Seaport Entertainment Group Inc. (SEG) Q2 2026 Earnings Report, Transcript and Summary

Greetings. Welcome to the Seaport Entertainment Group Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Jason Wilk, Senior Vice President of Finance. Thank you, Jason. You may begin.

Thank you, operator, and good morning, everyone. With me today is our President and Chief Executive Officer, Matt Partridge; and our Chief Financial Officer and Treasurer, Lenah Elaiwat. Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q and other SEC filings. You can find our SEC reports, earnings release quarterly supplemental information and our most recent investor presentation on our website at seaportentertainment.com. With that, I will turn the call over to Matt.

Thanks, Jason, and good morning, everyone. On our last earnings call, I described the first quarter as a turning point for our company, and I'm excited to start today's call by sharing an important milestone for Seaport Entertainment Group. In the second quarter of 2026, we achieved positive operating EBITDA and positive non-GAAP adjusted net income for the first time in the company's history. This quarter's results reflect continued momentum since our inception, representing our seventh consecutive quarter of double-digit non-GAAP adjusted net income per share improvement and a 103% year-over-year improvement in Q2 as the highest comparable quarter of per share improvement during our 2-year existence. Our progress and improving trajectory towards profitability are a direct reflection of the work our team has been doing since our spin-off to stabilize the company and its operations. While we're proud of that financial results are beginning to reflect the hard work put in by our team, we want to maintain balanced expectations. Timing of new tenant openings, scheduling nuances related to our event, concert and baseball operations and the general seasonality of our businesses all create variability quarter-to-quarter. As a result, the next 3 quarters should show year-over-year improvement, but may not result in the same level of per share performance we achieved this quarter. As our tenants and new businesses open and stabilize, our events business continues to grow, and we realize the full year benefits of the changes we've made to improve our organizational efficiency, we anticipate an improved earnings profile in 2027 and even more so in 2028. This is further supported by the fact we have more than 194,000 square feet of non-income-producing space opening with new concepts in the next 18 months, including the Balloon Museum, Willett's, Flanker Kitchen and Sports Bar, and Hidden Boot Saloon, the new concept from the team behind Public Records, the Pier 17 event space and the Meow Wolf. That is more than $20 million of incremental annualized operating EBITDA that is yet to materialize in our numbers. As we work towards initial stabilization in 2028, we are focused on operating our assets in a way that delivers a more compelling growth profile than a traditional real estate investment company. This means day-to-day place making, marquee events, brand and culturally driven activations and sponsorships and customer engagement that not only brings people into our venues, but drives incremental revenue, percentage rent and improved leasing spreads. This quarter is a reflection of the progress we can continue to create as we emphasize disciplined execution, and it gives us conviction in our long-term plan. We're building a set of complementary businesses that we believe are capable of generating sustainable long-term operational cash flow and earnings growth. One of the key contributors to our improved financial performance has been our focus on optimizing our G&A cost structure. We have made meaningful progress this year towards reducing audit fees, technology costs and the reshaping of our organization. For some context, after adjusting for onetime leadership transition costs, we have reduced our trailing 12-month general and administrative costs by more than 20% over the past 9 months, going from $34 million in trailing 12-month G&A as of Q3 2025 to less than $27 million as of Q2 2026. We expect this trend to continue as the full year benefits of the changes we've made are holistically reflected in 2027, and we'll evaluate further opportunities to reduce costs through, among other things, the nonrenewal or renegotiation of expiring legacy