permits and approvals that are subject to discretion by planning commissions, city councils and neighborhood bodies. Local governments may adopt or reinterpret zoning codes, impose moratoria, enact stricter environmental or historic-preservation standards or require additional community benefits. These actions can extend approval timelines, increase costs, reduce project density or permitted uses or render projects or operations infeasible. Adverse outcomes in New York or Las Vegas in particular could materially impair asset values and adversely affect our financial condition and results of operations.
Failure to obtain, maintain or renew required permits and licenses could adversely affect our operations.
Our operations require numerous permits and licenses, including with respect to occupancy, building, entertainment, alcohol service, food handling and outdoor use. Shifts in political priorities, constituent opposition or leadership changes can result in permits or licenses not being granted, not being renewed, being revoked or being renewed on materially worse terms, including fee increases, operating restrictions or geographic exclusions. Failure to obtain, maintain, or renew permits and licenses, or changes in underlying standards, could delay openings, restrict our operations or result in fines and penalties. Alcohol licensing carries strict compliance responsibilities, and violations by us or our vendors could trigger suspensions, revocations or civil liability.
We may be subject to increased compliance costs to comply with new and contemplated government regulations relating to energy standards and climate change.
A variety of legislation is being enacted, or considered for enactment, at the federal, state and local levels relating to energy and climate change. This legislation relates to items such as carbon dioxide emissions control and building codes that impose energy efficiency standards. For example, New York City has adopted Local Law 97, which requires individual, or certain groups of, buildings over a certain size to meet new energy efficiency and greenhouse gas emissions limits, with stricter limits scheduled to come into effect in 2030. New building code requirements that impose stricter energy efficiency standards could significantly increase our cost to construct buildings. Such environmental laws may affect, for example, how we manage storm water runoff, wastewater discharges and dust; how we develop or operate on properties on or affecting resources such as wetlands, endangered species, cultural resources, or areas subject to preservation laws; and how we address contamination. As climate change concerns continue to grow among certain constituencies, legislation and regulations of this nature may continue and may make compliance more costly. In addition, it is possible that some form of expanded energy or water efficiency legislation may be passed by certain bodies, which may, significantly increase our costs of building properties. We may be required to apply for additional approvals or modify our existing approvals because of changes in local circumstances or applicable law.
Energy-and water-related initiatives affect a wide variety of companies throughout the U.S. and the world. Because our potential future development activities could be heavily dependent on significant amounts of raw materials, such as lumber, steel and concrete, energy-related initiatives could have an indirect adverse impact on our operations to the extent the manufacturers and suppliers of our materials are burdened with expensive cap and trade and similar energy-related taxes and regulations. Noncompliance with environmental laws could result in fines and penalties, obligations to remediate, permit revocations and other sanctions.
Climate resiliency measures in the vicinity of our assets could materially and adversely affect our operations, access, costs, development plans and the value of our assets.
City and other local governments, related agencies and other organizations affiliated with or related to such cities and localities have in the past and could in the future undertake climate resiliency measures, including in areas where certain of our assets are located. Climate resiliency measures could include significant flood control or related infrastructure, such as perimeter walls, berms, raised grades, hardscape or shoreline alterations, or other engineered barriers and drainage
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improvements. If implemented, such measures could materially interfere with, restrict or alter how portions of our assets are accessed and used, could necessitate meaningful changes to certain building exteriors or systems, and could render parts of the site less functional or unusable for current uses.
Any such measures, if advanced, could disrupt our operations, limit or re-route vehicular and pedestrian access, reduce visibility or curb appeal, alter site circulation or loading, and impair tenant operations, customer traffic, or guest experience. These measures could require us to undertake modifications to buildings, facades, entrances, utility connections, or life-safety systems, and could affect site grading, easements, drainage and floodplain designations. These measures could also result in the imposition of additional permitting or code-compliance requirements, increase maintenance obligations, necessitate capital expenditures to adapt our improvements, diminish rental revenue if tenants are unable to operate as intended and increase vacancy or tenant improvement costs. In certain circumstances, public agencies may have authority to acquire interests in land, impose new easements or restrictions, or exercise police powers that could burden the property.
The planning and implementation of climate resiliency infrastructure could also affect future development or repositioning opportunities at affected sites by constraining buildable area, height, setbacks or access, or by creating design and engineering requirements that increase costs or reduce feasibility. In addition, any perceived or actual reduction in the functionality, accessibility or aesthetic appeal of any of our assets could negatively affect the marketability, tenant demand and appraised value of such assets. Insurance availability, coverage and cost could be adversely affected, and our lenders could seek to impose additional reserves, covenants or consent requirements related to flood risk, construction activity or property value, any of which could limit our financial flexibility. If we are unable to mitigate the effects of these measures through design changes, operational adjustments, insurance recoveries, tenant accommodations or other strategies, our results of operations, cash flows and the value of our assets could be materially and adversely affected.
We cannot predict whether, when or in what form any climate resiliency measures will be implemented, the ultimate obligations that may be imposed, or the magnitude of resulting costs or disruptions. Even if the climate resiliency measures are not implemented, the planning process and related uncertainty could still adversely affect tenant decision-making, leasing velocity or prospective buyer or lender perceptions, and could result in the diversion of our resources or distraction of key personnel. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations and the value of our assets.
We may be subject to potential costs to comply with environmental laws.
Future development and redevelopment opportunities may require additional capital and other expenditures to comply with laws and regulations relating to the protection of the environment. Under various federal, state or local laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property and may be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by the parties in connection with the contamination. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous or toxic substances, or the legality of disposal or classification of the material at the time. The presence of contamination or the failure to remediate contamination may adversely affect the owner’s ability to sell or lease real estate or to borrow using the real estate as collateral, and may expose us to tort or common law liability to neighbors, employees, site visitors, or others. It may also prevent new construction or changes in land use prior to remediation, such as sites in New York City that have been placed under an “E” designation. Other federal, state and local laws, ordinances and regulations require abatement or removal of asbestos-containing materials in the event of demolition or certain renovations or remodeling, the cost of which may be substantial for certain redevelopments, and also govern emissions of and exposure to asbestos fibers in the air. Federal and state laws also regulate the operation and removal of underground storage tanks. In connection with our ownership, operation and management of certain properties, we could be held liable for the costs of remedial action with respect to these regulated substances or tanks or related claims.
We cannot predict with any certainty the magnitude of any expenditures relating to the environmental compliance or the long-range effect, if any, on our operations. Compliance with such laws has not had a material adverse effect on our operating results or competitive position in the past but could have such an effect on our operating results and competitive position in the future.
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Tax increases, changes in tax rules and challenges by tax authorities to our tax positions may adversely affect our financial results.
As a company conducting business with physical operations in the United States, we are exposed, both directly and indirectly, to the effects of changes in U.S. federal, state and local tax rules. Taxes for financial reporting purposes and cash tax liabilities in the future may be adversely affected by changes in such tax rules. The tax rules of the various jurisdictions in which we operate or do business often are complex and subject to varying interpretations. Tax authorities may challenge tax positions that we take or historically have taken and may assess taxes where we have not made tax filings or may audit the tax filings we have made and assess additional taxes. Some of these assessments may be substantial, and also may involve the imposition of penalties and interest.
In addition, governments could change their existing tax laws, impose new taxes on us or increase the rates at which we are taxed in the future. The payment of substantial additional taxes, penalties or interest resulting from tax assessments, or the imposition of any new taxes, could materially and adversely impact our results of operations and financial condition.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
Our ability to utilize our net operating loss and tax credit carryforwards depends on generating future U.S. federal and state taxable income. Consequently, certain net operating loss and tax credit carryforwards presented in our financial statements may not ultimately be utilized. Additionally, under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to utilize its pre-change net operating losses and other pre-change tax attributes to offset its future post-change taxable income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. If we undergo such an ownership change, our ability to use our net operating loss and tax credit carryforwards may be limited, even if we generate taxable income.
Development of properties entails a lengthy, uncertain and costly entitlement process.
Approval to develop real property sometimes requires political support and generally entails an extensive entitlement process involving multiple and overlapping regulatory jurisdictions and often requires discretionary action by local governments. Real estate projects must generally comply with local land development regulations, as well as any applicable state and federal regulations. We incur substantial costs to comply with legal and regulatory requirements. An increase in legal and regulatory requirements may cause us to incur substantial additional costs, or in some cases cause us to determine that the property is not feasible for development. In addition, our competitors and local residents may challenge our efforts to obtain entitlements and permits for the development of properties. The process to comply with these regulations is usually lengthy and costly, may not result in the approvals we seek and can be expected to materially affect our development activities.
Any future exercise our right to develop, together with an interest in and to 80% of, the air rights above the Fashion Show mall would require, among other things, numerous approvals, and would likely involve an extensive process with substantial costs, and no assurance can be given that we would be successful in obtaining the necessary approvals to develop such rights.
Government regulations and legal challenges may delay the start or completion of the development of our properties, increase our expenses or limit our building or other activities.
Various local, state and federal statutes, ordinances, rules and regulations concerning building, health and safety, site and building design, environment, zoning, sales and similar matters apply to and/or affect the real estate development industry. In addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted or approvals already obtained depends on factors beyond our control, such as changes in federal, state and local policies, rules and regulations and their interpretations and application.
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Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps. If municipalities in which we operate take such actions, it could have an adverse effect on our business by causing delays, increasing our costs or limiting our ability to operate in those municipalities. These measures may reduce our ability to build and sell real estate development projects in the affected markets, including with respect to land we may already own, and create additional costs and administration requirements, which in turn may harm our future results of operations.
Governmental regulation affects numerous aspects of our business and industry, including construction, sales and lending activities and other dealings with consumers and tenants. Further, government agencies routinely initiate audits, reviews or investigations of our business practices to ensure compliance with applicable laws and regulations, which can cause us to incur costs or create other disruptions in our business that can be significant. Further, we may experience delays and increased expenses as a result of legal challenges to our proposed developments, whether brought by governmental authorities or private parties.
Compliance with the Americans with Disabilities Act may be a significant cost for us.
The Americans with Disabilities Act of 1990, as amended (the “ADA”), requires that all public accommodations and commercial facilities, including office buildings, meet certain federal requirements related to access and use by disabled persons. Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses. Noncompliance with the ADA or similar or related laws or regulations could result in the U.S. government imposing fines or private litigants being awarded damagesagainst us. Such costs may adversely affect our business, financial condition and results of operations.
We are subject to risks associated with changing public sentiment.
