ALEXANDER’S, INC.
ANNUAL REPORT TO
STOCKHOLDERS
2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 2019
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
001-06064
ALEXANDERS INC
(Exact name of registrant as specified in its
charter)
Delaware
(State or other jurisdiction of incorporation or organization)
210 Route 4 East, Paramus, New Jersey
(Address of principal executive offices)
51-0100517
(IRS Employer Identification No.)
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
Trading Symbol(s) Name of each exchange on which registered
ALX
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 Act.
Yes
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
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
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 such files).
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Non-Accelerated Filer
Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
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 $785,470,000 at June 30, 2019.
As of January 31, 2020, there were 5,107,290 shares of the registrant’s common stock outstanding.
Part III: Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 14, 2020.
DOCUMENTS INCORPORATED BY REFERENCE
Item
Financial Information:
Part I.
1.
Business
INDEX
Page
Number
1A.
1B.
2.
3.
4.
5.
6.
7.
Part II.
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
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
7A.
Quantitative and Qualitative Disclosures about Market Risk
8.
9.
9A.
9B.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Part III.
10.
Directors, Executive Officers and Corporate Governance(1)
11.
12.
13.
14.
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, Financial Statement Schedules
16.
Form 10-K Summary
Signatures
__________________________
5
7
18
19
21
21
22
24
25
35
36
58
58
61
61
62
62
62
62
63
72
73
(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,
2019, portions of which are incorporated by reference herein.
3
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 future performance. They represent our intentions, plans, expectations and beliefs and are subject
to numerous assumptions, risks and uncertainties. Our future results, financial condition 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 occurring after the date of this Annual Report
on Form 10-K.
4
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
•
731 Lexington Avenue, a 1,323,000 square foot multi-use building, comprising the entire block bounded by Lexington
Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan. The building contains 920,000 and 155,000 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) and The Container Store (34,000 square feet) are the principal retail tenants;
• Rego Park I, a 343,000 square foot shopping center, located on Queens Boulevard and 63rd Road in Queens. On April 4,
2017, Sears closed its 195,000 square foot anchor store at the property ($10,300,000 of annual revenue). On October 15,
2018, Sears filed for Chapter 11 bankruptcy relief and rejected its lease. On September 23, 2019, we leased 113,000
square feet at the property to IKEA Property, Inc. (“IKEA”), replacing a significant portion of the space formerly occupied
by Sears. The center is also anchored by a 50,000 square foot Burlington, a 46,000 square foot Bed Bath & Beyond and
a 36,000 square foot Marshalls;
• Rego Park II, a 609,000 square foot shopping center, adjacent to the Rego Park I shopping center in Queens. The center
is anchored by a 145,000 square foot Costco, a 135,000 square foot Century 21 and a 133,000 square foot Kohl’s. On
April 13, 2019, Kohl’s closed its store at the property. On January 24, 2020, Kohl’s subleased its store to At Home and
remains obligated under its lease which expires in January 2031;
• The Alexander apartment tower, located above our Rego Park II shopping center, contains 312 units aggregating 255,000
square feet;
•
•
Paramus, located at the intersection of Routes 4 and 17 in Paramus, New Jersey, consists of 30.3 acres of land that is
leased to IKEA; and
Flushing, a 167,000 square foot building, located on Roosevelt Avenue and Main Street in Queens, that is sub-leased to
New World Mall LLC for the remainder of our ground lease term.
Property to be developed
• Rego Park III, a 140,000 square foot land parcel adjacent to the Rego Park II shopping center in Queens, at the intersection
of Junction Boulevard and the Horace Harding Service Road.
Relationship with Vornado
We are managed by, and our properties are leased and developed by, Vornado, pursuant to various 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.
5
Relationship with Vornado - continued
As of December 31, 2019, 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 and Chief Executive Officer of Vornado. As of December 31,
2019, 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, 26.1% of our outstanding common stock, in addition to the
2.3% they indirectly own through Vornado. Joseph Macnow, our Treasurer, is the Executive Vice President - Chief Financial
Officer and Chief Administrative Officer of Vornado. Matthew Iocco, our Chief Financial Officer, is the Executive Vice President
- Chief Accounting Officer of Vornado.
Significant Tenant
Bloomberg accounted for revenue of $109,113,000, $107,356,000 and $105,224,000 in the years ended December 31, 2019,
2018, and 2017, respectively, representing approximately 48%, 46% and 46% of our total revenues in each year, respectively. No
other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were
to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In
order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial
information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from
other private sources, as well as publicly available data.
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 real estate investors, property owners and developers. Principal factors of competition
are rents charged, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our
success depends upon, among other factors, trends of the global, national and local economies, the financial condition and operating
results of current and prospective tenants and customers, the availability and cost of capital, construction and renovation costs,
taxes, governmental regulations, legislation, population and employment 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.
Employees
We currently have 69 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 those 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 Audit Committee Charter, Compensation
Committee Charter, Code of Business Conduct and Ethics and 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.
In May 2009, Vornado and Interstate each filed with the SEC an amendment to their respective Schedule 13D indicating that
they, as a group, own 47.2% of our common stock. This ownership level, together with the shares owned by Messrs. Roth,
Mandelbaum and Wight, 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, operations and financial condition are summarized below. The risks
and uncertainties described herein may not be the only ones we face. Additional risks and uncertainties not presently known to
us or that we currently believe to be immaterial may also adversely affect our business, operations and financial condition. See
“Forward-Looking Statements” contained herein on page 4.
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 declines in the real estate market in this area could hurt our financial performance and the value
of our properties. In addition to the factors affecting the national economic condition generally, the factors affecting economic
conditions in this area include:
•
•
•
•
•
•
•
•
•
•
financial performance and productivity of the media, advertising, professional services, financial, technology, retail,
insurance and real estate industries;
business layoffs or downsizing;
industry slowdowns;
relocations of businesses;
changing demographics;
increased telecommuting and use of alternative work places;
changes in the number of domestic and international tourists to our markets (including as a result of changes in the relative
strengths of world currencies);
infrastructure quality;
changes in the rates or treatment of the deductibility of state and local taxes; and
any oversupply of, or reduced demand for, real estate.
It is impossible for us to predict the future or the effect 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 could negatively affect our business and profitability.
We are subject to risks that affect the general and New York City retail environments.
Certain of our properties are New York City retail properties. As such, these properties are affected by the general and New
York City retail environments, including the level of consumer spending and consumer confidence, New York City tourism, the
threat of terrorism, increasing competition from on-line retailers, other retailers and outlet malls and the impact of technological
change upon the retail environment generally. These factors could adversely affect the financial condition of our retail tenants, or
result in the bankruptcy of such tenants, and the willingness of retailers to lease space in our retail locations, which could have an
adverse effect on our business and profitability.
Terrorist attacks 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, and our most significant property, 731 Lexington
Avenue, is located on Lexington Avenue and 59th Street in Manhattan. In response to a terrorist attack or the perceived threat of
terrorism, tenants in this area may choose to relocate their businesses to less populated, lower-profile areas of the United States
that may be perceived to be less likely targets of future terrorist activity and fewer customers may choose to patronize businesses
in this area. This, in turn, could 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. Furthermore, we may experience increased costs for
security, equipment and personnel. As a result, the value of our properties and the level of our revenues could decline materially.
7
Natural disasters and the effects of climate change could have a concentrated impact on the area which we operate and
could adversely impact our results.
Our investments are in the greater New York City metropolitan area and since they are concentrated along the Eastern Seaboard,
natural disasters, including hurricanes, could cause significant damage to our properties and the surrounding environment or area.
Potentially adverse consequences of “global warming,” including rising sea levels, could similarly have an impact on our properties
and the economy of the greater New York City metropolitan area in which we operate. Over time, these conditions could result
in declining demand for office space in our buildings or the inability of us to operate the buildings at all. Climate change may also
have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find
acceptable, increasing the cost of energy at our properties and requiring us to expend funds as we seek to repair and protect our
properties against such risks. The incurrence of these losses, costs or business interruptions may adversely affect our operating
and financial results.
REAL ESTATE INVESTMENTS’ VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.
Our performance and the value of an investment in us are subject to risks associated with our real estate assets and with
the real estate industry.
The value of our real estate and the value of an investment in us 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:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
global, 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;
the development and/or redevelopment of our properties;
changes in market rental rates;
the timing and costs associated with property improvements and rentals;
whether we are able to pass all or portions of any increases in operating costs through to tenants;
changes in real estate taxes and other expenses;
the ability of state and local governments to operate within their budgets;
whether tenants and users such as customers and shoppers consider a property attractive;
changes in consumer preferences adversely affecting retailers and retail store values;
changes in space utilization by our tenants due to technology, economic conditions and business environment;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
consequences of any armed conflict involving, or terrorist attack against, the United States or individual acts of
violence in public spaces;
trends in office real estate;
the impact on our retail tenants and demand for retail space at our properties due to increased competition from online
shopping;
availability of financing on acceptable terms or at all;
inflation or deflation;
fluctuations in interest rates;
our ability to obtain adequate insurance;
changes in zoning laws and taxation;
government regulation;
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 for operating
costs, 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.
8
Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations
as well as the value of an investment in our debt and equity securities.