contracts and service agreements. From a Seaport leasing perspective, activity has slowed a bit this quarter, though for good reason. We simply leased or programmed most of our available space. At spin, we had roughly 150,000 square feet of space available to lease or program or just under 200,000 square feet if we factor in the repositioning and leasing of the Tin Building. Today, that number stands at less than 50,000 square feet or just over 10% of the total space in the Seaport. The remaining vacant spaces continue to generate strong interest, especially after our recent leasing and programming announcements. However, the remaining spaces are generally smaller footprints with broader appeal, which is leading to more detailed negotiations as we work to identify the right tenants and deal structures for each space. As a result, we expect leasing timelines for the remaining spaces to take a bit longer, but we remain confident in our ability to drive overall leasing and programming demand and improve rent terms. One of the more notable leases we signed earlier this year is with the Balloon Museum. This was an ambitious project from the start, requiring us to deliver a white box to the tenant in less than 120 days and then working with the tenant towards their planned opening within 60 days thereafter. I'm pleased to say our team delivered on time and rent is expected to commence later this month. When open, we anticipate the Balloon Museum will be a key driver of additional foot traffic to the Seaport neighborhood, benefiting many of the businesses in the area. As an indoor ticketed experience, we also hope it will partially offset some of the seasonality related to the colder months when pedestrian activity typically slows. Combined with the rooftop at Pier 17 and the upcoming opening of Meow Wolf in 2028, the Balloon Museum adds to the neighborhood's growing roster of culturally relevant entertainment experiences, helping solidify the Seaport as one of New York City's premier entertainment destinations. On the rooftop at Pier 17, we are seeing continued strength in our concert business. During the second quarter, the rooftop hosted 22 shows, including 13 sellouts and achieved a 91% sell-through rate. Demand for our premium upsell offerings, including the Patron Patio, Heineken Silver Zone and the Liberty Club continues to build, and we are also seeing a higher average food and beverage spend per attendee. With more than 40 shows remaining in the 2026 season, the concert series continues to perform well and a growing demand for event-driven experiences on the rooftop reinforces the increasing value of the venue beyond concerts for our company and the broader community. I spoke about the growth of our events pipeline last quarter, and demand has continued with several high-profile events that have helped maintain the Seaport's position as a premier destination for sports, music, entertainment and cultural events. Some of our recent event highlights at the Seaport include hosting the first-ever live U.S. Men's National Team World Cup roster reveal and fan celebration in advance of the 2026 FIFA World Cup, which we previewed during our last earnings call. HBO Max's premier screening of the newest season of House of the Dragon. TNT Sports' first-ever Roland-Garros experience, which was an immersive 3-day fan experience with custom-built tennis court celebrating the iconic French Open, Aussie Barbecue, an annual music festival featuring Australian talent and culture, which relocated to the Seaport this year from Central Park Summer Stage and lululemon's Summer series, which kicked off their New York residency on the rooftop of Pier 17 with a packed Pilates session followed by a performance by DJ Kaskade. Part of what has helped drive increased event activity is our new restaurant concept, Sadie's and Sadie's Garden Bar. We previously shared that we envisioned Sadie's as the central hub of activity on the Cobblestones this summer, serving as a destination for sporting events, watch parties, live music, happy hours and cultural programming. That vision played out even better than we expected. One key driver behind the outperformance was the New York Knicks' historic NBA championship run, which brought thousands of fans to Sadie's and Sadie's Garden Bar, Lawn Club and other businesses throughout the Seaport for every post-season game. The excitement culminated with multiple game five