Seritage Growth Properties Securities Lawsuit Investigation

Shamis & Gentile P.A., a law firm that advocates for investors who are victims of securities fraud, is investigating potential claims against Seritage Growth Properties (SRG)

If you purchased or held Seritage Growth Properties securities and suffered losses, you may be eligible to join this securities investigation and seek corporate reforms, a court approved incentive award, and the return of funds back to the company.

About Seritage Growth Properties

Seritage Growth Properties is a publicly traded real estate investment trust (REIT) organized under Maryland law. The company owns, operates, and develops retail, residential, and mixed-use properties across the United States.

In 2022, Seritage’s stockholders approved a Plan of Sale, under which the company is selling all its assets, distributing the proceeds, and ultimately dissolving the trust.

What's Being Investigated

The investigation centers on allegations that Seritage Growth Properties and certain of its officers and trustees may have made materially false and/or misleading statements or failed to disclose material adverse facts regarding the company’s business, operations, and prospects.

The class action complaint alleges:

• Seritage lacked effective internal controls over the identification and review of impairment indicators for its real estate investments.
• As a result, the company may have overstated the value and projected gross proceeds of certain real estate assets.
• Positive statements about the company’s business and prospects allegedly were misleading or lacked a reasonable basis.

On August 14, 2023, Seritage disclosed a “material weakness” in its internal control over financial reporting, specifically tied to deficiencies in identifying impairment indicators for real estate investments and documenting evidence of review.

Later, on May 10, 2024, Seritage announced it was adjusting pricing projections for some assets, reducing the gross value of its portfolio by at least $325 million. Both disclosures were followed by significant declines in Seritage’s stock price.

Key Timeline

• August 14, 2023: Seritage disclosed a material weakness in its internal control over financial reporting related to the identification and documentation of impairment indicators for real estate investments. Investors allege this signaled potential oversight failures and risk to asset values.
• August 15, 2023: Seritage’s stock price fell $0.86 (9.67%) to close at $8.03 per share on unusually heavy trading volume. Plaintiffs contend this drop reflected investor concern over the internal control disclosure.
• May 10, 2024: Seritage announced first quarter 2024 results, stating it was “adjusting [its] pricing projections for some of [its] assets,” resulting in a reduction of at least $325 million in portfolio gross value. Investors argue this confirmed earlier control and valuation concerns.
• May 13, 2024: Seritage’s stock price fell $2.54 (27.3%) to close at $6.78 per share on unusually heavy trading volume. Plaintiffs allege this decline was driven by the asset value adjustment news.
• July 1, 2024: A securities class action was filed, alleging false and misleading statements and internal control failures.

Why Investors May Be Concerned

According to the complaint and related filings, investors are concerned that Seritage’s board and management may have failed to implement or monitor effective internal controls over financial reporting, particularly regarding the identification of impairment indicators for real estate assets.

Stockholders argue that these alleged oversight failures could have resulted in the company overstating the value of its assets and misrepresenting its financial health during the Plan of Sale.

Theories advanced by plaintiffs include:

• Alleged misleading statements or omissions about internal controls and asset values.
• Potential oversight failures by the board and Audit Committee in monitoring mission-critical risks.
• Officer-level responsibility for establishing and maintaining adequate controls and escalating red flags.
• Possible conflicts of interest or related-party issues.

Your Rights and Next Steps

This is an active investigation into potential breaches of fiduciary duty and securities law by Seritage Growth Properties’ board and management. If you are a long-term stockholder and owned shares during the relevant period (at least July 7, 2022 through May 10, 2024), you may have certain rights.

Potential next steps:

• Request corporate books and records under Maryland law to investigate possible mismanagement or wrongdoing.
• Make a pre-suit demand on the board to address alleged misconduct, as Maryland law generally requires such a step before filing a derivative action.
• Join or monitor the pending securities class action if you purchased or held Seritage securities and suffered losses.
• Pursue a derivative action on behalf of the company if particularized facts support a claim that the board is unable or unwilling to act.

You May Be Entitled to Compensation

Securities investigations are time-sensitive. If you purchased Seritage Growth Properties (NYSE: SRG) prior to May 10, 2024, and still hold some shares today, you can seek corporate reforms, the return of funds back to the Company, and a court approved incentive award at absolutely no cost to you.

To protect your rights and ensure you are included in any potential recovery, complete the form below to join the investigation.