There are many factors that can affect the value of our equity securities and any debt securities we may issue in the future,
including the state of the capital markets and economy. Demand for office and retail space typically declines nationwide due to
an economic downturn, bankruptcies, downsizing, layoffs and cost cutting. Government action or inaction may adversely affect
the state of the capital markets. The cost and availability of credit may be adversely affected by illiquid credit markets and wider
credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, 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 affect our financial condition and results of operations and the
value of our equity securities and any debt securities we may issue in the future.
U.S. federal tax reform legislation now and in the future could affect REITs generally, the geographic markets in which
we operate, the trading of our shares and our results of operations, both positively and negatively, in ways that are difficult
to anticipate.
The Tax Cuts and Jobs Act of 2017 (the “2017 Act”) represented sweeping tax reform legislation that made significant changes
to corporate and individual tax rates and the calculation of taxes, as well as international tax rules. As a REIT, we are generally
not required to pay federal taxes otherwise applicable to regular corporations if we comply with the various tax regulations
governing REITs. Shareholders, however, are generally required to pay taxes on REIT dividends. The 2017 Act and future tax
reform legislation could impact our share price or how shareholders and potential investors view an investment in REITs. For
example, the decrease in corporate tax rates in the 2017 Act could decrease the attractiveness of the REIT structure relative to
companies that are not organized as REITs. In addition, while certain elements of the 2017 Act do not impact us directly as a REIT,
they could impact the geographic markets in which we operate as well as our tenants in ways, both positive and negative, that are
difficult to anticipate. For example, the limitation in the 2017 Act on the deductibility of certain state and local taxes may make
operating in jurisdictions that impose such taxes at higher rates less desirable than operating in jurisdictions imposing such taxes
at lower rates. The overall impact of the 2017 Act also depends on the future interpretations and regulations that may be issued
by U.S. tax authorities, and it is possible that future guidance could adversely impact us.
Real estate is a competitive business and that competition may adversely impact us.
We compete with a large number of real estate investors, 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 the breadth and the quality of services provided. Substantially all of our properties face competition from
similar properties in the same market, which may adversely impact the rents we can charge at those properties and our results of
operations.
We may be adversely affected by trends in office real estate.
Telecommuting, flexible work schedules, open workplaces and teleconferencing are becoming more common. These practices
enable businesses to reduce their office space requirements. There is also an increasing trend among some businesses to utilize
shared office spaces and co-working spaces. A continuation of these trends could, over time, erode the overall demand for office
space and, in turn, place downward pressure on occupancy, rental rates and property valuations.
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 for distributions to stockholders will decrease if certain of our tenants cannot pay their rent or if we are not able to maintain
our occupancy levels 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. Even if we are able to enforce our rights, a tenant may not have
recoverable assets.
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. The bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties,
including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant or multiple tenants
could result in decreased net income and funds available to pay our indebtedness or make distributions to stockholders.
9
We depend upon anchor tenants to attract shoppers at our Rego Park I and II retail properties and decisions made by these
tenants, or adverse developments in the businesses of these tenants, could materially affect our financial condition and results
of operations.
Our Rego Park I and II retail properties are anchored by well-known department stores and other tenants who generate shopping
traffic. The value of these properties would be adversely affected if our anchor tenants failed to meet their contractual obligations,
sought concessions in order to continue operations or ceased their operations, including as a result of bankruptcy. If the level of
sales of stores operating in our properties were to decline significantly due to economic conditions, increased competition from
online shopping, closing of anchors or for other reasons, tenants may be unable to pay their minimum rents or expense recovery
charges. In the event of a default by a tenant or anchor, we may experience delays and costs in enforcing our rights as landlord.
Additionally, closure of an anchor or major tenant could result in lease terminations by, or reductions of rent from, other tenants
if the other tenants’ leases have co-tenancy clauses. On April 4, 2017, Sears closed its 195,000 square foot store at our Rego Park
I shopping center ($10,300,000 of annual revenue). On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief and rejected
its lease. On April 13, 2019, Kohl’s closed its 133,000 square foot store at our Rego Park II shopping center. On January 24, 2020,
Kohl’s subleased its store to At Home and remains obligated under its lease which expires in January 2031.
We may be unable to renew leases or relet space as leases expire.
When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if tenants
do renew or we can relet the space, the terms of renewal or reletting, considering among other things, the cost of improvements
to the property and leasing commissions, may be less favorable than the terms in the expired leases. In addition, changes in space
utilization by our tenants may impact our ability to renew or relet space without the need to incur substantial costs in renovating
or redesigning the internal configuration of the relevant property. If we are unable to promptly renew the leases or relet the space
at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations
and pay dividends and distributions to stockholders could be adversely affected.
731 Lexington Avenue accounts for a substantial portion of our revenues. Loss of or damage to the building would adversely
affect our financial condition and results of operations.
731 Lexington Avenue accounted for revenue of $153,797,000, $151,834,000 and $148,324,000 in the years ended December
31, 2019, 2018, and 2017, respectively, representing approximately 68%, 65% and 64% of our total revenues in each year,
respectively. Loss of or damage to the building in excess of our insurance coverage, including as a result of a terrorist attack,
would adversely affect our results of operations and financial condition.
Bloomberg represents a significant portion of our revenues. Loss of Bloomberg as a tenant or deterioration in Bloomberg’s
credit quality could adversely affect our financial condition and results of operations.
Bloomberg accounted for revenue of $109,113,000, $107,356,000 and $105,224,000 in the years ended December 31, 2019,
2018, and 2017, respectively, representing approximately 48%, 46% and 46% of our total revenues in each year, respectively. No
other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were
to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition.
10
The occurrence of cyber incidents, or a deficiency in our cyber security, as well as other disruptions of our IT networks and
related systems, could negatively impact our business by causing a disruption to our operations, a compromise or corruption
of our confidential information, and/or damage to our business relationships or reputation, all of which could negatively
impact our financial results.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware,
computer viruses, attachments to e-mails, persons who access our systems from inside or outside our organization, and other
significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through
cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased
as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although
we have not experienced cyber incidents that are individually, or in the aggregate, material, we have experienced cyber attacks in
the past, which have thus far been mitigated by preventative, detective, and responsive measures that we have put in place. Our
IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations
(including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Although
we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented
various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and
measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Unauthorized
parties, whether within or outside our company, may disrupt or gain access to our systems, or those of third parties with whom
we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen
credentials, social engineering, phishing, computer viruses or other malicious codes, and similar means of unauthorized and
destructive tampering. Even the most well protected information, networks, systems and facilities remain potentially vulnerable
because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against
a target, and in some cases are designed to not be detected and, in fact, may not be detected. Accordingly, we may be unable to
anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible
for us to entirely mitigate this risk.
A security breach or other significant disruption involving our IT networks and related systems could disrupt the proper
functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; result in the unauthorized
access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable
information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-
parties for disruptive, destructive or otherwise harmful purposes and outcomes; result in our inability to maintain the building
systems relied upon by our tenants for the efficient use of their leased space; require significant management attention and resources
to remedy any damages that result; subject us to litigation claims for breach of contract, damages, credits, fines, penalties,
governmental investigations and enforcement actions or termination of leases or other agreements; or damage our reputation
among our tenants and investors generally. Any or all of the foregoing could have a material adverse effect on our results of
operations, financial condition and cash flows.
A cyber attack or systems failure could interfere with our ability to comply with financial reporting requirements, which could
adversely affect us. A cyber attack could also compromise the confidential information of our employees, tenants, customers and
vendors. A successful attack could disrupt and materially affect our business operations, including damaging relationships with
tenants, customers and vendors. Any compromise of our information security systems could also result in a violation of applicable
privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which
may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which
could harm our business.
11
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 per property, and all-risk property and
rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, with sub-limits
for certain perils such as floods and earthquakes on each of our properties.
Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for
coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism
Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027. Coverage for acts of
terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding
NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For
NBCR acts, FNSIC is responsible for a $268,000 deductible and 20% of the balance of a covered loss, and the Federal government
is responsible for the remaining 80% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism or other
events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are
responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us and contain customary covenants requiring us to maintain insurance. Although we
believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent
amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain, it
could adversely affect our ability to finance or refinance our properties.
Compliance or failure to comply with the Americans with Disabilities Act (“ADA”) or other safety regulations and
requirements could result in substantial costs.
The 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 and/or legal fees to their counsel. 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.
Changes in the method pursuant to which the LIBOR rates are determined and phasing out of LIBOR after 2021 may
affect our financial results.
The chief executive of the United Kingdom Financial Conduct Authority (“FCA”), which regulates the London Interbank
Offered Rate (“LIBOR”), announced that the FCA intends to stop compelling banks to submit rates for the calculation of LIBOR
after 2021. In response, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference
Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to USD-LIBOR
in derivatives and other financial contracts. It is not possible to predict the effect of these changes, including when LIBOR will
cease to be available or when there will be sufficient liquidity in the SOFR markets.
We have outstanding debt with variable rates based on LIBOR. In the transition from the use of LIBOR to SOFR or other
alternatives, the level of interest payments we incur may change. In addition, although certain of our LIBOR based obligations
provide for alternative methods of calculating the related interest rate payable (including transition to an alternative benchmark
rate) if LIBOR is not reported, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments
that are higher than, lower than or that do not otherwise correlate over time with the interest rates and/or payments that would
have been made on our obligations if LIBOR was available in its current form. Use of alternative interest rates or other LIBOR
reforms could result in increased volatility or a tightening of credit markets which could adversely affect our ability to obtain cost-
effective financing.