watch parties that stretched from the Heineken River Deck on Pier 17 to the Cobble Stones at Sadie's, bringing more than 10,000 people to the Seaport. It was an unforgettable moment for New York City, and we're proud that Sadie's became a place for New Yorkers to experience the excitement together. That celebratory spirit rolled right into FIFA World Cup, driving strong visitation to the neighborhood from locals and tourists alike. Sadie's Garden Bar, in particular, benefited from consistent soccer programming, making it a go-to destination for fans looking for a great atmosphere to catch their favorite game. In addition to the 2026 activities driven by the FIFA World Cup, we also benefited from events tied to America's 250th anniversary. On July 4, Pier 17 welcomed 2 tall ships as part of the International Sail 250 celebration that took over the New York Waterfront. We also hosted the 50th anniversary of the Macy's 4th of July fireworks, including the NBC broadcast of the event on the rooftop of Pier 17, with Sadie's hosting a sold-out 4th of July block party as part of the broader holiday celebrations. Also as part of the America 250 celebrations, the South Street Seaport Museum is hosting the Promise of Liberty, a limited time exhibition featuring several of the nation's original founding documents, including the Declaration of Independence, the United States Constitution and an advanced copy of Dr. Martin Luther King Jr.'s I Have a Dream speech delivered during the March on Washington. It has truly been a special summer for the Seaport to play such a central role in the celebrations around this milestone anniversary. As one of New York City's oldest neighborhoods and a place deeply connected to the nation's early history, the Seaport provides a fitting backdrop for celebrating America's founding. The visibility and visitation our events and programming brings to the Seaport are invaluable and the financial benefits they bring have been a key catalyst to our improvement. We look forward to continuing the momentum with an ongoing slate of activities, which includes the return of Seaport Cinema, our popular outdoor movie series at Pier 17, Bastid's Barbecue a hip-hop music and food festival, which will take over Sadie's Garden Bar and The Cobblestones this weekend. The expansion of the Seaport Racket Club in celebration of Tennis' U.S. Open and the second year of New York City Wine and Food Festival, among many others. Moving West, the momentum is just as strong out in Las Vegas. The aviators opened the season in first place in the Pacific Coast League, and I'm excited to report they held that position through the first half of the season. As a result, they've secured their spot in the playoffs this fall. Additionally, in April, the team held its highest attended regular season game in franchise history with more than 11,000 fans. The Las Vegas ballpark also hosted a sold-out 6 game series with the Athletics, drawing more than 50,000 fans and 3 sold-out games of Banana Ball, the fast-paced high-energy version of baseball made popular by the Savannah Bananas. These non-aviator events resulted in the highest-grossing 1-day food and beverage sales and the highest grossing 1-day merchandise sales in the history of the ballpark. Combined with an increasing focus on expense management, we're encouraged by the progress made by our team in Las Vegas as they continue to deliver an amazing ballpark experience across multiple event types. Overall, everything I've discussed comes back to progress. We're making progress organizationally, operationally and financially. We said we were entering the year from the strongest position since our inception and that we expect our momentum will carry through 2027 with continued operating efficiency and cash flow improvement, allowing us to achieve initial stabilization of our existing assets by 2028. This quarter's results, our first with positive operating EBITDA in all segments along with positive non-GAAP adjusted net income, show that improving trajectory remains firmly intact. I'm optimistic about where we're headed and our opportunities for future growth. But none of this happens without our team, and I want to thank everyone across the organization for their continued commitment and hard work as we keep moving forward. With that, I'll turn it over to Lenah, who will walk through our second quarter financial performance in more detail.