Community opposition and changing public sentiment can delay, restrict or prevent our projects and operations. Certain of our projects and operations are subject to public hearings and review and comment processes that provide opportunities for opposition. Organized community groups and advocacy organizations could increase scrutiny on our projects and operations, leading to appeals, litigation or negotiated conditions that add cost and delay or interfere with our ability to achieve our strategic objectives.
Risks Related to Our Separation From and Our Relationship with HHH
Prior to the Spin-Off, we had no history of operating as a separate, publicly traded company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.
The historical information about us prior to August 1, 2024 in this Annual Report refers to our business as operated by and integrated with HHH. Our historical financial information prior to August 1, 2024 included in this Annual Report is derived from the consolidated financial statements and accounting records of HHH. Accordingly, the historical financial information prior to August 1, 2024 included in this Annual Report does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during such periods or those that we will achieve in the future primarily as a result of the factors described below:
prior to the separation, our business was operated by HHH as part of its broader corporate organization, rather than as a separate, publicly traded company. HHH or one of its affiliates performed various corporate functions for us such as legal, treasury, accounting, internal audit, human resources and finance. Our historical financial results for periods prior to the separation reflect allocations of corporate expenses from HHH for such functions and are likely to be less than the expenses we would have incurred had we operated as a separate publicly traded company. Following the separation, our costs related to such functions previously performed by HHH may therefore increase;
prior to the separation, our business was integrated with the other businesses of HHH. Historically, we shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. Although we
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entered into transition agreements with HHH, these arrangements may not fully capture the benefits that we enjoyed as a result of being integrated with HHH and may result in us paying higher charges than in the past for these services. This could have an adverse effect on our results of operations and financial condition;
generally, our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, were historically satisfied as part of the corporate-wide cash management policies of HHH. We expect that from time to time we will seek to obtain financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements; and
the cost of capital for our business may be higher than HHH’s cost of capital prior to the separation.
Other significant changes may occur in our cost structure, management, financing and business operations as a result of operating as a company separate from HHH. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited Consolidated and Combined Financial Statements and notes thereto included in this Annual Report.
As a separate, publicly traded company, we may not enjoy the same benefits that we did as a part of HHH.
There is a risk that, by separating from HHH, we became more susceptible to market fluctuations and other adverse events than we would have been if we had remained a part of the current HHH organizational structure. As part of HHH, we were able to enjoy certain benefits from HHH’s operating diversity, purchasing power and opportunities to pursue integrated strategies with HHH’s other businesses. As a separate, publicly traded company, we do not have similar diversity or integration opportunities and may not have similar purchasing power or access to capital markets.
Future sales of our common stock, or the perception that such sales may occur, could depress our common stock price.
Except as otherwise described herein, all of our outstanding shares of common stock are freely tradable without restriction, other than those shares held by our affiliates. In connection with the Spin-Off, we filed a registration statement on Form S-8 registering under the Securities Act of 1933, as amended (the “Securities Act”) our common stock reserved for issuance under our equity incentive plan. If equity securities granted under such plan are sold or it is perceived that they will be sold in the public market, the trading price of our common stock could decline substantially. Actual or potential sales of our common stock made pursuant to registration rights could similarly cause the trading price of our common stock to drop significantly. Any of the foregoing also could impede our ability to raise future capital.
As of December 31, 2025, Pershing Square owns approximately 39.3% of our outstanding common stock. Pursuant to the Investor Rights Agreement, Pershing Square may request that we file a registration statement to register the offer and sale of its shares. Each such request for registration must cover securities the aggregate fair market value of which is at least $25 million. The number of demand registrations that Pershing Square is entitled to request pursuant to the Investor Rights Agreement is unlimited; provided, that we will not be obligated to undertake more than one related underwritten offering in any twelve-month period following October 17, 2024. Pershing Square is also entitled to certain “piggyback” registration rights pursuant to the Investor Rights Agreement. If we propose to register shares of our common stock or other securities under the Securities Act, either for our own account or for the account of other security holders, in connection with such offering, Pershing Square will be able to request that we include its shares in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act, subject to certain exceptions, Pershing Square will be entitled to notice of the registration and have the right, subject to certain limitations, to include its shares of common stock in the registration. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without the need for compliance with Rule 144 under the Securities Act. Any disposition by Pershing Square, or any of our substantial stockholders, of our common stock in the public market, or the perception that such dispositions could occur, could adversely affect prevailing market prices of our common stock.
In addition, our Amended and Restated Certificate of Incorporation provides that we may issue up to 480,000,000 shares of common stock and 20,000,000 shares of preferred stock, $0.01 par value per share. Future issuances of shares of our common stock or securities convertible or exchangeable into common stock may dilute the ownership interest of our
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common stockholders. Because our decision to issue additional equity or convertible or exchangeable securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future issuances. In addition, we are not required to offer any such securities to existing stockholders on a preemptive basis. Therefore, it may not be possible for existing stockholders to participate in such future issuances, which may dilute the existing stockholders’ interests in us.
Our suppliers or other companies with whom we conduct business may conclude that our financial stability as a separate, publicly traded company is insufficient to satisfy their requirements for doing or continuing to do business with them.
Some of our suppliers or other companies with whom we conduct business may conclude that our financial stability as a separate, publicly traded company is insufficient to satisfy their requirements for doing or continuing to do business with them, or may require us to provide additional credit support, such as letters of credit or other financial guarantees. Any failure of parties to be satisfied with our financial stability could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Potential indemnification obligations to HHH pursuant to the Separation Agreement (as defined herein) could materially and adversely affect our business, financial condition, results of operations and cash flows.
In connection with the Spin-Off, we entered into a separation agreement with HHH (the “Separation Agreement”). The Separation Agreement, among other things, provides for indemnification obligations (for uncapped amounts) designed to make us financially responsible for all liabilities that HHH may incur relating to our business activities (as currently and historically conducted), whether incurred prior to or after the separation. If we are required to indemnify HHH under the circumstances set forth in the Separation Agreement, we may be subject to substantial liabilities.
In connection with our separation from HHH, HHH agreed to indemnify us for certain liabilities. However, there can be no assurance that such indemnity will be sufficient to insure us against the full amount of such liabilities, or that HHH’s ability to satisfy its indemnification obligations will not be impaired in the future.
Pursuant to the Separation Agreement and certain other agreements with HHH, HHH has agreed to indemnify us for certain liabilities. However, third parties could also seek to hold us responsible for any of the liabilities that HHH has agreed to retain, and there can be no assurance that the indemnity from HHH will be sufficient to protect us against the full amount of such liabilities, or that HHH will be able to fully satisfy its indemnification obligations. In addition, HHH’s insurance will not necessarily be available to us for liabilities associated with occurrences of indemnified liabilities prior to the separation, and in any event HHH’s insurers may deny coverage to us for liabilities associated with certain occurrences of indemnified liabilities prior to the separation.
Moreover, even if we ultimately succeed in recovering from HHH or such insurance providers any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.
We may not achieve some or all of the expected benefits of the separation, and the separation may adversely affect our business.
We may not be able to achieve the full strategic and financial benefits expected to result from the separation, or such benefits may be delayed or not occur at all, for a variety of reasons, including, among others:
as part of HHH prior to the separation, we were able to enjoy certain benefits from HHH’s operating diversity, purchasing power and opportunities to pursue integrated strategies with HHH’s other businesses. As a separate, publicly traded company, we do not have similar diversity or integration opportunities and may not have similar purchasing power or access to capital markets. We may also incur costs for certain functions previously performed by HHH, such as accounting, tax, legal, human resources and other general administrative functions that are higher than the amounts reflected in our historical financial statements for periods prior to the separation, which could impact our cash flows profitability;
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certain costs and liabilities that were less significant to HHH prior to the separation are more significant for us as a separate company after the separation;
following the separation, our business is less diversified than HHH’s businesses prior to the separation; we have and will continue to incur costs in connection with our transition to being a separate, publicly traded company including accounting, tax, legal and other professional services costs, recruiting and relocation costs associated with hiring or reassigning our personnel and costs to separate information systems; and
following the separation, we are more susceptible to market fluctuations and other adverse events than if we were still a part of HHH.
If we fail to achieve some or all of the benefits expected to result from the separation, or if such benefits are delayed, our business, operating results and financial condition could be adversely affected.
We may have received better terms from unaffiliated third parties than the terms we received in our agreements with HHH.
The agreements we entered into with HHH in connection with the separation, including the Separation Agreement, transition services agreement, employee matters agreement, tax matters agreement and other commercial agreements, were prepared in the context of our separation from HHH while we were still a wholly-owned subsidiary of HHH. Accordingly, during the period in which the terms of those agreements were prepared, we did not have a separate or independent board of directors or a management team that was separate from or independent of HHH. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. Arm’s-length negotiations between HHH and an unaffiliated third party in another form of transaction, such as a buyer in a sale of a business transaction, may have resulted in more favorable terms to the unaffiliated third party.
We or HHH may fail to perform under the various agreements we executed as part of the separation or we may fail to have necessary systems and services in place when certain of the agreements expire.
The Separation Agreement and other agreements we entered into with HHH in connection with the separation determine the allocation of assets and liabilities between the companies following the separation and include indemnifications related to liabilities and obligations. The transition services agreement provides for the performance of certain services by HHH for our benefit for a period of time after the separation. We will rely on HHH to satisfy its performance obligations under these agreements. If HHH is unable to satisfy its obligations under these agreements, including its indemnification obligations, we could incur operational difficulties or losses. If we do not have in place our own systems and services, or if we do not have agreements with other providers of these services once certain transaction agreements expire, we may not be able to operate our business effectively. We are in the process of creating our own, or engaging third parties to provide, systems and services to replace many of the systems and services that HHH currently provides to us. However, we may not be successful in implementing these systems and services or in transitioning data from HHH’s systems to us.
We are also establishing or expanding our own tax, internal audit, investor relations, corporate governance and public company compliance and other corporate functions. We expect to incur one-time costs to replicate, or outsource from other providers, these corporate functions to replace the corporate services that HHH historically provided us prior to the separation. Any failure or significant downtime in our own financial, administrative or other support systems or in the HHH financial, administrative or other support systems during the transitional period during which HHH provides us with support could negatively impact our results of operations or prevent us from paying our suppliers and employees, executing business combinations and foreign currency transactions or performing administrative or other services on a timely basis, which could negatively affect our results of operations.
In particular, our day-to-day business operations rely on information technology systems. A significant portion of the communications among our personnel, customers and suppliers take place on information technology platforms. We expect the transfer of information technology systems from HHH to us to be complex, time consuming and costly. There is also a risk of data loss in the process of transferring information technology. As a result of our reliance on information
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technology systems, the cost of such information technology integration and transfer and any such loss of key data could have an adverse effect on our business, financial condition and results of operations.