12
We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability
to lease and/or sell real estate.
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 the
release. The presence of contamination or the failure to remediate contamination may also 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 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) 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 related claims arising out of environmental contamination or human exposure to
contamination at or from our properties.
Each of our properties has been subjected to varying degrees of environmental assessment. To date, these environmental
assessments have not revealed 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, human exposure to
contamination or changes in clean-up or compliance requirements could result in significant costs to us.
In addition, we may become subject to costs or taxes, or increases therein, associated with natural resource or energy usage
(such as a “carbon tax”). These costs or taxes could increase our operating costs and decrease the cash available to pay our
obligations or distribute to stockholders.
We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control
and similar requirements.
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 and thereby restricts our doing business with
such persons. In addition, our leases, loans and other agreements may require us to comply with OFAC and related requirements,
and any failure to do so may result in a breach of such agreements. If a tenant or other party with whom we conduct business is
placed on the OFAC list or is otherwise a party with whom we are prohibited from doing business, we may be required to terminate
the lease or other agreement or face other penalties. Any such termination could result in a loss of revenue or otherwise negatively
affect our financial results and cash flows.
WE MAY ACQUIRE OR SELL ASSETS OR DEVELOP PROPERTIES. OUR FAILURE OR INABILITY TO
CONSUMMATE THESE TRANSACTIONS OR MANAGE THE RESULTS OF THESE TRANSACTIONS COULD
ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS.
We may acquire, develop, or redevelop 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 succeed in (i) developing,
redeveloping or acquiring properties; (ii) completing these activities on time or within budget; and (iii) leasing or selling developed,
redeveloped or acquired properties at amounts sufficient to cover our costs. Competition in these activities could also significantly
increase our costs. 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 also abandon acquisition or development opportunities
that we have begun pursuing and consequently fail to recover expenses already incurred. Furthermore, we may be exposed to the
liabilities of properties acquired, some of which we may not be aware of at the time of acquisition.
13
We are exposed to risks associated with property redevelopment and repositioning that could adversely affect us, including
our financial condition and results of operations.
We continue to engage in redevelopment and repositioning activities with respect to our properties, and, accordingly, we are
subject to certain risks, which could adversely affect us, including our financial condition and results of operations. These risks
include, without limitation, (i) the availability and pricing of financing on favorable terms or at all; (ii) the availability and timely
receipt of zoning and other regulatory approvals; (iii) the potential for the fluctuation of occupancy rates and rents at redeveloped
properties, which may result in our investment not being profitable; (iv) start up, repositioning and redevelopment costs may be
higher than anticipated; (v) cost overruns and untimely completion of construction (including risks beyond our control, such as
weather or labor conditions, or material shortages); (vi) the potential that we may fail to recover expenses already incurred if we
abandon development or redevelopment opportunities after we begin to explore them; (vii) the potential that we may expend funds
on and devote management time to projects which we do not complete; (viii) the inability to lease a property on schedule or at
all, resulting in increased construction or redevelopment costs; and (ix) the possibility that properties will be leased at below
expected rental rates. These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or
the completion of redevelopment activities, any of which could have an adverse effect on our financial condition, results of
operations, cash flow, the market value of our common shares and ability to satisfy our principal and interest obligations and to
make distributions to our stockholders.
It may be difficult to sell real estate quickly, which may limit our flexibility.
Real estate investments are relatively illiquid. Consequently, we may have limited ability to dispose of assets in our portfolio
promptly in response to changes in economic or other conditions which could have an adverse effect on our sources of working
capital and our ability to satisfy our debt obligations.
We have an investment in marketable equity securities. The value of this investment may decline as a result of operating
performance or economic or market conditions.
We have an investment in The Macerich Company (“Macerich”), a retail shopping center company. As of December 31, 2019,
this investment had a carrying amount of $14,409,000. A decline in the value of this investment due to, among other reasons,
Macerich’s operating performance or economic or market conditions, would result in recognized GAAP losses, which could be
material.
OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND FINANCIAL
RISKS.
Substantially all of our assets are owned by subsidiaries. We depend on dividends and distributions from these 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 our 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.
As of December 31, 2019, we had outstanding mortgage indebtedness of $974,836,000, secured by three of our properties.
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.
14
We have a substantial amount of indebtedness that could affect our future operations.
As of December 31, 2019, total debt outstanding was $974,836,000. We are subject to the risks normally associated with debt
financing, including the risk that our cash flow from operations will be insufficient to meet required debt service. Our debt service
costs generally will not be reduced if developments in the market or at our properties, such as the entry of new competitors or the
loss of major tenants, cause a reduction in the income from our properties. Should such events occur, our operations may be
adversely affected. If a property is mortgaged to secure payment of indebtedness and income from such property is insufficient
to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in
our total asset value.
We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on
acceptable terms.
As of December 31, 2019, total debt outstanding was $974,836,000 and our ratio of total debt to total enterprise value was
41.2%. “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, 2019, our scheduled cash
payments for principal and interest were $34,669,000. 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 might fail to qualify or remain qualified as a REIT, and may be required to pay federal 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. 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 and depends on various facts and circumstances that are not entirely within our control. In addition,
legislation, new regulations, administrative interpretations or court decisions may significantly change the relevant tax laws and/
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 that taxable year and in future years until we were able
to qualify as a REIT and did so. 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.
We may face possible adverse changes in federal tax laws, which may result in an increase in our tax liability.
At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be
amended. We cannot predict if or when any new U.S. federal income tax law, regulation, or administrative interpretation, or any
amendment to any existing U.S. federal income tax law, Treasury regulation or administrative interpretation, will be adopted,
promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. Alexander’s, its
taxable REIT subsidiaries, and our security holders could be adversely affected by any such change in, or any new, U.S. federal
income tax law, Treasury regulation or administrative interpretation.
15
We may face possible adverse state and local tax audits and changes in state and local tax law.
Because we are organized and qualify as a REIT, we are generally not subject to federal income taxes, but we are subject to
certain state and local taxes. In the normal course of business, certain entities through which we own real estate either have
undergone, or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions
in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue.
There can be no assurance that ongoing and future audits will not occur with increased frequency or that the ultimate result of
such audits will not have a material adverse effect on our results of operations.
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. A shortfall in tax revenues for states and municipalities in which we operate 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 the payment
of dividends and distributions to our stockholders.
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. Although we believe that we could find a
replacement, the loss of his services could harm our operations and adversely affect the value of our common stock.
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; and
set the preferences, rights and other terms of any classified or reclassified stock that Alexander’s issues.
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, Interstate and its three general partners (each of whom are both trustees of Vornado and Directors of
Alexander’s) together beneficially own approximately 58.5% 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.
16
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.
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.
As of December 31, 2019, Interstate and its partners owned approximately 7.1% of the common shares of beneficial interest
of Vornado and approximately 26.1% 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 and Chief Executive Officer 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.
As of December 31, 2019, Vornado owned 32.4% of our outstanding common stock, in addition to the 26.1% owned by
Interstate and its partners. In addition to the relationships described in the immediately preceding paragraph, Dr. Richard West is
a trustee of Vornado and a member of our Board of Directors and Joseph Macnow, our Treasurer, is the Executive Vice President
- Chief Financial Officer and Chief Administrative Officer of Vornado. Matthew Iocco is our Chief Financial Officer and the
Executive Vice President - Chief Accounting Officer of 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 four of the
trustees of Vornado are on our Board of 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.
17
THE NUMBER OF SHARES OF ALEXANDER’S COMMON STOCK AND THE MARKET FOR THOSE SHARES
GIVE RISE TO VARIOUS RISKS.
The trading price of our common shares has been volatile and may continue to fluctuate.
The trading price of our common shares has been volatile and may continue to fluctuate widely as a result of several 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;
our dividend policy;
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;
uncertainty and volatility in the equity and credit markets;
fluctuations in interest rates;
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 REITs;
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 REITs
and other real estate related companies;
domestic and international economic factors unrelated to our performance;
changes in tax laws and rules; and
all other risk factors addressed elsewhere in this Annual Report on Form 10-K.
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, 2019,
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; of which 11,408 shares of common stock are reserved for issuance upon redemption of the deferred
stock units previously granted to our Board of Directors. In addition, 494,379 shares are available for future grant under the terms
of our 2016 Omnibus Stock Plan. These awards may be granted in the form of options, restricted stock, stock appreciation rights,
deferred stock units, 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.
18
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, 2019.
Property
Acreage
Property
In Service
For Lease
Rate
Rent PSF (1)
Tenants
Land
Total
Not Available
Occupancy
Annual
Square Feet
Under
Weighted
Average
Development Or
In Service
Escalated
Lease Expiration(s)
Original
Term (2)
Option
Term (3)
Operating Properties:
731 Lexington Avenue
New York, NY
Office
Retail
Rego Park I
Queens, NY
Rego Park II
Queens, NY
The Alexander apartment
tower, 312 units
920,000
896,000
24,000
100%
$
121.81
Bloomberg L.P.