Thanks, Matt, and good morning, everyone. As you've likely gathered from Matt's remarks, it's been a busy quarter. Our results show the meaningful progress we've made, reflecting the exceptional execution, hard work and dedication of our team. Before I walk through our Q2 results in detail, I want to remind everyone that we changed our segment reporting at the start of the year to better reflect how we view the business. We use operating EBITDA to report the overall performance of our 3 operating segments: landlord operations, hospitality and entertainment. We think the revised definition we shared during our last call gives a clearer, more comparable picture of how each operating business is performing. Unless we note otherwise, all operating EBITDA figures discussed today are net of intercompany transactions. For the quarter ending June 30, 2026, total operating EBITDA improved by $5.6 million from a loss of $1.1 million in the same quarter prior year to positive operating EBITDA of $4.5 million with all business segments generating positive results. The improvement was driven primarily by the benefits recognized from closing the Tin Building operations in Q1 of 2026 and the early termination of the Nike lease at Pier 17, along with several operational improvements that I'll outline shortly. As we previously disclosed in 2025, Nike exercised a lease termination option that revised their lease term to expire in Q1 of 2027, 3 years ahead of the original contractual end date. At that time, we received $2 million of termination fees with another $2 million due in Q1 of 2027, and we were continuing to receive contractual rent through the duration of this revised lease period. During the second quarter of this year, we entered into an agreement with Nike to terminate the lease effective April 30, 2026, and concurrently received the remaining termination payment and a payment for the majority of the remaining rent due under the lease. The full effects of these payments as well as our write-off of our straight-line rent balance related to this lease were recognized into rental income this quarter for a net effect of an additional $2.7 million in rental revenue year-over-year when compared to Nike's contractual rent revenue in prior year. Overall, rental revenue for the quarter increased $2.8 million or 67% year-over-year, mainly due to this transaction. This is a positive outcome for us as Nike surrendering of this space allows us to begin the construction of our planned event space in Pier 17 sooner than we originally anticipated. Additionally, year-over-year event-driven rental revenue increased across the property as demand for marquee events and activations has strengthened the Seaport's reputation as an entertainment destination. That growth, along with the start of GITANO's lease in April and Cork's opening that same month, fully offset the loss of rental income from the ESPN lease, which ended in the third quarter of 2025. I also want to share an update on the former IPIC Theater located in the Seaport. Blue Fox Entertainment, a global film distribution and film sales company, acquired the 46,000 square foot lease through IPIC's bankruptcy process, paying all outstanding balances. Blue Fox Entertainment plans to reimagine and rebrand the space to enhance the movie theater experience, and we look forward to working with their team. Within the landlord segment, operating costs continue to improve, down about $800,000 or 10% versus the prior year. The largest savings came from insurance premium reductions, along with reduced spending on cleaning, security and technology. Operating EBITDA for the quarter was $600,000, which improved by $3.6 million year-over-year. When excluding the effects of the Nike lease in both periods, landlord operating EBITDA improved by 23% over Q2 of prior year. Moving on to hospitality. This quarter also marks 2 important milestones within the segment. First, hospitality generated positive operating EBITDA of approximately $280,000, an improvement of $3.1 million year-over-year, driven primarily by a full quarter benefit of the closure of the Tin Building, which in prior year impacted EBITDA with a loss of $2.8 million. Second, Sadie's, our first internally developed and operated restaurant concept, generated positive operating EBITDA in its first full quarter of operation, which speaks to the strength of the concept and our team's execution. Further, Sadie's Garden Bar generated a 125% increase in year-over-year revenue compared to prior year when the outdoor bar at the center of the Cobblestones was not managed directly by SEG. While Sadie's has exceeded expectations, fueled in large part by the Knicks championship run and World Cup activity, our legacy full-service restaurants have faced softer top line sales. In response, the hospitality team is continuing to evaluate opportunities to strengthen performance, including menu optimization, expanded programming and targeted marketing to build awareness and drive visitation. Turning to entertainment. Operating EBITDA declined $1 million or 23% year-over-year, driven mainly by the concert series on the rooftop at Pier 17. In Q2 of 2026, we incurred increased repair and maintenance expenses as well as increased operating expenses related to the rooftop. Concerts EBITDA was also affected by decreased sponsorship revenue compared to prior year