If the Spin-Off failed to qualify as a distribution under Section 355 of the Code, HHH stockholders could incur significant adverse tax consequences, and we could be required to indemnify HHH for certain tax consequences that could be material pursuant to indemnification obligations under the tax matters agreement.
In connection with the Spin-Off, HHH received an opinion of Latham & Watkins LLP, tax counsel to HHH, regarding the qualification of the distribution as a tax-free transaction under Section 355 of the Code. There is no administrative or judicial authority that directly addresses facts that are substantially similar to those of the Spin-Off, and the opinion of tax counsel is therefore not free from doubt. Moreover, the opinion of tax counsel was based on, among other things, certain factual assumptions, representations and undertakings from HHH and us, including those regarding the past and future conduct of the companies’ respective businesses and other matters. If any of these factual assumptions, representations, or undertakings is incorrect or not satisfied, HHH may not be able to rely on the opinion. In addition, the opinion of tax counsel is not binding on the IRS or the courts, and, notwithstanding the opinion of tax counsel, the IRS could determine that the Spin-Off did not so qualify or that the Spin-Off should be taxable for other reasons, including as a result of a significant change in stock or asset ownership after the distribution, and HHH and its stockholders could incur significant adverse U.S. federal income tax consequences.
If the Spin-Off is ultimately determined not to have qualified as a tax-free transaction under Section 355 of the Code, the distribution could be treated as a taxable disposition of our common shares by HHH and as a taxable distribution to HHH stockholders for U.S. federal income tax purposes. In such case, HHH stockholders that are subject to U.S. federal income tax could incur significant adverse U.S. federal income tax consequences.
Under the tax matters agreement that we have entered into with HHH, we are generally required to indemnify HHH against taxes incurred by HHH that arise as a result of certain acts or omissions by us, inaccuracies, misrepresentations or misstatements relating to us or events involving our stock or assets relating to the qualification of the distribution as a tax-free transaction under Section 355 of the Code, except that we will generally not bear any such taxes resulting from corporate-level taxable gain to HHH under Section 355(e) of the Code. If we are required to pay any liabilities under the circumstances set forth in the tax matters agreement, the amounts may be significant.
To comply with the tax matters agreement, we might not be able to engage in certain transactions.
Under the tax matters agreement that we entered into with HHH, we are required to comply with the representations and undertakings made to legal counsel in connection with the tax opinion HHH received regarding the intended tax treatment of the Spin-Off and certain related transactions. The tax matters agreement also restricts our ability to take or fail to take any action if such action or failure to act could adversely affect the intended tax treatment of the Spin-Off, except that we are generally not prohibited from entering into equity transactions that result in corporate-level taxable gain to HHH under Section 355(e) of the Code. In particular, except in specific circumstances, in the two years following the distribution, we will be restricted from, among other things, (i) ceasing to actively conduct certain elements of our business, and (ii) selling, transferring or otherwise disposing of, 30% or more of the gross assets of certain of our businesses. These restrictions may limit for a period of time our ability to pursue certain transactions that we may believe to be in the best interests of our stockholders or that might increase the value of our business.
Risks Related to Our Common Stock
We cannot be certain that an active trading market for our common stock will be sustained, and the price of our common stock may fluctuate significantly.
Prior to the Spin-Off, there was no public market for our common stock. We cannot guarantee that an active trading market will be sustained for our common stock. If an active trading market is not sustained, you may have difficulty selling your Company common stock at an attractive price, or at all. The market price of our common stock may fluctuate
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significantly due to a number of factors, some of which may be beyond our control and/or unrelated to our operating performance, including:
our quarterly or annual earnings, or those of other companies in our industry;
the failure of securities analysts to cover our common stock;
actual or anticipated fluctuations in our operating results;
changes in earnings estimates by securities analysts or our ability to meet those estimates;
the operating and stock price performance of other comparable companies;
publication of research reports about our industry;
announcements by us or our competitors of significant contracts (or amendments thereto or terminations thereof), acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments;
changes to the regulatory and legal environment in which we operate;
changes in interest or inflation rates;
overall market fluctuations and domestic and worldwide economic conditions; and
other factors described in this “Risk Factors” section and elsewhere in this Annual Report.
In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
We are an emerging growth company and the information we provide stockholders may be different from information provided by other public companies.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under current applicable SEC rules, we will continue to be an emerging growth company until the earliest to occur of the following:
the last day of the fiscal year in which our total annual gross revenues first meet or exceed $1.235 billion (as adjusted for inflation);
the date on which we have, during the prior three-year period, issued more than $1.0 billion in non-convertible debt;
the last day of the fiscal year in which we have an aggregate worldwide market value of common stock held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter; or
the last day of the fiscal year following the fifth anniversary of the date of our separation from HHH.
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For as long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to:
not being required to comply with the auditor attestation requirements of the assessment of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act;
exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies;
reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
exemptions from the requirement of holding a non-binding advisory vote on executive compensation and stockholder approval on golden parachute compensation not previously approved.
We may choose to take advantage of some or all of these reduced burdens. For example, we expect to take advantage of the reduced disclosure obligations regarding executive compensation in our proxy statements. For as long as we take advantage of the reduced reporting obligations, the information we provide stockholders may be different from information provided by other public companies. In addition, it is possible that some investors will find our common stock less attractive as a result of these elections, which may result in a less active trading market for our common stock and higher volatility in our stock price.
In addition, we have elected to not take advantage of the extended transition period that allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies, which means that the financial statements included in this Annual Report, as well as financial statements we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. Our election not to take advantage of the extended transition period is irrevocable.
If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.
As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. In addition, beginning with this Annual Report, we are required to furnish annual management assessments of the effectiveness of our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include a report by our independent registered public accounting firm addressing these assessments pursuant to Section 404 of the Sarbanes-Oxley Act. These reporting and other obligations may place significant demands on management, and administrative and operational resources, including accounting systems and resources.
The process of designing, implementing and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly and complicated. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the applicable requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal control over financial reporting is effective, or, when applicable, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are then listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
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We do not expect to pay any dividends for the foreseeable future.
You should not rely on our common stock to provide dividend income. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. In addition, any future credit facility or debt securities may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock.
Your percentage ownership in us may be diluted in the future.
In the future, your percentage ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that we will be granting to our directors, officers and employees. It is anticipated that our Compensation Committee will grant additional equity awards to our employees and directors from time to time under our employee benefits plans. These additional awards will have a dilutive effect on our earnings per share of common stock, which could adversely affect the market price of our common stock.
In addition, our Amended and Restated Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred shares having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock respecting dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred shares could dilute the voting power or reduce the value of our common stock. For example, we could grant the holders of preferred shares the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences that we could assign to holders of preferred shares could affect the residual value of the common stock.
Anti-takeover provisions in our Amended and Restated Certificate of Incorporation, our Bylaws, Delaware law, the Investor Rights Agreement and certain other agreements may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
Our Amended and Restated Certificate of Incorporation, our Bylaws, the Investor Rights Agreement and Delaware law, among other things, contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. For example, our Amended and Restated Certificate of Incorporation and Bylaws contain the following limitations:
the inability of our stockholders to act by written consent;
restrictions on the ability of stockholders to call a special meeting without 20% or more of the voting power of the issued and outstanding shares entitled to vote generally in the election of our directors;
requirements stockholders must comply with for nominating individuals for election as directors or for proposing business to be considered at stockholder meetings;
the right of our board of directors to issue preferred stock without stockholder approval;
a requirement that, to the fullest extent permitted by law, certain proceedings against or involving us or our directors or officers be brought exclusively in the Court of Chancery in the State of Delaware;
that certain provisions may be amended only by the affirmative vote of at least 66 2/3% of the shares of common stock entitled to vote thereon, voting together as a single class; and
the limitations described in “—MLB rules require that any person or group seeking to acquire a controlling interest in us or the Aviators must receive the prior approval of MLB. Such limitations and approval requirements may restrict any change of control or business combination opportunities in which our stockholders might receive a premium for shares of our common stock.”
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On October 17, 2024, we entered into the Investor Rights Agreement with Pershing Square, pursuant to which Pershing Square is entitled to designate at least one individual as a nominee for election to our board of directors as long as it owns at least 10% of the total outstanding shares of our common stock. If we increase the size of the board to larger than five directors, the Investor Rights Agreement entitles Pershing Square to nominate individuals representing at least 20% of the total number of our directors, which could allow Pershing Square to exercise additional influence over certain of our corporate and governance matters. The board designation and related rights are also contained in our Amended and Restated Certificate of Incorporation.
In addition, we are a Delaware corporation, and Section 203 of the DGCL applies to us. In general, Section 203 prevents an interested stockholder from engaging in certain business combinations with us for three years following the time that person becomes an interested stockholder subject to certain exceptions. The statute generally defines an interested stockholder as any person that is the owner of 15% or more of the outstanding voting stock or is our affiliate or associate and was the owner of 15% or more of outstanding voting stock at any time within the three-year period immediately before the date of determination.
We have granted a waiver of the applicability of the provisions of Section 203 of the DGCL such that Pershing Square, which as of December 31, 2025 owned approximately 39.3% of the outstanding shares of our common stock, may increase its position in our common stock without being subject to Section 203’s restrictions on business combinations. As such, Pershing Square, through its ability to accumulate more common stock than would otherwise be permitted under Section 203, has the ability to become a large holder group that would be able to affect matters requiring approval by Company stockholders, including the election of directors and approval of mergers or other business combination transactions.
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. There also may be dilution of our common stock from the exercise of any future outstanding warrants, which may materially adversely affect the market price and negatively impact a holder’s investment.
MLB rules require that any person or group seeking to acquire a controlling interest in us or the Aviators must receive the prior approval of MLB. Such limitations and approval requirements may restrict any change of control or business combination opportunities in which our stockholders might receive a premium for shares of our common stock.
To comply with the policies of MLB, our Amended and Restated Certificate of Incorporation provides that, as long as we have an ownership interest in the professional baseball club currently known as the Aviators, and subject to certain exceptions, no person may acquire shares of our common stock if, after such acquisition, that person would (i) own at least 50% of the outstanding shares of our common stock or at least 50% of the total voting power of our then-outstanding securities entitled to vote generally in the election of directors or (ii) have the ability to appoint at least a majority of the members of our board, unless, in each case, such person is approved by MLB or qualifies as an exempt person (which includes Pershing Square or any person approved by MLB as the “control person” of the Aviators). In the event that a person attempts to acquire shares of our common stock in violation of these restrictions, the applicable excess shares would automatically be transferred to a trust and held for the benefit of the excess share transferor, and such excess shares may be sold for cash, on the open market, in privately negotiated transactions or otherwise. No assurance can be given that the trust will be able to sell the shares at a price that is equal to or greater than the price paid by the person who attempted to acquire the shares. In addition, such person’s right to receive the net proceeds of the sale, as well as any dividends or other distributions to which such person would otherwise be entitled, will be subject to their compliance with the applicable mechanics included in the Amended and Restated Certificate of Incorporation.