2029
2039
83,000
34,000
38,000
155,000
1,075,000
83,000
34,000
38,000
155,000
1,051,000
113,000
50,000
46,000
36,000
16,000
82,000
343,000
145,000
135,000
133,000
196,000
609,000
—
50,000
46,000
36,000
16,000
—
148,000
145,000
135,000
133,000
196,000
609,000
1.9
4.8
6.6
—
—
—
—
24,000
113,000
—
—
—
—
82,000
195,000
—
—
—
—
—
The Home Depot
The Container Store
Various
2025
2021
Various
2035
N/A
Various
93%
277.36
IKEA (4)
Burlington
Bed Bath & Beyond
Marshalls
Old Navy
(6)
2025
2022
2021
2032
2021
N/A
(5)
2030
2027
N/A
N/A
N/A
N/A
Costco
Century 21
Kohl’s (7)
Various
2034
2031
2031
Various
2059
2051
2051
Various
100%
53.18
92%
59.78
Queens, NY
—
255,000
255,000
—
94%
46.19
(8)
Residential
(9)
N/A
Paramus
Paramus, NJ
30.3
—
—
—
100%
—
IKEA (ground lessee)
2041
N/A
Flushing
Queens, NY (10)
Property to be Developed:
Rego Park III, adjacent
to Rego Park II
1
167,000
167,000
—
100%
29.18
New World Mall LLC
2027
2037
Queens, NY
3.2
—
2,449,000
—
2,230,000
—
219,000
—
—
—
—
—
(1) Represents the weighted average escalated annual rent per square foot, which includes tenant reimbursements and excludes the impact of tenant concessions (such as free rent), as of
December 31, 2019. For a discussion of our leasing activity, see Item 7 - Overview - Square Footage, Occupancy and Leasing Activity.
(2) Represents the year in which the tenant’s lease expires, without consideration of any renewal or extension options. Lease expiration dates are based on non-cancelable lease terms and do
not extend beyond any early termination rights that the tenant may have under its lease.
IKEA has the option to terminate its lease after the fifth year of the lease term subject to payment to us of the lesser of $10,000,000 or the amount of rent due under the remaining term.
Formerly occupied by Sears. Currently out of service due to redevelopment.
(3) Represents the year in which the tenant’s lease expires if all renewal or extension options are exercised.
(4) On September 23, 2019, we entered into a lease agreement with IKEA, replacing a significant portion of the space formerly occupied by Sears. Currently out of service due to redevelopment.
(5)
(6)
(7) On April 13, 2019, Kohl’s closed its store at the property. On January 24, 2020, Kohl’s subleased its store to At Home and remains obligated under its lease which expires in January 2031.
(8) Average monthly rent per unit is $3,150.
(9) Residential tenants have one or two year leases.
(10) Ground leased through January 2027 with one 10-year extension option.
19
Operating Properties
731 Lexington Avenue
731 Lexington Avenue, a 1,323,000 square foot multi-use building, comprises the entire 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
920,000 and 155,000 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 occupies all of the office space. The Home
Depot (83,000 square feet) and The Container Store (34,000 square feet) are the principal retail tenants.
The office portion of 731 Lexington Avenue is encumbered by a mortgage loan with a balance of $500,000,000 as of December
31, 2019. The interest-only loan is at LIBOR plus 0.90% (2.64% as of December 31, 2019) and matures in June 2020, with four
one-year unilateral extension options. In connection therewith, we purchased an interest rate cap with a notional amount of
$500,000,000 that caps LIBOR at a rate of 6.0%.
The retail portion of 731 Lexington Avenue is encumbered by a mortgage loan with a balance of $350,000,000 as of December
31, 2019. The interest-only loan is at LIBOR plus 1.40% (3.10% as of December 31, 2019) and matures in August 2020, with two
one-year conditional extension options.
Rego Park I
Rego Park I, a 343,000 square foot shopping center, located on Queens Boulevard and 63rd Road in Queens. On April 4, 2017,
Sears closed its 195,000 square foot anchor store at the property ($10,300,000 of annual revenue). On October 15, 2018, Sears
filed for Chapter 11 bankruptcy relief and rejected its lease. On September 23, 2019, we leased 113,000 square feet at the property
to IKEA, replacing a significant portion of the space formerly occupied by Sears. The center is also anchored by a 50,000 square
foot Burlington, a 46,000 square foot Bed Bath & Beyond and a 36,000 square foot Marshalls. The center contains a parking deck
(1,241 spaces) that provides for paid parking.
Rego Park II
Rego Park II, a 609,000 square foot shopping center, adjacent to the Rego Park I shopping center in Queens. The center is
anchored by a 145,000 square foot Costco, a 135,000 square foot Century 21 and a 133,000 square foot Kohl’s. On April 13, 2019,
Kohl’s closed its store at the property. On January 24, 2020, Kohl’s subleased its store to At Home and remains obligated under
its lease which expires in January 2031. The center contains a parking deck (1,326 spaces) that provides for paid parking.
This center is encumbered by a mortgage loan in the amount of $252,544,000. The interest-only loan is at LIBOR plus 1.35%
(3.15% as of December 31, 2019) and matures in December 2025. As of December 31, 2019, we have a participation in the mortgage
in the amount of $195,708,000 which for GAAP purposes is netted against the mortgage balance. Therefore, the balance sheet
amount of the mortgage loan is $56,836,000. On February 14, 2020, we reduced our participation in the mortgage loan to $50,000,000
and received cash proceeds of approximately $145,000,000.
The Alexander Apartment Tower
The Alexander apartment tower, located above our Rego Park II shopping center, contains 312 units aggregating 255,000 square
feet.
20
Operating Properties - continued
Paramus
We own 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey. The land 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. The land has been ground leased to IKEA Property, Inc. since 2001. The lease expires in 2041, with a
purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed
rate of 4.72%, which matures in October 2021. The annual triple-net rent is the sum of $700,000 plus the amount of interest 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 $60,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years
would include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
Flushing
Flushing is located on 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, which expires in 2027 and has one 10-year extension option.
Property to be Developed
Rego Park III
We own a 140,000 square foot land parcel adjacent to the Rego Park II shopping center in Queens, New York, at the intersection
of Junction Boulevard and the Horace Harding Service Road. The land is currently being used for paid public parking. In 2016,
the Company started the entitlement process.
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.
In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado
and us (and certain of our subsidiaries) with regard to space that Sears leased at our Rego Park I property alleging that the defendants
are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) two fires in February 2014 that
caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking
garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to
repair the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions
into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than $4,000,000 and future
damages it estimated would not be less than $25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a
remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears.
We intend to defend the remaining claim vigorously. The amount or range of reasonable possible losses, if any, is not expected to
be greater than $650,000. On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief resulting in an automatic stay of this
case.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
21
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.”
As of January 31, 2020, there were 212 holders of record of our common stock.
Recent Sales of Unregistered Securities
During 2019, we did not sell any unregistered securities.
Information relating to compensation plans under which our equity securities are authorized for issuance is set forth under Part
III, Item 12 of this Annual Report on Form 10-K and such information is incorporated by reference herein.
Recent Purchases of Equity Securities
During 2019, we did not repurchase any of our equity securities.
22
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, a peer
group index. The graph assumes that $100 was invested on December 31, 2014 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.
Comparison of Five-Year Cumulative Return
$225
$200
$175
$150
$125
$100
$75
2014
2015
2016
2017
2018
2019
Alexander's, Inc.
S&P 500 Index
The NAREIT All Equity Index
Alexander’s
S&P 500 Index
The NAREIT All Equity Index
$
$
100
100
100
$
91
101
103
$
105
114
112
$
102
138
121
$
82
132
116
94
174
150
2014
2015
2016
2017
2018
2019
23
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)
2019
2018
2017
2016
2015
Year Ended December 31,
Total revenues
Income from continuing operations (1)
Loss from discontinued operations
Net income
Income per common share:
Income from continuing operations - basic
Income from continuing operations - diluted
Net income per common share - basic
Net income per common share - diluted
$
$
$
$
226,350
60,075
—
60,075
$
$
$
232,825
56,641
(23,797)
32,844
$
$
$
230,574
80,509
—
80,509
$
$
$
226,936
86,477
—
86,477
$
$
$
207,915
76,907
—
76,907
11.74
$
11.07
$
15.74
$
16.91
$
11.74
11.74
11.74
11.07
6.42
6.42
15.74
15.74
15.74
16.91
16.91
16.91
15.04
15.04
15.04
15.04
Dividends per common share
$
18.00
$
18.00
$
17.00
$
16.00
$
14.00
Balance sheet data:
Total assets (2) (3)
Real estate, at cost
$ 1,265,511
$ 1,285,549
$ 1,632,395
$ 1,451,230
$ 1,447,808
1,041,342
1,027,691
1,037,368
1,033,551
1,029,472
Accumulated depreciation and amortization
Mortgages payable, net of deferred debt issuance costs (2)
Total equity
324,499
970,961
253,515
297,421
965,826
285,092
283,044
252,737
225,533
1,240,222
1,052,359
1,053,262
343,955
352,845
352,880
(1) 2019 and 2018 include $8,757 and $11,990 of expense, respectively, from the decrease in the fair value of marketable securities. Prior to
January 1, 2018, changes in the fair value of marketable securities were recognized through “accumulated other comprehensive loss” on
our consolidated balance sheets and did not impact our consolidated statements of income.
