ALEXANDER’S, INC.
ANNUAL REPORT TO
STOCKHOLDERS
2010
This Annual Report is printed on recycled paper and is recyclable.
EXHIBIT INDEX ON PAGE 66
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
⌧
(cid:134)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 2010
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission File Number:
to
001-6064
ALEXANDER’S, INC.
(Exact name of registrant as specified in its
charter)
Delaware
(State or other jurisdiction of incorporation or organization)
51-0100517
(IRS Employer Identification No.)
210 Route 4 East, Paramus, New Jersey
(Address of principal executive offices)
07652
(Zip Code)
Registrant’s telephone number, including area code
(201) 587-8541
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1 par value per share
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act.
YES (cid:134) NO ⌧
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.
YES (cid:134) NO ⌧
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
YES ⌧ NO (cid:134)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).
(cid:134) Yes (cid:134) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:134)
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
(cid:134) Large Accelerated Filer
(cid:134) Non-Accelerated Filer (Do not check if smaller reporting company)
⌧ Accelerated Filer
(cid:134) Smaller Reporting Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES (cid:134) NO ⌧
The aggregate market value of the voting and non-voting shares of common stock held by non-affiliates of the registrant,
(i.e., by persons other than officers and directors of Alexander’s, Inc.) was $622,802,000 at June 30, 2010.
As of December 31, 2010 there were 5,105,936 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III: Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 26, 2011.
Item
Part I.
Part II.
Part III.
1.
1A.
1B.
2.
3.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance(1)
Executive Compensation(1)
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters(1)
Certain Relationships and Related Transactions, and Director Independence(1)
Principal Accounting Fees and Services(1)
Part IV.
15.
Exhibits and Financial Statement Schedules
Signatures
_____________________________
Page
4
7
15
16
20
21
23
24
37
38
56
56
59
59
60
60
60
60
61
62
(1) These items are omitted in part or in whole because the registrant will file a definitive Proxy Statement pursuant to
Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later
than 120 days after December 31, 2010, portions of which are incorporated by reference herein.
2
FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject
to numerous assumptions, risks and uncertainties. Our future results, financial condition, results of operations and business
may differ materially from those expressed in these forward-looking statements. You can find many of these statements by
looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,”
“may” or other similar expressions in this Annual Report on Form 10-K. We also note the following forward-looking
statements: in the case of our development projects, the estimated completion date, estimated project costs and costs to
complete; and estimates of dividends on shares of our common stock. Many of the factors that will determine the outcome of
these and our other forward-looking statements are beyond our ability to control or predict. For a further discussion of
factors that could materially affect the outcome of our forward-looking statements, see “Item 1A - Risk Factors” in this
Annual Report on Form 10-K.
For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements,
which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference.
All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any
obligation to release publicly, any revisions to our forward-looking statements to reflect events or circumstances after the
date of this Annual Report on Form 10-K.
3
ITEM 1. BUSINESS
GENERAL
PART I
Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing,
managing, developing and redeveloping its properties. All references to “we,” “us,” “our,” “Company” and “Alexander’s”
refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed
by, Vornado Realty Trust (“Vornado”) (NYSE: VNO).
We have seven properties in the greater New York City metropolitan area consisting of:
Operating properties
(i)
the 731 Lexington Avenue property, a 1,307,000 square foot multi-use building, comprising the entire square block
bounded by Lexington Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan. The building
contains 885,000 and 174,000 of net rentable square feet of office and retail space, respectively, which we own, and
248,000 square feet of residential space consisting of 105 condominium units, which we sold. Bloomberg L.P.
(“Bloomberg”) occupies all of the office space. The Home Depot (83,000 square feet), The Container Store
(34,000 square feet) and Hennes & Mauritz (27,000 square feet) are the principal retail tenants;
(ii)
the Kings Plaza Regional Shopping Center contains 1,210,000 square feet and is located on Flatbush Avenue in
Brooklyn. The center is anchored by a 339,000 square foot Macy’s (owned by Macy’s, Inc.), a 289,000 square foot
Sears department store and a 114,000 square foot Lowe’s on land leased from us;
(iii) the Rego Park I Shopping Center contains 343,000 square feet and is located on Queens Boulevard and 63rd Road in
Queens. The center is anchored by a 195,000 square foot Sears department store, a 46,000 square foot Bed Bath &
Beyond and a 36,000 square foot Marshalls. In January 2011, we leased 50,000 square feet to Burlington Coat
Factory;
(iv) the Rego Park II property, a newly developed 615,000 square foot shopping center, is located adjacent to our Rego
Park I property in Queens. As of December 31, 2010, 89% of the center is in service and such portion is 100%
leased, primarily to three anchor tenants: a 145,000 square foot Costco, a 135,000 square foot Century 21 and a
133,000 square foot Kohl’s. In addition 47,000 square feet is leased to Toys “R” Us/Babies “R” Us, a one-third
owned affiliate of Vornado;
(v)
the Paramus property, located at the intersection of Routes 4 and 17 in Paramus, New Jersey, consists of 30.3 acres
of land leased to IKEA Property, Inc.;
(vi) the Flushing property, a 167,000 square foot building, is located at Roosevelt Avenue and Main Street in Queens
and is sub-leased to New World Mall LLC for the remainder of our ground lease term; and
Property to be developed
(vii) the Rego Park III property is a 3.4 acre land parcel adjacent to our Rego Park II property in Queens at the
intersection of Junction Boulevard and the Horace Harding Service Road.
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Business Environment
Substantially all businesses, including ours, were negatively affected by the 2008/2009 economic recession and
illiquidity and volatility in the capital and financial markets. Although there are signs of an economic recovery and greater
stability in the capital and financial markets, it is not possible for us to predict whether these trends will continue in the future
or quantify the impact of these or any other trends on our financial results.
Significant Tenants
Bloomberg accounted for $83,137,000, $77,988,000 and $66,333,000, or 34%, 35% and 31% of our consolidated
revenues in the years ended December 31, 2010, 2009 and 2008, respectively. No other tenant accounted for more than 10%
of our consolidated revenues in any of the last three years. If we were to lose Bloomberg as a tenant, or if Bloomberg were to
fail or become unable to perform its obligations under its lease, it would adversely affect our results of operations and
financial condition. We receive and evaluate certain confidential financial information and metrics from Bloomberg on a
semi-annual basis. In addition, we access and evaluate financial information regarding Bloomberg from private sources, as
well as publicly available data.
Relationship with Vornado
At December 31, 2010, Vornado owned 32.4% of our outstanding common stock. Steven Roth is the Chairman of our
Board of Directors and Chief Executive Officer, the Managing General Partner of Interstate Properties (“Interstate”), a New
Jersey general partnership, and the Chairman of the Board of Trustees of Vornado. At December 31, 2010, Mr. Roth,
Interstate and its other two general partners, David Mandelbaum and Russell B. Wight, Jr. (who are also directors of the
Company and trustees of Vornado) owned, in the aggregate, 27.2% of our outstanding common stock, in addition to the 2.3%
they indirectly own through Vornado. Michael D. Fascitelli, President and Chief Executive Officer of Vornado, is our
President and a member of our Board of Directors. Joseph Macnow, our Executive Vice President and Chief Financial
Officer, holds the same position with Vornado.
We are managed by, and our properties are leased and developed by, Vornado, pursuant to agreements which expire in
March of each year and are automatically renewable. Vornado is a fully-integrated REIT with significant experience in
managing, leasing, developing, and operating retail and office properties.
Environmental Matters
In July 2006, we discovered an oil spill at our Kings Plaza Regional Shopping Center. We have notified the New York
State Department of Environmental Conservation (“NYSDEC”) about the spill and have developed a remediation plan. The
NYSDEC has approved a portion of the remediation plan and clean up is ongoing. The estimated costs associated with the
clean up will aggregate approximately $2,500,000. We have paid $500,000 of such amount and the remainder is covered
under our insurance policy.
Competition
We operate in a highly competitive environment. All of our properties are located in the greater New York City
metropolitan area. We compete with a large number of property owners and developers. Principal factors of competition are
the amount of rent charged, attractiveness of location and quality and breadth of services provided. Our success depends
upon, among other factors, trends of national and local economies, the financial condition and operating results of current and
prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental
regulations and legislation, population trends, zoning laws, and our ability to lease, sublease or sell our properties, at
profitable levels. Our success is also subject to our ability to refinance existing debt as it comes due and on acceptable terms.
5
Employees
We currently have 80 employees.
Executive Office
Our executive office is located at 210 Route 4 East, Paramus, New Jersey, 07652 and our telephone number is (201) 587-
8541.
Available Information
Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
amendments to these reports, as well as Reports on Forms 3, 4 and 5 regarding officers, directors, and 10% beneficial owners
filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934, are available free of
charge on our website (www.alx-inc.com) as soon as reasonably practicable after they are electronically filed with, or
furnished to, the Securities and Exchange Commission (“SEC”). Also available on our website are copies of our (i) Audit
Committee Charter, (ii) Compensation Committee Charter, (iii) Code of Business Conduct and Ethics and (iv) Corporate
Governance Guidelines. In the event of any changes to these items, revised copies will be made available on our website.
Copies of these documents are also available directly from us, free of charge.
On April 11, 2000, Vornado and Interstate filed with the SEC, the 26th amendment to a Form 13D indicating that they, as
a group, own in excess of 51% of our common stock. This ownership level makes us a “controlled” company for the
purposes of the New York Stock Exchange, Inc.’s Corporate Governance Standards (the “NYSE Rules”). This means that
we are not required to, among other things, have a majority of the members of our Board of Directors be independent under
the NYSE Rules, have all of the members of our Compensation Committee be independent under the NYSE Rules or to have
a Nominating Committee. While we have voluntarily complied with a majority of the independence requirements of the
NYSE Rules, we are under no obligation to do so and this situation may change at any time.
6
ITEM 1A. RISK FACTORS
Material factors that may adversely affect our business and operations are summarized below.
REAL ESTATE INVESTMENTS’ VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These
conditions may also adversely impact our revenues and cash flows.
The factors that affect the value of our real estate include, among other things:
changes in real estate taxes and other expenses;
national, regional and local economic conditions;
competition from other available space;
local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
how well we manage our properties;
changes in market rental rates;
the timing and costs associated with property improvements and rentals;
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• whether we are able to pass all or portions of any increases in operating costs through to tenants;
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• whether tenants and users such as customers and shoppers consider a property attractive;
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the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
availability of financing on acceptable terms or at all;
fluctuations in interest rates;
our ability to obtain adequate insurance;
changes in zoning laws and taxation;
government regulation;
consequences of any armed conflict involving, or terrorist attack against, the United States;
potential liability under environmental or other laws or regulations;
natural disasters;
general competitive factors; and
climate changes.
The rents we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these
factors. If our rental revenues and/or occupancy levels decline, we generally would expect to have less cash available to pay
our indebtedness and for distribution to our stockholders. In addition, some of our major expenses, including mortgage
payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.
Capital markets and economic conditions can materially affect our financial condition and results of operations and
the value of our debt and equity securities.
There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets
and economy which have recently negatively affected substantially all businesses, including ours. Demand for office and
retail space may decline nationwide as it did in 2008 and 2009, due to bankruptcies, downsizing, layoffs and cost cutting.
The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads may
adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Our inability or
the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may
materially effect our financial condition and results of operations and the value of our debt and equity securities.
Real estate is a competitive business.
We operate in a highly competitive environment. All of our properties are located in the greater New York City
metropolitan area. We compete with a large number of real estate property owners and developers, some of which may be
willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of
location, the quality of the property and breadth and quality of services provided. Our success depends upon, among other
factors, trends of national and local economies, the financial condition and operating results of current and prospective
tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations,
legislation and population trends.
7
We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be
able to pay.
Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms.
In addition, because a majority of our income is derived from renting real property, our income, funds available to pay
indebtedness and funds available for distribution to stockholders will decrease if certain of our tenants cannot pay their rent
or if we are not able to maintain our level of occupancy on favorable terms. If a tenant does not pay its rent, we might not be
able to enforce our rights as landlord without delays and might incur substantial legal and other costs. During periods of
economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy
rates.
Bankruptcy or insolvency of tenants may decrease our revenues, net income and available cash.
From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become
insolvent in the future. In the case of our shopping centers, the bankruptcy or insolvency of a major tenant could cause us to
have difficulty leasing the remainder of the affected property. Our leases generally do not contain restrictions designed to
ensure the creditworthiness of our tenants. As a result, the bankruptcy or insolvency of a major tenant could result in a lower
level of net income and funds available for the payment of our indebtedness or distribution to stockholders.
Some of our tenants represent a significant portion of our revenues. Loss of these tenant relationships or deterioration
in the tenants’ credit quality could adversely affect our financial condition or results of operation.
Bloomberg accounted for $83,137,000, $77,988,000 and $66,333,000, or 34%, 35% and 31% of our consolidated
revenues in the years ended December 31, 2010, 2009 and 2008, respectively. No other tenant accounted for more than 10%
of our consolidated revenues in any of the last three years. If we were to lose Bloomberg as a tenant, or if Bloomberg were to
fail or become unable to perform its obligations under its lease, it would adversely affect our results of operations and
financial condition.
Inflation or deflation may adversely affect our financial condition and results of operations.
Although neither inflation nor deflation has materially impacted our operations in the recent past, increased inflation
could have a pronounced negative impact on our mortgages and interest rates and general and administrative expenses, as
these costs could increase at a rate higher than our rents. Inflation could also have an adverse effect on consumer spending
which could impact our tenants’ sales and, in turn, our percentage rents, where applicable. Conversely, deflation could lead
to downward pressure on rents and other sources of income.
Our business and operations would suffer in the event of system failures.
Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for
our internal information technology systems, our systems are vulnerable to damages from any number of sources, including
computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures.
Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business.
We may also incur additional costs to remedy damages caused by such disruptions.
8
We may incur costs to comply with environmental laws.
Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection
of the environment including air and water quality, hazardous or toxic substances and health and safety. Under some
environmental laws, 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. The owner or operator may also 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 those parties
because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the
release of the substances or caused such release. The presence of contamination or the failure to remediate contamination
may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations
govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing
materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to
asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing
polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also
subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and
bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in
susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial
action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental
contamination or human exposure at or from our properties.
In July 2006, we discovered an oil spill at our Kings Plaza Regional Shopping Center. We have notified the New York
State Department of Environmental Conservation (“NYSDEC”) about the spill and have developed a remediation plan. The
NYSDEC has approved a portion of the remediation plan and clean up is ongoing. The estimated costs associated with the
clean up will aggregate approximately $2,500,000. We have paid $500,000 of such amount and the remainder is covered
under our insurance policy.
Each of our properties has been subjected to varying degrees of environmental assessment at various times. Except as
referenced above, the environmental assessments did not, as of the date of this Annual Report on Form 10-K, reveal any
environmental condition material to our business. However, identification of new compliance concerns or undiscovered
areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human
exposure to the contamination or changes in cleanup or compliance requirements could result in significant costs to us.
Some of our potential losses may not be covered by insurance.
We maintain general liability insurance with limits of $300,000,000 per occurrence and all-risk property and rental value
insurance coverage with limits of $1.7 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain
perils such as floods and earthquakes on each of our properties. There can be no assurance that we will be able to maintain
similar levels of insurance coverage in the future in amounts and on terms that are commercially reasonable. We are
responsible for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on our 731 Lexington
Avenue property, in the event of a substantial casualty, as defined. Our mortgage loans contain customary covenants
requiring us to maintain insurance. If lenders insist on greater coverage than we are able to obtain, it could adversely affect
our ability to finance our properties.
Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements
could result in substantial costs.
The Americans with Disabilities Act (“ADA”) generally requires that public buildings, including our properties, meet
certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of
fines by the federal government or the award of damages to private litigants. If, under the ADA, we are required to make
substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it
could adversely affect our financial condition and results of operations, as well as the amount of cash available for
distribution to stockholders.
Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life
safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do
not know whether existing requirements will change or whether compliance with future requirements will require significant
unanticipated expenditures that will affect our cash flow and results of operations.
9
OUR INVESTMENTS ARE CONCENTRATED IN THE GREATER NEW YORK CITY METROPOLITAN AREA.
CIRCUMSTANCES AFFECTING THIS AREA GENERALLY COULD ADVERSELY AFFECT OUR BUSINESS.
All of our properties are in the greater New York City metropolitan area and are affected by the economic cycles and
risks inherent in that area.
All of our revenues come from properties located in the greater New York City metropolitan area. Real estate markets are
subject to economic downturns and we cannot predict how economic conditions will impact this market in either the short or
long term. Declines in the economy or a decline in the real estate market in this area could hurt our financial performance
and the value of our properties. The factors affecting economic conditions in this area include:
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financial performance and productivity of the publishing, advertising, financial, technology, retail, insurance and
real estate industries;
unemployment levels;
business layoffs or downsizing;
industry slowdowns;
relocations of businesses;
changing demographics;
increased telecommuting and use of alternative work places;
infrastructure quality; and
any oversupply of, or reduced demand for, real estate.
It is impossible for us to assess the future effects of trends in the economic and investment climates of the greater New
York City metropolitan region, and more generally of the United States, on the real estate market in this area. Local, national
or global economic downturns, would negatively affect our businesses and profitability.
Terrorist attacks, such as those of September 11, 2001 in New York City, may adversely affect the value of our properties
and our ability to generate cash flow.