In addition to the influence Pershing Square could exercise in respect of its voting power (see “—Pershing Square is our largest stockholder and may exert influence over us that may be adverse to our best interests and those of our other stockholders”), the share ownership limitations and required MLB approvals could have an anti-takeover effect, potentially discouraging third parties from making proposals for certain acquisitions of our common stock or a change of control transaction. In addition, if MLB does not provide approval of a specific transaction, these provisions could prevent a transaction in which holders of our common stock might receive a premium for their shares over the then-prevailing market
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price or which our board of directors or stockholders might believe to be otherwise in the best interest of us and our stockholders.
General Risks
Loss of key personnel could adversely affect our business and operations.
We depend on the efforts of key executive personnel. The loss of the services of any key executive personnel could adversely affect our business and operations. While we believe we have proper succession planning and are confident we could attract and train new personnel, if necessary, this could impose additional costs and hinder our business strategy.
Our operations also depend on attracting and retaining qualified hospitality, operations, production, security and technical personnel, as well as specialized creative and engineering talent for experiential formats. Tight labor markets, rising wage rates, minimum wage legislation, unionization efforts and shortages of skilled technicians or seasonal staff can increase costs and constrain operating hours or capacity. We also rely on third-party contractors and staffing agencies, and their performance or compliance failures could create operational and reputational risks for us.
Actual or threatened terrorist activity and other acts of violence or civil unrest, or the perception of a heightened threat of such risks, could adversely affect our financial condition and results of operations.
Future actual or threatened terrorist attacks or other acts of violence or civil unrest in the areas in which we conduct our business, or the perception of a heightened threat of such risks, may result in reduced economic activity, which could harm the demand for goods and services offered by tenants, revenue from our assets and the success of our entertainment offerings. Such a resulting decrease in consumer demand could also make it difficult to renew or re-lease properties at lease rates equal to or above historical rates. Terrorist activities or other acts of violence or civil unrest, or the perception of a heightened threat of such risks, also could directly affect the value of our assets and events—particularly because they are open to the public. Any such incidents could cause material physical or reputational damage to our assets and business or destruction or loss, and the availability of insurance for such incidents, or of insurance generally, might be lower or cost more, which could increase our operating expenses and adversely affect our financial condition and results of operations. To the extent that our tenants are affected by real or perceived physical safety concerns stemming from such incidents, their businesses similarly could be adversely affected, including their ability to continue to meet their obligations under their existing leases. Such incidents, or the fear of such incidents, could decrease consumer demand for our assets and offerings, decrease or delay the occupancy of new or redeveloped properties and limit our access to capital or increase our cost of capital.
Weakness or instability in the general economy, our markets or our results of operations could result in future asset impairments, which would increase our reported loss or reduce our reported earnings and net worth.
Economic conditions remain fragile in some markets and the possibility remains that the domestic or global economies, or certain industry sectors that are key to our revenue, may deteriorate. If certain aspects of our operations are adversely affected by challenging economic and financial conditions, we may be required to record future impairments, which would negatively impact our results of operations.
We are, and may in the future be, subject to legal proceedings or investigations, the resolution of which could negatively affect our business, financial condition or results of operations.
Our business exposes us to significant potential risk from lawsuits, investigations and other legal proceedings. We are, and may in the future be, subject to a variety of proceedings, including, among others, litigation regarding our assets and offerings and ordinary course employment litigation.
In litigation, plaintiffs may seek various remedies, including declaratory or injunctive relief; compensatory or punitivedamages; restitution, disgorgement, civil penalties, abatement, attorneys’ fees, costs or other relief. Settlement demands may seek significant monetary and other remedies, or otherwise be on terms that we do not consider reasonable under the circumstances. In some instances, even if we have complied with applicable laws, regulations and terms of contracts, an
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adverse judgment or outcome may occur based on other applicable laws or principles of common law, including negligence and strict liability, and result in significant liability and reputational damage for us. We may also be subject to claims in addition to those described above by similar groups of plaintiffs in the future relating to our current or former assets or activities. In addition, awards against and settlements by our competitors or publicity associated with our current litigation could incentivize parties to bring additional claimsagainst us.
Any claim brought against us, regardless of its merits, could be costly to defend and could result in an increase of our insurance premiums and exhaust our available insurance coverage. The financial impact of litigation is difficult to assess or quantify. Some claims brought against us might not be covered by our insurance policies or might exhaust our available insurance coverage for such occurrences. To the extent our insurance coverage is inadequate and we are not successful in identifying or purchasing additional coverage for such claims, we would have to pay the amount of any settlement or judgment that is in excess of policy limits. Claimsagainst us that result in entry of a judgment or that we settle that are not covered or not sufficiently covered by insurance policies could have a material adverse impact on our business, financial condition and results of operations.
All references to numbered Notes are specific to Notes to our Consolidated and Combined Financial Statements included in this Annual Report. Capitalized terms used, but not defined, in this MD&A have the same meanings as in such Notes.
Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our combined financial statements, and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.
Overview
General Overview
The Company was formed to own, operate, and develop a unique collection of assets positioned at the intersection of entertainment and real estate. Our existing portfolio encompasses a wide range of leisure and recreational activities, including live concerts, fine dining, nightlife, professional sports, and high-end and experiential retail. We primarily analyze our portfolio of assets through the lens of our three operating segments: (1) Hospitality, (2) Entertainment (previously Sponsorships, Events, and Entertainment), and (3) Landlord Operations, and are focused on realizing value for stockholders primarily through dedicated management of existing assets, expansion of partnerships, strategic acquisitions, and completion of development and redevelopment projects.
Hospitality
Hospitality represents our ownership interests in various food and beverage operating businesses and sponsorship agreements related to these businesses. We own, either wholly or through partnerships with third parties, and operate,
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including through license and management agreements, fine dining and casual dining restaurants, cocktail bars, nightlife and entertainment venues (The Fulton, Mister Dips, Carne Mare, and Gitano) and our unconsolidated venture, the Lawn Club. These businesses are all our tenants and are part of our Landlord Operations. We also have a 25% interest in JG. We aim to capitalize on opportunities in the food and beverage space to leverage growing consumer appetite for unique restaurant experiences as a catalyst to further expand the Company’s culinary footprint. Our Hospitality-related period-over-period comparisons do not adjust for operational revisions to our asset strategies from period to period, such as opening or closing restaurant concepts or redirecting operations to use space for private events and/or concerts.
Entertainment
Entertainment includes the Las Vegas Aviators Triple-A Minor League Baseball team and the Las Vegas Ballpark, our interest in and to the Fashion Show Mall Air Rights, events at The Rooftop at Pier 17, and sponsorship agreements related to these venues. The Aviators are a Triple-A affiliate of the Athletics and play at the Las Vegas Ballpark, a 10,000-person capacity ballpark located in Downtown Summerlin. The Rooftop at Pier 17 is a premier outdoor concert venue that hosts a popular Seaport Concert Series featuring emerging and established musicians alike. We see The Rooftop at Pier 17 as an opportunity to continue to drive events and entertainment growth as we believe that the demand for live music and private events is strong and accelerating.
Landlord Operations
Landlord Operations represents our ownership interests in, and operation of physical real estate assets located in the Seaport, a historic neighborhood in Lower Manhattan on the banks of the East River and within walking distance of the Brooklyn Bridge. Landlord Operations assets include:
Pier 17, a historic building containing restaurants, entertainment, office space, and The Rooftop at Pier 17, an outdoor concert venue;
the Tin Building, a mixed-use building leased to the Tin Building by Jean-Georges through February 2026;
the Fulton Market Building, a mixed-use building containing office and retail spaces, including a movie theater and the Lawn Club, an experiential retail concept focused on “classic lawn games” and cocktails;
the Cobblestones retail and other locations which include the Museum Block, Schermerhorn Row, and more;
250 Water Street, a full block development site approved for zoning of affordable and market-rate housing, office, retail, and community-oriented gathering space. During 2025, the Company entered into a purchase and sale agreement to sell 250 Water Street. The sale was completed on February 6, 2026 for gross proceeds of $143.0 million. See Note 15 – Subsequent Events for further details; and
85 South Street, an eight-story residential building.
Our assets included in the Landlord Operations segment primarily sit under a long-term ground lease from the City of New York with extension options through 2120. We are focused on continuing to fill vacancies in our Landlord Operations portfolio and believe this to be an opportunity to drive incremental segment growth.
Separation from HHH
On July 31, 2024, HHH completed its spin-off of SEG through the pro rata distribution of all the outstanding shares of common stock of SEG to HHH’s stockholders as of the close of business on the record date of July 29, 2024.
In connection with the Separation, on July 31, 2024, the Company entered into a separation and distribution agreement and various other agreements with HHH, including a transition services agreement, an employee matters agreement, a tax matters agreement, and a revolving credit agreement. Additionally, HHH contributed capital of $23.4 million to the Company prior to the Separation to support the operating, investing, and financing activities of the Company. For
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additional discussion of the Separation, see Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated and Combined Financial Statements included in this Annual Report.
Basis of Presentation
The accompanying Consolidated and Combined Financial Statements represent the assets, liabilities, and operations of Seaport Entertainment Group Inc. as well as the assets, liabilities and operations related to the Seaport Entertainment division of HHH prior to the Separation that were transferred to Seaport Entertainment Group Inc. on July 31, 2024 in connection with the Separation.
Prior to the Separation, we operated as part of HHH and not as a standalone company. Our financial statements for the periods until the Separation on July 31, 2024 are combined financial statements prepared on a carve-out basis derived from the accounting records of HHH. Our financial statements for the periods beginning on and after August 1, 2024 are consolidated financial statements based on our financial position, results of operations and cash flows as a standalone company. The accompanying Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 and Consolidated Statement of Operations for the year ended December 31, 2025 have been prepared on a standalone basis and are derived from the accounting records of the Company. The accompanying Combined Financial Statements for the year ended December 31, 2024 have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of the Company from August 1, 2024 to December 31, 2024 and have been prepared on a carve-out basis and are derived from the combined financial statements and accounting records of HHH for January 1, 2024 to July 31, 2024 as discussed below. The accompanying Combined Statements of Operations for the year ended December 31, 2023 have been prepared on a standalone basis derived from the combined financial statements and accounting records of HHH. These statements reflect the consolidated and combined historical results of operations, financial position, and cash flows of Seaport Entertainment Group in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying Consolidated and Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the Company’s financial position, results of operations, and cash flows would have been had the Company operated as a standalone company for the entirety of all of the periods presented.