(2) Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2018, we determined that the $195,708
participation in our Rego Park II shopping center mortgage loan was incorrectly classified as an asset, presented as “Rego Park II loan
participation,” instead of as a reduction to “mortgages payable, net of deferred debt issuance costs” on our consolidated balance sheet as
of December 31, 2018. Accordingly, our consolidated balance sheet for the year ended December 31, 2018 has been restated to reclassify
$195,708 from “Rego Park II loan participation” to “mortgages payable, net of deferred debt issuance costs.” See Note 2 - Summary of
Significant Accounting Policies to our consolidated financial statements in this Annual Report on Form 10-K for additional information.
(3) On January 1, 2019 we adopted Accounting Standards Codification Topic 842, Leases, which required us to record a right-of-use asset of
$4,529 as of December 31, 2019. See Note 2 - Summary of Significant Accounting Policies and Note 9 - Leases to our consolidated financial
statements in this Annual Report on Form 10-K for additional information.
24
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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 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.
We compete with a large number of property owners and developers. Our success depends upon, among other factors, trends
of the global, national and local economies, the financial condition and operating results of current and prospective tenants and
customers, the availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation,
population and employment 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.
Year Ended December 31, 2019 Financial Results Summary
Net income for the year ended December 31, 2019 was $60,075,000 or $11.74 per diluted share, compared to $32,844,000, or
$6.42 per diluted share for the year ended December 31, 2018. Net income for the year ended December 31, 2018 included
$23,797,000, or $4.65 per diluted share, of expense for potential additional New York City real property transfer taxes on the 2012
sale of Kings Plaza Regional Shopping Center (“Kings Plaza”).
Funds from operations (“FFO”) (non-GAAP) for the year ended December 31, 2019 was $99,670,000, or $19.47 per diluted
share, compared to $77,429,000, or $15.13 per diluted share for the year ended December 31, 2018. FFO (non-GAAP) for the
year ended December 31, 2018 included $23,797,000, or $4.65 per diluted share, of expense for the Kings Plaza transfer taxes.
Quarter Ended December 31, 2019 Financial Results Summary
Net income for the quarter ended December 31, 2019 was $14,434,000, or $2.82 per diluted share, compared to $9,971,000,
or $1.95 per diluted share for the quarter ended December 31, 2018.
FFO (non-GAAP) for the quarter ended December 31, 2019 was $24,626,000, or $4.81 per diluted share, compared to
$24,158,000, or $4.72 per diluted share for the quarter ended December 31, 2018.
Square Footage, Occupancy and Leasing Activity
As of December 31, 2019, our portfolio was comprised of seven properties aggregating 2,449,000 square feet, of which
2,230,000 square feet was in service and 219,000 square feet (primarily the former Sears space at our Rego Park I shopping center)
was out of service due to redevelopment. The in service square feet was 96.5% occupied as of December 31, 2019.
On September 23, 2019, we entered into a 10-year lease agreement with IKEA for 113,000 square feet at our Rego Park I
shopping center, replacing a significant portion of the space formerly occupied by Sears. IKEA has the option to terminate this
lease after the fifth year of the lease term subject to payment to us of the lesser of $10,000,000 or the amount of rent due under
the remaining term.
Financing
On October 3, 2018, we extended our mortgage loan on our Paramus property. The $68,000,000 interest-only loan has a fixed
rate of 4.72% and matures in October 2021. Previously the loan bore interest at a fixed rate of 2.90%. The tenant pays all of the
interest on this mortgage loan as part of its rent.
On December 12, 2018, we completed a refinancing of our Rego Park II shopping center in the amount of $252,544,000. The
interest-only loan is at LIBOR plus 1.35% (3.15% as of December 31, 2019) and matures in December 2025. As of December 31,
2019, we have a participation in the mortgage in the amount of $195,708,000 which for GAAP purposes is netted against the
mortgage balance. Therefore, the balance sheet amount of the mortgage loan is $56,836,000. On February 14, 2020, we reduced
our participation in the mortgage loan to $50,000,000 and received cash proceeds of approximately $145,000,000.
25
Overview - continued
Significant Tenant
Bloomberg accounted for revenue of $109,113,000, $107,356,000, and $105,224,000 in the years ended December 31, 2019,
2018 and 2017, respectively, representing approximately 48%, 46% and 46% of our total revenues in each year, respectively. No
other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were
to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In
order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial
information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from
other private sources, as well as publicly available data.
On June 28, 2019, we entered into a lease agreement with Bloomberg for an additional 49,000 square feet at our 731 Lexington
Avenue property.
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 – Summary of Significant
Accounting Policies, 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, 2019 and 2018, the
carrying amount of our real estate, net of accumulated depreciation and amortization, was $716,843,000 and $730,270,000,
respectively. Maintenance and repairs are expensed 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. We capitalize all property operating expenses directly associated with and attributable to, the development and
construction of a project, including interest expense. The capitalization period begins when development activities are underway
and ends when it is determined that the asset is substantially complete and ready for its intended use, which is typically evidenced
by the receipt of a temporary certificate of occupancy. General and administrative costs are expensed as incurred.
Our properties, including properties to be developed in the future, 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, including an estimated terminal value calculated using an appropriate capitalization rate. 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.
26
Critical Accounting Policies and Estimates - continued
Revenue Recognition
Our rental revenues include revenues from the leasing of space to tenants at our properties and revenues from parking and
tenant services. We have the following revenue recognition policies:
• Lease revenues from the leasing of space to tenants at our properties. Revenues derived from base rent are recognized
over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent
abatements. We commence rental revenue recognition when the underlying asset is available for use by the lessee. 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.
Revenues derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses
are generally recognized in the same period as the related expenses are incurred. As lessor, we have elected to combine
the lease components (base and variable rent), non-lease components (reimbursements of common area maintenance
expenses) and reimbursement of real estate taxes and insurance expenses from our operating lease agreements and account
for the components as a single lease component in accordance with ASC Topic 842, Leases (“ASC 842”).
• Parking revenue arising from the rental of parking spaces at our properties. This income is recognized as the services are
transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).
• Tenant services is revenue arising from sub-metered electric, elevator and other services provided to tenants at their
request. This revenue is recognized as the services are transferred in accordance with ASC 606.
Income Taxes
We operate in a manner intended to enable us to continue to qualify as a 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. We distribute to our stockholders 100% of our taxable income and
therefore, no provision for Federal income taxes is required. If we fail to distribute the required amount of income to our
stockholders, or fail to meet other REIT requirements, we may fail to qualify as a REIT, which may result in substantial adverse
tax consequences.
27
Results of Operations – Year Ended December 31, 2019 compared to December 31, 2018
Rental Revenues
Rental revenues were $226,350,000 in the year ended December 31, 2019, compared to $232,825,000 in the prior year, a
decrease of $6,475,000. This decrease was primarily due to the Sears vacancy effective October 2018 at our Rego Park I property.
Operating Expenses
Operating expenses were $89,738,000 in the year ended December 31, 2019, compared to $93,775,000 in the prior year, a
decrease of $4,037,000. This decrease was primarily due to bad debt expense in the prior year of $4,459,000, primarily due to
the Sears bankruptcy and lease termination.
Depreciation and Amortization
Depreciation and amortization was $31,351,000 in the year ended December 31, 2019, compared to $33,089,000 in the prior
year, a decrease of $1,738,000. This decrease was primarily due to acceleration of depreciation and amortization in the prior year
related to the Toys “R” Us, Inc. (“Toys”) bankruptcy and lease termination at our Rego Park II property.
General and Administrative Expenses
General and administrative expenses were $5,772,000 in the year ended December 31, 2019, compared to $5,343,000 in the
prior year, an increase of $429,000. This increase was primarily due to higher professional fees.
Interest and Other Income, net
Interest and other income, net was $8,244,000 in the year ended December 31, 2019, compared to $12,546,000 in the prior
year, a decrease of $4,302,000. This decrease was primarily due to (i) $7,126,000 of interest income in the prior year from our
Rego Park II loan participation (on December 12, 2018, we refinanced our $252,544,000 Rego Park II shopping center mortgage
loan and GAAP required that our $195,708,000 loan participation be treated as an extinguishment of debt), partially offset by (ii)
$1,364,000 of higher interest income due to an increase in average interest rates and (iii) $1,600,000 of expense in the prior year
from a litigation settlement.
Interest and Debt Expense
Interest and debt expense was $38,901,000 in the year ended December 31, 2019, compared to $44,533,000 in the prior year,
a decrease of $5,632,000. This decrease was primarily due to $7,178,000 of lower interest expense due to the refinancing of our
Rego Park II shopping center loan, partially offset by $1,810,000 of higher interest expense resulting from an increase in average
interest rates.
Change in Fair Value of Marketable Securities
Change in fair value of marketable securities was an expense of $8,757,000 in the year ended December 31, 2019, resulting
from Macerich’s closing share prices of $26.92 and $43.28 as of December 31, 2019 and 2018, respectively, on 535,265 shares
owned. Change in fair value of marketable securities was an expense of $11,990,000 in the prior year, resulting from Macerich’s
closing share prices of $43.28 and $65.68 as of December 31, 2018 and 2017, respectively.