following the nonrenewal of a legacy sponsor. While replacing sponsorship partners is a longer-term proposition, it also opens the door to diversified opportunities that align with our entertainment-focused strategy and customer base. In Las Vegas, the team delivered higher operating EBITDA year-over-year despite hosting 7 fewer Aviators home games. Those results came from a focused strategy of disciplined cost management, matching game day expenses to attendance to continue improving operating costs. Las Vegas operating EBITDA also benefited from hosting the sold-out 3-day Banana Ball series as well as the 6 game sold-out Athletics run. The Athletics games drove an increase in quarterly merchandise sales of over 50% year-over-year. When excluding merchandise sold during the Athletics games at Las Vegas Ballpark, the Aviators retail sales increased 8% year-over-year despite 7 fewer games. Increasing merchandise sales has been a focus of the team this season. The family-friendly nature of the ballpark and Summerlin community allows the team to find fun and creative ways to engage the community with theme nights and related merchandise. Looking ahead, the remainder of the Aviators season promises plenty of excitement, including another chance at the Pacific Coast League Championship this September. In looking at G&A, a continued key initiative has been reducing our corporate cost structure towards stabilization, and we're seeing those efforts reflected in our quarterly results. General and administrative expense totaled $6.6 million in the second quarter, a $1.7 million or 20% improvement compared to $8.3 million in the second quarter of last year. When excluding restructuring-related severance costs and leadership transition costs, second quarter G&A improved by $2.9 million or 35% when compared to prior year and $1.2 million or 18% when sequentially compared to Q1 of 2026, as we've continued to streamline our cost structure. In other income or loss, we recorded a net expense of approximately $700,000 in the second quarter, mainly reflecting certain nonrecurring items such as preopening costs for Sadie's, Tin Building wind-down costs and certain legal expenses. In Q2 of 2026, we also recorded an additional $1.4 million loss on the sale of 250 Water Street. This loss is related to the estimated post-closing obligations required under the purchase and sale agreement and will be funded by the escrow that was set up at closing. During the quarter, we recorded net interest income of approximately $700,000, down approximately $100,000 or 14% from prior year, reflecting a lower interest rate environment. Equity and earnings or losses from unconsolidated ventures declined approximately $0.5 million or 61% year-over-year, reflecting lower EBITDA from Lawn Club and reduced earnings from the Jean-Georges Restaurant Group. At Lawn Club, revenue grew year-over-year, though higher operational costs resulted in lower net income. At Jean-Georges Restaurant Group, performance has been challenged thus far in '26 as new restaurants ramp up. Their team continues to focus on driving value through increased license and management fee income while improving existing restaurant operations. Second quarter net loss attributable to common stockholders improved 29% year-over-year to $10.5 million, while net loss per share improved to $0.82 from $1.16 loss in the second quarter of 2025. These year-over-year improvements reflect the benefits of stronger operational execution across multiple businesses, the Tin Building closure, termination revenue from Nike and continued progress on our G&A cost initiatives. On the balance sheet, capital expenditures totaled $14.8 million in the second quarter, with the majority invested in landlord work related to Balloon Museum, Flanker Kitchen and Sports Bar, Hidden Boot Saloon and other maintenance projects. We completed landlord work and delivered the Tin Building space to the Balloon Museum in June of 2026. And as Matt mentioned, we expect the museum to open soon and rent to commence concurrently with opening. At quarter end, we held a net cash position of $88.9 million with $127 million of cash, cash equivalents and restricted cash as of June 30, 2026. Of note, during the quarter, we received $20.8 million of the $27.8 million escrow related to the 250 Water Street post-closing obligations. Our only outstanding debt remains the $38.1 million Las Vegas ballpark loan, and we paid approximately $1 million of recurring principal payments during the quarter. We continue to maintain a strong balance sheet, which gives us flexibility as we deploy capital and keep improving operations. Before we open the call for questions, I wanted to close with the milestone mentioned earlier, positive non-GAAP adjusted net income of $320,000. This represents an improvement of $7.7 million year-over-year from a non-GAAP adjusted net loss of $7.4 million. On a per share basis, non-GAAP adjusted net income attributable to common stockholders was $0.02 compared to a loss of $0.58 per share a year ago. As we've noted, this quarter's results benefited from the accelerated Nike payment and other favorable timing items. However, they also reflect the progress we've made over the past 2 years, stabilizing operations, corporate costs and repositioning our assets since spin. With that, we'll go ahead and start the Q&A portion of the call.