These Combined Financial Statements include the attribution of certain assets and liabilities that had been held at HHH but which are specifically identifiable or attributable to the business that was transferred to the Company in connection with the Separation.
For an additional discussion on the basis of presentation of these statements, see Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated and Combined Financial Statements included in this Annual Report.
Key Factors Affecting Our Business
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report titled “Risk Factors.”
Management Strategies and Operational Changes
As mentioned elsewhere in this Annual Report, prior to the Separation, we operated as part of HHH and not as a standalone company. Therefore, our historical results prior to the Separation are reflective of the management strategies and operations of the Company based on the direction and strategies of HHH. Additionally, our historical results reflect the allocation of expenses from HHH associated with certain services prior to the Separation, including (1) certain support functions that were provided on a centralized basis within HHH, including, but not limited to executive oversight, treasury, accounting, finance, internal audit, legal, information technology, human resources, communications, and risk management; and (2) employee benefits and compensation, including stock-based compensation. As a separate public company, our ongoing costs related to such support functions may differ from, and may potentially exceed, the amounts that have been allocated to us in these financial statements. Following the Separation, HHH continued to provide some of these services on a transitional basis in exchange for agreed-upon fees. In addition to one-time costs to design and establish
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our corporate functions, we also incur incremental costs associated with being a stand-alone public company, including additional labor costs, such as salaries, benefits, and potential bonuses and/or stock based compensation awards for staff additions to establish certain corporate functions historically supported by HHH and not covered by the transition services agreement, and corporate governance costs, including board of director compensation and expenses, audit and other professional services fees, annual report and proxy statement costs, SEC filing fees, transfer agent fees, consulting and legal fees and stock exchange listing fees. Following the Separation, our future results and cost structure may differ based on new strategies and operational changes implemented by our management team, which may include changes to our chosen organizational structure, whether functions are outsourced or performed by the Company employees, and strategic decisions made in areas such as executive leadership, corporate infrastructure, and information technology.
Tin Building and our Investment in the Tin Building by Jean-Georges
The Company owns 100% of the Tin Building which was completed and placed in service in our Landlord Operations segment during the third quarter of 2022. As of December 31, 2025, the Company leased 100% of the rentable space in the Tin Building to the Tin Building by Jean-Georges joint venture, a Hospitality segment business in which we recognized 100% of the economic interest in accordance with the equity method through December 31, 2024. As of January 1, 2025, in conjunction with the internalization of food and beverage operations, the Company began consolidating the Tin Building by Jean-Georges joint venture within the Hospitality segment. The Company recognizes lease payments from the Tin Building by Jean-Georges in Rental revenue within the Landlord Operations segment. As the Company recognizes 100% of operating income or losses from the Tin Building by Jean-Georges, the Tin Building lease has no net impact to the total Company net loss. However, Landlord Operations Adjusted EBITDA, as defined below, includes only rental revenue related to the Tin Building lease payments, and does not include rent expense in Equity in losses from unconsolidated ventures for the years ending December 31, 2024 and December 31, 2023, or rent expense for the year ended December 31, 2025 included in Hospitality costs in Hospitality Adjusted EBITDA. The rental revenue and hospitality costs associated with the lease payments are eliminated in the Consolidated Statements of Operations for the year ended December 31, 2025. See Note 2 – Investments in Unconsolidated Ventures for additional details related to the Tin Building by Jean-Georges joint venture and pro forma information.
On June 30, 2025, the Company’s ownership interest in the Tin Building by Jean-Georges increased to 100% through the execution of certain membership interest transfers.
Prior to June 30, 2025, the Tin Building by Jean-Georges was managed by CCMC, a related party that is indirectly owned by JG. On June 30, 2025, indirect subsidiaries of the Company and wholly owned subsidiaries of JG entered into License Agreements with respect to the license of certain intellectual property of JG for the Tin Building by Jean-Georges and the Fulton Restaurant. As part of the restructuring transactions described above and in consideration of entry into the License Agreements, on July 1, 2025, an indirect subsidiary of the Company provided notice to CCMC terminating certain management agreements between CCMC and affiliates of the Company. As a result, the Services Agreement has been terminated pursuant to its terms.
In February 2026, the Company entered into a lease of 100% of the Tin Building with contemporary art experience creator, Lux Entertainment, to open their U.S. flagship location of the Balloon Museum. In connection with the lease and the commencement of the Company’s landlord obligations, the Tin Building by Jean-Georges ceased operations in February 2026. Refer to Note 15 – Subsequent Events for additional information.
Seasonality
Our operations are highly seasonal and are significantly impacted by weather conditions. Concerts at our outdoor venue and Aviators baseball games primarily occur from May through October, and we typically see increased customer traffic at our restaurants during the summer months when the weather is generally warmer and more favorable, which contributes to higher revenue during these periods. However, weather-related disruptions, such as floods and heavy rains, can negatively impact our summer operations. For instance, outdoor concerts may have to be cancelled or rescheduled due to inclement weather, which can result in lost revenue. Similarly, floods can lead to temporary closures of our restaurants and can disrupt our supply chain, leading to potential revenue losses and increased costs.
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During the fall and winter months, our operations tend to slow down due to the colder weather, which results in fewer outdoor events and less foot traffic at our restaurants, and the end of the Aviators baseball season. This seasonality pattern results in lower revenues during these periods. Moreover, severe winter weather conditions, such as snowstorms and freezing temperatures, can further deter customers from visiting our restaurants, further impacting our revenues and cash flow. Our seasonality also results in fluctuations in cash and cash equivalents, accounts receivable, deferred expenses, and accounts payable and other liabilities at different times during the year.
Lease Renewals and Occupancy
As of December 31, 2025 and December 31, 2024, the weighted average remaining term of our retail, office, and other properties leases where we are the lessor was approximately seven years, excluding renewal options. The stability of the rental revenue generated by our properties depends principally on our tenants’ ability to pay rent and our ability to collect rents, renew expiring leases, re-lease space upon the expiration or other termination of leases, lease currently vacant properties, and maintain or increase rental rates at our leased properties. To the extent our properties become vacant, we would forego rental income while remaining responsible for the payment of property taxes and maintaining the property until it is re-leased, which could negatively impact our operating results. As of December 31, 2025, our real estate assets at the Seaport were 90% leased or programmed.
Inflationary Pressures and Other Macroeconomic Trends
Financial results across all our segments may be impacted by inflation. In Landlord Operations, certain of our leases contain rent escalators that increase rent at a fixed amount and may not be sufficient during periods of high inflation. For properties leased to third-party tenants, the impact of inflation on our property and operating expenses is limited as substantially all our leases are net leases, and property-level expenses are generally reimbursed by our tenants. Inflation and increased costs may also have an adverse impact on our tenants and their creditworthiness if the increase in property-level expenses is greater than their increase in revenues. For unleased properties and properties occupied by our restaurants, we are more exposed to inflationary pressures on property and operating expenses. For our Hospitality and Entertainment segments, inflationary pressure has a direct impact on our profitability due to increases in our costs, as well as potential reductions in customers that could negatively impact revenue. Although certain indicators have suggested that inflation has made downwardprogress, the economy continues to be impacted by elevated inflation rates and faces further inflation risk.
Other adverse economic conditions, including slower economic growth and the potential for a recession, could also have an adverse effect on us, our tenants and consumers. For example, rapid changes in U.S. trade policy, new or increased tariffs, retaliatory tariffs and global trade disruptions could negatively impact us or our tenants, including by further aggravating inflation, increasing costs, disrupting supply chains and negatively affecting consumer sentiment and spending.
Significant Items Impacting Comparability
Impairment. The Company reviews its long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company also periodically evaluates its investments in unconsolidated ventures for recoverability and valuation declines that are other than temporary. In the third quarter of 2023, the Company recorded a $672.5 million impairment charge related to Seaport properties in the Landlord Operations segment and a $37.0 million impairment charge related to its investments in unconsolidated ventures in the Hospitality segment. The Company recognized the impairments due to decreases in estimated future cash flows resulting from significant uncertainty of future performance as stabilization and profitability are taking longer than expected, pressure on the current cost structure, decreased demand for office space, as well as an increase in the capitalization rate and a decrease in restaurant multiples used to evaluate future cash flows. The Company used a discounted cash flow analysis to determine the fair value. During the year ended December 31, 2024, the Company recorded a $10.0 million impairment charge related to its investments in unconsolidated ventures in the Hospitality segment for a write-off of warrants in Jean-George Restaurants. There were no impairment charges during the year ended December 31, 2025.
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Separation Costs. The Company incurred pre-tax charges related to the planned separation from HHH, primarily related to legal and consulting costs, of $23.8 million and $4.5 million for the years ended December 31, 2024 and 2023, respectively. No costs related to the Separation were incurred or recorded for the year ended December 31, 2025.
Shared Service Costs. Prior to the Separation, HHH provided the Company certain services, including (1) certain support functions that were provided on a centralized basis within HHH, including, but not limited to property management, development, executive oversight, treasury, accounting, finance, internal audit, legal, information technology, human resources, communications, and risk management; and (2) employee benefits and compensation, including stock-based compensation. The Company’s Consolidated and Combined Financial Statements reflect an allocation of these costs. When specific identification or a direct attribution of costs based on time incurred for the Company’s benefit is not practicable, a proportional cost method is used, primarily based on revenue, headcount, payroll costs or other applicable measures. The Company recorded expenses associated with shared services that are not directly attributable to the Company of $12.8 million and $13.9 million for the years ended December 30, 2024 and 2023, respectively. In connection with the Separation, the Company entered into a transition services agreement with HHH that provides for the performance of certain services by HHH for our benefit for a period of time after the Separation. The Company recorded expenses associated with this transition services agreement with HHH of $0.1 million and $0.3 million for the year ended December 31, 2025 and 2024, respectively. No costs related to the transition services agreement were incurred or recorded for the year ended December 31, 2023.