Loss from Discontinued Operations
Loss from discontinued operations was $23,797,000 in the year ended December 31, 2018. The loss was due to an expense
for potential additional real property transfer taxes from the 2012 sale of Kings Plaza. See Note 6 – Discontinued Operations, to
our consolidated financial statements in this Annual Report on Form 10-K.
28
Results of Operations – Year Ended December 31, 2018 compared to December 31, 2017
Rental Revenues
Rental revenues were $232,825,000 in the year ended December 31, 2018, compared to $230,574,000 in the prior year, an
increase of $2,251,000. This increase was primarily due to (i) higher revenue from a new restaurant tenant at our 731 Lexington
property and (ii) higher expense reimbursements, partially offset by (iii) lower revenue from Sears at our Rego Park I property
and Toys at our Rego Park II property.
Operating Expenses
Operating expenses were $93,775,000 in the year ended December 31, 2018, compared to $85,127,000 in the prior year, an
increase of $8,648,000. This increase was primarily due to (i) higher bad debt expense of $4,406,000, (ii) higher real estate taxes
of $2,180,000 and (iii) higher operating expenses of $1,664,000.
Depreciation and Amortization
Depreciation and amortization was $33,089,000 in the year ended December 31, 2018, compared to $34,925,000 in the prior
year, a decrease of $1,836,000. This decrease was primarily due to additional depreciation and amortization of tenant improvements
and deferred leasing costs of $2,444,000 related to a tenant lease termination at our 731 Lexington Avenue property in 2017.
General and Administrative Expenses
General and administrative expenses were $5,343,000 in the year ended December 31, 2018, compared to $5,255,000 in the
prior year, an increase of $88,000.
Interest and Other Income, net
Interest and other income, net was $12,546,000 in the year ended December 31, 2018, compared to $6,716,000 in the prior
year, an increase of $5,830,000. This increase was primarily due to (i) $4,673,000 of higher interest income from the Rego Park
II loan participation entered into in July 2017 and (ii) $3,693,000 of higher interest income due to an increase in average interest
rates, partially offset by (iii) $1,600,000 of expense in 2018 from a litigation settlement and (iv) $760,000 of lower interest income
due to lower average investment balances.
Interest and Debt Expense
Interest and debt expense was $44,533,000 in the year ended December 31, 2018, compared to $31,474,000 in the prior year,
an increase of $13,059,000. This increase was primarily due to (i) $8,482,000 resulting from an increase in average interest rates,
(ii) $2,620,000 resulting from the refinancing of the office portion of 731 Lexington Avenue on June 1, 2017 for $500,000,000 at
LIBOR plus 0.90% (previously a $300,000,000 loan at LIBOR plus 0.95%) and (iii) $1,641,000 of higher amortization of debt
issuance costs.
Change in Fair Value of Marketable Securities
Change in fair value of marketable securities was an expense of $11,990,000 in the year ended December 31, 2018, resulting
from Macerich’s closing share prices of $43.28 and $65.68 as of December 31, 2018 and 2017, respectively, on 535,265 shares
owned.
Loss from Discontinued Operations
Loss from discontinued operations was $23,797,000 in the year ended December 31, 2018. The loss was due to an expense
for potential additional real property transfer taxes from the 2012 sale of Kings Plaza. See Note 6 – Discontinued Operations, to
our consolidated financial statements in this Annual Report on Form 10-K.
29
Related Party Transactions
Vornado
As of December 31, 2019, Vornado owned 32.4% of our outstanding common stock. We are managed by, and our properties
are leased and developed by, Vornado, pursuant to various agreements, which expire in March of each year and are automatically
renewable. These agreements are described in Note 4 – Related Party Transactions, to our consolidated financial statements in
this Annual Report on Form 10-K.
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 and Chief Executive Officer
of Vornado. As of December 31, 2019, 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, 26.1% of our outstanding
common stock, in addition to the 2.3% they indirectly own through Vornado. Joseph Macnow, our Treasurer, is the Executive Vice
President - Chief Financial Officer and Chief Administrative Officer of Vornado. Matthew Iocco, our Chief Financial Officer, is
the Executive Vice President - Chief Accounting Officer of Vornado.
Toys
Our affiliate, Vornado, owned 32.5% of Toys as of December 31, 2018. On February 1, 2019, in connection with the Toys
Chapter 11 bankruptcy, the plan of reorganization for Toys was declared effective and Vornado’s ownership in Toys was canceled
and Toys’ Board of Directors was dissolved. Joseph Macnow, Vornado’s Executive Vice President and Chief Financial Officer
and Wendy A. Silverstein, a member of our Board of Directors, represented Vornado as members of Toys’ Board of Directors.
Also in connection with the Toys Chapter 11 bankruptcy, Toys rejected its 47,000 square foot lease at our Rego Park II shopping
center ($2,600,000 of annual revenue) effective June 30, 2018 and possession of the space was returned to us.
Liquidity and Capital Resources
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. 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 and capital expenditures.
Dividends
On January 15, 2020, we set our regular quarterly dividend to $4.50 per share (an indicated annual rate of $18.00 per share).
The dividend, if declared by the Board of Directors for all of 2020, would require us to pay out approximately $92,100,000.
Financing Activities and Contractual Obligations
On October 3, 2018, we extended our mortgage loan on our Paramus property. The $68,000,000 interest-only loan has a fixed
rate of 4.72% and matures in October 2021. Previously the loan bore interest at a fixed rate of 2.90%. The tenant pays all of the
interest on this mortgage loan as part of its rent.
On December 12, 2018, we completed a refinancing of our Rego Park II shopping center in the amount of $252,544,000. The
interest-only loan is at LIBOR plus 1.35% (3.15% as of December 31, 2019) and matures in December 2025. As of December 31,
2019, we have a participation in the mortgage in the amount of $195,708,000 which for GAAP purposes is netted against the
mortgage balance. Therefore, the balance sheet amount of the mortgage loan is $56,836,000. On February 14, 2020, we reduced
our participation in the mortgage loan to $50,000,000 and received cash proceeds of approximately $145,000,000.
30
Liquidity and Capital Resources - continued
Below is a summary of our outstanding debt and maturities as of December 31, 2019. We may refinance our maturing debt
as it comes due or choose to repay it.
(Amounts in thousands)
Paramus
731 Lexington Avenue, retail condominium(1)
731 Lexington Avenue, office condominium(2)
Rego Park II shopping center(3)
Total
Deferred debt issuance costs, net of accumulated amortization of $14,362
Total, net
Balance
Interest
Rate
4.72%
3.10%
2.64%
3.15%
$
$
68,000
350,000
500,000
56,836
974,836
(3,875)
970,961
Maturity
Oct. 2021
Aug. 2022
Jun. 2024
Dec. 2025
(1) Interest at LIBOR plus 1.40%. Maturity date represents the extended maturity based on our conditional right to extend.
(2) Interest at LIBOR plus 0.90%. Maturity date represents the extended maturity based on our unilateral right to extend.
(3) Interest at LIBOR plus 1.35%. The amount of this loan is net of our $195,708 loan participation (see Note 2 - Summary of Significant
Accounting Policies, to our consolidated financial statements in this Annual Report on Form 10-K).
Below is a summary of our contractual obligations and commitments as of December 31, 2019.
(Amounts in thousands)
Contractual obligations(1) (principal and interest)(2):
Long-term debt obligations(3)
Operating lease obligations
Commitments:
Standby letters of credit
Total
Less than
One Year
One to
Three Years
Three to
Five Years
More than
Five Years
$
$
$
1,079,915
5,600
1,085,515
1,030
$
$
$
29,525
800
30,325
960
$
$
$
469,147
1,600
470,747
70
$
$
$
522,592
1,600
524,192
$
$
58,651
1,600
60,251
— $
—
(1)
(2)
Excludes committed tenant-related obligations as timing and amounts of payments are uncertain and may only be due upon satisfactory
performance of certain conditions.
Principal repayments based on extended loan maturity dates. Interest on variable rate debt is computed using rates in effect as of December
31, 2019.
(3)
Net of loan participation and related interest.
Commitments and Contingencies
Insurance
We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, and all-risk property and
rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, with sub-limits
for certain perils such as floods and earthquakes on each of our properties.
Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for
coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism
Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027. Coverage for acts of
terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding
NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For
NBCR acts, FNSIC is responsible for a $268,000 deductible and 20% of the balance of a covered loss, and the Federal government
is responsible for the remaining 80% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC.
31
Liquidity and Capital Resources - continued
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism or other
events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are
responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us and contain customary covenants requiring us to maintain insurance. Although we
believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent
amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain, it
could adversely affect our ability to finance or refinance our properties.
Paramus
In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA. The lease has a purchase option in 2021 for
$75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 4.72%, which matures
in October 2021. The annual triple-net rent is the sum of $700,000 plus the amount of interest 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 $60,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years would include debt
service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
Rego Park I Litigation
In June 2014, Sears filed a lawsuit in the Supreme Court of the State of New York against Vornado and us (and certain of our
subsidiaries) with regard to space that Sears leased at our Rego Park I property alleging that the defendants are liable for harm
that Sears has suffered as a result of (a) water intrusions into the premises, (b) two fires in February 2014 that caused damages to
those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking garage. Sears asserted
various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair the premises and to
provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions into its premises. In
addition to injunctive relief, Sears sought, among other things, damages of not less than $4,000,000 and future damages it estimated
would not be less than $25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a remaining claim for
property damages, which we estimate to be approximately $650,000 based on information provided by Sears. We intend to defend
the remaining claim vigorously. The amount or range of reasonable possible losses, if any, is not expected to be greater than
$650,000. On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief resulting in an automatic stay of this case.