[Operator Instructions] Our first question comes from Matthew Erdner with Jones Trading.

Congrats on the continued progress. So you guys still have a pretty strong cash position. I'm just trying to get a scope of what you guys are thinking for continued CapEx or investment into the properties as you continue to re-tenant. Is it still kind of that $70 million to $90-ish million range?

Yes, that $70 million to $90 million, so we've spent about $20 million over the first half of the year. And so we're thinking that $50 million to $70 million remaining is still the right number for a lot of the projects and committed capital we have already announced.

Got it. That's helpful. And then could you kind of speak about the event space and what you guys are putting in there now that you have your hands back on that actual space, what you guys are thinking? And then how are you looking to kind of program that out?

Matt, thanks for the questions. We're really excited about the event space. It's going to have a dedicated entrance on the ground floor of Pier 17 with dedicated elevator transportation up to both the second, third and fourth floor of the Pier. All 3 floors will have sweeping views of the Manhattan Skyline, the Brooklyn Bridge, the Brooklyn Skyline, the East River. So it's pretty unique space. The way that we're designing it is to be as flexible as possible because in our minds, we're going to have everything from traditional corporate offsites to small convention style programming to product launches and consumer-facing opportunities. And we're designing some elements of it to factor in the consumer-facing, consumer engagement side of things. So it's going to be able to accommodate a lot of different program types, but it's going to have all the infrastructure to make it as easy as possible for people to come and activate.

Got it. That's awesome. And then as it relates to the remaining space, you mentioned a little bit about the discussions there. Have you guys looked or, I guess, thought about any internally developed concepts similar to Sadie's that you would put in there? Or are you going to just lease that out to somebody over the near term?

The way we think about internal concepts is we want to operate the stuff that's systemically important. Sadie's being at the center of the Cobblestones with the Garden Bar and putting the LED screen out there for watch parties like the Knicks and World Cup and things like that, combined with the open container district we have associated with it, that's a systemically important operation within the Seaport. Same with the concert venue, same with the event space. But the small shop space, some of the smaller remaining restaurant spaces we have, those aren't as systemically important. And so we'd look to shift the operating execution over to a third-party tenant who's going to live and breathe it every day. A big emphasis that we have from a leasing perspective is getting one of ones down here. We don't want chains. We want people who are going to live and breathe their businesses, be entrepreneurial about how they operate them and provide something unique to the neighborhood and the community and the people who come to the Seaport. And so that's what -- like I said in the prepared comments, that's what's taking longer is finding those right people, understanding how they think about their businesses and the value proposition to the customer base that comes down here and also where we're headed with Balloon Museum opening, Meow Wolf in the event space.

Right, right. That makes sense. And then as it relates to the stuff that's in progress of opening up, have there been any delays in timing or construction, anything like that?

No, not really. I mean the event space is a bit of a fluid process, just given the negotiations that we had to go through with Nike, but we're obviously on the other side of that. I think Balloon Museum has gone as quickly as feasible given the amount of work that was done in that space. And I think we still feel good about the path that Meow Wolf is on. Those are obviously the big ones that are on deck. And then the restaurants and things like that with Public Records and Flanker and Hidden Boot Saloon, those are all on pace.

Awesome. And then a couple more for me, and then I'll hop out. 85 South, are you guys still kind of exploring, I guess, selling that?

We are. We've had some starts and stops. I think as I mentioned on the last call, with 250 Water Street, we were required, given the materiality of the asset to disclose a little bit more, but it puts us at a competitive disadvantage when we're negotiating with different potential buyers. So for 85 South, like I said, we've had starts and stops, but we'll probably be relatively quiet in terms of progress until we get to a transaction just to maintain as much negotiating leverage as possible.

Got it. That makes sense. And then Matt, since you've joined, you guys have had a bunch of progress. How does it kind of align with the expectations when you decided to come over versus where you are now? Just kind of put a big picture at the Seaport.

I mean I'd love to say this was all planned out, and we're right on track. Things ebb and flow. We get lucky here or there. We have setbacks here and there. So it's not a linear path, but I can't say enough how proud I am of the team and how much progress we've made, especially over the last, call it, 9, 10 months since I stepped into the seat. Everybody has run really hard towards executing on the strategy. And I think, look, we've always said it was going to take 3-plus years to stabilize everything, and I think we're right on track with that for 2028 being that initial stabilization year.

Our next question comes from Ross Haberman with RLH Investments.

Nice quarter, Matt. You guys are really coming along here. Lenah, can I go back to the $50 million to $70 million in CapEx, which you referred to. What is the -- that's over, what, the next 2 years. Is that correct?