All of our properties are located in the greater New York City metropolitan area. In the aftermath of a terrorist attack,
tenants in this area may choose to relocate their businesses to less populated, lower-profile areas of the United States that are
not as likely to be targets of future terrorist activity and fewer customers may choose to patronize businesses in this area.
This would trigger a decrease in the demand for space in these markets, which could increase vacancies in our properties and
force us to lease our properties on less favorable terms. As a result, the value of our properties and the level of our revenues
could decline materially.
We are subject to risks that affect the general retail environment.
A substantial portion of our properties are in the retail shopping center real estate market. This means that we are subject
to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence,
unemployment rates, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites
and catalog companies. These factors could adversely affect the financial condition of our retail tenants and the willingness
of retailers to lease space in our shopping centers.
We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets
Control.
Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department
of the Treasury (“OFAC”) maintains a list of persons designated as terrorists or who are otherwise blocked or banned
(“Prohibited Persons”) from conducting business or engaging in transactions in the United States. Our leases, loans and other
agreements may require us to comply with OFAC requirements. If a tenant or other party with whom we conduct business is
placed on the OFAC list we may be required to terminate the lease or other agreement. Any such termination could result in
a loss of revenue or otherwise negatively affect our financial results and cash flows.
10
WE MAY ACQUIRE OR SELL ASSETS OR DEVELOP PROPERTIES. OUR FAILURE OR INABILITY TO
CONSUMMATE THESE TRANSACTIONS OR MANAGE THESE TRANSACTIONS COULD ADVERSELY
AFFECT OUR OPERATIONS AND FINANCIAL RESULTS.
We may acquire or develop properties and this may create risks.
Although our stated business strategy is not to engage in acquisitions, we may acquire or develop properties when we
believe that an acquisition or development project is otherwise consistent with our business strategy. We may not, however,
succeed in consummating desired acquisitions or in completing developments on time or within budget. In addition, we may
face competition in pursuing acquisition or development opportunities that could increase our costs. When we do pursue a
project or acquisition, we may not succeed in leasing newly developed or acquired properties at rents sufficient to cover costs
of acquisition or development and operations. Difficulties in integrating acquisitions may prove costly or time-consuming
and could divert management’s attention. Acquisitions or developments in new markets or types of properties where we do
not have the same level of market knowledge may result in weaker than anticipated performance. We may abandon
acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already
incurred and have devoted management time to a matter not consummated.
It may be difficult to buy and sell real estate quickly, which may limit our flexibility.
Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary
our portfolio promptly in response to changes in economic or other conditions. Moreover, our ability to buy, sell, or finance
real estate assets may be adversely affected during periods of uncertainty or unfavorable conditions in the credit markets as
we, or potential buyers of our assets, may experience difficulty in obtaining financing.
OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND FINANCIAL
RISKS.
We depend on dividends and distributions from our direct and indirect subsidiaries. The creditors of these subsidiaries
are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions
to us.
Substantially all of our properties and assets are held through subsidiaries. We depend on cash distributions and
dividends from our subsidiaries for substantially all of our cash flow. The creditors of each of our direct and indirect
subsidiaries are entitled to payment of that subsidiary’s obligations to them when due and payable before that subsidiary may
make distributions or dividends to us. Thus, our ability to pay dividends, if any, to our security holders depends on our
subsidiaries’ ability to first satisfy their obligations to their creditors and our ability to satisfy our obligations, if any, to our
creditors.
In addition, our participation in any distribution of the assets of any of our direct or indirect subsidiaries upon the
liquidation, reorganization or insolvency of the subsidiary, is only after the claims of the creditors, including trade creditors,
and preferred security holders, if any, of the applicable direct or indirect subsidiaries are satisfied.
Our existing financing documents contain covenants and restrictions that may restrict our operational and financial
flexibility.
At December 31, 2010, substantially all of the individual properties we own were encumbered by mortgages. These
mortgages contain covenants that limit our ability to incur additional indebtedness on these properties, provide for lender
approval of tenants’ leases in certain circumstances, and provide for yield maintenance or defeasance premiums to prepay
them. These mortgages may significantly restrict our operational and financial flexibility. In addition, if we were to fail to
perform our obligations under existing indebtedness or become insolvent or were liquidated, secured creditors would be
entitled to payment in full from the proceeds of the sale of the pledged assets prior to any proceeds being paid to other
creditors or to any holders of our securities. In such an event, it is possible that we would have insufficient assets remaining
to make payments to other creditors or to any holders of our securities.
11
We have indebtedness, and this indebtedness and the cost to service it, may increase and debt refinancing may not be
available on acceptable terms.
As of December 31, 2010, total debt outstanding was $1,246,411,000. Our ratio of total debt to total enterprise value was
42.2% at December 31, 2010. “Enterprise value” means the market equity value of our common stock, plus debt, less cash
and cash equivalents at such date. In addition, we have significant debt service obligations. For the year ended December
31, 2010, our scheduled cash payments for principal and interest were $92,770,000. In the future, we may incur additional
debt, and thus increase the ratio of total debt to total enterprise value. If our level of indebtedness increases, there may be an
increased risk of default which could adversely affect our financial condition and results of operations. In addition, in a
rising interest rate environment, the cost of refinancing our existing debt and any new debt or market rate security or
instrument may increase. Continued uncertainty in the equity and credit markets may negatively impact our ability to obtain
financing on reasonable terms or at all, which may negatively affect our ability to refinance our debt.
We may issue stock appreciations rights and other forms of stock-based compensation, and the cash required to settle
these awards may impact our liquidity.
In the past, we have issued stock appreciation rights (“SARs”) and other forms of stock-based compensation. As of
December 31, 2010, no SARs or other forms of stock-based compensation were outstanding. We may in the future issue
SARs and other forms of stock-based compensation as a form of executive compensation, and the cash required to settle
these awards may impact our liquidity.
We might fail to qualify or remain qualified as a REIT, and may be required to pay income taxes at corporate rates.
Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal
income tax purposes, we might fail to remain qualified. Our qualification as a REIT for federal income tax purposes is
governed by highly technical and complex provisions of the Internal Revenue Code (the “Code”) for which there are only
limited judicial or administrative interpretations. Our qualification as a REIT also depends on various facts and
circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations
or court decisions might significantly change the tax laws with respect to the requirements for qualification as a REIT or the
federal income tax consequences of qualifying as a REIT.
If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under statutory
relief provisions, we could not deduct distributions to stockholders in computing our taxable income and would have to pay
federal income tax on our taxable income at regular corporate rates. The federal income tax payable would include any
applicable alternative minimum tax. If we had to pay federal income tax, the amount of money available to distribute to
stockholders and pay our indebtedness would be reduced for the year or years involved, and we would no longer be required
to make distributions to stockholders. In addition, we would also be disqualified from treatment as a REIT for the four
taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant
statutory provisions. Although we currently intend to operate in a manner designed to allow us to qualify as a REIT, future
economic, market, legal, tax or other considerations may cause us to revoke the REIT election or fail to qualify as a REIT.
We face possible adverse changes in tax laws, which may result in an increase in our tax liability.
From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our
tax liability. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the
frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or
income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of
cash available for payment of dividends.
Loss of our key personnel could harm our operations and adversely affect the value of our common stock.
We are dependent on the efforts of Steven Roth, our Chief Executive Officer, and Michael D. Fascitelli, our President.
Although we believe that we could find replacements for these key personnel, the loss of their services could harm our
operations and adversely affect the value of our common stock.
12
ALEXANDER’S CHARTER DOCUMENTS AND APPLICABLE LAW MAY HINDER ANY ATTEMPT TO
ACQUIRE US.
Provisions in Alexander’s certificate of incorporation and by laws, as well as provisions of the Code and Delaware
corporate law, may delay or prevent a change in control of the Company or a tender offer, even if such action might be
beneficial to stockholders, and limit the stockholders’ opportunity to receive a potential premium for their shares of common
stock over then prevailing market prices.
Primarily to facilitate maintenance of its qualification as a REIT, Alexander’s certificate of incorporation generally
prohibits ownership, directly, indirectly or beneficially, by any single stockholder of more than 9.9% of the outstanding
shares of preferred stock of any class or 4.9% of outstanding common stock of any class. The Board of Directors may waive
or modify these ownership limits with respect to one or more persons if it is satisfied that ownership in excess of these limits
will not jeopardize Alexander’s status as a REIT for federal income tax purposes. In addition, the Board of Directors has,
subject to certain conditions and limitations, exempted Vornado and certain of its affiliates from these ownership limitations.
Stock owned in violation of these ownership limits will be subject to the loss of rights and other restrictions. These
ownership limits may have the effect of inhibiting or impeding a change in control.
Alexander’s Board of Directors is divided into three classes of directors. Directors of each class are chosen for three-year
staggered terms. Staggered terms of directors may have the effect of delaying or preventing changes in control or
management, even though changes in management or a change in control might be in the best interest of our stockholders.
In addition, Alexander’s charter documents authorize the Board of Directors to:
•
•
•
•
cause Alexander’s to issue additional authorized but unissued common stock or preferred stock;
classify or reclassify, in one or more series, any unissued preferred stock;
set the preferences, rights and other terms of any classified or reclassified stock that Alexander’s issues; and
increase, without stockholder approval, the number of shares of beneficial interest that Alexander’s may issue.
The Board of Directors could establish a series of preferred stock with terms that could delay, deter or prevent a change in
control of Alexander’s or other transaction that might involve a premium price or otherwise be in the best interest of our
stockholders, although the Board of Directors does not, at present, intend to establish a series of preferred stock of this kind.
Alexander’s charter documents contain other provisions that may delay, deter or prevent a change in control of the Company
or other transaction that might involve a premium price or otherwise be in the best interest of our stockholders.
In addition, Vornado and Interstate (the three general partners of which are both trustees of Vornado and Directors of
Alexander’s) together beneficially own approximately 59.6% of our outstanding shares of common stock. This degree of
ownership is likely to reduce the possibility of a tender offer or an attempt to change control of the Company by a third party.
We may change our policies without obtaining the approval of our stockholders.
Our operating and financial policies, including our policies with respect to acquisitions of real estate or other assets,
growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Directors.
Accordingly, our stockholders do not control these policies.
13
OUR OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE TO CONFLICTS
OF INTEREST.
Steven Roth, Vornado and Interstate may exercise substantial influence over us. They and some of our other directors
and officers have interests or positions in other entities that may compete with us.
At December 31, 2010, Interstate and its partners owned approximately 7.0% of the common shares of beneficial interest
of Vornado and approximately 27.2% of our outstanding common stock. Steven Roth, David Mandelbaum and Russell B.
Wight, Jr. are the partners of Interstate. Mr. Roth is the Chairman of our Board of Directors and Chief Executive Officer, the
Chairman of the Board of Trustees of Vornado and the Managing General Partner of Interstate. Mr. Wight and
Mr. Mandelbaum are both trustees of Vornado and members of our Board of Directors. In addition, Vornado manages and
leases the real estate assets of Interstate.
At December 31, 2010, Vornado owned 32.4% of our outstanding common stock, in addition to the 27.2% owned by
Interstate and its partners. In addition to the relationships described in the immediately preceding paragraph, Michael D.
Fascitelli, President and Chief Executive Officer of Vornado, is our President and a member of our Board of Directors. Dr.
Richard West is a trustee of Vornado and a member of our Board of Directors. Joseph Macnow, our Executive Vice
President and Chief Financial Officer, holds the same position with Vornado.
Because of their overlapping interests, Vornado, Mr. Roth, Interstate and the other individuals noted in the preceding
paragraphs may have substantial influence over Alexander’s, and on the outcome of any matters submitted to Alexander’s
stockholders for approval. In addition, certain decisions concerning our operations or financial structure may present
conflicts of interest among Vornado, Messrs. Roth, Mandelbaum and Wight and Interstate and other security holders.
Vornado, Mr. Roth and Interstate may, in the future, engage in a wide variety of activities in the real estate business which
may result in conflicts of interest with respect to matters affecting us, such as, which of these entities or persons, if any, may
take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic
locations in which these entities make investments, potential competition between business activities conducted, or sought to
be conducted, by us, competition for properties and tenants, possible corporate transactions such as acquisitions, and other
strategic decisions affecting the future of these entities.
There may be conflicts of interest between Vornado, its affiliates and us.
Vornado manages, develops and leases our properties under agreements that have one-year terms expiring in March of
each year, which are automatically renewable. Because we share common senior management with Vornado and because
five of the trustees of Vornado also constitute the majority of our directors, the terms of the foregoing agreements and any
future agreements may not be comparable to those we could have negotiated with an unaffiliated third party.
For a description of Interstate’s ownership of Vornado and Alexander’s, see “Steven Roth, Vornado and Interstate may
exercise substantial influence over us. They and some of our other directors and officers have interests or positions in other
entities that may compete with us.” above.
14
THE NUMBER OF SHARES OF ALEXANDER’S COMMON STOCK AND THE MARKET FOR THOSE SHARES
GIVE RISE TO VARIOUS RISKS.
The price of our common shares has been volatile and may fluctuate.
The trading price of our common shares has been volatile and may continue to fluctuate widely as a result of a number of
factors, many of which are outside of our control. In addition, the stock market is subject to fluctuations in the share prices and
trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have in the past
and may in the future adversely affect the market price of our common shares. Among the factors that could affect the price of
our common shares are:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our financial condition and performance;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
actual or anticipated quarterly fluctuations in our operating results and financial condition;
the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in
comparison to other equity securities, including securities issued by other real estate companies, and fixed income
securities;
uncertainly and volatility in the equity and credit markets;
changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts
or actions taken by rating agencies with respect to our securities or those of other real estate investment trusts;
failure to meet analysts’ revenue or earnings estimates;
speculation in the press or investment community;
strategic actions by us or our competitors, such as acquisitions or restructurings;
the extent of institutional investor interest in us;
the extent of short-selling of our common shares and the shares of our competitors;
fluctuations in the stock price and operating results of our competitors;
general financial and economic market conditions and, in particular, developments related to market conditions for real
estate investment trusts and other real estate related companies;
domestic and international economic factors unrelated to our performance; and
all other risk factors addressed elsewhere in this document.
A significant decline in our stock price could result in substantial losses for stockholders.
Alexander’s has additional shares of its common stock available for future issuance, which could decrease the market
price of the common stock currently outstanding.
The interest of our current stockholders could be diluted if we issue additional equity securities. As of December 31,
2010, we had authorized but unissued 4,826,550 shares of common stock, par value of $1.00 per share and 3,000,000 shares
of preferred stock, par value $1.00 per share. In addition, 895,000 shares are available for future grant under the terms of our
2006 Omnibus Stock Plan. These awards may be granted in the form of options, restricted stock, SARs or other equity-based
interests, and if granted, would reduce that number of shares available for future grants, provided however that an award that
may be settled only in cash, would not reduce the number of shares available under the plan. We cannot predict the impact
that future issuances of common or preferred stock or any exercise of outstanding options or grants of additional equity-based
interests would have on the market price of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved comments from the staff of the Securities and Exchange Commission as of the date of this
Annual Report on Form 10-K.
15
ITEM 2. PROPERTIES
The following table shows the location, ownership, approximate size (excluding parking garages) and occupancy of each of
our properties as of December 31, 2010.
Land
Acreage
Building
Square Feet
Occupancy
Rate
Average
Annualized
Rent Per
Square Foot
697,000
188,000
885,000
83,000
34,000
27,000
30,000
174,000
1,059,000
100%
$
82.14
100%
161.23
415,000
94%
61.57
Tenants
Bloomberg L.P.
Bloomberg L.P.
The Home Depot
The Container Store
Hennes & Mauritz
Various
106 Mall tenants
Macy’s (owned by
Macy’s, Inc.)
Sears
Lowe’s (ground lessee)
Best Buy
Lease
Expiration/
Option
Expiration(s)
2029/2039
2015/2020
2025/2035
2021
2019
Various
Various
N/A
2023/2033
2028/2053
2032
Sears
2021
Burlington Coat Factory
(lease not commenced)
Bed Bath & Beyond
Marshalls
Old Navy
2022/2027
2013/2021
2021
2021
85%
32.28
Costco
Century 21
Kohl’s
Toys "R"Us/Babies "R" Us
Various
2034/2059
2030/2050
2030/2050
2021/2036
Various
100%
38.01
Property
Operating Properties:
731 Lexington Avenue
New York, New York
Office
Retail
Kings Plaza Regional Shopping Center
Brooklyn, New York
Rego Park I
Queens, New York
Rego Park II
Queens, New York
In Service
Under Development
Routes 4 and 17
Paramus, New Jersey
Roosevelt Avenue and Main Street
Queens, New York (ground leased
through January 2037)
1.9
24.3
4.8
6.6
339,000
289,000
114,000
53,000
1,210,000
195,000
50,000
46,000
36,000
16,000
343,000
145,000
135,000
133,000
47,000
90,000
550,000
65,000
615,000
30.3
-
100%
-
IKEA (ground lessee)
2041
1
167,000
100%
14.99 New World Mall LLC
2027/2037
Property to be Developed:
Rego Park III, adjacent to Rego Park II
Queens, New York
3.4
-
3,394,000
-
-
-
-
16
ITEM 2.