Tin Building by Jean-Georges. As of January 1, 2025, in conjunction with the internalization of food and beverage operations, the Company began consolidating the Tin Building by Jean-Georges joint venture within the Hospitality segment. The Company recognizes lease payments from the Tin Building by Jean-Georges in Rental revenue within the Landlord Operations segment. As the Company recognizes 100% of operating income or losses from the Tin Building by Jean-Georges, the Tin Building lease has no net impact to the Company’s total net loss. On June 30, 2025, the Company’s ownership interest in the Tin Building by Jean-Georges increased to 100% through the execution of certain membership interest transfers. As a result of the transfer, an indirect subsidiary of the Company became the sole member of the Tin Building by Jean-Georges. The Company owns 100% of the Tin Building and, as of December 31, 2025, leased 100% of the space to the Tin Building by Jean-Georges. Throughout this Form 10-K, references to the Tin Building relate to the Company’s 100% owned landlord operations and references to the Tin Building by Jean-Georges refer to the hospitality business in which the Company previously had an equity ownership interest, and as of June 30, 2025, owns 100%. Subsequent to year end, the Company entered into a lease of 100% of the Tin Building with contemporary art experience creator, Lux Entertainment, to open their U.S. flagship location of the Balloon Museum. In connection with the lease and the commencement of the Company’s landlord obligations, the Tin Building by Jean-Georges ceased operations in February 2026. Refer to Note 15 – Subsequent Events for additional information. See Tin Building and our Investment in the Tin Building by Jean-Georges above for additional details.
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Leadership Transition Costs. The Company incurred leadership transition costs, primarily related to severance costs, bonus accrual and stock compensation expense, of $12.2 million for the year ended December 31, 2025. No costs related to the leadership transition were incurred or recorded for the years ended December 31, 2024 and 2023.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table sets forth our operating results:
Year Ended December 31,
Change
in thousands except percentages
REVENUES
Hospitality revenue
Entertainment revenue
Rental revenue
Other revenue
Total revenue
EXPENSES
Hospitality costs
Entertainment costs
Operating costs
General and administrative
Depreciation and amortization
Total expenses
OTHER
Loss on assets held for sale
Other income (loss), net
Total other
Operating loss
Interest income (expense)
Equity in earnings (losses) from unconsolidated ventures
Loss on early extinguishment of debt
Loss before income taxes
Income tax (benefit) expense
Net loss
Preferred distributions to noncontrolling interest in subsidiary
Net loss attributable to common stockholders
Net loss attributable to common stockholders decreased $36.5 million, or 24%, to $116.7 million for the year ended December 31, 2025, compared to $153.2 million in the prior-year period, primarily due to a $44.5 million increase in equity in earnings from unconsolidated ventures, a $21.7 million increase in hospitality revenue, and a $20.5 million decrease in general and administrative costs, partially offset by a $36.0 million increase in hospitality costs, a $11.0 million increase in loss on assets held for sale, and a $9.5 million increase in other income (loss), net.
Items Included in Segment Adjusted EBITDA
See Segment Operating Results for discussion of significant variances for revenues and expenses included in Adjusted EBITDA.
Items Excluded from Segment Adjusted EBITDA
The following includes information on the significant variances in expenses and other items not directly related to segment activities.
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General and Administrative . General and administrative costs decreased $20.5 million, or 32%, to $42.8 million for the year ended December 31, 2025, compared to $63.3 million in the prior-year period. This change was primarily due to a $23.8 million decrease in separation costs, partially offset by an increase in general operating costs, including $12.2 million of leadership transition costs.
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $2.6 million, or 7%, to $32.2 million for the year ended December 31, 2025, compared to $34.8 million in the prior-year period. This change was primarily due to disposal of assets in late 2024 that decreased depreciation expense year over year.
Interest Income (Expense) . Interest income (expense) increased $7.2 million, or 107%, to interest income of $0.5 million for the year ended December 31, 2025, compared to interest expense of $6.8 million in the prior-year period. This change is primarily due to a $3.0 million increase in interest income, a $1.8 million increase in amounts capitalized to development assets, and a $3.2 million decrease in interest expense on secured mortgages payable, partially offset by a decrease in finance charges of $1.0 million.
Income Tax (Benefit) Expense. The following table summarizes information related to our income taxes:
Year Ended December 31,
Change
thousands except percentages
Income tax (benefit) expense
Loss before income taxes
Effective income tax rate
The Company’s effective tax rate was 0.0% for the year ended December 31, 2025 and the year ended December 31, 2024.
Segment Operating Results
Hospitality
Segment Adjusted EBITDA
The following table presents segment Adjusted EBITDA for Hospitality:
Years Ended
Hospitality Adjusted EBITDA (a)
December 31,
Change
in thousands except percentages
Hospitality revenue (b)
Total revenues
Hospitality costs (c)
Total operating expenses
Other income (loss), net
Total expenses
Equity in earnings (losses) from unconsolidated ventures
Adjusted EBITDA
Period-over-period comparability is impacted by the consolidation of the Tin Building by Jean-Georges as of January 1, 2025. For prior periods in 2024, the Tin Building by Jean-Georges was an unconsolidated joint venture accounted for under the equity method in the Equity in earnings (losses) from unconsolidated ventures within our Hospitality segment.
Hospitality revenue includes amounts related to intercompany transactions that are eliminated in the Statement of Operations.
Hospitality costs include amounts related to intercompany leases that are eliminated in the Statement of Operations.
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Hospitality Adjusted EBITDA loss decreased $13.7 million compared to the prior-year period primarily due to the following:
Hospitality Revenue.
Hospitality revenue increased $21.9 million, or 73%, to $51.9 million for the year ended December 31, 2025, compared to $30.0 million in the prior-year period. This change was primarily a result of consolidating the Tin Building by Jean-Georges as of January 1, 2025, an increase as a result of the opening of new hospitality concepts during the period, as well as increased revenue related to events held at the Seaport. This is partially offset by decreased revenue across various restaurants within the Seaport as a result of reduced operating hours during the period.
Hospitality Costs .
Hospitality costs increased $47.6 million, or 114%, to $89.3 million for the year ended December 31, 2025, compared to $41.7 million in the prior-year period, primarily due to the consolidation of the Tin Building by Jean-Georges as of January 1, 2025.
Other Income (Loss), Net .
Other income (loss), net, decreased $5.1 million, or 113%, to $0.6 million loss for the year ended December 31, 2025, compared to $4.5 million income in the prior-year period. This change was primarily a result of reimbursements from CCMC received in 2024 relating to prior period operating expenses that were not received in 2025.
Equity in Earnings (Losses) from Unconsolidated Ventures.
Equity in earnings (losses) from unconsolidated ventures increased $44.5 million, or 106%, to earnings of $2.4 million for the year ended December 31, 2025, compared to losses of $42.1 million in the prior-year period. This change was primarily due to a $33.4 million decrease in losses as a result of consolidating the Tin Building by Jean-Georges as of January 1, 2025, a $9.6 million decrease in losses from JG, and a $2.1 million increase in earnings for the Lawn Club.
Entertainment
Segment Adjusted EBITDA
The following table presents segment Adjusted EBITDA for Entertainment:
Entertainment Adjusted EBITDA
Years Ended December 31,
Change
in thousands except percentages
Entertainment revenue (a)
Total revenues
Entertainment costs (b)
Total operating expenses
Other income, net
Total expenses
Adjusted EBITDA
Entertainment revenue includes amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Entertainment costs include amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
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Entertainment Adjusted EBITDA increased $1.2 million compared to the prior-year period primarily due to the following:
Entertainment Revenue .
Entertainment revenue increased $8.0 million, or 16%, to $59.4 million for the year ended December 31, 2025, compared to $51.4 million in the prior-year period. This change was primarily due to increased revenue from the Aviators and special event revenue at the Las Vegas Ballpark, as well as increased concert-related revenue as a result of additional concerts on The Rooftop at Pier 17 compared to the prior year period.
Entertainment Costs .
Entertainment costs increased $6.7 million, or 13%, to $57.5 million for the year ended December 31, 2025, compared to $50.8 million in the prior-year period. This change was primarily due to operating expenses from the Aviators and related Las Vegas events as well as increased costs related to increased concert activity at the Seaport.
Landlord Operations
Segment Adjusted EBITDA
The following table presents segment Adjusted EBITDA for Landlord Operations:
Years Ended
Landlord Operations Adjusted EBITDA
December 31,
Change
in thousands except percentages
Rental revenue (a)
Other revenue
Total revenues
Operating costs (b)
Total operating expenses
Loss on assets held for sale
Other income (loss), net
Total expenses
Adjusted EBITDA
Rental revenue includes amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Operating costs include amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Landlord Operations Adjusted EBITDA loss increased $10.0 million compared to the prior-year period primarily due to the following:
Rental Revenue .
Rental revenue increased $2.1 million, or 6%, to $35.3 million for the year ended December 31, 2025, compared to $33.2 million in the prior-year period. This change was primarily driven by a decrease in reserves affecting rental revenue compared to the prior-year period, recognition of termination fee revenue, and an increase in rent escalation revenue and revenue generated by variable-rent leases.
Operating Costs .
Operating costs decreased $3.4 million, or 10%, to $31.6 million for the year ended December 31, 2025, compared to $35.0 million in the prior year period. This change was primarily due to decreases in marketing, insurance, and other landlord specific costs period over period.
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Loss on Assets Held for Sale
Loss on assets held for sale increased $11.0 million for the year ended December 31, 2025, compared to zero for the prior-year period, due to an $11.0 million loss recognized to write down the fair value of assets held for sale relating to 250 Water Street.
Other Income (Loss), Net .
Other income (loss), net decreased $4.4 million to a loss of $2.3 million for the year ended December 31, 2025, compared to income of $2.1 million in the prior year period. This change was primarily due to a $2.2 million loss on disposal of assets in 2025 as well as a $2.0 million litigation settlement received in 2024 that did not recur in 2025.
Comparison of the Years Ended December 31, 2024 and 2023
The following table sets forth our operating results:
Years Ended December 31,
Change
in thousands except percentages
REVENUES
Hospitality revenue
Entertainment revenue
Rental revenue
Other revenue
Total revenue
EXPENSES
Hospitality costs
Entertainment costs
Operating costs
General and administrative
Depreciation and amortization
Other
Total expenses
OTHER
Provision for impairment
Other income, net
Total other
Operating loss
Interest expense, net
Equity in losses from unconsolidated ventures
Loss on early extinguishment of debt
Loss before income taxes
Income tax (benefit) expense
Net loss
Preferred distributions to noncontrolling interest in subsidiary
Net loss attributable to common stockholders
Net loss decreased $684.9 million, or 82%, to $153.2 million for the year ended December 31, 2024, compared to $838.1 million in the prior-year period, primarily due to the $672.5 million in impairment charges in the third quarter of 2023, the $37.7 million decrease in equity in losses from unconsolidated ventures, and the $13.6 million decrease in depreciation and amortization, partially offset by a $32.7 million increase in general and administrative costs.
Items Included in Segment Adjusted EBITDA
See Segment Operating Results for discussion of significant variances for revenues and expenses included in Adjusted EBITDA.
