The Company conducts a portion of its property rental activities through investments in unconsolidated entities. The Company’s partners in these unconsolidated entities are unrelated real estate entities or commercial enterprises. The Company and its partners in these unconsolidated entities make initial and/or ongoing capital contributions to these unconsolidated entities. The obligations to make capital contributions are governed by each unconsolidated entity’s respective operating agreement and related governing documents.

As of June 30, 2023, the Company had investments in seven unconsolidated entities as follows:


		Seritage %	# of	Total
Unconsolidated Entities	Entity Partner(s)	Ownership	Properties	GLA
GS Portfolio Holdings II LLC ("GGP I JV")	Brookfield Properties Retail (formerly GGP Inc.)	50.0%	2		136,000
GS Portfolio Holdings (2017) LLC ("GGP II JV")	Brookfield Properties Retail (formerly GGP Inc.)	50.0%	3		262,500
SPS Portfolio Holdings II LLC ("Simon JV")	Simon Property Group, Inc.	50.0%	3		275,700
Mark 302 JV LLC ("Mark 302 JV")	An investment fund managed by Invesco Real Estate	50.0%	1		51,500
SI UTC LLC ("UTC JV")	A separate account advised by Invesco Real Estate	50.0%	1		106,200
Tech Ridge JV Holding LLC ("Tech Ridge JV")	An affiliate of RD Management	50.0%	1		—
Landmark Land Holdings, LLC ("Landmark JV")	The Howard Hughes Corporation and Foulger-Pratt	31.3%	1		—
			12		831,900

The Company has contributed certain properties to unconsolidated entities in exchange for equity interests in those unconsolidated entities. The contribution of property to unconsolidated entities is accounted for as a sale of real estate and the Company recognizes the gain or loss on the sale (the “Gain (Loss)”) based upon the transaction price attributed to the property at the closing of the unconsolidated entities transaction (the “Contribution Value”). The Gain or (Loss) is included in gain on sale of real estate on the condensed consolidated statements of operations.

In certain circumstances, the Contribution Value is subject to revaluation as defined in the respective unconsolidated entity agreements, which may result in an adjustment to the gain or loss recognized. If the Contribution Value is subject to revaluation, the Company initially recognizes the gain or loss at the value that is the expected amount within the range of possible outcomes and will re-evaluate the expected amount on a quarterly basis through the final determination date.

Upon revaluation, the primary inputs in determining the Contribution Value will be updated for actual results and may result in a cash settlement or capital account adjustment between the unconsolidated entity partners, as well as an adjustment to the initial gain or loss.

Each reporting period, the Company re-analyzes the primary inputs that determine the Contribution Value and the gain or loss for those unconsolidated entities subject to a revaluation. The following table summarizes the properties contributed to the Company’s unconsolidated entities (in millions):

The following tables present combined condensed financial data for the Company’s unconsolidated entities (in thousands):


	June 30, 2023			December 31, 2022
ASSETS
Investment in real estate
Land	$	207,508		$	263,169
Buildings and improvements		393,538			419,920
Accumulated depreciation		(73,869	)		(68,482	)
		527,177			614,607
Construction in progress		144,164			219,870
Net investment in real estate		671,341			834,477
Cash and cash equivalents		37,930			29,072
Investment in unconsolidated entities		53,901			55,247
Tenant and other receivables, net		5,408			5,041
Other assets, net		45,577			14,245
Total assets	$	814,157		$	938,082

LIABILITIES AND MEMBERS' INTERESTS
Liabilities		495			—
Accounts payable, accrued expenses and other liabilities		88,555			52,808
Total liabilities		89,050			52,808

Members' Interest
Additional paid in capital		729,375			957,154
Retained earnings (accumulated deficit)		(4,268	)		(71,880	)
Total members' interest		725,107			885,274
Total liabilities and members' interest	$	814,157		$	938,082


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Total revenue	$	5,072		$	7,919		$	11,376		$	15,759
Property operating expenses		(2,852	)		(3,110	)		(5,845	)		(7,036	)
Depreciation and amortization		(4,563	)		(6,503	)		(9,538	)		(14,011	)
Operating loss		(2,343	)		(1,694	)		(4,007	)		(5,288	)
Other expenses		(115	)		(826	)		(391	)		(2,260	)
Gains (losses) and (impairments)		(24,918	)		(32,474	)		(95,718	)		(93,614	)
Net loss	$	(27,376	)	$	(34,994	)	$	(100,116	)	$	(101,162	)
Equity in loss of unconsolidated entities (1)	$	(13,698	)	$	(33,720	)	$	(50,070	)	$	(66,796	)

(1)

Equity in loss of unconsolidated entities on the condensed consolidated statements of operations includes basis difference adjustments.

The Company shares in the profits and losses of these unconsolidated entities generally in accordance with the Company’s respective equity interests. In some instances, the Company may recognize profits and losses related to investment in an unconsolidated entity that differ from the Company’s equity interest in the unconsolidated entity. This may arise from impairments that the Company recognizes related to its investment that differ from the impairments the unconsolidated entity recognizes with respect to its assets, differences between the Company’s basis in assets it has transferred to the unconsolidated entity and the unconsolidated entity’s basis in those assets or other items. In conjunction with the Plan of Sale, the Company recognized a change in plan to reduce the holding periods of all its investments in unconsolidated entities, which triggered the need for a quarterly impairment analysis pursuant to ASC 323, Equity Method and Joint Ventures. The Company utilizes appraisals and third-party prepared fair value estimates as well as negotiated offers to sell the investments for the impairment analysis. As a result of the Company’s analysis, other-than-temporary impairment of $12.7 million and $32.5 million was recorded against equity method investments in three unconsolidated entities for the three and six months ended June 30, 2023 and 2022, respectively.

During the three and six months ended June 30, 2023, the Company sold its interest in one unconsolidated entity, resulting in a gain of $7.3 million which is included on the condensed consolidated statements of operations.

During the three months ended June 30, 2023, the Company did not exercise any put rights. During the six months ended June 30, 2023, the Company exercised its put right on one Unconsolidated Property. The Company has exercised its put rights on seven Unconsolidated Properties since January 1, 2022. The Company closed on the sale of one exercised put right during the three and six

months ended June 30, 2023. During the year ended December 31, 2022, the Company closed on the sale of three of the previously exercised put rights. The Company’s partners assess impairment on its underlying assets pursuant to ASC 360, Property, Plant and Equipment, and recorded impairment on unconsolidated properties of $70.8 million and $61.1 million for the six months ended June 30, 2023 and 2022, respectively. The Company's 50% share of these impairment charges is included in equity in loss of unconsolidated entities on the condensed consolidated statements of operations. No such impairment was recorded during the three months ended June 30, 2023 and 2022, respectively.

The Company acts as the operating partner and day-to-day manager for the Mark 302 JV, the UTC JV, and Tech Ridge JV. The Company is entitled to receive certain fees for providing management, leasing, and construction supervision services to certain of its unconsolidated entities. During the three months ended June 30, 2023 and 2022, the Company recorded management and related fees of $0.4 million and $0.3 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded management and related fees of $0.6 million and $2.1 million, respectively. These fees are included in management and other fee income on the condensed consolidated statements of operations. Refer to Note 2 for the Company’s accounting policies.