PROPERTIES – continued
Operating Properties
731 Lexington Avenue
The 731 Lexington Avenue property, a 1,307,000 square foot multi-use building, comprises the entire square block
bounded by Lexington Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan, New York, and is situated
in the heart of one of Manhattan’s busiest business and shopping districts, with convenient access to several subway and bus
lines. The property is located across the street from Bloomingdale’s flagship store and only a few blocks away from Fifth
Avenue and 57th Street. The building contains 885,000 and 174,000 of net rentable square feet of office and retail space,
respectively, which we own, and 248,000 square feet of residential space consisting of 105 condominium units, which we
sold. Bloomberg L.P. occupies all of the office space. The Home Depot (83,000 square feet), The Container Store (34,000
square feet) and Hennes & Mauritz (27,000 square feet) are the principal retail tenants.
The office and retail spaces are encumbered by first mortgage loans with balances of $351,751,000 and $320,000,000,
respectively, as of December 31, 2010. These loans mature in February 2014 and July 2015 and bear interest at 5.33% and
4.93%, respectively.
Kings Plaza Regional Shopping Center
The Kings Plaza Regional Shopping Center contains 1,210,000 square feet and is located on Flatbush Avenue in
Brooklyn, New York. The center is anchored by a 339,000 square foot Macy’s (owned by Macy’s, Inc.), a 289,000 square
foot Sears department store and a 114,000 square foot Lowe’s on land leased from us. Among the features are a marina, a
parking deck (3,739 spaces) and an energy plant that generates electricity for the center.
The following table sets forth lease expirations for the Mall tenants in the center as of December 31, 2010, for each of the
next ten years, assuming none of the tenants exercise their renewal options.
Number of Square Feet of
Expiring
Leases
6
13
14
10
Expiring
Leases
12,067
42,600
35,652
37,965
Year
Month to month
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
11
6
7
13
8
10
6
44,256
8,656
25,275
46,051
27,622
26,749
59,494
Annual Rent of
Expiring Leases
$
Total
1,076,292
2,225,484
2,489,844
2,495,220
3,153,720
635,652
1,633,548
2,979,468
1,893,744
1,919,256
2,791,656
$
Per
Square Foot
89.19
52.24
69.84
65.72
71.26
73.43
64.63
64.70
68.56
71.75
46.92
Percent of
Total Leased
Square Feet
2.9%
10.1%
8.5%
9.0%
10.5%
2.1%
6.0%
11.0%
6.6%
6.4%
14.1%
Percent of
2010 Gross
Annual
Rentals
4.2%
8.6%
9.6%
9.6%
12.2%
2.5%
6.3%
11.5%
7.3%
7.4%
10.8%
17
ITEM 2.
PROPERTIES – continued
Mall sales per square foot were $618 and $628 for the years ended December 31, 2010 and 2009, respectively. The
following table sets forth the occupancy rate and the average annual rent per square foot for the Mall stores for each of the
past five years.
As of December 31,
Occupancy Rate
2010
2009
2008
2007
2006
94%
92%
94%
94%
94%
Average
Annual Base Rent
Per Square Foot
$
61.57
59.32
56.86
55.95
52.78
The center is encumbered by a first mortgage loan with a balance of $151,214,000 at December 31, 2010. The loan
matures in June 2011 and bears interest at 7.46%.
Rego Park I
The Rego Park I Shopping Center contains 343,000 square feet and is located on Queens Boulevard and 63rd Road in
Queens, New York. The center is anchored by a 195,000 square foot Sears department store, a 46,000 square foot Bed Bath
& Beyond and a 36,000 square foot Marshalls. In January 2011, we leased 50,000 square feet to Burlington Coat Factory.
The center contains a parking deck (1,265 spaces) that provides for paid parking.
The center is encumbered by a 100% cash collateralized loan with a balance of $78,246,000 at December 31, 2010. The
loan matures in March 2012, bears interest at 0.75% and is prepayable at any time without penalty.
Rego Park II
The Rego Park II property, a newly developed 615,000 square foot shopping center, is located adjacent to our Rego Park I
property in Queens, New York. As of December 31, 2010, 89% of the center is in service and such portion is 100% leased,
primarily to three anchor tenants: a 145,000 square foot Costco, a 135,000 square foot Century 21 and a 133,000 square foot
Kohl’s. In addition, 47,000 square feet is leased to Toys “R” Us/Babies “R” Us, a one-third owned affiliate of Vornado. The
center contains a parking deck (1,315 spaces) that provides paid parking.
In December 2010, we repaid a portion of the construction loan and extended its maturity date to December 2011. The
loan has a balance of $277,200,000 at December 31, 2010 and bears interest at LIBOR plus 1.20% (1.46% at December 31,
2010.)
Paramus
We own 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey. The property is located
directly across from the Garden State Plaza regional shopping mall and is within two miles of three other regional shopping
malls and ten miles of New York City. This land is leased to IKEA Property, Inc. The lease has a 40-year term expiring in
2041, with a purchase option in 2021 for $75,000,000. We have a $68,000,000 interest only, non-recourse mortgage loan on
the property from a third-party lender. The fixed interest rate on the debt is 5.92% with interest payable monthly until
maturity in October 2011. The annual triple-net rent is the sum of $700,000 plus the amount of debt service on the mortgage
loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a net
gain on the sale of the land of approximately $62,000,000. If the purchase option is not exercised, the triple-net rent for the
last 20 years must include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
18
ITEM 2.
PROPERTIES – continued
Flushing
The Flushing property is located at Roosevelt Avenue and Main Street in the downtown, commercial section of Flushing,
Queens, New York. Roosevelt Avenue and Main Street are active shopping districts and there are many national retailers
located in the area. A subway entrance is located directly in front of the property with bus service across the street. The
property comprises a four-floor building containing 167,000 square feet and a parking garage, which is sub-leased to New
World Mall, LLC for the remainder of our ground lease term.
In 2003, we recognized $1,289,000 of income representing a non-refundable purchase deposit of $1,875,000, net of
$586,000 of costs associated with the transaction, from a party that agreed to purchase this property; as such party had not
met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8, 2004,
we received letters from the party demanding return of the deposit. On December 28, 2005, the party filed a complaint
against us in the New York State Court alleging that we failed to honor the terms and conditions of the agreement. The
complaint sought specific performance and, if specific performance was denied, it sought a return of the deposit plus interest
and $50,000 in costs. In August 2010, the New York State Court entered judgment denying specific performance and
ordered us to return the deposit together with accrued interest and fees. We have filed a notice of appeal and this judgment is
stayed pending the appeal. As a result of the judgment, included as a component of “general and administrative” expenses on
our consolidated statement of income for the year ended December 31, 2010 is a $3,135,000 litigation loss accrual,
representing the amount of the deposit, accrued interest and fees.
Property to be Developed
Rego Park III
We own approximately 3.4 acres of land adjacent to our Rego Park II property in Queens, New York, which comprises a
one-quarter square block and is located at the intersection of Junction Boulevard and the Horace Harding Service Road. The
land is currently being used for public paid parking and while the current plans for the development of this parcel are
preliminary, it may include up to 80,000 square feet of retail space. There can be no assurance that this project will
commence, be completed, completed on time or completed for the budgeted amount.
Insurance
We maintain general liability insurance with limits of $300,000,000 per occurrence and all-risk property and rental value
insurance coverage with limits of $1.7 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain
perils such as floods and earthquakes on each of our properties. There can be no assurance that we will be able to maintain
similar levels of insurance coverage in the future in amounts and on terms that are commercially reasonable. We are
responsible for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on our 731 Lexington
Avenue property, in the event of a substantial casualty, as defined. Our mortgage loans contain customary covenants
requiring us to maintain insurance. If lenders insist on greater coverage than we are able to obtain, it could adversely affect
our ability to finance our properties.
19
ITEM 3.
LEGAL PROCEEDINGS
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, after
consultation with our legal counsel, the outcome of such matters will not have a material effect on our financial condition,
results of operations or cash flows.
For a discussion of the litigation concerning our Flushing, New York, property, see “Item 2. Properties – Operating
Properties – Flushing.”
20
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange under the symbol “ALX.” Set forth below are the high and
low closing prices for the shares of our common stock for each full quarterly period within the two most recent years and any
dividends paid per share during such periods.
High
2010
Low
Year Ended December 31,
2009
Dividends
High
Low
Dividends
$
312.28 $
267.94 $
-
$
266.93 $
125.88 $
340.00
282.03
347.83
297.16
421.82
314.45
2.50
2.50
2.50
303.14
160.46
325.22
250.00
314.05
260.15
-
-
-
-
Quarter
First
Second
Third
Fourth
In order to maintain our qualification as a REIT under the Internal Revenue Code, we must distribute at least 90% of our
taxable income to stockholders. Because the balance of our net operating loss carryover (“NOL”) has exceeded taxable
income in the past, there was no distribution requirement and accordingly no dividends were paid. In 2010, our estimated
taxable income exceeded the remaining balance of our NOL and we began paying a regular quarterly dividend of $2.50 per
share (estimated quarterly taxable income) beginning in the second quarter of 2010. On January 12, 2011, we increased our
regular quarterly dividend to $3.00 per share (an indicated annual rate of $12.00 per share).
As of December 31, 2010, there were approximately 376 holders of record of our common stock.
Recent Sales of Unregistered Securities
During 2010, we did not sell any unregistered securities.
Recent Purchases of Equity Securities
During 2010, we did not repurchase any of our equity securities.
21
Performance Graph
The following graph is a comparison of the five-year cumulative return of our common stock, the Standard & Poor’s 500
Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index
(excluding health care real estate investment trusts), a peer group index. The graph assumes that $100 was invested on
December 31, 2005 in our common stock, the S&P 500 Index and the NAREIT All Equity Index and that all dividends were
reinvested without the payment of any commissions. There can be no assurance that the performance of our stock will
continue in line with the same or similar trends depicted in the graph below.
Alexander’s
S&P 500 Index
The NAREIT All Equity Index
2005
100
100
100
2006
171
116
135
2007
144
122
114
2008
105
77
71
2009
124
97
91
2010
172
112
116
22
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial and operating data. This data should be read in conjunction with the
consolidated financial statements and notes thereto and “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this Annual Report on Form 10-K. This data may not be comparable to, or
indicative of, future operating results.
(Amounts in thousands, except per share amounts)
2010
Year Ended December 31,
2008
2007
2009
2006
Total revenues
Income (loss) before net gain on sale of condominiums(1)
Net gain on sale of condominiums after income taxes
Net income (loss)
Net (income) loss attributable to the noncontrolling
interest
Net income (loss) attributable to Alexander’s
Income (loss) per common share:
Income (loss) per common share – basic
Income (loss) per common share – diluted
Balance sheet data:
Total assets
Real estate, at cost
Accumulated depreciation and amortization
Debt
Total equity
$
$
$
$
$
$
241,350 $
223,529 $
211,097 $
207,980 $
198,772
67,445 $
-
67,445
132,941 $
-
132,941
76,295 $
-
76,295
115,509 $
-
115,509
(89,334)
13,256
(76,078)
(1,016)
66,429 $
(751)
132,190 $
(7)
76,288 $
(1,168)
114,341 $
1,095
(74,983)
13.01 $
25.90 $
15.05 $
22.68 $
(14.92)
13.01 $
25.89 $
14.96 $
22.44 $
(14.92)
1,679,300 $ 1,703,769 $ 1,603,568 $
967,975
1,025,234
1,050,291
114,235
132,386
157,232
1,221,255
1,278,964
1,246,411
180,751
314,626
343,776
1,532,410 $ 1,447,242
692,388
80,779
1,068,498
28,337
835,081
96,183
1,110,197
137,426
__________________________
(1)
Includes reversals of stock appreciation rights ("SARs") compensation expense of $34,275, $20,254 and $43,536 in 2009, 2008 and
2007, respectively, and an accrual for SARs compensation expense of $148,613 in 2006.
23
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
Overview
Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing,
managing, developing and redeveloping properties. All references to “we,” “us,” “our,” “Company,” and “Alexander’s”,
refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed
by, Vornado Realty Trust (“Vornado”) (NYSE: VNO). We have seven properties in the greater New York City metropolitan
area.
We compete with a large number of property owners and developers. Our success depends upon, among other factors,
trends of national and local economies, the financial condition and operating results of current and prospective tenants, the
availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and
legislation, population trends, zoning laws, and our ability to lease, sublease or sell our properties, at profitable levels. Our
success is also subject to our ability to refinance existing debt on acceptable terms as it comes due.
Substantially all businesses, including ours, were negatively affected by the 2008/2009 economic recession and
illiquidity and volatility in the capital and financial markets. Although there are signs of an economic recovery and greater
stability in the capital and financial markets, it is not possible for us to predict whether these trends will continue in the future
or quantify the impact of these or any other trends on our financial results.
In January 2011, we leased 50,000 square feet at our Rego Park I Shopping Center to Burlington Coat Factory.
Year Ended December 31, 2010 Financial Results Summary
Net income attributable to common stockholders for the year ended December 31, 2010 was $66,429,000, or $13.01 per
diluted share, compared to $132,190,000, or $25.89 per diluted share, for the year ended December 31, 2009. Funds from
operations attributable to common stockholders (“FFO”) for the year ended December 31, 2010 was $97,271,000, or $19.05
per diluted share, compared to $158,960,000, or $31.14 per diluted share, for the year ended December 31, 2009. Net income
attributable to common stockholders and FFO for the years ended December 31, 2010 and 2009 include income of
$5,113,000 and $42,472,000, respectively, or $1.00 and $8.32 per diluted share, respectively, from the reversal of a portion of
the liability for income taxes due to the expiration of the applicable statute of limitations. The year ended December 31,
2010 also includes $3,135,000, or $0.61 per diluted share, for a litigation loss accrual related to our Flushing property and the
year ended December 31, 2009 includes $34,275,000, or $6.71 per diluted share, for the reversal of a portion of previously
recognized stock appreciation rights compensation expense.
Quarter Ended December 31, 2010 Financial Results Summary
Net income attributable to common stockholders for the quarter ended December 31, 2010 was $17,891,000, or $3.50 per
diluted share, compared to $15,102,000, or $2.96 per diluted share, for the quarter ended December 31, 2009. FFO for the
quarter ended December 31, 2010 was $25,982,000, or $5.09 per diluted share, compared to $22,372,000, or $4.38 per
diluted share, for the quarter ended December 31, 2009.
Significant Tenants
Bloomberg L.P. (“Bloomberg”) accounted for $83,137,000, $77,988,000, and $66,333,000, or 34%, 35% and 31%, of our
consolidated revenues in the years ended December 31, 2010, 2009 and 2008, respectively. No other tenant accounted for
more than 10% of our consolidated revenues in any of the last three years. If we were to lose Bloomberg as a tenant, or if
Bloomberg were to fail or become unable to perform its obligations under its lease, it would adversely affect our results of
operations and financial condition. We receive and evaluate certain confidential financial information and metrics from
Bloomberg on a semi-annual basis. In addition, we access and evaluate financial information regarding Bloomberg from
private sources, as well as publicly available data.
24
Recently Issued Accounting Literature
On January 21, 2010, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards
Codification (“ASC”) 820, Fair Value Measurements and Disclosures, adding new requirements for disclosures about
transfers into and out of Levels 1 and 2 fair value measurements and additional disclosures about the activity within Level 3
fair value measurements. The adoption of this guidance on January 1, 2010 did not have any effect on our consolidated
financial statements.
On June 12, 2009, the FASB issued an update to ASC 810, Consolidation, which modifies the existing quantitative
guidance used in determining the primary beneficiary of a variable interest entity (“VIE”) by requiring entities to
qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the
significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially
significant to the VIE. The adoption of this guidance on January 1, 2010 did not have any effect on our consolidated
financial statements.
Critical Accounting Policies and Estimates
Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of
America (“GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a
summary of our accounting policies that we believe are critical to the preparation of our consolidated financial statements.
This summary should be read in conjunction with a more complete discussion of our accounting policies included in Note 2
to the consolidated financial statements in this Annual Report on Form 10-K.
Real Estate
Real estate is carried at cost, net of accumulated depreciation and amortization. As of December 31, 2010 and 2009, the
carrying amount of our real estate, net of accumulated depreciation, was $893,059,000 and $892,848,000, respectively.
Maintenance and repairs are charged to operations as incurred. Depreciation requires an estimate by management of the
useful life of each property and improvement as well as an allocation of the costs associated with a property to its various
components. If we do not allocate these costs appropriately or incorrectly estimate the useful lives of our real estate,
depreciation expense may be misstated. As real estate is undergoing development activities, all property operating expenses,
including interest expense, are capitalized to the cost of the real property to the extent that we believe such costs are
recoverable through the value of the property.
Our properties and related intangible assets, including properties to be developed in the future, currently under
development and those that are substantially completed and are to be held and used, are individually reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An
impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result
from the use and eventual disposition of the asset. Estimates of future cash flows are based on our current plans, intended
holding periods and available market information at the time the analyses are prepared. For our development properties,
estimates of future cash flows also include all future expenditures necessary to develop the asset, including interest payments
that will be capitalized as part of the cost of the asset. An impairment loss is recognized only if the carrying amount of the
asset is not recoverable and is measured based on the excess of the property’s carrying amount over its estimated fair value.
If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions or
otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated
financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future
occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over
longer periods decrease the likelihood of recording impairment losses.