Tenant Matter
On April 13, 2019, Kohl’s closed its 133,000 square foot store at our Rego Park II shopping center. On January 24, 2020, Kohl’s
subleased its store to At Home and remains obligated under its lease which expires in January 2031.
Letters of Credit
Approximately $1,030,000 of standby letters of credit were issued and outstanding as of December 31, 2019.
Other
There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters
in the aggregate will not have a material effect on our financial position, results of operations or cash flows.
32
Liquidity and Capital Resources - continued
Cash Flows for the Year Ended December 31, 2019
Cash and cash equivalents and restricted cash were $313,977,000 at December 31, 2019, compared to $289,495,000 at December
31, 2018, an increase of $24,482,000. This increase resulted from (i) $126,070,000 of net cash provided by operating activities,
partially offset by (ii) $92,139,000 of net cash used in financing activities and (iii) $9,449,000 of net cash used in investing activities.
Net cash provided by operating activities of $126,070,000 was comprised of (i) net income of $60,075,000, (ii) adjustments
for non-cash items of $48,079,000 and (iii) the net change in operating assets and liabilities of $17,916,000. The adjustments for
non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $36,515,000,
(ii) the change in fair value of marketable securities of $8,757,000, (iii) straight-lining of rental income of $2,413,000 and (iv)
stock-based compensation expense of $394,000.
Net cash used in financing activities was primarily comprised of dividends paid of $92,124,000.
Net cash used in investing activities was comprised of construction in progress and real estate additions of $9,449,000.
Cash Flows for the Year Ended December 31, 2018
Cash and cash equivalents and restricted cash were $289,495,000 at December 31, 2018, compared to $393,279,000 at December
31, 2017, a decrease of $103,784,000. This decrease resulted from (i) $176,185,000 of net cash used in financing activities and
(ii) $1,137,000 of net cash used in investing activities, partially offset by (iii) $73,538,000 of net cash provided by operating
activities.
Net cash used in financing activities of $176,185,000 was primarily comprised of net debt repayments of $81,896,000 (primarily
the refinancing and subsequent repayment of the mortgage loan on our Rego Park I shopping center) and dividends paid of
$92,100,000.
Net cash used in investing activities of $1,137,000 was comprised of construction in progress and real estate additions of
$3,966,000, partially offset by repayment of Rego Park II loan participation of $2,829,000.
Net cash provided by operating activities of $73,538,000 was comprised of (i) net income of $32,844,000 and (ii) adjustments
for non-cash items of $56,807,000, partially offset by (iii) the net change in operating assets and liabilities of $16,113,000. The
adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs)
of $38,499,000, (ii) the change in fair value of marketable securities of $11,990,000, (iii) straight-lining of rental income of
$5,924,000 and (iv) stock-based compensation expense of $394,000.
Cash Flows for the Year Ended December 31, 2017
Cash and cash equivalents and restricted cash were $393,279,000 at December 31, 2017, compared to $374,678,000 at December
31, 2016, an increase of $18,601,000. This increase resulted from (i) $123,426,000 of net cash provided by operating activities
and (ii) $97,146,000 of net cash provided by financing activities, partially offset by (iii) $201,971,000 of net cash used in investing
activities.
Net cash provided by operating activities of $123,426,000 was comprised of (i) net income of $80,509,000 and (ii) adjustments
for non-cash items of $43,372,000, partially offset by (iii) the net change in operating assets and liabilities of $455,000. The
adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs)
of $38,681,000, (ii) straight-lining of rental income of $4,297,000 and (iii) stock-based compensation expense of $394,000.
Net cash provided by financing activities of $97,146,000 was primarily comprised of (i) $500,000,000 of proceeds from the
refinancing of the office portion of 731 Lexington Avenue, partially offset by (ii) debt repayments of $303,707,000 (primarily the
repayment of the former loan on the office portion of 731 Lexington Avenue) and (iii) dividends paid of $86,961,000.
Net cash used in investing activities of $201,971,000 was comprised of (i) Rego Park II loan participation of $200,000,000
and (ii) construction in progress and real estate additions of $3,434,000, partially offset by (iii) principal repayment proceeds from
the Rego Park II loan participation of $1,463,000.
33
Funds from Operations (“FFO”) (non-GAAP)
FFO is computed in accordance with the December 2018 restated 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 depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from
real estate assets and other specified 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 (non-GAAP) for the years and quarters ended December 31, 2019 and 2018
FFO (non-GAAP) for the year ended December 31, 2019 was $99,670,000, or $19.47 per diluted share, compared to
$77,429,000, or $15.13 per diluted share for the year ended December 31, 2018. FFO (non-GAAP) for the year ended December
31, 2018 included $23,797,000, or $4.65 per diluted share, of expense for the potential additional New York City real property
transfer taxes on the 2012 sale of Kings Plaza.
FFO (non-GAAP) for the quarter ended December 31, 2019 was $24,626,000, or $4.81 per diluted share, compared to
$24,158,000, or $4.72 per diluted share for the quarter ended December 31, 2018.
The following table reconciles our net income to FFO (non-GAAP):
(Amounts in thousands, except share and per share amounts)
Net income
Depreciation and amortization of real property
Change in fair value of marketable securities
FFO (non-GAAP)
FFO per diluted share (non-GAAP)
For the Year Ended
December 31,
For the Three Months Ended
December 31,
2019
2018
2019
2018
60,075
30,838
8,757
99,670
19.47
$
$
$
32,844
32,595
11,990
77,429
15.13
$
$
$
14,434
7,692
2,500
24,626
4.81
$
$
$
9,971
7,758
6,429
24,158
4.72
$
$
$
Weighted average shares used in computing FFO per diluted
share
5,118,198
5,116,838
5,118,698
5,117,347
34
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 rate
Fixed rate
2019
2018
Weighted
Average
Interest Rate
Effect of 1%
Change in
Base Rates
December 31,
Balance
Weighted
Average
Interest Rate
2.85%
4.72%
2.98%
$
$
9,068
—
9,068
$
$
906,836
68,000
974,836
3.55%
4.72%
3.64%
December 31,
Balance
$
$
906,836
68,000
974,836
Total effect on diluted earnings per share
$
1.77
As of December 31, 2019 we had an interest rate cap with a notional amount of $500,000,000 that caps LIBOR at a rate of
6.0%.
Fair Value of Debt
The fair value of our consolidated debt is calculated by discounting the future contractual cash flows of these instruments using
current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. As of
December 31, 2019 and 2018, the estimated fair value of our consolidated debt was $974,000,000 and $969,000,000, 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 the disposition of our financial instruments.
35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Page
Number
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Income for the
Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income for the
Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Changes in Equity for the
Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Cash Flows for the
Years Ended December 31, 2019, 2018 and 2017
Notes to Consolidated Financial Statements
37
39
40
41
42
43
44
36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Alexander’s, Inc.
Paramus, New Jersey
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Alexander’s, Inc. and subsidiaries (the “Company”) as of
December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, changes in equity, and cash
flows, for each of the three years in the period ended December 31, 2019, and the related notes and the schedules listed in the
Index at Item 15 (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 18, 2020, expressed an unqualified opinion on the Company’s internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Real Estate - Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company’s real estate assets are evaluated for impairment when events or changes in circumstances indicate that the carrying
amount may not be recoverable. The Company’s evaluation of the recoverability of real estate assets involves the comparison of
undiscounted future cash flows expected to be generated by each real estate asset over the Company’s estimated holding period
to the respective carrying amount. The Company’s undiscounted future cash flow analyses require management to make certain
estimates, including estimated terminal values determined using appropriate capitalization rates.
37
Given that the Company’s estimated capitalization rates used in the evaluation of impairment of real estate assets is a significant
assumption made by management, performing audit procedures to evaluate the reasonableness of management’s undiscounted
future cash flow analyses required a high degree of auditor judgment and an increased extent of effort, including the need to involve
our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the determination of capitalization rates included the following, among others:
• We tested the design and operating effectiveness of controls over impairment, including those of determining the
appropriate capitalization rates.
• With the assistance of our fair value specialists, we evaluated the capitalization rates for real estate assets with possible
impairment indicators by evaluating the source information and assumptions used by management.
• We evaluated the reasonableness of management’s capitalization rates used by developing independent estimates of
capitalization rates, focusing on geographical location and property type, and comparing our independent estimates to
those used by the Company.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 18, 2020
We have served as the Company’s auditor since 1969.