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Items Excluded from Segment Adjusted EBITDA
The following includes information on the significant variances in expenses and other items not directly related to segment activities.
General and Administrative . General and administrative costs increased $32.7 million, or 107%, to $63.3 million for the year ended December 31, 2024, compared to $30.5 million in the prior-year period. This change was primarily due to a $19.3 million increase in separation costs, a $15.8 million increase in personnel and overhead expenses, and a $0.3 million increase in costs related to various transition services provided by HHH. These increases were partially offset by a $1.1 million decrease in shared service costs allocated from HHH based on various allocation methodologies and a $1.6 million decrease in expenses related to the development of the Company’s e-commerce platform in the prior-year period that did not occur in the current period.
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $13.6 million, or 28%, to $34.8 million for the year ended December 31, 2024, compared to $48.4 million in the prior-year period. This change was primarily due to a decrease in depreciation expense following the impairment recognized on the Company’s buildings and equipment in the third quarter of 2023.
Interest Expense, Net . Interest expense, net, increased $3.6 million, or 113%, to $6.8 million for the year ended December 31, 2024, compared to $3.2 million in the prior-year period. This change is primarily due to a $7.9 million decrease in amounts capitalized to development assets, partially offset by a $2.5 million increase in interest expense on secured mortgages payable and a $1.9 million increase in interest income.
Income Tax (Benefit) Expense. The following table summarizes information related to our income taxes:
Year Ended December 31,
Change
thousands except percentages
Income tax (benefit) expense
Loss before income taxes
Effective income tax rate
The Company’s effective tax rate was 0.0% for the year ended December 31, 2024, compared to 0.3% for the year ended December 31, 2023. The decrease was primarily due to the recording of a valuation allowance on the U.S. consolidated federal and state deferred tax asset balance.
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Segment Operating Results
Hospitality
Segment Adjusted EBITDA
The following table presents segment Adjusted EBITDA for Hospitality:
Hospitality
Adjusted EBITDA
Year Ended December 31,
Change
thousands except percentages
Hospitality revenue (a)
Total revenues
Hospitality costs (b)
Total operating expenses
Other income, net
Total expenses
Equity in earnings (losses) from unconsolidated ventures
Adjusted EBITDA
Hospitality revenue includes amounts related to intercompany transactions that are eliminated in the Statement of Operations.
Hospitality costs include amounts related to intercompany leases that are eliminated in the Statement of Operations.
Hospitality Adjusted EBITDA loss decreased $41.7 million compared to the prior-year period primarily due to the following:
Hospitality Revenue .
Hospitality revenue decreased $3.4 million, or 10%, to $30.0 million for the year ended December 31, 2024, compared to $33.4 million in the prior-year period. This change was primarily due to a $1.6 million decrease related to reduced restaurant performance and a $1.8 million decrease related to small popups and short-term activations in the Cobble & Co and Garden Bar spaces in 2023, with no similar activity in 2024.
Hospitality Costs .
Hospitality costs decreased $2.4 million, or 5%, to $41.7 million for the year ended December 31, 2024, compared to $44.1 million in the prior-year period, primarily due to decreases in variable costs such as food and beverage costs and labor costs.
Other Income, Net .
Other income, net, was $4.5 million for the year ended December 31, 2024, compared to an immaterial amount in the prior-year period. This Other income primarily represents reimbursements from CCMC received in 2024 relating to prior period operating expenses.
Equity in Earnings (Losses) from Unconsolidated Ventures.
Equity in losses from unconsolidated ventures decreased $38.3 million, or 48%, to $42.1 million for the year ended December 31, 2024, compared to $80.4 million in the prior-year period. This change was primarily due to a $10.0 million impairment recognized in the year ended December 31, 2024 related to JG and a $37.0 million impairment recognized in the year ended December 31, 2023 against the carrying value of the Company’s investments in unconsolidated ventures, which included $30.8 million related to JG, $5.0 million related to Ssäm Bar, and $1.2 million related to the Tin Building by Jean-Georges. Excluding the impact of the impairments, equity losses decreased $11.1 million, primarily related to a $7.7 million decrease for the Tin Building by Jean-Georges, a $1.2 million decrease in losses for Ssäm Bar, which closed in the third quarter of 2023, and a $1.8 million decrease in losses at The Lawn Club.
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Entertainment
Segment Adjusted EBITDA
The following table presents segment Adjusted EBITDA for Entertainment:
Entertainment
Adjusted EBITDA
Year Ended December 31,
Change
thousands except percentages
Entertainment revenue (a)
Total revenues
Entertainment costs (b)
Total operating expenses
Other income, net
Total expenses
Adjusted EBITDA
Entertainment revenue includes amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Entertainment costs include amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Entertainment Adjusted EBITDA income decreased $4.2 million compared to the prior-year period primarily due to the following:
Entertainment Revenue .
Entertainment revenue decreased $5.1 million, or 9%, to $51.4 million for the year ended December 31, 2024, compared to $56.5 million in the prior-year period. This change was primarily due to a $2.2 million decrease in concession sales and ticket sales at the Las Vegas Ballpark, a $2.2 million decrease in revenue related to a Winterland Skating concept at the Seaport in 2023 that was not repeated in 2024, and a $1.1 million decrease in concert series revenue at the Seaport.
Entertainment Costs .
Entertainment costs decreased $0.7 million, or 1%, to $50.8 million for the year ended December 31, 2024, compared to $51.5 million in the prior-year period. This change was primarily due to a $2.5 million decrease in breakdown and removal costs associated with the seasonal Winterland Skating concept at the Seaport in 2023, a $1.9 million decrease in costs associated with the Las Vegas Ballpark, partially offset by a $1.0 million increase in costs associated with the concert series at the Seaport, a $0.4 million increase in costs associated with special events at the Las Vegas Ballpark and a $1.9 million increase in provision for doubtful debts related to entertainment events.
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Landlord Operations
Segment Adjusted EBITDA
The following table presents segment Adjusted EBITDA for Landlord Operations:
Landlord Operations
Adjusted EBITDA
Year Ended December 31,
Change
thousands except percentages
Rental revenue (a)
Other revenue
Total revenues
Operating costs (b)
Total operating expenses
Other income, net
Total expenses
Adjusted EBITDA
Rental revenue includes amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Operating costs include amounts related to intercompany transactions that eliminate in the Company’s Statement of Operations.
Landlord Operations Adjusted EBITDA loss increased $1.7 million compared to the prior-year period primarily due to the following:
Rental Revenue .
Rental revenue increased $3.1 million, or 10%, to $33.2 million for the year ended December 31, 2024, compared to $30.1 million in the prior-year period. This change was primarily driven by a $5.2 million increase in rental revenue at the Fulton Market Building due to the commencement of the Alexander Wang lease at the end of 2023. This increase was partially offset by a $1.7 million decrease at Schermerhorn Row mainly due to decreased occupancy and percent rents.
Operating Costs .
Operating costs increased $2.7 million, or 8%, to $35.0 million for the year ended December 31, 2024, compared to $32.4 million in the prior year period. This change was primarily due to a $1.2 million increase in professional services fees and a $1.4 million increase in utilities, maintenance and cleaning costs.
Other Income, Net .
Other income, net increased $2.1 million to $2.1 million for the year ended December 31, 2024, compared to an immaterial amount in the prior year period. This Other income primarily represents a $2.0 million legal settlement in the year ended December 31, 2024.
Liquidity and Capital Resources
Prior to the Separation, we operated as a division within HHH’s consolidated structure, which uses a centralized approach to cash management and financing of our operations. This arrangement is not reflective of the manner in which we would have financed our operations had we been an independent, publicly traded company during the entirety of the periods presented. The cash and cash equivalents held by HHH at the corporate level are not specifically identifiable to us and, therefore, have not been reflected in our Consolidated and Combined Financial Statements. As of December 31, 2025 and December 31, 2024, our cash and cash equivalents were $77.8 million and $165.7 million, respectively. As of December 31, 2025 and December 31, 2024, our restricted cash was $9.6 million and $2.2 million, respectively. Restricted cash is segregated in escrow accounts related to payment of principal and interest on the Company’s outstanding mortgages payable as well as the buyer’s deposit related to the sale of 250 Water Street.
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HHH’s third-party long-term debt and the related interest expense have not been allocated to us for any of the periods presented as we were not the legal obligor nor were we a guarantor of such debt. As of December 31, 2025 and December 31, 2024, we had third-party mortgages payable of $99.6 million and $102.4 million, respectively, related to our 250 Water Street development, a variable-rate mortgage which requires monthly installments of only interest, and the Las Vegas Ballpark, a fixed-rate mortgage which requires semi-annual installments of principal and interest. See Note 6 – Mortgages Payable, Net in the Notes to the Consolidated and Combined Financial Statements included in this Annual Report for additional information. As of December 31, 2025 and December 31, 2024, the Company’s secured mortgage loans did not have any undrawn lender commitment available to be drawn for property development. In connection with the Separation, on July 31, 2024, the variable rate mortgage related to 250 Water Street was refinanced, with HHH paying down $53.7 million of the outstanding principal balance and SEG refinancing the remaining $61.3 million at an interest rate of SOFR plus a margin of 4.5% and with a scheduled maturity date of July 1, 2029. On January 1, 2025, the mortgage loan on 250 Water Street was amended, increasing the stated margin rate from 5.0% to 7.0%. See Note 6 – Mortgages Payable, Net in the Notes to the Consolidated and Combined Financial Statements included in this Annual Report for additional information. As of December 31, 2025, we classified the mortgage loan on 250 Water Street as held for sale and subsequent to year end, in conjunction with the sale of the property, the mortgage loan was paid off.
Following the Separation, our capital structure and sources of liquidity have changed from our historical capital structure because HHH is no longer financing our operations, investments in joint ventures, and development and redevelopment projects. Our development and redevelopment opportunities are capital intensive and will require significant additional funding, if and when pursued. Our ability to fund our operating needs and development and redevelopment projects will depend on our future ability to continue to manage cash flow from operating activities, and on our ability to obtain debt or equity financing on acceptable terms. In addition, we typically must provide completion guarantees to lenders in connection with their financing for our development and redevelopment projects. Additionally, on July 31, 2024, a subsidiary of HHH that became our subsidiary in connection with the Separation, issued 10,000 shares of 14.000% Series A preferred stock, par value $0.01 per share, with an aggregate liquidation preference of $10.0 million.