25
Critical Accounting Policies and Estimates - Continued
Allowance for Doubtful Accounts
We periodically evaluate the collectibility of amounts due from tenants, including the receivable arising from the straight-
lining of rents, and maintain an allowance for doubtful accounts ($1,047,000 and $1,736,000 as of December 31, 2010 and
2009, respectively) for estimated losses resulting from the inability of tenants to make required payments under the lease
agreements. We exercise judgment in establishing these allowances and consider payment history and current credit status in
developing these estimates. These estimates may differ from actual results, which could be material to our consolidated
financial statements.
Revenue Recognition
We have the following revenue sources and revenue recognition policies:
• Base Rent (revenue arising from tenant leases) – These rents are recognized over the non-cancelable term of the
related leases on a straight-line basis, which includes the effects of rent steps and free rent abatements under the
leases. We commence rental revenue recognition when the tenant takes possession of the leased space and the leased
space is substantially ready for its intended use. In addition, in circumstances where we provide a tenant
improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of
rental revenue on a straight-line basis over the term of the lease.
• Percentage Rent (revenue arising from retail tenant leases that is contingent upon the sales of tenants exceeding
defined thresholds) – These rents are recognized only after the contingency has been removed (i.e., when tenant sales
thresholds have been achieved).
• Expense Reimbursements (revenue arising from tenant leases which provide for the recovery of all or a portion of the
operating expenses and real estate taxes of the respective properties) – This revenue is accrued in the same periods as
the expenses are incurred.
• Parking income (revenue arising from the rental of parking space at our properties) – This income is recognized as
cash is received.
Before we recognize revenue, we assess its collectability. If our assessment of the collectability of revenue changes, the
impact on our consolidated financial statements could be material.
Income Taxes
We operate in a manner intended to enable us to continue to qualify as a Real Estate Investment Trust (“REIT”) under
Sections 856 – 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to maintain our qualification as
a REIT under the Code, we must distribute at least 90% of our taxable income to stockholders each year. To the extent we do
not distribute all of our taxable income, we would be subject to corporate level income taxes. Because the balance of our net
operating loss carryover (“NOL”) has exceeded taxable income in the past, there was no distribution requirement. In 2010,
our estimated taxable income exceeded the remaining balance of our NOL and we began paying a regular quarterly dividend
which approximated our taxable income.
Under ASC 740, Income Taxes, deferred income taxes would be recognized for temporary differences between the
financial reporting basis of assets and liabilities and their respective tax basis and for operating loss and tax credit carry-
forwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred
tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of
available evidence, including tax planning strategies and other factors. As of December 31, 2010 and 2009, there were no
deferred tax assets or liabilities on our consolidated balance sheets.
26
Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009
Property Rentals
Property rentals were $166,403,000 in the year ended December 31, 2010, compared to $155,275,000 in the year ended
December 31, 2009, an increase of $11,128,000. This increase was primarily attributable to tenants at the Rego Park II
property whose space was placed into service subsequent to the second half of 2009 and during 2010.
Expense Reimbursements
Tenant expense reimbursements were $74,947,000 in the year ended December 31, 2010, compared to $68,254,000 in the
year ended December 31, 2009, an increase of $6,693,000. This increase was primarily due to higher reimbursable operating
expenses and real estate taxes and services provided to tenants. This was primarily attributable to the Rego Park II property
whose space was placed into service subsequent to the second half of 2009 and during 2010.
Operating Expenses
Operating expenses were $78,652,000 in the year ended December 31, 2010, compared to $73,340,000 in the year ended
December 31, 2009, a increase of $5,312,000. This resulted from a $6,115,000 increase in reimbursable operating expenses
and real estate taxes, primarily attributable to the Rego Park II property whose space was placed into service subsequent to
the second half of 2009 and during 2010, partially offset by an $803,000 decrease in non-reimbursable operating expenses.
Depreciation and Amortization
Depreciation and amortization was $31,343,000 in the year ended December 31, 2010, compared to $27,284,000 in the
year ended December 31, 2009, an increase of $4,059,000. This increase resulted primarily from depreciation on the portion
of Rego Park II placed into service subsequent to the second half of 2009 and during 2010.
General and Administrative Expenses
Excluding $3,135,000 for a litigation loss accrual related to our Flushing property in 2010, and $34,275,000 for the
reversal of SARs compensation expense and $1,407,000 for the write-off of previously capitalized costs at our Flushing
property in 2009, general and administrative expenses increased by $35,000 from the prior year.
Interest and Other Income, net
Interest and other income, net was $851,000 in the year ended December 31, 2010, compared to $2,847,000 in the prior
year, a decrease of $1,996,000. This decrease was primarily due to lower average yields on investments (0.13% in the
current year as compared to 0.48% in the prior year).
Interest and Debt Expense
Interest and debt expense was $58,372,000 in the year ended December 31, 2010, compared to $57,473,000 in the prior
year, an increase of $899,000. This increase was primarily due to (i) $2,183,000 of lower capitalized interest as a result of
placing a portion of our Rego Park II property into service, (ii) $1,784,000 of interest related to our income tax liability,
resulting primarily from a lower reversal of previously recognized interest expense in the current year as compared to the
prior year, partially offset by (iii) interest savings of $2,433,000 from the partial repayment of our Kings Plaza debt in March
2010 and (iv) $351,000 of lower interest on the leasing commissions owed to Vornado.
27
Results of Operations – Year Ended December 31, 2010 Compared to December 31, 2009 - continued
Net loss on Early Extinguishment of Debt
Net loss on early extinguishment of debt was $1,238,000 in the year ended December 31, 2010, compared to $519,000 in
the prior year and resulted from the open market purchases of our Kings Plaza debt of $27,500,000 and $11,948,000 in 2010
and 2009, respectively, for $28,738,000 and $12,467,000 in cash, respectively.
Income Tax Benefit
Income tax benefit was $2,641,000 in the year ended December 31, 2010, compared to $36,935,000 in the prior year, a
decrease of $34,294,000. This decrease resulted primarily from a lower reversal of our income tax liability in the current
year as compared to the prior year. These liabilities were reversed as a result of the expiration of the applicable statute of
limitations.
Net Income Attributable to the Noncontrolling Interest
Net income attributable to the noncontrolling interest was $1,016,000 in the year ended December 31, 2010, compared to
$751,000 in the prior year, and represents our venture partner’s 75% pro rata share of net income from our consolidated
partially owned entity, the Kings Plaza energy plant joint venture.
28
Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008
Property Rentals
Property rentals were $155,275,000 in the year ended December 31, 2009, compared to $143,004,000 in the year ended
December 31, 2008, an increase of $12,271,000. This increase was primarily attributable to anchor tenants at the Rego Park
II property whose space was placed into service during 2009.
Expense Reimbursements
Tenant expense reimbursements were $68,254,000 in the year ended December 31, 2009, compared to $68,093,000 in the
year ended December 31, 2008, an increase of $161,000.
Operating Expenses
Operating expenses were $73,340,000 in the year ended December 31, 2009, compared to $77,110,000 in the year ended
December 31, 2008, a decrease of $3,770,000. This decrease resulted primarily from a $3,707,000 write-off in 2008 of
Circuit City’s receivable arising from the straight-lining of rent in connection with its lease termination at Rego Park I.
Depreciation and Amortization
Depreciation and amortization was $27,284,000 in the year ended December 31, 2009, compared to $24,066,000 in the
year ended December 31, 2008, an increase of $3,218,000. This increase resulted primarily from depreciation on the portion
of Rego Park II placed into service during 2009, partially offset by a $1,430,000 write-off of in 2008 of Circuit City’s tenant
improvements in connection with its lease termination at Rego Park I.
General and Administrative Expenses
Excluding (i) $34,275,000 and $20,254,000 for the reversal of a portion of previously recognized SARs compensation
expense in 2009 and 2008, respectively, and (ii) $1,407,000 for the write-off of previously capitalized costs at our Flushing
property in 2009, general and administrative expenses decreased by $1,065,000 from 2008. This decrease resulted primarily
from lower professional fees.
Interest and Other Income, net
Interest and other income, net was $2,847,000 in the year ended December 31, 2009, compared to $15,222,000 in the
prior year, a decrease of $12,375,000. This decrease was primarily comprised of (i) $8,448,000 from lower average yields on
investments (0.48% in the year ended December 31, 2009 as compared to 2.29% in the year ended December 2008), (ii)
$2,164,000 from lower average cash balances in 2009 and (iii) $1,872,000 from the net gain on the sale of real estate tax
abatement certificates in 2008.
Interest and Debt Expense
Interest and debt expense was $57,473,000 in the year ended December 31, 2009, compared to $62,474,000 in the prior
year, a decrease of $5,001,000. This decrease was primarily comprised of (i) a $5,165,000 reversal of a portion of the
liability for income taxes in the current year (which was previously recognized as interest expense) due to the expiration of
the applicable statute of limitations, (ii) a $4,237,000 decrease in interest from the refinancing of the Rego Park I mortgage
loan in March 2009, (iii) a $1,021,000 decrease in interest on the Rego Park II construction loan, primarily due to a lower
average interest rate (1.58% in the year ended December 31, 2009 as compared to 3.81% in the prior year), (iv) a $569,000
decrease in interest on the income tax liability due to the reversal of a portion of the liability in 2009 and (v) a $507,000
decrease in interest on the leasing commissions due to Vornado, mainly due to a lower rate in 2009, partially offset by (vi)
$7,132,000 of lower capitalized interest as a result of placing a portion of the Rego Park II property into service during 2009.
29
Results of Operations – Year Ended December 31, 2009 Compared to December 31, 2008 - continued
Net Loss on Early Extinguishment of Debt
Net loss on early extinguishment of debt was $519,000 in the year ended December 31, 2009 and resulted from the open
market purchases of our Kings Plaza debt of $11,948,000 for $12,467,000 in cash.
Income Tax Benefit (Expense)
In the year ended December 31, 2009, we had an income tax benefit of $36,935,000, compared to an expense of $941,000
in the year ended December 31, 2008. The tax benefit in 2009 was due to the reversal of a portion of the liability for income
taxes due to the expiration of the applicable statute of limitations. The tax expense in 2008 relates primarily to the interest
income of our taxable REIT subsidiary which was liquidated in 2008.
Net Income Attributable to the Noncontrolling Interest
Net income attributable to the noncontrolling interest was $751,000 in the year ended December 31, 2009, compared to
$7,000 in the year ended December 31, 2008, and represents our venture partner’s 75% pro rata share of net income from our
consolidated partially owned entity, the Kings Plaza energy plant joint venture.
30
Related Party Transactions
Vornado
At December 31, 2010, Vornado owned 32.4% of our outstanding common stock. We are managed by, and our
properties are leased and developed by, Vornado, pursuant to the agreements described below, which expire in March of each
year and are automatically renewable. Steven Roth is the Chairman of our Board of Directors and Chief Executive Officer,
the Managing General Partner of Interstate Properties (“Interstate”), a New Jersey general partnership, and the Chairman of
the Board of Trustees of Vornado. At December 31, 2010, Mr. Roth, Interstate and its other two general partners, David
Mandelbaum and Russell B. Wight, Jr. (who are also directors of the Company and trustees of Vornado) owned, in the
aggregate, 27.2% of our outstanding common stock, in addition to the 2.3% they indirectly own through Vornado. Michael
D. Fascitelli, President and Chief Executive Officer of Vornado, is our President and a member of our Board of Directors.
Joseph Macnow, our Executive Vice President and Chief Financial Officer, holds the same position with Vornado.
Management and Development Agreements
We pay Vornado an annual management fee equal to the sum of (i) $3,000,000, (ii) 3% of gross income from the Kings
Plaza Regional Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington
Avenue, and (iv) $248,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.
In addition, Vornado is entitled to a development fee of 6% of development costs, as defined, with a minimum guaranteed
fee of $750,000 per annum.
Leasing Agreements
Vornado also provides us with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for
the eleventh through the twentieth year of a lease term, and 1% of rent for the twenty-first through thirtieth year of a lease
term, subject to the payment of rents by tenants. In the event third-party real estate brokers are used, the fees to Vornado
increase by 1% and Vornado is responsible for the fees to the third-party real estate brokers. Vornado is also entitled to a
commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000
and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable in annual
installments in an amount not to exceed $4,000,000, with interest on the unpaid balance at LIBOR plus 1% (1.99% at
December 31, 2010).
Other Agreements
We have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise cleaning,
engineering and security services at our Lexington Avenue and Kings Plaza properties for an annual fee of the cost for such
services plus 6%.
The following is a summary of fees to Vornado under the agreements discussed above.
(Amounts in thousands)
Company management fees
Development fees
Leasing fees
Property management fees and payments for cleaning,
Year Ended December 31,
2010
2009
2008
$
$
3,000
727
4,267
$
3,000
3,215
15,975
3,000
6,520
2,946
engineering and security services
4,342
4,108
4,146
$
12,336
$
26,298
$
16,612
As a result of the substantial completion of the Rego Park II construction, we paid Vornado the unpaid balance of the
development fee of $13,934,000 in the fourth quarter of 2010. At December 31, 2010, we owed Vornado $41,888,000 for
leasing fees and $1,897,000 for management, property management and cleaning fees.
31
LIQUIDITY AND CAPITAL RESOURCES
We anticipate that cash flows from continuing operations over the next twelve months, together with existing cash
balances, will be adequate to fund our business operations, cash dividends to stockholders, debt amortization and recurring
capital expenditures.
Development Projects
The Rego Park II property, a newly developed 615,000 square foot shopping center, is located adjacent to our Rego Park I
property in Queens, New York. As of December 31, 2010, 89% of the center is in service. In December 2010, we repaid a
portion of the construction loan and extended its maturity date to December 2011. The loan has a balance of $277,200,000 at
December 31, 2010 and bears interest at LIBOR plus 1.20% (1.46% at December 31, 2010).
Insurance
We maintain general liability insurance with limits of $300,000,000 per occurrence and all-risk property and rental value
insurance coverage with limits of $1.7 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain
perils such as floods and earthquakes on each of our properties. There can be no assurance that we will be able to maintain
similar levels of insurance coverage in the future in amounts and on terms that are commercially reasonable. We are
responsible for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on our 731 Lexington
Avenue property, in the event of a substantial casualty, as defined. Our mortgage loans contain customary covenants
requiring us to maintain insurance. If lenders insist on greater coverage than we are able to obtain, it could adversely affect
our ability to finance our properties.
Dividends
On January 12, 2011, we increased our regular quarterly dividend to $3.00 per share (an indicated annual rate of $12.00
per share). This dividend policy, if continued for all of 2011, would require us to pay out approximately $61,300,000.
32
LIQUIDITY AND CAPITAL RESOURCES – continued
Debt and Contractual Obligations
Below is a summary of our outstanding debt at December 31, 2010.
(Amounts in thousands)
Balance
Interest
Rate
Maturity
Kings Plaza
Paramus
Rego Park II(1)
Rego Park I(2)
Lexington Office
Lexington Retail(3)
$
$
151,214
68,000
277,200
78,246
351,751
320,000
1,246,411
7.46%
5.92%
1.46%
0.75%
5.33%
4.93%
Jun. 2011
Oct. 2011
Dec. 2011
Mar. 2012
Feb. 2014
Jul. 2015
__________________________
(1) This loan bears interest at LIBOR plus 1.20%.
(2) This loan is 100% cash collateralized.
(3)
In the event of a substantial casualty, up to $75,000 of this loan may become recourse to us.
Below is a summary of our contractual obligations and commitments as of December 31, 2010.
(Amounts in thousands)
Contractual obligations:
Long-term debt obligations
Operating lease obligations
Purchase obligations (primarily
constuction commitments)
Other obligations (primarily due to
Vornado)
Total
Less than
One Year
One to
More than
Three Years Five Years Five Years
Three to
$
1,389,800 $
13,018
557,961 $
802
171,067 $
1,605
660,772 $
1,605
-
9,006
359
359
-
-
-
51,043
1,454,220 $
$
7,135
566,257 $
8,000
180,672 $
8,000
670,377 $
27,908
36,914
Commitments:
Standby letters of credit
$
7,998,000 $
7,998,000 $
- $
- $
-
The table above excludes $3,041,000 of liabilities for income taxes for which the timing of future cash flows is uncertain.
33
LIQUIDITY AND CAPITAL RESOURCES – Continued
Cash Flows
Property rental income is our primary source of cash flow and is dependent on a number of factors including the
occupancy level and rental rates of our properties, as well as our tenants’ ability to pay their rents. Our properties provide us
with a relatively consistent stream of cash flow that enables us to pay our operating expenses, interest expense, recurring
capital expenditures and cash dividends to stockholders. Other sources of liquidity to fund cash requirements include our
existing cash, proceeds from financings, including mortgage or construction loans secured by our properties and proceeds
from asset sales.
Cash and cash equivalents were $397,220,000 at December 31, 2010, compared to $412,734,000 at December 31, 2009, a
decrease of $15,514,000. This decrease resulted from $72,143,000 of net cash used in financing activities and $19,393,000
of net cash used in investing activities, partially offset by $76,022,000 of net cash provided by operating activities. Our
consolidated outstanding debt was $1,246,411,000 at December 31, 2010, a $32,553,000 decrease from the balance at
December 31, 2009. $496,414,000 of our outstanding debt matures during 2011. We may refinance our maturing debt as it
comes due or choose to repay it.
Year Ended December 31, 2010
Net cash provided by operating activities of $76,022,000 was comprised of net income of $67,445,000, and $15,792,000
of adjustments for non-cash items, partially offset by $7,215,000 for the net change in operating assets and liabilities. The
adjustments for non-cash items were primarily comprised of (i) depreciation and amortization of $34,849,000, partially offset
by (ii) straight-lining of rental income of $15,182,000 and (iii) a $5,113,000 reversal of a portion of the liability for income
taxes.