Yes, it's over the next 2 years. It's until we reach that stabilization point and get through all of the projects we've committed to.

And Ross, I would just elaborate that you know how these things go, dollars typically trail construction progress. So even though something like Meow Wolf may open late Q4 2027, early Q1 2028, dollars will trail that opening just as we close out the projects. So to Lenah's point, it's about 2 years to put us into mid-2028 before we expect all the dollars to get out the door.

In the past, you threw out a number that if all these projects were -- if all these leases were in place, how much revenue or cash flow they would generate. What is that number today? What you haven't signed?

Yes, we still have that out there. It's in the supplemental. Give me one sec, Ross.

I'm sorry, Mr. Matt. I apologize.

Yes, it's around $26 million.

It's just over $26 million, Ross. And as we continue to make progress from a leasing standpoint, yes, the additional -- as we keep making progress from a leasing standpoint, hopefully, that number will increase. But obviously, as things open and as we lap over things like Nike and ESPN no longer being in the historical trailing 12, that number will move around.

And that's a pre-G&A number?

Correct.

Is there more room? You said you hope to get the G&A down to about $27 million. Is there more room on that to lower that further?

Yes, I think so. I mean we'll -- we're going to start budgeting this month for 2027, and that will continue to be a focus. We inherited some existing service contracts and arrangements that had 2-, 3-year lives on them. So we're coming up on the expiration of some of those where we can either renegotiate them or move on from them. And some of those are related to systems, some of those are related to consultants and other relationships. So it will continue to be an emphasis, but I think we've made a lot of progress and not all of that progress is reflected in the number in Q2. So we'll start to see the full year benefits of that as we get into 2027.

Our next question comes from Dan Joseph with Apparent Capital.

Congratulations. This was an outstanding quarter, great progress for the company. I also want to call out your presentation and materials, particularly Pages 47 through 49. For me personally, I thought that was incredible progress, very transparent, very good communication and continues to help me understand the company in a better and better way. So thank you, guys, for continuing to lean into improving the way that you communicate with us as shareholders.

Thanks, Dan. Always happy to provide information as we can. I think you know things move around, so that limits our ability to be forward-looking, but I think we're getting to a better and better stabilization point where we'll be able to start providing more forward-looking information in the coming months and quarters.

That's great. So on that subject, from a stabilization standpoint, as you now are in the cash flow positive realm kind of ahead of expectations, have your expectations for stabilized EBITDA in 2028 changed at all?

I wouldn't say they've changed. I think, obviously, if we can continue to accelerate positive earnings earlier, that's going to help with cash burn. Q1 is obviously a seasonally slower month, so that's going to be a harder one to get to a positive place. But the event space, Balloon Museum opening, eventually Meow Wolf and all the other concepts that are in the queue are obviously going to help. How the event space ramps up in terms of business and bookings and things like that, I think, is an area where we have different iterations of models. Obviously, we have optimistic models and conservative models related to that. But our team is very focused on putting structure around that and getting that ramped up as quickly as possible. I'd say that's probably the most volatile component of what we have in the queue right now given how operationally involved it will be.

Got it. A couple of questions on some of the challenges that you guys are having. You mentioned the loss of a sponsor at the rooftop. Could you elaborate on that a little bit?

Yes, it was Chase. They had historically been a founding sponsor when the Pier and rooftop concert series were launched. They've had some turnover or change in the team that we were working with, and they've looked to prioritize what I would call more exclusive and unique experiences for their cardholders. And so we're in active conversations with different groups, whether in the financial services world or entertainment world or everything in between about replacing that sponsorship income. Those deals don't happen overnight. The team that we have is a terrific team who's got a lot of deep relationships. And so -- but these are typically multiple year deals, and so they take a lot longer to negotiate and ultimately replace that cash flow.

Got it. And Lawn Club, you mentioned that the EBITDA at the Lawn Club was down. Is there a plan in place to kind of reverse that trend? Do you see upside there? How do you guys look at Lawn Club as -- and obviously, it's a meaningful contributor.