Management believes that our existing cash balances and restricted cash balances, along with access to capital markets, taken as a whole, provide (i) adequate liquidity to meet all of our current and long-term (beyond 12 months) obligations when due, including our third-party mortgages payable, and (ii) adequate liquidity to fund capital expenditures and development and redevelopment projects. However, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including (1) our credit ratings, including the lowering of any of our credit ratings, or absence of a credit rating, (2) the liquidity of the overall capital markets, and (3) the current state of the economy and, accordingly, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms in the future, or at all, which could have a negative impact on our liquidity and capital resources. The cash flows presented in our Consolidated and Combined Statement of Cash Flows may not be indicative of the cash flows we would have recognized had we operated as a standalone publicly traded company for the periods presented.
Prior to the Separation, HHH contributed additional cash to the Company in order to fund its operations until a permanent capital structure was finalized. However, we do not expect HHH to have an ongoing long-term relationship with the Company and HHH will not have any ongoing financial commitments to the Company.
On October 17, 2024, we completed our previously announced rights offering, in which we distributed to holders of our common stock transferable subscription rights to purchase up to an aggregate of 7,000,000 shares of common stock at a subscription price of $25.00 per whole share. As a result of the rights offering, we issued 7,000,000 shares of common stock for gross proceeds of $175.0 million. The rights offering generated net proceeds to us of approximately $166.8 million after deducting approximately $8.2 million in offering expenses.
On February 25, 2026, the Company’s board of directors approved a common stock repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase shares (the “Common Stock Repurchase Program”). Refer to Note 15 – Subsequent Events for additional details.
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Cash Flows
The following table sets forth a summary of our cash flows:
Years Ended December 31,
in thousands
Cash used in operating activities
Cash used in investing activities
Cash (used in) provided by financing activities
Operating Activities
Cash used in operating activities decreased $3.0 million to $49.7 million in the year ended December 31, 2025, compared to $52.7 million in the prior-year period. The decrease primarily relates to changes in cash used in operating activities in each of our segments and decreased general and administrative expenses.
Cash used in operating activities increased $1.9 million to $52.7 million in the year ended December 31, 2024, compared to $50.8 million in the prior-year period. The increase in cash used in operating activities was primarily due to increased costs incurred in the year ended December 31, 2024 related to the Separation from HHH, with no similar activity in the prior-year period, offset by decreases in cash used in operating activities at our segments
While we have historically used cash in operating activities, we expect that the additional liquidity provided by the Rights Offering will provide sufficient capital to fund operations until such time that we may generate cash from operating activities.
Investing Activities
Cash used in investing activities decreased $79.1 million to $23.8 million in the year ended December 31, 2025, compared to $102.9 million in the prior-year period. The decrease in cash used in investing activities was primarily related to the consolidation of the Tin Building by Jean-Georges.
Cash used in investing activities decreased $5.4 million to $102.9 million in the year ended December 31, 2024, compared to $108.3 million in the prior-year period. The decrease in cash used in investing activities was primarily related to decreases in investments in operating property improvements, property development, and funding of operating costs related to the Tin Building by Jean-Georges, partially offset by restricted cash released from escrow related to the 250 Water Street development in the year ended December 31, 2024.
Financing Activities
Cash provided by financing activities decreased $286.6 million to $7.0 million used in the year ended December 31, 2025, compared to $279.6 million provided in the prior-year period, primarily due to the elimination of net transfers provided by HHH to fund the operating and investing activities described above.
Cash provided by financing activities increased $143.4 million to $279.6 million in the year ended December 31, 2024, compared to $136.2 million in the prior-year period, primarily due to the proceeds received from the Rights Offering in the year ended December 31, 2024 and an increase in the net transfers provided by HHH prior to the Separation to fund the operating and investing activities explained above.
Contractual Obligations
We have material contractual obligations that arise in the normal course of business. Contractual obligations entered into prior to the Separation may not be representative of our future contractual obligations profile as an independent, publicly traded company. Our pre-Separation contractual obligations do not reflect changes that we experienced as a result
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of the Separation, such as contractual arrangements that we entered into that were historically entered into by the HHH for shared services.
As of December 31, 2025, we had outstanding mortgages payable related to the 250 Water Street development and Las Vegas Ballpark, which are collateralized by certain of the Company’s real estate assets. A summary of our mortgages payable as of December 31, 2025, and December 31, 2024 can be found in Note 6 – Mortgages Payable, Net in the Notes to Consolidated and Combined Financial Statements, included in this Annual Report. The mortgage loan on 250 Water Street was paid in full in connection with the sale of 250 Water Street subsequent to year end. Refer to Note 15 – Subsequent Events for additional details.
We lease land or buildings at certain properties from third parties. Rental payments are expensed as incurred and have been, to the extent applicable, straight-lined over the term of the lease. Contractual rental expense was $6.9 million, $6.6 million and $6.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. The amortization of straight-line rents included in the contractual rent amount was $2.5 million, $2.0 million and $2.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. A summary of our lease obligations as of December 31, 2025 and 2024, can be found in Note 11 – Leases in the Notes to Consolidated and Combined Financial Statements included in this Annual Report.
Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires management to make informed judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.
We believe that of our significant accounting policies, which are described in Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated and Combined Financial Statements included in this Annual Report, the accounting policies below involves a greater degree of judgment and complexity. Accordingly, we believe these are the most critical to understand and evaluate fully our financial condition and results of operations.
Impairments
Methodology
We review our long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount is not expected to be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is expensed to operations and the carrying amount of the asset is reduced. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset.
Judgments and Uncertainties
An impairmentloss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value. The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, pricing, development costs, sales pace and capitalization rates, selling costs, and estimated holding periods for the applicable assets. As such, the evaluation of anticipated cash flows is highly subjective and is based in part on assumptions that could differ materially from actual results in future periods. Unfavorable changes in any of the primary assumptions could result in a reduction of anticipated future cash flows and could indicate property impairment. Uncertainties related to the primary assumptions could affect the timing of an impairment. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.
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Variable Interest Entities
Methodology
Our Consolidated and Combined Financial Statements include all of our accounts, including our majority owned and controlled subsidiaries and VIEs for which we are the primary beneficiary. If the Company determined it was not the primary beneficiary of a VIE during the years ended December 31, 2025, 2024 and 2023, the Company did not consolidate the VIE in which it holds a variable interest.
Judgments and Uncertainties
The Company determines whether it is the primary beneficiary of a VIE upon initial involvement with a VIE and reassesses whether it is the primary beneficiary of a VIE on an ongoing basis. The determination of whether an entity is a VIE and whether the Company is the primary beneficiary of a VIE is based upon facts and circumstances for the VIE and requires significant judgments such as whether the entity is a VIE, whether the Company’s interest in a VIE is a variable interest, the determination of the activities that most significantly impact the economic performance of the entity, whether the Company controls those activities, and whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.
The Tin Building by Jean-Georges was previously classified as a variable interest entity. As of January 1, 2025, in conjunction with the internalization of food and beverage operations, the Company, through employing the management team personnel and directing the operating activities that most significantly impact the Tin Building by Jean-Georges’ economic performance, became the primary beneficiary of the Tin Building by Jean-Georges and began consolidating the Tin Building by Jean-Georges into the Company’s financial statements. See Note 2 – Investments in Unconsolidated Ventures for additional information.
On June 30, 2025, the Assignors entered into a membership interest transfer agreement pursuant to which the Assignors transferred 100% of their interests in the Tin Building by Jean-Georges to an indirect subsidiary of the Company. As a result of the transfer, an indirect subsidiary of the Company became the sole member of the Tin Building by Jean-Georges. Subsequent to year end, the Tin Building by Jean-Georges ceased its operations. Refer to Note 15 – Subsequent Events for additional details.
Investments in Unconsolidated Ventures
Methodology
The Company’s investments in unconsolidated ventures are accounted for under the equity method to the extent that, based on contractual rights associated with the investments, the Company can exert significant influence over a venture’s operations. Under the equity method, the Company’s investment in the venture is recorded at cost and is subsequently adjusted to recognize the Company’s allocable share of the earnings or losses of the venture. Dividends and distributions received by the business are recognized as a reduction in the carrying amount of the investment.
The Company evaluates its equity method investments for significance in accordance with Regulation S-X, Rule 3-09 and Regulation S-X, Rule 4-08(g) and presents separate annual financial statements or summarized financial information, respectively, as required by those rules. The Company is required to file audited financial statements of the Fulton Seafood Market, LLC for the year ended December 31, 2024. The Company’s investment in the Fulton Seafood Market, LLC does not meet the threshold necessary for disclosure of audited financial statements in 2023, however for comparability, audited financial statements of Fulton Seafood Market, LLC for the years ended December 31, 2024, and 2023 are attached as exhibits to this Annual Report.
For investments in ventures where the Company has virtually no influence over operations and the investments do not have a readily determinable fair value, the business has elected the measurement alternative to carry the securities at cost
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less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the issuer.
Judgments and Uncertainties
Generally, joint venture operating agreements provide that assets, liabilities, funding obligations, profits and losses, and cash flows are shared in accordance with ownership percentages. For certain equity method investments, various provisions in the joint venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and preferred returns may result in the Company’s economic interest differing from its stated ownership or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities. For these investments, the Company recognizes income or loss based on the joint venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing percentage.
Capitalization of Development Costs
Methodology
Development costs, which primarily include direct costs related to placing the asset in service associated with specific development properties, are capitalized as part of the property being developed. Construction and improvement costs incurred in connection with the development of new properties, or the redevelopment of existing properties are capitalized before they are placed into service. Costs include planning, engineering, design, direct material, labor and subcontract costs. Real estate taxes, utilities, direct legal and professional fees related to the sale of a specific unit, interest, insurance costs and certain employee costs incurred during construction periods are also capitalized. Capitalization commences when the development activities begin and cease when a project is completed, put on hold or at the date that the Company decides not to move forward with a project. Capitalized costs related to a project where the Company has determined not to move forward are expensed if they are not deemed recoverable. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Demolition costs associated with redevelopments are expensed as incurred unless the demolition was included in the Company’s development plans and imminent as of the acquisition date of an asset. Once the assets are placed into service, they are depreciated in accordance with the Company’s policy. In the event that management no longer has the ability or intent to complete a development, the costs previously capitalized are evaluated for impairment.
Judgments and Uncertainties
The capitalization of development costs requires judgment, and can directly and materially impact our results of operations because, for example, (i) if we don’t capitalize costs that should be capitalized, then our operating expenses would be overstated during the development period, and the subsequent depreciation of the developed real estate would be understated, or (ii) if we capitalize costs that should not be capitalized, then our operating expenses would be understated during the development period, and the subsequent depreciation of the real estate would be overstated. For the years ended December 31, 2025 and 2024, we capitalized development costs of $6.5 million and $50.4 million, respectively.