Net cash used in investing activities of $19,393,000 was primarily comprised of $42,310,000 of real estate additions,
primarily related to the development of our Rego Park II property, and purchases of short-term investments of $23,000,000,
partially offset by $40,000,000 of proceeds from maturing short-term investments.
Net cash used in financing activities of $72,143,000 was primarily comprised of (i) dividends paid on common stock of
$38,295,000, (ii) $27,500,000 for the purchase of a portion of our Kings Plaza debt, (iii) $24,039,000 for the repayment of a
portion of Rego Park II construction loan upon exercise of the one-year extension option and (iv) $17,080,000 for the
repayment of borrowings, partially offset by (v) $34,828,000 of borrowings under our Rego Park II construction loan.
Year Ended December 31, 2009
Cash and cash equivalents were $412,734,000 at December 31, 2009, compared to $515,940,000 at December 31, 2008, a
decrease of $103,206,000. This decrease resulted from $201,282,000 of net cash used in investing activities, partially offset
by $58,497,000 of net cash provided by financing activities and $39,579,000 of net cash provided by operating activities.
Net cash provided by operating activities of $39,579,000 was comprised of net income of $132,941,000, partially offset
by adjustments for non-cash items of $67,799,000 and the net change in operating assets and liabilities of $25,563,000. The
adjustments for non-cash items were comprised of (i) a $42,472,000 reversal of a portion of the liability for income taxes, (ii)
a reversal of the liability for SARs compensation expense of $34,275,000 and (iii) straight-lining of rental income of
$23,381,000, partially offset by (iv) depreciation and amortization of $30,445,000 and (v) other non-cash adjustments of
$1,884,000. The net change in operating assets and liabilities of $25,563,000 included a $22,838,000 payment for SARs
compensation expense.
Net cash used in investing activities of $201,282,000 was primarily comprised of restricted cash of $86,427,000,
primarily related to the fully cash-collateralized mortgage at Rego Park I, capital expenditures of $74,855,000, primarily
related to the development of our Rego Park II project, and short-term investments of $55,000,000, partially offset by
$15,000,000 of proceeds from maturing short-term investments.
Net cash provided by financing activities of $58,497,000 was primarily comprised of $162,961,000 of proceeds from a
construction loan to fund expenditures for our Rego Park II project, partially offset by repayments of borrowings of
$105,252,000.
34
LIQUIDITY AND CAPITAL RESOURCES – Continued
Year Ended December 31, 2008
Cash and cash equivalents were $515,940,000 at December 31, 2008, compared to $560,231,000 at December 31, 2007, a
decrease of $44,291,000. This decrease resulted from $131,638,000 of net cash used in investing activities, primarily related
to capital expenditures at our Rego Park II project, partially offset by $78,088,000 of net cash provided by financing activities
and $9,259,000 of net cash provided by operating activities.
Net cash provided by operating activities of $9,259,000 was primarily comprised of (i) net income of $76,295,000,
partially offset by, (ii) the net change in operating assets and liabilities of $64,467,000 and (iii) adjustments for non-cash
items of $2,569,000. The net change in operating assets and liabilities was primarily comprised of a $62,808,000 payment
for a portion of the liability for SARs compensation expense. The adjustments for non-cash items were primarily comprised
of (a) a reversal of a portion of the liability for SARs compensation expense of $20,254,000 and (b) straight-lining of rental
income of $10,113,000, partially offset by (c) depreciation and amortization of $26,719,000.
Net cash used in investing activities of $131,638,000 was primarily comprised of capital expenditures of $134,554,000,
primarily related to the development of our Rego Park II project.
Net cash provided by financing activities of $78,088,000 was primarily comprised of $125,909,000 of proceeds from a
construction loan to fund expenditures for our Rego Park II project, partially offset by the payment of a special dividend of
$35,571,000 and repayments of borrowings of $14,851,000.
35
Funds from Operations (“FFO”)
FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of
Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net
gains from sales of depreciated real estate assets, depreciation and amortization expense from real estate assets, extraordinary
items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries.
FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of
operating performance between periods and among our peers because it excludes the effect of real estate depreciation and
amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate
diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash
generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should
not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may
not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income to FFO is
provided below.
FFO attributable to common stockholders for the year ended December 31, 2010 was $97,271,000, or $19.05 per diluted
share, compared to $158,960,000, or $31.14 per diluted share, for the year ended December 31, 2009. FFO attributable to
common stockholders for the years ended December 31, 2010 and 2009 include income of $5,113,000 and $42,472,000, or
$1.00 and $8.32 per diluted share, respectively, from the reversal of a portion of the liability for income taxes due to the
expiration of the applicable statute of limitations. The year ended December 31, 2010 also includes $3,135,000, or $0.61 per
diluted share, for a litigation loss accrual related to our Flushing property and the year ended December 31, 2009 includes
$34,275,000, or $6.71 per diluted share, for the reversal of a portion of previously recognized stock appreciation rights
compensation expense.
FFO attributable to common stockholders for the quarter ended December 31, 2010 was $25,982,000, or $5.09 per diluted
share, compared to $22,372,000, or $4.38 per diluted share, for the year ended December 31, 2009.
The following table reconciles our net income to FFO:
(Amounts in thousands, except share and per share amounts)
Net income attributable to Alexander’s
Depreciation and amortization of real property
FFO attributable to common stockholders
FFO attributable to common stockholders per diluted share
For the Year Ended
December 31,
For the Quarter Ended
December 31,
2010
2009
2010
2009
66,429 $
30,842
97,271 $
132,190 $
26,770
158,960 $
17,891 $
8,091
25,982 $
15,102
7,270
22,372
19.05 $
31.14 $
5.09 $
4.38
$
$
$
Weighted average shares used in computing diluted FFO per share
5,105,936
5,105,370
5,105,936
5,105,936
36
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. Our
exposure to a change in interest rates is summarized in the table below.
(Amounts in thousands, except per share amounts)
Variable (including $41,888 due to Vornado)
Fixed Rate
Total effect on diluted earnings per share
Balance as of
December 31,
2010
Weighted-Average
Interest Rate
Effect of 1%
Change in
Base Rates
$
$
319,088
969,211
1,288,299
1.53%
5.24%
$
$
$
3,191
-
3,191
0.62
The fair value of our consolidated debt is calculated by discounting the future contractual cash flows of our existing debt
using the current rates available to borrowers with similar credit ratings for the remaining terms of such debt. As of
December 31, 2010 and 2009, the estimated fair value of our consolidated debt was $1,291,048,000 and $1,215,501,000,
respectively. Our fair value estimates, which are made at the end of the reporting period, may be different from the amounts
that may ultimately be realized upon disposition of our financial instruments.
37
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 31, 2010 and 2009
Consolidated Statements of Income for the
Years Ended December 31, 2010, 2009 and 2008
Consolidated Statements of Changes in Equity for the
Years Ended December 31, 2010, 2009 and 2008
Consolidated Statements of Cash Flows for the
Years Ended December 31, 2010, 2009 and 2008
Notes to Consolidated Financial Statements
Page
Number
39
40
41
42
43
44
38
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Alexander’s, Inc.
Paramus, New Jersey
We have audited the accompanying consolidated balance sheets of Alexander’s, Inc. and subsidiaries (the “Company”) as
of December 31, 2010 and 2009, and the related consolidated statements of income, changes in equity, and cash flows for
each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedules
listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the
Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
Alexander’s, Inc. and subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth
therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company’s internal control over financial reporting as of December 31, 2010, based on the criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 22, 2011 expressed an unqualified opinion on the Company’s internal control over financial
reporting.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 22, 2011
39
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
ASSETS
Real estate, at cost:
Land
Buildings and leasehold improvements
Development and construction in progress
Total
Accumulated depreciation and amortization
Real estate, net
Cash and cash equivalents
Short-term investments
Restricted cash
Accounts receivable, net of allowance for doubtful accounts of $1,047 and $1,736, respectively
Receivable arising from the straight-lining of rents
Deferred lease and other property costs, net (including unamortized leasing fees to Vornado of
$48,949 and $49,638, respectively)
Deferred debt issuance costs, net of accumulated amortization of $18,855, and $15,349, respectively
Other assets
LIABILITIES AND EQUITY
Notes and mortgages payable
Amounts due to Vornado
Accounts payable and accrued expenses
Liability for income taxes and other
Total liabilities
Commitments and contingencies
Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued and outstanding, none
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued 5,173,450 shares;
outstanding, 5,105,936 shares
Additional capital
Retained earnings
Treasury stock: 67,514 shares, at cost
Total Alexander’s equity
Noncontrolling interest in consolidated subsidiary
Total equity
See notes to consolidated financial statements.
$
$
$
December 31,
2010
2009
74,974 $
934,782
40,535
1,050,291
(157,232)
893,059
397,220
23,000
85,567
4,224
175,680
74,974
832,761
117,499
1,025,234
(132,386)
892,848
412,734
40,000
91,484
2,159
160,498
68,835
8,167
23,548
1,679,300 $
71,285
11,616
21,145
1,703,769
1,246,411 $
43,785
41,610
3,718
1,335,524
1,278,964
56,666
45,208
8,305
1,389,143
-
-
5,173
31,501
304,055
340,729
(375)
340,354
3,422
343,776
1,679,300 $
5,173
31,501
275,921
312,595
(375)
312,220
2,406
314,626
1,703,769
$
40
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
Year Ended December 31,
2009
2010
2008
REVENUES
Property rentals
Expense reimbursements
Total revenues
$
166,403 $
74,947
241,350
155,275 $
68,254
223,529
143,004
68,093
211,097
EXPENSES
Operating (including fees to Vornado of $5,182, $4,948 and $4,986, respectively)
Depreciation and amortization
General and administrative (including a reversal of stock appreciation rights (“SARs”)
compensation expense of $34,275 and $20,254, in 2009 and 2008, respectively,
and management fees to Vornado of $2,160 in each year)
Total expenses
OPERATING INCOME
Interest and other income, net
Interest and debt expense
Net loss on early extinguishment of debt
Income before income taxes
Income tax benefit (expense)
Net income
Net income attributable to the noncontrolling interest
Net income attributable to Alexander’s
Net income per common share - basic
Weighted average shares - basic
Net income per common share - diluted
Weighted average shares - diluted
Dividends per common share (including a special dividend in 2008)
$
$
$
$
78,652
31,343
73,340
27,284
77,110
24,066
7,792
117,787
(28,246)
72,378
(14,567)
86,609
123,563
151,151
124,488
851
(58,372)
(1,238)
64,804
2,641
67,445
(1,016)
66,429 $
2,847
(57,473)
(519)
96,006
36,935
132,941
(751)
132,190 $
15,222
(62,474)
-
77,236
(941)
76,295
(7)
76,288
13.01 $
25.90 $
15.05
5,105,936
5,103,790
5,067,426
13.01 $
25.89 $
14.96
5,105,936
5,105,370
5,098,529
7.50 $
- $
7.00
See notes to consolidated financial statements.
41
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
(Amounts in thousands)
Common Stock
Shares
Amount
Additional
Capital
Retained
Earnings
Treasury
Stock
Alexander’s controlling
Equity
Interest
Total
Equity
Non-
Balance, December 31, 2007
Net income
Special cash dividend
($7.00 per share)
Distributions
Common stock issued under
option plan
Balance, December 31, 2008
Net income
Common stock issued under
option plan
Balance, December 31, 2009
Net income
Dividends paid on common
stock
5,173 $
-
5,173 $
-
-
-
-
5,173
-
-
5,173
-
-
-
-
5,173
-
-
5,173
-
27,636 $
-
-
-
3,011
30,647
-
854
31,501
-
103,014 $
76,288
(720) $
-
135,103 $
76,288
2,323 $
7
137,426
76,295
(35,571)
-
-
143,731
132,190
-
275,921
66,429
-
-
265
(455)
-
80
(375)
-
(35,571)
-
3,276
179,096
132,190
934
312,220
66,429
-
(675)
-
1,655
751
-
2,406
1,016
(35,571)
(675)
3,276
180,751
132,941
934
314,626
67,445
-
-
-
(38,295)
-
(38,295)
-
(38,295)
Balance, December 31, 2010
5,173 $
5,173 $
31,501 $
304,055 $
(375) $
340,354 $
3,422 $
343,776
See notes to consolidated financial statements.
42
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended December 31,
2009
2010
2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of debt issuance costs)
Straight-lining of rental income
Reversal of income tax liability
Liability for stock appreciation rights
Other non-cash adjustments
Change in operating assets and liabilities:
Accounts receivable, net
Other assets
Payment for stock appreciation rights
Accounts payable and accrued expenses
Income tax liability of taxable REIT subsidiary
Amounts due to Vornado
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Construction in progress and real estate additions
Purchases of short-term investments
Proceeds from maturing short-term investments
Restricted cash
Proceeds from the sale of real estate tax abatement certificates
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Debt repayments
Dividends paid (including a special dividend in 2008)
Proceeds from borrowings
Debt issuance costs
Exercise of stock options
Distributions to the noncontrolling interest
Net cash (used in) provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest (of which $1,269, $3,452 and $10,584 have
been capitalized)
Non-cash additions to real estate included in accounts payable and accrued expenses
$
67,445 $
132,941 $
76,295
34,849
(15,182)
(5,113)
-
1,238
(2,065)
(6,068)
-
13,273
704
(12,881)
(178)
76,022
30,445
(23,381)
(42,472)
(34,275)
1,884
4,421
(12,421)
(22,838)
4,668
2,054
(1,344)
(103)
39,579
26,719
(10,113)
(800)
(20,254)
1,879
(635)
(3,947)
(62,808)
(4,467)
2,549
4,898
(57)
9,259
(42,310)
(23,000)
40,000
5,917
-
(19,393)
(74,855)
(55,000)
15,000
(86,427)
-
(201,282)
(134,554)
-
-
(70)
2,986
(131,638)
(68,619)
(38,295)
34,828
(57)
-
-
(72,143)
(105,252)
-
162,961
(146)
934
-
58,497
(14,851)
(35,571)
125,909
-
3,276
(675)
78,088
(15,514)
412,734
397,220 $
(103,206)
515,940
412,734 $
(44,291)
560,231
515,940
52,889 $
57,906 $
68,097
- $
22,409 $
33,406
$
$
$
See notes to consolidated financial statements.
43
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing,
managing, developing and redeveloping its properties. All references to “we,” “us,” “our,” “Company” and “Alexander’s”
refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed
by, Vornado Realty Trust (“Vornado”) (NYSE: VNO).
We have seven properties in the greater New York City metropolitan area consisting of:
Operating properties
(i)
the 731 Lexington Avenue property, a 1,307,000 square foot multi-use building, comprising the entire square
block bounded by Lexington Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan. The
building contains 885,000 and 174,000 of net rentable square feet of office and retail space, respectively, which
we own, and 248,000 square feet of residential space consisting of 105 condominium units, which we sold.
Bloomberg L.P. (“Bloomberg”) occupies all of the office space. The Home Depot (83,000 square feet), The
Container Store (34,000 square feet) and Hennes & Mauritz (27,000 square feet) are the principal retail tenants;
(ii)
the Kings Plaza Regional Shopping Center contains 1,210,000 square feet and is located on Flatbush Avenue in
Brooklyn. The center is anchored by a 339,000 square foot Macy’s (owned by Macy’s, Inc.), a 289,000 square
foot Sears department store and a 114,000 square foot Lowe’s;
(iii) the Rego Park I Shopping Center contains 343,000 square feet and is located on Queens Boulevard and 63rd
Road in Queens. The center is anchored by a 195,000 square foot Sears department store, a 46,000 square foot
Bed Bath & Beyond and a 36,000 square foot Marshalls. In January 2011, we leased 50,000 square feet to
Burlington Coat Factory;
(iv) the Rego Park II property, a newly developed 615,000 square foot shopping center, is located adjacent to our
Rego Park I property in Queens. As of December 31, 2010, 89% of the center is in service and such portion is
100% leased, primarily to three anchor tenants: a 145,000 square foot Costco, a 135,000 square foot Century 21
and a 133,000 square foot Kohl’s. In addition 47,000 square feet is leased to Toys “R” Us/Babies “R” Us, a one-
third owned affiliate of Vornado;
(v)
the Paramus property, located at the intersection of Routes 4 and 17 in Paramus, New Jersey, consists of 30.3
acres of land leased to IKEA Property, Inc.;
(vi) the Flushing property, a 167,000 square foot building, is located at Roosevelt Avenue and Main Street in Queens
and is sub-leased to New World Mall LLC for the remainder of our ground lease term; and
Property to be developed
(vii) the Rego Park III property is a 3.4 acre land parcel adjacent to our Rego Park II property in Queens at the
intersection of Junction Boulevard and the Horace Harding Service Road.
We have determined that our properties have similar economic characteristics and meet the criteria which permit the
properties to be aggregated into one reportable segment (the leasing, management, development and redeveloping of
properties in the greater New York City metropolitan area). Our chief operating decision-maker assesses and measures
segment operating results based on a performance measure referred to as net operating income at the individual operating
segment. Net operating income for each property represents net rental revenues less operating expenses.