Dan, yes, Lawn Club is certainly a meaningful contributor to us. And a part of the decline year-over-year is that in prior year, the Lawn Club operated the Sadie's Garden Bar. And so that was a tremendous benefit to the Lawn Club at the time that effectively got shifted over to Sadie's. So the Lawn Club team is doing a great job in trying to make up that revenue and continuing activations inside and outside the space. So we definitely see the progress they're making. And it was -- for us, it's more of a shift from one venue to another versus a decline at the Lawn Club that would be a serious issue.

Yes, Dan, just anecdotally, I think Lawn Club hit an all-time record in revenue for July. So they're not slowing down. I think -- and obviously, the Sadie's Garden Bar, given our comments earlier, has performed better than last year. So I think everybody is in the aggregate coming out ahead. It's just shifting where the revenue is coming from. And I think Lawn Club will have a very strong back half of the year based on how they've reforecasted and their expectations for the remainder of Q3 and into Q4.

Yes. That's helpful. So that doesn't feel like a negative. That actually feels like a positive just given the strength of Sadie's. I mean, as you know, I've been down there and the Sadie's traffic is unbelievable. So I look at that from a positive light. One more question, which at the last call, you mentioned having -- the Board having approved share repurchase program. as well as having the shelf offering, I think, for $125 million for the potential launch when the stock strengthens. Any kind of new news or information that you can share on the share repurchase program or any plans to raise capital? Or are you kind of standing pat right now on that front?

No, I wouldn't say there's any new news. We continue to view the shelf and the buyback program as tools. I think as we continue to get clarity in terms of opening time lines and things like that and capital costs and stuff like that, we'll have a better sense of cash burn as we get into 2027 and ultimately 2028, and that will certainly influence whether or not the share buyback program becomes more actionable. Obviously, the performance of the stock will also impact that. But I think generally, what you and investors should expect is that we won't talk about share buybacks until they happen if they do happen. And as we've said, it is a tool in the toolbox. I think beyond that, from a capital raising standpoint, no, we don't -- we haven't suggested there's any imminent capital raising. And I think from our standpoint, we're focused on executing and continuing to march towards that 2028 stabilization point with the existing asset base. As I've said in the past, we're going to be opportunistic in evaluating other opportunities. But as I've also said, we're not going to race towards something or feel like we have to do something just to put capital to work. We want to do it because it's the right investment decision and the right capital allocation decision for the company long term.

Makes sense. It's really smart. As you know, I think you guys are just doing a great job blocking, tackling and making really great strategic decisions. So again, congratulations on everything. I don't want to monopolize any more time. Looking forward to seeing the Balloon museum when it opens up and continued good work ahead.

Our next question comes from Ross Haberman with RLH Investments.

Sorry, guys, I left out one question. Could you talk in general about leasing rates and prices given the political environment in the city? What are you seeing there? What kind of trends if there are any?

I wouldn't say there's any trends in relation to politics or anything along those lines. I think if you look at the city broadly, there's an inordinate amount of strength in the Midtown corridor. Office has been red hot during the summer in terms of office leasing, and I think we're starting to see some of that play out downtown. I would say the Seaport is a little bit unique in that there was, including our property, a decent amount of inventory on the market available. And as we continue to chip away at that inventory and fill in the occupancy, that's going to give us more pricing power. And I think we're starting to see that, especially as we make different announcements that are relevant to potential tenants. So for us, it's not a demand issue. It's a use consideration, and we're trying to be judicious in terms of how we evaluate the tenant mix and the place making that we're trying to create down here.

I was just trying to get a general sense if prices are firmer today or not today or less than they were a year ago or so.

I would say they're firmer today, broadly speaking. And I think certainly for the Seaport, they're firmer just given all the progress that we've made.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Matt Partridge for closing comments.

Thanks, everybody, for joining us today. We really appreciate the support and look forward to sharing updates on the progress on the next earnings call in November. Have a great rest of the summer break.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.