44
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation – The accompanying consolidated financial statements include our accounts and those of our
consolidated subsidiaries. All significant intercompany amounts have been eliminated. Our financial statements are
prepared in conformity with the accounting principles generally accepted in the United States of America (“GAAP”), which
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Real Estate – Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs
are charged to operations as incurred. Depreciation requires an estimate by management of the useful life of each property
and improvement as well as an allocation of the costs associated with a property to its various components. If we do not
allocate these costs appropriately or incorrectly estimate the useful lives of our real estate, depreciation expense may be
misstated. As real estate is undergoing development activities, all property operating expenses, including interest expense,
are capitalized to the cost of the real property to the extent that we believe such costs are recoverable through the value of the
property.
Our properties and related intangible assets, including properties to be developed in the future, currently under
development and those that are substantially completed and are to be held and used, are individually reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An
impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result
from the use and eventual disposition of the asset. Estimates of future cash flows are based on our current plans, intended
holding periods and available market information at the time the analyses are prepared. For our development properties,
estimates of future cash flows also include all future expenditures necessary to develop the asset, including interest payments
that will be capitalized as part of the cost of the asset. An impairment loss is recognized only if the carrying amount of the
asset is not recoverable and is measured based on the excess of the property’s carrying amount over its estimated fair value.
If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions or
otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated
financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future
occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over
longer periods decrease the likelihood of recording impairment losses.
Cash and Cash Equivalents – Cash and cash equivalents consist of highly liquid investments with original maturities of
three months or less. The majority of our cash and cash equivalents are held at major commercial banks which may at times
exceed the Federal Deposit Insurance Corporation limit. To date we have not experienced any losses on our invested cash.
Short-term Investments – Short-term investments consist of certificates of deposit placed through an account registry
service (“CDARS”) with original maturities of 91 to 180 days. These investments are FDIC insured and classified as
available-for-sale.
Restricted Cash – Restricted cash consists of cash held in a non-interest bearing escrow account in connection with our
Rego Park I 100% cash collateralized mortgage, as well as security deposits and other cash escrowed under loan agreements
for debt service, real estate taxes, property insurance and capital improvements.
45
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Allowance for Doubtful Accounts – We periodically evaluate the collectibility of amounts due from tenants, including
the receivable arising from the straight-lining of rents, and maintain an allowance for doubtful accounts ($1,047,000 and
$1,736,000 as of December 31, 2010 and 2009, respectively) for estimated losses resulting from the inability of tenants to
make required payments under the lease agreements. We exercise judgment in establishing these allowances and consider
payment history and current credit status in developing these estimates.
Deferred Charges – Direct financing costs are deferred and amortized over the terms of the related agreements as a
component of interest and debt expense. Direct costs related to leasing activities are capitalized and amortized on a straight-
line basis over the lives of the related leases. All other deferred charges are amortized on a straight-line basis, which
approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.
Fair Value of Financial Instruments – The fair value of our consolidated debt is calculated by discounting the future
contractual cash flows of our existing debt using the current rates available to borrowers with similar credit ratings for the
remaining terms of such debt. As of December 31, 2010 and 2009, the estimated fair value of our consolidated debt was
$1,291,048,000 and $1,215,501,000, respectively. Our fair value estimates, which are made at the end of the reporting
period, may be different from the amounts that may ultimately be realized upon disposition of our financial instruments.
Revenue Recognition – We have the following revenue sources and revenue recognition policies:
Base Rent (revenue arising from tenant leases) – These rents are recognized over the non-cancelable term of the related
leases on a straight-line basis, which includes the effects of rent steps and free rent abatements under the leases. We
commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is
substantially ready for its intended use. In addition, in circumstances where we provide a tenant improvement allowance for
improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line
basis over the term of the lease.
Percentage Rent (revenue arising from retail tenant leases that is contingent upon the sales of tenants exceeding defined
thresholds) – These rents are recognized only after the contingency has been removed (i.e., when tenant sales thresholds have
been achieved).
Expense Reimbursements (revenue arising from tenant leases which provide for the recovery of all or a portion of the
operating expenses and real estate taxes of the respective properties) – This revenue is accrued in the same periods as the
expenses are incurred.
Parking Income (revenue arising from the rental of parking space at our properties) – This income is recognized as cash is
received.
Income Taxes – We operate in a manner intended to enable us to continue to qualify as a Real Estate Investment Trust
(“REIT”) under Sections 856 – 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to maintain
our qualification as a REIT under the Code, we must distribute at least 90% of our taxable income to stockholders each year.
To the extent we do not distribute all of our taxable income, we would be subject to corporate level income taxes. Because
the balance of our net operating loss carryover (“NOL”) has exceeded taxable income in the past, there was no distribution
requirement. In 2010, our estimated taxable income exceeded the remaining balance of our NOL and we began paying a
regular quarterly dividend which approximated our taxable income. All of the dividends distributed in 2010 were
characterized as ordinary income for federal income tax purposes. In 2008, we declared and paid a special dividend which
was attributable to the liquidation of the wholly owned 731 Lexington Avenue taxable REIT subsidiary into Alexander’s.
46
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
The following table reconciles our net income to estimated taxable income (loss) for the years ended December 31, 2010,
2009 and 2008.
(Unaudited and in thousands)
$
Net income attributable to Alexander’s
Straight-line rent adjustments
Depreciation and amortization timing differences
Reversal of liability for income taxes
Interest expense
Stock appreciation rights compensation expense
Net income of the TRS
Other
Taxable income (loss) before NOL
NOL carried forward
2010
Years Ended December 31,
2009
132,190 $
(23,381)
1,385
(37,307)
(107)
(57,113)
-
(3,395)
12,272
(29,211)
66,429 $
(15,182)
602
(3,162)
-
-
-
6,245
54,932
(16,939)
2008
76,288
(6,634)
16
(625)
-
(83,973)
(3,165)
(9,521)
(27,614)
(1,597)
Taxable income/(NOL)
$
37,993 $
(16,939) $
(29,211)
At December 31, 2010, the net basis of our assets and liabilities for tax purposes is approximately $197,991,000 lower
than the amount reported for financial statement purposes.
Under ASC 740, Income Taxes, deferred income taxes would be recognized for temporary differences between the
financial reporting basis of assets and liabilities and their respective tax basis and for operating loss and tax credit carry-
forwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred
tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of
available evidence, including tax planning strategies and other factors. As of December 31, 2010 and 2009 there were no
deferred tax assets or liabilities on our consolidated balance sheets.
Income Per Share
Basic income per share is computed based on weighted average shares of common stock outstanding during the period.
Diluted income per share is computed based on the weighted average shares of common stock outstanding during the period
and assumes all potentially dilutive securities were converted into common stock at the earliest date possible.
Recently Issued Accounting Literature
On January 21, 2010, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards
Codification (“ASC”) 820, Fair Value Measurements and Disclosures, adding new requirements for disclosures about
transfers into and out of Levels 1 and 2 fair value measurements and additional disclosures about the activity within Level 3
fair value measurements. The adoption of this guidance on January 1, 2010 did not have any effect on our consolidated
financial statements.
On June 12, 2009, the FASB issued an update to ASC 810, Consolidation, which modifies the existing quantitative
guidance used in determining the primary beneficiary of a variable interest entity (“VIE”) by requiring entities to
qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the
significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially
significant to the VIE. The adoption of this guidance on January 1, 2010 did not have any effect on our consolidated
financial statements.
47
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS
Vornado
At December 31, 2010, Vornado owned 32.4% of our outstanding common stock. We are managed by, and our
properties are leased and developed by, Vornado, pursuant to the agreements described below, which expire in March of each
year and are automatically renewable. Steven Roth is the Chairman of our Board of Directors and our Chief Executive
Officer, the Managing General Partner of Interstate Properties (“Interstate”), a New Jersey general partnership, and the
Chairman of the Board of Trustees of Vornado. At December 31, 2010, Mr. Roth, Interstate and its other two general
partners, David Mandelbaum and Russell B. Wight, Jr. (who are also directors of the Company and trustees of Vornado)
owned, in the aggregate, 27.2% of our outstanding common stock, in addition to the 2.3% they indirectly own through
Vornado. Michael D. Fascitelli, President and Chief Executive Officer of Vornado, is our President and a member of our
Board of Directors. Joseph Macnow, our Executive Vice President and Chief Financial Officer, holds the same position with
Vornado.
Management and Development Agreements
We pay Vornado an annual management fee equal to the sum of (i) $3,000,000, (ii) 3% of gross income from the Kings
Plaza Regional Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington
Avenue, and (iv) $248,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.
In addition, Vornado is entitled to a development fee of 6% of development costs, as defined, with a minimum guaranteed
fee of $750,000 per annum.
Leasing Agreements
Vornado also provides us with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for
the eleventh through the twentieth year of a lease term, and 1% of rent for the twenty-first through thirtieth year of a lease
term, subject to the payment of rents by tenants. In the event third-party real estate brokers are used, the fees to Vornado
increase by 1% and Vornado is responsible for the fees to the third-party real estate brokers. Vornado is also entitled to a
commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000
and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable in annual
installments in an amount not to exceed $4,000,000, with interest on the unpaid balance at LIBOR plus 1% (1.99% at
December 31, 2010).
Other Agreements
We have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise cleaning,
engineering and security services at our Lexington Avenue and Kings Plaza properties for an annual fee of the cost for such
services plus 6%.
48
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS - continued
The following is a summary of fees to Vornado under the agreements discussed above.
(Amounts in thousands)
Company management fees
Development fees
Leasing fees
Property management fees and payments for cleaning, engineering
and security services
Year Ended December 31,
2009
2008
2010
3,000 $
727
4,267
3,000 $
3,215
15,975
3,000
6,520
2,946
4,342
12,336 $
4,108
26,298 $
4,146
16,612
$
$
As a result of the substantial completion of the Rego Park II construction, we paid Vornado the unpaid balance of the
development fee of $13,934,000 in the fourth quarter of 2010. At December 31, 2010, we owed Vornado $41,888,000 for
leasing fees, and $1,897,000 for management, property management and cleaning fees.
4. FAIR VALUE MEASUREMENTS
ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair
value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820
establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three
levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or
liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data;
and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the
highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation
techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as
well as consider counterparty credit risk in our assessment of fair value. Financial assets recorded at fair value in our
consolidated financial statements at December 31, 2010 and 2009 consist solely of short-term investments (CDARS
classified as available-for-sale) and are presented in the table below based on their level in the fair value hierarchy. There
were no financial liabilities recorded at fair value at December 31, 2010 and 2009.
(Amounts in thousands)
Short-term investments
(Amounts in thousands)
Short-term investments
As of December 31, 2010
Total
Level 1
Level 2
Level 3
23,000 $
23,000 $
- $
As of December 31, 2009
Total
Level 1
Level 2
Level 3
40,000 $
40,000
$
- $
-
-
$
$
49
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. REGO PARK II PROJECT
The Rego Park II property, a newly developed 615,000 square foot shopping center, is located adjacent to our Rego Park I
property in Queens, New York. As of December 31, 2010, 89% of the center is in service and such portion is 100% leased,
primarily to three anchor tenants: a 145,000 square foot Costco, a 135,000 square foot Century 21 and a 133,000 square foot
Kohl’s. In addition, 47,000 square feet is leased to Toys “R” Us/Babies “R” Us, a one-third owned affiliate of Vornado. The
center contains a parking deck (1,315 spaces) that provides paid parking.
In December 2010, we repaid a portion of the construction loan and extended its maturity date to December 2011. The
loan has a balance of $277,200,000 at December 31, 2010 and bears interest at LIBOR plus 1.20% (1.46% at December 31,
2010).
6. NOTES AND MORTGAGES PAYABLE
The following is a summary of our outstanding notes and mortgages payable.
Maturity
Interest Rate at
December 31, 2010
Balance at December 31
2009
2010
(Amounts in thousands)
First mortgage, secured by the Kings Plaza
Regional Shopping Center
First mortgage, secured by the Paramus property
Construction loan, secured by the
Rego Park II Shopping Center(2)
First mortgage, secured by the Rego Park I
Jun. 2011
Oct. 2011
Dec. 2011
Shopping Center (100% cash collateralized)
Mar. 2012
First mortgage, secured by the office space
at the Lexington Avenue property
First mortgage, secured by the retail space
at the Lexington Avenue property(3)
Feb. 2014
Jul. 2015
7.46 %
5.92 %
1.46 %
0.75 %
5.33 %
4.93 %
$
151,214 (1) $
68,000
183,318
68,000
277,200
266,411
78,246
78,246
351,751
362,989
320,000
1,246,411
$
320,000
1,278,964
$
___________________
(1) On March 3, 2010, we acquired $27,500 of this debt for $28,738 in cash, resulting in a $1,238 net loss on early extinguishment of
debt.
(2) This loan bears interest at LIBOR plus 1.20%.
(3)
In the event of a substantial casualty, as defined, up to $75,000 of this loan may become recourse to us.
All of our debt is secured by mortgages and/or pledges of the stock of the subsidiaries holding the properties. The net
carrying value of real estate collateralizing the debt amounted to $890,289,000 at December 31, 2010. Our existing financing
documents contain covenants that limit our ability to incur additional indebtedness on these properties, provide for lender
approval of tenants’ leases in certain circumstances, and provide for yield maintenance to prepay them. As of December 31,
2010, the principal repayments for the next five years and thereafter are as follows:
(Amounts in thousands)
Year Ending December 31,
2011
2012
2013
2014
2015
Thereafter
$
Amount
508,275
90,711
13,208
314,217
320,000
-
We may refinance our maturing debt as it comes due or choose to repay it.
50
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LIABILITY FOR INCOME TAXES
In accordance with the provisions of ASC 740, Income Taxes, we have an income tax liability of $3,041,000 and
$7,450,000 as of December 31, 2010 and 2009, respectively. This ASC 740 liability, which includes $2,466,000 and
$4,041,000 of accrued interest as of December 31, 2010 and 2009, respectively, is included as a component of “liability for
income taxes and other,” on our consolidated balance sheets. If this liability were reversed, it would result in non-cash
income and reduce our effective tax rate. Of this liability, $2,455,000 is expected to reverse in the third quarter of 2011 as a
result of the expiration of the applicable statute of limitations. Interest expense related to the ASC 740 liability is included as
a component of “interest and debt expense” on our consolidated statements of income. In the years ended December 31,
2010, 2009 and 2008, we recognized interest of $376,000, $1,807,000 and $2,549,000, respectively.
(Amounts in thousands)
Balance at January 1, 2009
Amount
$
47,868
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reduction for tax positions of prior years
Settlements
Balance at December 31, 2009
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reduction for tax positions of prior years
Settlements
Balance at December 31, 2010
$
247
1,807
(42,472)
-
7,450
328
376
(5,113)
-
3,041
In 2010 and 2009, we reversed $5,113,000 and $42,472,000, respectively, of liabilities related to income taxes as a result
of the expiration of the applicable statute of limitations. Accordingly, we recognized income in 2010 and 2009, of which
$3,162,000 and $37,307,000, respectively, were included as a component of “income tax benefit” (portion previously
recognized as income tax expense) and $1,951,000 and $5,165,000, respectively, were included as a reduction of “interest
and debt expense” (portion previously recognized as interest expense) on our consolidated statements of income.
As of December 31, 2010, Taxable REIT Subsidiary (“TRS”) tax returns for the years 2004 through 2009 and REIT tax
returns for the years 2007 through 2009 remain open to examination by the major taxing jurisdictions to which we are
subject.
8. NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY
Prior to 2005, we owned and operated an energy plant that generated all of the electrical power at our Kings Plaza
Regional Shopping Center. In April 2005, we contributed the 35 year old plant and $750,000 in cash, for a 25% interest in a
joint venture. In addition, we provided the joint venture with a $15,350,000 loan (eliminated in consolidation). The joint
venture rebuilt the plant at a total cost of approximately $18,350,000 and began operations in March 2007. Pursuant to ASC
Topic 805, Business Combinations, we control the joint venture and accordingly, consolidate its accounts into our
consolidated financial statements.
51
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. LEASES
As Lessor
We lease space to tenants in retail centers and an office building. The rental terms range from approximately 5 to 25
years. The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real
estate taxes, insurance and maintenance costs. Retail leases also provide for the payment by the lessee of additional rents
based on a percentage of their sales.
Future base rental revenue under these non-cancelable operating leases is as follows:
(Amounts in thousands)
Year Ending December 31,
2011
2012
2013
2014
2015
Thereafter
$
Amount
150,019
154,098
148,945
146,158
145,877
1,506,739
These future minimum amounts do not include additional rents based on a percentage of tenants’ sales. For the years ended
December 31, 2010, 2009, and 2008, these rents were $665,000, $633,000, and $784,000, respectively.
Bloomberg L.P. (“Bloomberg”) accounted for $83,137,000, $77,988,000 and $66,333,000, or 34%, 35% and 31% of our
consolidated revenues in the years ended December 31, 2010, 2009 and 2008, respectively. No other tenant accounted for
more than 10% of consolidated revenues in any of the last three years. If we were to lose Bloomberg as a tenant, or if
Bloomberg were to fail or become unable to perform its obligations under its lease, it would adversely affect our results of
operations and financial condition. We receive and evaluate certain confidential financial information and metrics from
Bloomberg on a semi-annual basis. In addition, we access and evaluate financial information regarding Bloomberg from
private sources, as well as publicly available data.
As Lessee
We are a tenant under long-term ground leases that range from approximately 8 to 17 years. Future minimum lease
payments under these operating leases are as follows:
(Amounts in thousands)
Year Ending December 31,
2011
2012
2013
2014
2015
Thereafter
$
Amount
802
802
803
802
803
9,006
Rent expense is primarily for our Flushing ground lease and was $848,000, $848,000, and $841,000 for the years ended
December 31, 2010, 2009 and 2008, respectively.
52
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. COMMITMENTS AND CONTINGENCIES
Insurance
We maintain general liability insurance with limits of $300,000,000 per occurrence and all-risk property and rental value
insurance coverage with limits of $1.7 billion per occurrence, including coverage for terrorist acts, with sub-limits for certain
perils such as floods and earthquakes on each of our properties. There can be no assurance that we will be able to maintain
similar levels of insurance coverage in the future in amounts and on terms that are commercially reasonable. We are
responsible for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on our 731 Lexington
Avenue property, in the event of a substantial casualty, as defined. Our mortgage loans contain customary covenants
requiring us to maintain insurance. If lenders insist on greater coverage than we are able to obtain, it could adversely affect
our ability to finance our properties.
Environmental Remediation
In July 2006, we discovered an oil spill at our Kings Plaza Regional Shopping Center. We have notified the New York
State Department of Environmental Conservation (“NYSDEC”) about the spill and have developed a remediation plan. The
NYSDEC has approved a portion of the remediation plan and clean up is ongoing. The estimated costs associated with the
clean up will aggregate approximately $2,500,000. We have paid $500,000 of such amount and the remainder is covered
under our insurance policy.
Flushing Property
In 2003, we recognized $1,289,000 of income representing a non-refundable purchase deposit of $1,875,000, net of
$586,000 of costs associated with the transaction, from a party that agreed to purchase this property, as such party had not
met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8, 2004,
we received letters from the party demanding return of the deposit. On December 28, 2005, the party filed a complaint
against us in the New York State Court alleging that we failed to honor the terms and conditions of the agreement. The
complaint sought specific performance and, if specific performance was denied, it sought a return of the deposit plus interest
and $50,000 in costs. In August 2010, the New York State Court entered judgment denying specific performance and
ordered us to return the deposit together with accrued interest and fees. We have filed a notice of appeal and this judgment is
stayed pending the appeal. As a result of the judgment, included as a component of “general and administrative” expenses on
our consolidated statement of income for the year ended December 31, 2010 is a $3,135,000 litigation loss accrual,
representing the amount of the deposit, accrued interest and fees.
Paramus
In 2001 we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a 40-year term
with a purchase option in 2021 for $75,000,000. We have a $68,000,000 interest only, non-recourse mortgage loan on the
property from a third party lender. The fixed interest rate on the debt is 5.92% with interest payable monthly until maturity in
October 2011. The annual triple-net rent is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the
purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a gain on sale of
land of approximately $62,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years must
include the debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
Letters of Credit
Approximately $7,998,000 of standby letters of credit were issued and outstanding as of December 31, 2010.
Other
There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such
matters will not have a material effect on our financial condition, results of operations or cash flows.
53
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCK-BASED COMPENSATION
Our Omnibus Stock Plan (the “Plan”), which was approved by our stockholders on May 18, 2006, provides for grants of
incentive and non-qualified stock options, restricted stock, SARs and performance shares, as defined, to the directors, officers
and employees of the Company and Vornado, and any other person or entity as designated by the Omnibus Stock Plan
Committee of our Board of Directors (the “Committee”). At December 31, 2010, there were 895,000 shares available for
future grant under the Plan.
We account for all stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation.
Stock Options
There have been no stock option grants since 1999; accordingly, no compensation expense was recognized during the
years ended December 31, 2010, 2009 and 2008. There were 14,346 and 47,640 options exercised during the years ended
December 31, 2009 and 2008, respectively. Cash received from option exercises in each of the years ended December 31,
2009 and 2008 was $934,000 and $3,276,000, respectively. As of December 31, 2010, there are no stock options
outstanding.
Stock Appreciation Rights (“SARs”)
On September 15 and October 14, 2008, Steven Roth, the Chairman of our Board of Directors and Chief Executive
Officer, exercised an aggregate of 200,000 SARs which were scheduled to expire on March 4, 2009 and received gross
proceeds of $62,808,000. On March 2, 2009, Mr. Roth and Mr. Fascitelli each exercised 150,000 SARs, which were
scheduled to expire on March 4, 2009 and each received gross proceeds of $11,419,000. These SARs were granted at 100%
of the market price of our company’s stock on the date of grant. As of December 31, 2010, there are no SARs outstanding.
12. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted income per share, including a reconciliation of net
income and the number of shares used in computing basic and diluted income per share. Basic income per share is
determined using the weighted average shares of common stock outstanding during the period. Diluted income per share is
determined using the weighted average shares of common stock outstanding during the period and assumes all potentially
dilutive securities were converted into common shares at the earliest date possible.
For the Year Ended December 31,
2009
2008
2010
$
66,429 $
132,190 $
76,288
5,105,936
-
5,105,936
5,103,790
1,580
5,105,370
5,067,426
31,103
5,098,529
$
$
13.01 $
25.90 $
15.05
13.01 $
25.89 $
14.96
(Amounts in thousands, except share and per share amounts)
Net income attributable to common shareholders – basic and diluted
Weighted average shares outstanding – basic
Dilutive effect of stock options
Weighted average shares outstanding – diluted
Net income per common share – basic
Net income per common share – diluted
54
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
(Amounts in thousands, except per share amounts)
2010
December 31
September 30
June 30
March 31
2009
December 31
September 30
June 30
March 31
Net Income
Attributable to
Common
Shareholders
Revenues
Income Per
Common Share(1)
Basic
Diluted
$
$
62,250 $
61,390
59,166
58,544
57,154 $
58,410
54,875
53,090
17,891 $
17,875
15,549
15,114
15,102 $
58,029
13,005
46,054
3.50 $
3.50
3.05
2.96
2.96 $
11.37
2.55
9.04
3.50
3.50
3.05
2.96
2.96
11.37
2.55
9.03
_______________________
(1) The total for the year may differ from the sum of the quarters as a result of weighting.
55
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures – Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered
by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer
have concluded that, as of the end of such period, our disclosure controls and procedures are effective.
56
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
The management of Alexander’s, Inc., together with its consolidated subsidiaries (the “Company”), is responsible for
establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over
financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial
officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s
financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United
States of America.
As of December 31, 2010, management conducted an assessment of the effectiveness of the Company’s internal control
over financial reporting based on the framework established in Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has
determined that the Company’s internal control over financial reporting as of December 31, 2010 is effective.
The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable
assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made
only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could
have a material effect on the Company’s financial statements.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 has been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 58 of
this Annual Report on Form 10-K, which expresses an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2010.
57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Alexander’s, Inc.
Paramus, New Jersey
We have audited the internal control over financial reporting of Alexander’s, Inc. and subsidiaries (the “Company”) as of
December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on
a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2010 of
the Company and our report dated February 22, 2011 expressed an unqualified opinion on those financial statements and
financial statement schedules.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 22, 2011
58
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information relating to our directors will be contained in a definitive Proxy Statement involving the election of directors
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. We will file the Proxy Statement with
the Securities and Exchange Commission no later than 120 days after December 31, 2010. Such information is incorporated
by reference herein. Also incorporated herein by reference is the information under the caption “Section 16(a) Beneficial
Ownership Reporting Compliance” of the Proxy Statement.
The following is a list of the names, ages, principal occupations and positions with us of our executive officers and the
positions held by such officers during the past five years.
Name
Steven Roth
Age
69
Michael D. Fascitelli
54
Joseph Macnow
65
PRINCIPAL OCCUPATION, POSITION AND OFFICE
(Current and during past five years with the Company unless otherwise stated)
Chairman of the Board of Directors since May 2004 and Chief Executive Officer since
March 1995; Chairman of the Board of Vornado Realty Trust since May 1989; Chief
Executive Officer of Vornado Realty Trust from May 1989 through May 2009; a
Trustee of Vornado Realty Trust since 1979; and Managing General Partner of
Interstate Properties.
President since August 2000; Director of the Company since December 1996; Chief
Executive Officer of Vornado Realty Trust since May 2009 and President and Trustee
since December 1996; Partner at Goldman Sachs & Co., in charge of its real estate
practice, from December 1992 to December 1996; and, prior thereto, Vice President at
Goldman Sachs & Co.
Executive Vice President and Chief Financial Officer since June 2002; Executive Vice
President – Finance and Administration from March 2001 to June 2002; Vice President
and Chief Financial Officer from August 1995 to March 2001; Executive Vice President
– Finance and Administration of Vornado Realty Trust since January 1998 and Chief
Financial Officer of Vornado Realty Trust since March 2001; and Vice President and
Chief Financial Officer of Vornado Realty Trust from 1985 to January 1998.
We have a code of business conduct and ethics that applies to our Chief Executive Officer and Executive Vice President
and Chief Financial Officer, among others. The code is posted on our website at www.alx-inc.com. We intend to satisfy our
disclosure obligation regarding amendments and waivers of this code applicable to our Chief Executive Officer and
Executive Vice President and Chief Financial Officer by posting such information on our website.
59
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation will be contained in the Proxy Statement referred to in “Item 10.
Directors, Executive Officers and Corporate Governance” of this Annual Report on Form 10-K. Such information is
incorporated by reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information relating to security ownership of certain beneficial owners and management and related stockholder matters,
except as set forth below, will be contained in the Proxy Statement referred to in “Item 10. Directors, Executive Officers and
Corporate Governance” of this Annual Report on Form 10-K. Such information is incorporated by reference herein.
Equity Compensation Plan Information
The following table provides information as of December 31, 2010, regarding our equity compensation.
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
Plan Category
warrants and rights
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
N/A $
N/A
N/A $
N/A
N/A
N/A
895,000
N/A
895,000
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information relating to certain relationships and related transactions and director independence will be contained in the
Proxy Statement referred to in “Item 10. Directors, Executive Officers and Corporate Governance” of this Annual Report on
Form 10-K. Such information is incorporated by reference herein.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information relating to principal accounting fees and services will be contained in the Proxy Statement referred to in
“Item 10. Directors, Executive Officers and Corporate Governance” of this Annual Report on Form 10-K. Such information
is incorporated by reference herein.
60
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a)
The following documents are filed as part of this Annual Report on Form 10-K.
1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.
2. The following financial statement schedules should be read in conjunction with the financial statements included
in Item 8 of this Annual Report on Form 10-K.
Schedule II – Valuation and Qualifying Accounts – years ended
December 31, 2010, 2009 and 2008
Schedule III – Real Estate and Accumulated Depreciation as of
December 31, 2010, 2009 and 2008
Pages in this
Annual Report
on Form 10-K
63
64
All other financial statement schedules are omitted because they are not applicable, not required, or
the information is included elsewhere in the consolidated financial statements or the notes thereto.
3. The following exhibits listed on the Exhibit Index are filed with this Annual Report on Form 10-K.
Exhibit
No.
21
23
31.1
31.2
32.1
32.2
Subsidiaries of Registrant
Consent of Independent Registered Public Accounting Firm
Rule 13a-14(a) Certification of the Chief Executive Officer
Rule 13a-14(a) Certification of the Chief Financial Officer
Section 1350 Certification of the Chief Executive Officer
Section 1350 Certification of the Chief Financial Officer
61
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALEXANDER’S, INC.
(Registrant)
Date: February 22, 2011
By:
/s/ Joseph Macnow
Joseph Macnow, Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
By: /s/Steven Roth
(Steven Roth)
Chairman of the Board of Directors
(Principal Executive Officer)
Date
February 22, 2011
By: /s/Michael D. Fascitelli
(Michael D. Fascitelli)
By: /s/Joseph Macnow
(Joseph Macnow)
By: /s/Thomas R. DiBenedetto
(Thomas R. DiBenedetto)
By: /s/David Mandelbaum
(David Mandelbaum)
By: /s/Arthur Sonnenblick
(Arthur Sonnenblick)
By: /s/Neil Underberg
(Neil Underberg)
By: /s/Richard R. West
(Richard R. West)
By: /s/Russell B. Wight Jr.
(Russell B. Wight Jr)
President and Director
February 22, 2011
February 22, 2011
February 22, 2011
February 22, 2011
February 22, 2011
February 22, 2011
February 22, 2011
February 22, 2011
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
62
ALEXANDER’S, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
Column A
Description
Column B Column C Column D Column E
Additions: Deductions:
Uncollectible
Accounts
Operations Written Off
Balance at Charged
Beginning
Against
of Year
Balance
at End
of Year
Allowance for doubtful accounts:
Year Ended December 31, 2010
Year Ended December 31, 2009
Year Ended December 31, 2008
$
$
$
1,736 $
(22) $
(667) $
1,047
1,357 $
540 $
(161) $
1,736
667 $
910 $
(220) $
1,357
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ALEXANDER’S, INC. AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
REAL ESTATE:
Balance at beginning of period
Additions (deletions) during the period:
Land
Buildings and leasehold improvements
Development and construction in progress
Less: Fully depreciated assets
Balance at end of period
ACCUMULATED DEPRECIATION:
Balance at beginning of period
Additions charged to operating expenses
Less: Fully depreciated assets
Balance at end of period
2010
December 31,
2009
2008
$
1,025,234 $
967,975 $
835,081
-
102,402
(76,964)
1,050,672
(381)
1,050,291 $
-
238,119
(177,389)
1,028,705
(3,471)
1,025,234 $
5,519
5,043
123,079
968,722
(747)
967,975
132,386 $
25,227
157,613
(381)
157,232 $
114,235 $
21,622
135,857
(3,471)
132,386 $
96,183
18,799
114,982
(747)
114,235
$
$
$
65
EXHIBIT INDEX
Exhibit
No.
3.1
- Amended and Restated Certificate of Incorporation. Incorporated herein by reference
from Exhibit 3.1 to the registrant’s Registration Statement on Form S-3 filed on
September 20, 1995
3.2
- By-laws, as amended. Incorporated herein by reference from Exhibit 10.1 to the
registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
10.1
10.2
10.3
10.4
10.5
10.6
- Real Estate Retention Agreement dated as of July 20, 1992, between Vornado Realty
Trust and Keen Realty Consultants, Inc., each as special real estate consultants, and
the Company. Incorporated herein by reference from Exhibit 10(i)(O) to the
registrant’s Annual Report on Form 10-K for the fiscal year ended July 25, 1992
- Extension Agreement to the Real Estate Retention Agreement, dated as of February 6,
1995, between the Company and Vornado Realty Trust. Incorporated herein by
reference from Exhibit 10(i)(G)(2) to the registrant’s Annual Report Form 10-K for
the year ended December 31, 1994
- Agreement of Lease dated as of April 30, 2001 between Seven Thirty One Limited
Partnership, landlord, and Bloomberg L.P., tenant. Incorporated herein by reference
from Exhibit 10(v) B to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2001, filed on August 2, 2001
- Amended and Restated Consolidated Mortgage and Security Agreement dated as of
May 31, 2001 among Alexander’s Kings Plaza LLC as mortgagor, Alexander’s of
King LLC as mortgagor and Kings Parking LLC as mortgagor, collectively borrower,
to Morgan Guaranty Trust Company of New York, as mortgagee. Incorporated herein
by reference from Exhibit 10(v) A1 to the registrant’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2001, filed on August 2, 2001
- Amended, Restated and Consolidated Promissory Note, dated as of May 31, 2001 by
and between Alexander’s Kings Plaza LLC, Alexander’s of Kings LLC, and
Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of
New York, lender. Incorporated herein by reference from Exhibit 10(v) A2 to the
registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, filed
on August 2, 2001
- Cash Management Agreement dated as of May 31, 2001 by and between Alexander’s
Kings Plaza LLC, Alexander’s of Kings LLC, and Kings Parking LLC collectively
borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated
herein by reference from Exhibit 10(v) A3 to the registrant’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2001, filed on August 2, 2001
___________________
*
Incorporated by reference.
*
*
*
*
*
*
*
*
66
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
- Note modification and Severance Agreement dated as of November 26, 2001, between
Alexander’s Kings Plaza LLC, Alexander’s of Kings LLC, and Kings Parking LLC
collectively borrower and JP Morgan Chase Bank of New York, lender. Incorporated
herein by reference from Exhibit 10(v)(A)(4) to the registrant’s Annual Report on Form
10 K for the year ended December 31, 2001, filed on March 13, 2002
*
- Loan Agreement dated as of October 2, 2001 by and between ALX of Paramus LLC as
borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated
herein by reference from Exhibit 10(v)(C)(1) to the registrant’s Annual Report on Form
10-K for the year ended December 31, 2001, filed on March 13, 2002
- Mortgage, Security Agreement and Fixture Financing Statement dated as of October 2,
2001 by and between ALX of Paramus LLC as borrower, and SVENSKA
HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from
Exhibit 10(v)(C)(2) to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2001, filed on March 13, 2002
- Environmental undertaking letter dated as of October 2, 2001 by and between ALX of
Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender.
Incorporated herein by reference from Exhibit 10(v)(C)(3) to the registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2001, filed on March 13,
2002
- Lease dated as of October 2, 2001 by and between ALX of Paramus LLC, as Landlord,
and IKEA Property, Inc. as Tenant. Incorporated herein by reference from Exhibit
10(v)(C)(4) to the registrant’s Annual Report on Form 10-K for the year ended December
31, 2001, filed on March 13, 2002
- First Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by and
between Alexander’s, Inc. and Vornado Realty, L.P. Incorporated herein by reference
from Exhibit 10(i)(E)(3) to the registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002, filed on August 7, 2002
- 59th Street Real Estate Retention Agreement, dated as of July 3, 2002, by and between
Vornado Realty, L.P., 731 Residential LLC and 731 Commercial LLC. Incorporated
herein by reference from Exhibit 10(i)(E)(4) to the registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2002, filed on August 7, 2002
- Amended and Restated Management and Development Agreement, dated as of July 3,
2002, by and between Alexander’s, Inc., the subsidiaries party thereto and Vornado
Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(1) to the
registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed on
August 7, 2002
- Kings Plaza Management Agreement, dated as of May 31, 2001, by and between
Alexander’s Kings Plaza LLC and Vornado Management Corp. Incorporated herein by
the quarter ended June 30, 2002, filed on August 7, 2002
- Limited Liability Company Operating Agreement of 731 Residential LLC, dated as of
July 3, 2002, among 731 Residential Holding LLC, as the sole member, Domenic A.
Borriello, as an Independent Manager and Kim Lutthang, as an Independent Manager.
Incorporated herein by reference from Exhibit 10(i)(A)(1) to the registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 7, 2002
*
*
*
*
*
*
*
*
*
___________________
*
Incorporated by reference.
67
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
- Limited Liability Company Operating Agreement of 731 Commercial LLC, dated as of
July 3, 2002, among 731 Commercial Holding LLC, as the sole member, Domenic A.
Borriello, as an Independent Manager and Kim Lutthang, as an Independent Manager.
Incorporated herein by reference from Exhibit 10(i)(A)(2) to the registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 7, 2002
- Reimbursement Agreement, dated as of July 3, 2002, by and between Alexander’s, Inc.,
731 Commercial LLC, 731 Residential LLC and Vornado Realty, L.P. Incorporated
herein by reference from Exhibit 10(i)(C)(8) to the registrant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2002, filed on August 7, 2002
- First Amendment of Lease, dated as of April 19, 2002, between Seven Thirty One
Limited Partnership, landlord and Bloomberg L.P., tenant. Incorporated herein by
reference from Exhibit 10(v)(B)(2) to the registrant’s Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2002, filed on August 7, 2002
- Loan and Security Agreement, dated as of February 13, 2004, between 731 Office One
LLC, as Borrower and German American Capital Corporation, as Lender. Incorporated
herein by reference from Exhibit 10.20 to the registrant’s Annual Report on Form 10-K
for the year ended December 31, 2003, filed on March 2, 2004
- Amended, Restated and Consolidated Mortgage, Security Agreement, Financing
Statement and Assignment of Leases, Rent and Security Deposits by and between 731
Office One LLC as Borrower and German American Capital Corporation as Lender,
dated as of February 13, 2004. Incorporated herein by reference from Exhibit 10.21 to the
registrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on
March 2, 2004
- Amended, Restated and Consolidated Note, dated as of February 13, 2004, by 731 Office
One LLC in favor of German American Capital Corporation. Incorporated herein by
reference from Exhibit 10.22 to the registrant’s Annual Report on Form 10-K for the year
ended December 31, 2003, filed on March 2, 2004
- Assignment of Leases, Rents and Security Deposits from 731 Office One LLC to German
American Capital Corporation, dated as of February 13, 2004. Incorporated herein by
reference from Exhibit 10.23 to the registrant’s Annual Report on Form 10-K for the year
ended December 31, 2003, filed on March 2, 2004
- Account and Control Agreement, dated as of February 13, 2004, by and among German
American Capital Corporation as Lender, and 731 Office One LLC as Borrower, and JP
Morgan Chase as Cash Management Bank. Incorporated herein by reference from Exhibit
10.24 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Manager’s Consent and Subordination of Management Agreement dated February 13,
2004 by 731 Office One LLC and Alexander’s Management LLC and German American
Capital Corporation. Incorporated herein by reference from Exhibit 10.25 to the
registrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on
March 2, 2004
- Note Exchange Agreement dated as of February 13, 2004 by and between 731 Office
One LLC and German American Capital Corporation. Incorporated herein by reference
from Exhibit 10.26 to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2003, filed on March 2, 2004
*
*
*
*
*
*
*
*
*
*
___________________
*
Incorporated by reference.
68
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
- Promissory Note A-1 dated as of February 13, 2004 by 731 Office One LLC in favor of
German American Capital Corporation. Incorporated herein by reference from Exhibit
10.27 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Promissory Note A-2 dated as of February 13, 2004 by 731 Office One LLC in favor of
German American Capital Corporation. Incorporated herein by reference from Exhibit
10.28 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Promissory Note A-3 dated as of February 13, 2004 by 731 Office One LLC in favor of
German American Capital Corporation. Incorporated herein by reference from Exhibit
10.29 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Promissory Note A-4 dated as of February 13, 2004, by 731 Office One LLC in favor of
German American Capital Corporation. Incorporated herein by reference from Exhibit
10.30 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Promissory Note A-X dated as of February 13, 2004, by 731 Office One LLC in favor of
German American Capital Corporation. Incorporated herein by reference from Exhibit
10.31 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Promissory Note B dated as of February 13, 2004, by 731 Office One LLC in favor of
German American Capital Corporation. Incorporated herein by reference from Exhibit
10.32 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2003, filed on March 2, 2004
- Guaranty of Recourse Obligations dated as of February 13, 2004, by Alexander’s, Inc. to
and for the benefit of German American Capital Corporation. Incorporated herein by
reference from Exhibit 10.33 to the registrant’s Annual Report on Form 10-K for the year
ended December 31, 2003, filed on March 2, 2004
- Environmental Indemnity dated as of February 13, 2004, by Alexander’s, Inc. and 731
Office One LLC for the benefit of German American Capital Corporation. Incorporated
herein by reference from Exhibit 10.34 to the registrant’s Annual Report on Form 10-K
for the year ended December 31, 2003, filed on March 2, 2004
- Loan Agreement dated as of July 6, 2005, between 731 Retail One LLC, as Borrower and
Archon Financial, as Lender. Incorporated herein by reference from Exhibit 10.1 to the
registrant’s Current Report on Form 8-K, filed on July 12, 2005
10.36
**
- Form of Stock Option Agreement between the Company and certain employees.
Incorporated herein by reference from Exhibit 10.61 to the registrant’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2005, filed on October 27, 2005
10.37
**
- Form of Restricted Stock Option Agreement between the Company and certain
employees. Incorporated herein by reference from Exhibit 10.62 to the registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed on
October 27, 2005
___________________
*
**
Incorporated by reference.
Management contract or compensatory agreement.
*
*
*
*
*
*
*
*
*
*
*
69
10.38
**
- Registrant’s 2006 Omnibus Stock Plan dated April 4, 2006. Incorporated herein by
reference from Annex B to Schedule 14A, filed by the registrant on April 28, 2006
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
- Second Amendment to Real Estate Retention Agreement, dated as of January 1, 2007, by
and between Alexander’s, Inc. and Vornado Realty L.P. Incorporated herein by reference
from Exhibit 10.64 to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2006, filed on February 26, 2007
- Amendment to 59th Street Real Estate Retention agreement, dated as of January 1, 2007,
by and among Vornado Realty L.P., 731 Retail One LLC, 731 Restaurant LLC, 731
Office One LLC and 731 Office Two LLC. Incorporated herein by reference from
Exhibit 10.65 to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2006, filed on February 26, 2007
- Building Loan Agreement, dated as of December 21, 2007, among Alexander’s of Rego
Park II, Inc., as Borrower, PB Capital Corporation, as Lender, Norddeutsche Landesbank
Girozentrale, New York Branch, as Lender, Wells Fargo Bank, National Association, as
Lender, Landesbank Baden-Wurttemberg, New York Branch, as Lender, Bank of Ireland,
Connecticut Branch, as Lender, PB Capital Corporation, as Administrative Agent, PB
Capital Corporation and Norddeutsche Landesbank Girozentrale, New York Branch, as
Co-Arrangers. Incorporated herein by reference from Exhibit 10.1 to the registrant’s
Current Report on Form 8-K, filed on December 28, 2007
- Project Loan Agreement, dated as of December 21, 2007, among Alexander’s of Rego
Park II, Inc., as Borrower, PB Capital Corporation, as Lender, Norddeutsche Landesbank
Girozentrale, New York Branch, as Lender, Wells Fargo Bank, National Association, as
Lender, Landesbank Baden-Wurttemberg, New York Branch, as Lender, Bank of Ireland,
Connecticut Branch, as Lender, PB Capital Corporation, as Administrative Agent, PB
Capital Corporation and Norddeutsche Landesbank Girozentrale, New York Branch, as
Co-Arrangers. Incorporated herein by reference from Exhibit 10.2 to the registrant’s
Current Report on Form 8-K, filed on December 28, 2007
- Series I Building Loan Mortgage, Assignment of Leases and Rents and Security
Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as
Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders.
Incorporated herein by reference from Exhibit 10.3 to the registrant’s Current Report on
Form 8-K, filed on December 28, 2007
- Series II Building Loan Mortgage, Assignment of Leases and Rents and Security
Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as
Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders.
Incorporated herein by reference from Exhibit 10.4 to the registrant’s Current Report on
Form 8-K, filed on December 28, 2007
- Series I Project Loan Mortgage, Assignment of Leases and Rents and Security
Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as
Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders.
Incorporated herein by reference from Exhibit 10.5 to the registrants Current Report on
Form 8-K, filed on December 31, 2007
- Series II Project Loan Mortgage, Assignment of Leases and Rents and Security
Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as
Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders.
Incorporated herein by reference from Exhibit 10.6 to the registrant’s Current Report on
Form 8-K, filed on December 28, 2007
*
*
*
*
*
*
*
*
*
___________________
Incorporated by reference.
Management contract or compensatory agreement.
*
**
70
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
- Guaranty of Completion, dated as of December 21, 2007, executed by Alexander’s, Inc.
for the benefit of PB Capital Corporation, as Administrative Agent for itself and the other
Lenders Incorporated herein by reference from Exhibit 10.7 to the registrant’s Current
Report on Form 8-K, filed on December 28, 2007
- Guaranty of Payment, dated as of December 21, 2007, executed by Alexander’s, Inc. for
the benefit of PB Capital Corporation, as Administrative Agent for itself and the other
Lenders. Incorporated herein by reference from Exhibit 10.8 to the registrant’s Current
Report on Form 8-K, filed on December 28, 2007
- First Amendment to Amended and Restated Management and Development Agreement,
dated as of July 6, 2005, by and between Alexander’s, Inc., the subsidiaries party thereto
and Vornado Management Corp. Incorporated herein by reference from Exhibit 10.52 to
the registrant’s Annual Report on Form 10-K, for the year ended December 31, 2007,
filed on February 25, 2008
- Second Amendment
to Amended and Restated Management and Development
Agreement, dated as of December 20, 2007, by and between Alexander’s, Inc., the
subsidiaries party thereto and Vornado Management Corp. Incorporated herein by
reference from Exhibit 10.53 to the registrant’s Annual Report on Form 10-K, for the
year ended December 31, 2007, filed on February 25, 2008
- Rego II Management and Development Agreement, dated as of December 20, 2007, by
and between Alexander’s of Rego Park II, Inc., and Vornado Realty L.P. Incorporated
herein by reference from Exhibit 10.54 to the registrant’s Annual Report on Form 10-K,
for the year ended December 31, 2007, filed on February 25, 2008
- Third Amendment to Real Estate Retention Agreement, dated as of December 20, 2007,
by and between Alexander’s, Inc., and Vornado Realty L.P. Incorporated herein by
reference from Exhibit 10.55 to the registrant’s Annual Report on Form 10-K, for the
year ended December 31, 2007, filed on February 25, 2008
- Rego II Real Estate Retention Agreement, dated as of December 20, 2007, by and
between Alexander’s, Inc., and Vornado Realty L.P. Incorporated herein by reference
from Exhibit 10.56 to the registrant’s Annual Report on Form 10-K, for the year ended
December 31, 2007 filed on February 25, 2008
- Loan Agreement dated as of March 10, 2009 between Alexander’s Rego Park Shopping
Center Inc., as Borrower and U.S. Bank National Association, as Lender. Incorporated
herein by reference from Exhibit 10.55 to the registrant’s Quarterly Report on for 10-Q
for the quarter ended March 31, 2009, filed on May 4, 2009
- Amended and Restated Mortgage, Security Agreement, Fixture Filing and Assignment of
Leases and Rentals by and between Alexander’s Rego Shopping Center, Inc. as Borrower
and U.S. Bank National Association as Lender, dated as of March 10, 2009. Incorporated
herein by reference from Exhibit 10.56 to the registrant’s Quarterly Report on for 10-Q
for the quarter ended March 31, 2009, filed on May 4, 2009
- Amended and Restated Promissory Note dated as of March 10, 2009, by Alexander’s
Rego Shopping Center Inc., in favor of U.S. Bank National Association. Incorporated
herein by reference from Exhibit 10.57 to the registrant’s Quarterly Report on for 10-Q
for the quarter ended March 31, 2009, filed on May 4, 2009
- Cash Pledge Agreement dated as of March 10, 2009, executed by Alexander’s Rego
Shopping Center Inc. to and for the benefit of U.S. Bank National Association.
Incorporated herein by reference from Exhibit 10.58 to the registrant’s Quarterly Report
on for 10-Q for the quarter ended March 31, 2009, filed on May 4, 2009
*
*
*
*
*
*
*
*
*
*
*
___________________
*
Incorporated by reference.
71
10.58
10.59
21
23
- Lease dated as of February 7, 2005, by and between 731 Office One LLC, as Landlord,
and Citibank, N.A., as Tenant. Incorporated herein by reference from Exhibit 10.59 to
the registrant’s Quarterly Report on for 10-Q for the quarter ended March 31, 2009, filed
on May 4, 2009
- Assignment and Assumption and Consent Agreement, dated as of March 25, 2009, by
and between 731 Office One LLC, as Landlord, Citicorp North America, Inc., as
Assignor, and Bloomberg L.P., as Assignee. Incorporated herein by reference from
Exhibit 10.60 to the registrant’s Quarterly Report on for 10-Q for the quarter ended
March 31, 2009, filed on May 4, 2009
*
*
- Subsidiaries of Registrant
- Consent of Independent Registered Public Accounting Firm
31.1
- Rule 13a-14 (a) Certification of the Chief Executive Officer
31.2
- Rule 13a-14 (a) Certification of the Chief Financial Officer
32.1
- Section 1350 Certification of the Chief Executive Officer
32.2
- Section 1350 Certification of the Chief Financial Officer
___________________
*
Incorporated by reference.
72
Board of Directors
Officers
CORPORATE INFORMATION
Steven Roth
Chairman of the Board of Trustees, Vornado Realty
Trust; Partner, Interstate Properties
Thomas R. DiBenedetto*
President, Boston International Group, Inc. and
Junction Investors Ltd.
Michael D. Fascitelli
President, Chief Executive Officer and Trustee,
Vornado Realty Trust
David Mandelbaum
A member of the law firm of Mandelbaum &
Mandelbaum, P.C.; Partner, Interstate Properties;
Trustee, Vornado Realty Trust
Arthur I. Sonnenblick*
Senior Managing Director of Cushman & Wakefield
Sonnenblick Goldman
Neil Underberg
Partner in Winston & Strawn LLP, Attorneys
Dr. Richard R. West*
Dean Emeritus, Leonard N. Stern School of Business,
New York University; Trustee, Vornado Realty Trust
Russell B. Wight, Jr.
Partner, Interstate Properties; Trustee, Vornado
Realty Trust
Annual Meeting
The annual meeting of stockholders of
Alexander’s, Inc., will be held at 10:00 A.M. on
Thursday, May 26, 2011 at the Saddle Brook
Marriott, Interstate 80 and the Garden State Parkway,
Saddle Brook, New Jersey, 07663.
*Member of the Audit Committee
Steven Roth
Chairman of the Board and Chief Executive Officer
Michael D. Fascitelli
President
Joseph Macnow
Executive Vice President and Chief Financial Officer
Company Data
Executive Offices
210 Route 4 East
Paramus, New Jersey 07652
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Parsippany, New Jersey
General Counsel
Shearman & Sterling LLP
New York, New York
Transfer Agent and Registrar
American Stock
Transfer & Trust Co.
New York, New York
Management Certifications
The Company’s Chief Executive Officer and Chief
Financial Officer provided certifications to the
Securities and Exchange Commission as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and
these certifications are included in the Company’s
Annual Report on Form 10-K for the year ended
December 31, 2010. In addition, as required by
Section 303A.12(a) of the New York Stock Exchange
(NYSE) Listed Company Manual, on June 23, 2010,
the Company’s Chief Executive Officer submitted to
the NYSE the annual CEO certification regarding the
Company’s compliance with the NYSE’s corporate
governance listing standards.
Report on Form 10-K
Stockholders may obtain a copy of the Company’s
Annual Report on Form 10-K as filed with the
Securities and Exchange Commission free of charge
(except for exhibits) by writing to the Secretary,
Alexander’s, Inc., 888 Seventh Avenue, New York,
New York, 10019 or by visiting the Company’s
website at www.alx-inc.com. Stockholders may
obtain a copy of any exhibit not contained herein for
a fee not to exceed the Company’s reasonable
expenses in furnishing such exhibit.
Stock Listing
New York Stock Exchange – ALX