38
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
ASSETS
December 31,
2019
2018
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
Restricted cash
Marketable securities
Tenant and other receivables
Receivable arising from the straight-lining of rents
Deferred lease and other property costs, net, including unamortized leasing fees to Vornado of
$32,374 and $31,039, respectively
Other assets
LIABILITIES AND EQUITY
Mortgages payable, net of deferred debt issuance costs
Amounts due to Vornado
Accounts payable and accrued expenses
Other liabilities
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, 5,107,290 shares
Additional capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock: 66,160 shares, at cost
Total equity
$
44,971
$
984,053
12,318
1,041,342
(324,499)
716,843
298,063
15,914
14,409
6,092
166,376
41,123
6,691
44,971
978,474
4,246
1,027,691
(297,421)
730,270
283,056
6,439
23,166
4,075
168,789
40,669
29,085
$
$
1,265,511
$
1,285,549
970,961
$
965,826
1,426
31,756
7,853
708
30,889
3,034
1,011,996
1,000,457
—
—
5,173
32,365
216,394
(49)
253,883
(368)
253,515
5,173
31,971
248,443
(127)
285,460
(368)
285,092
$
1,265,511
$
1,285,549
See notes to consolidated financial statements.
39
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share amounts)
REVENUES
Rental revenues
EXPENSES
Operating, including fees to Vornado of $5,386, $4,700 and $4,671, respectively
Depreciation and amortization
General and administrative, including management fees to Vornado of $2,380
in each year
Total expenses
Interest and other income, net
Interest and debt expense
Change in fair value of marketable securities (see Note 5)
Income from continuing operations
Loss from discontinued operations (see Note 6)
Net income
Income per common share - basic and diluted:
Income from continuing operations
Loss from discontinued operations (see Note 6)
Net income per common share
Year Ended December 31,
2019
2018
2017
$
226,350
$
232,825
$
230,574
(89,738)
(31,351)
(5,772)
(126,861)
8,244
(38,901)
(8,757)
60,075
—
(93,775)
(33,089)
(5,343)
(132,207)
12,546
(44,533)
(11,990)
56,641
(23,797)
60,075
$
32,844
$
(85,127)
(34,925)
(5,255)
(125,307)
6,716
(31,474)
—
80,509
—
80,509
11.74
—
11.74
$
$
11.07
(4.65)
6.42
$
$
15.74
—
15.74
$
$
$
Weighted average shares outstanding- basic and diluted
5,118,198
5,116,838
5,115,501
See notes to consolidated financial statements.
40
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Net income
Other comprehensive income (loss):
Change in fair value of marketable securities (see Note 5)
Change in value of interest rate cap
Comprehensive income
Year Ended December 31,
2019
2018
2017
60,075
$
32,844
$
80,509
—
78
—
(1)
60,153
$
32,843
$
(2,762)
(70)
77,677
$
$
See notes to consolidated financial statements.
41
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
Balance, December 31, 2016
5,173
$
5,173
$
31,189
$
308,995
$
7,862
$
(374) $
352,845
Common Stock
Shares
Amount
Additional
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
Equity
Net income
Dividends paid ($17.00 per common share)
Change in fair value of marketable securities
Change in fair value of interest rate cap
Deferred stock unit grants
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
394
(6)
Balance, December 31, 2017
5,173
5,173
31,577
Net income
Dividends paid ($18.00 per common share)
Cumulative effect of change in accounting
principle
Change in fair value of interest rate cap
Deferred stock unit grants
Balance, December 31, 2018
Net income
Dividends paid ($18.00 per common share)
Change in fair value of interest rate cap
Deferred stock unit grants
Balance, December 31, 2019
—
—
—
—
—
—
—
—
—
—
—
—
—
—
394
5,173
5,173
31,971
—
—
—
—
—
—
—
—
—
—
—
394
80,509
(86,961)
—
—
—
—
302,543
32,844
(92,100)
5,156
—
—
248,443
60,075
(92,124)
—
—
—
—
(2,762)
(70)
—
—
—
—
—
—
—
6
80,509
(86,961)
(2,762)
(70)
394
—
5,030
(368)
343,955
—
—
(5,156)
(1)
—
(127)
—
—
78
—
—
—
—
—
32,844
(92,100)
—
(1)
394
(368)
285,092
—
—
—
—
60,075
(92,124)
78
394
5,173
$
5,173
$
32,365
$
216,394
$
(49) $
(368) $
253,515
See notes to consolidated financial statements.
42
ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended December 31,
2018
2017
2019
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
Stock-based compensation expense
Change in fair value of marketable securities
Change in operating assets and liabilities:
Tenant and other receivables, net
Other assets
Amounts due to Vornado
Accounts payable and accrued expenses
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Construction in progress and real estate additions
Rego Park II loan participation
Repayment of Rego Park II loan participation
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Debt issuance costs
Debt repayments
Proceeds from borrowing
Net cash (used in) provided by financing activities
Net increase (decrease) in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of year
Cash and cash equivalents and restricted cash at end of year
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of year
Restricted cash at beginning of year
Cash and cash equivalents and restricted cash at beginning of year
Cash and cash equivalents at end of year
Restricted cash at end of year
Cash and cash equivalents and restricted cash at end of year
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest
NON-CASH TRANSACTIONS
Lease liability arising from the recognition of right-of-use asset
Liability for real estate additions, including $18, $125 and $21 for development fees due to
Vornado in 2019, 2018 and 2017, respectively
Reclassification of prepaid real estate taxes to construction in progress for property in
redevelopment
Write-off of fully amortized and/or depreciated assets
Derecognition of Rego Park II loan participation asset (see Note 2)
See notes to consolidated financial statements.
43
$
60,075
$
32,844
$
80,509
36,515
2,413
394
8,757
(2,017)
21,553
789
(1,800)
(609)
126,070
(9,449)
—
—
(9,449)
(92,124)
(15)
—
—
(92,139)
24,482
289,495
313,977
283,056
6,439
289,495
298,063
15,914
313,977
38,499
5,924
394
11,990
(1,382)
(1,197)
(1,907)
(11,760)
133
73,538
38,681
4,297
394
—
363
(2,627)
1,626
211
(28)
123,426
(3,966)
—
2,829
(1,137)
(3,434)
(200,000)
1,463
(201,971)
(92,100)
(2,189)
(160,142)
78,246
(176,185)
(103,784)
393,279
289,495
307,536
85,743
393,279
283,056
6,439
289,495
$
$
$
$
$
(86,961)
(12,186)
(303,707)
500,000
97,146
18,601
374,678
393,279
288,926
85,752
374,678
307,536
85,743
393,279
$
$
$
$
$
34,669
$
38,231
$
26,994
5,428
$
— $
3,191
1,466
—
—
631
—
16,090
195,708
—
705
—
4,265
—
$
$
$
$
$
$
$
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
•
731 Lexington Avenue, a 1,323,000 square foot multi-use building, comprising the entire block bounded by Lexington
Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan. The building contains 920,000 and 155,000
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) and The Container Store (34,000 square feet) are the principal retail tenants;
• Rego Park I, a 343,000 square foot shopping center, located on Queens Boulevard and 63rd Road in Queens. On April 4,
2017, Sears closed its 195,000 square foot anchor store at the property ($10,300,000 of annual revenue). On October 15,
2018, Sears filed for Chapter 11 bankruptcy relief and rejected its lease. On September 23, 2019, we leased 113,000
square feet at the property to IKEA Property, Inc. (“IKEA”), replacing a significant portion of the space formerly occupied
by Sears. The center is also anchored by a 50,000 square foot Burlington, a 46,000 square foot Bed Bath & Beyond and
a 36,000 square foot Marshalls;
• Rego Park II, a 609,000 square foot shopping center, adjacent to the Rego Park I shopping center in Queens. The center
is anchored by a 145,000 square foot Costco, a 135,000 square foot Century 21 and a 133,000 square foot Kohl’s. On
April 13, 2019, Kohl’s closed its store at the property. On January 24, 2020, Kohl’s subleased its store to At Home and
remains obligated under its lease which expires in January 2031;
• The Alexander apartment tower, located above our Rego Park II shopping center, contains 312 units aggregating 255,000
square feet;
•
•
Paramus, located at the intersection of Routes 4 and 17 in Paramus, New Jersey, consists of 30.3 acres of land that is
leased to IKEA; and
Flushing, a 167,000 square foot building, located on Roosevelt Avenue and Main Street in Queens, that is sub-leased to
New World Mall LLC for the remainder of our ground lease term.
Property to be developed
• Rego Park III, a 140,000 square foot land parcel adjacent to the Rego Park II shopping center 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 that 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 intercompany amounts have been eliminated. 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. Certain prior year balances have been reclassified in order to conform to the current year presentation.
Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2018, we determined that
the $195,708,000 participation in our Rego Park II shopping center mortgage loan was incorrectly classified as an asset, presented
as “Rego Park II loan participation,” instead of as a reduction to “mortgages payable, net of deferred debt issuance costs” on our
consolidated balance sheet as of December 31, 2018. On December 12, 2018, we refinanced this mortgage loan and the interest
rate on the existing loan participation was adjusted to equal the interest rate on the refinanced loan. Consequently, we should have
considered $195,708,000 of the Rego Park II shopping center mortgage loan liability extinguished as the participation interest is
considered the reacquisition of our debt. Accordingly, our consolidated balance sheet for the year ended December 31, 2018 has
been restated to reclassify $195,708,000 from “Rego Park II loan participation” to “mortgages payable, net of deferred debt issuance
costs.” This reclassification had no material impact to our consolidated statements of income, comprehensive income, changes in
equity or statement of cash flows for the year ended December 31, 2018.
Certain prior year balances have been reclassified in order to conform to the current period presentation. For the years
ended December 31, 2018 and 2017, “property rentals” of $152,795,000 and $152,857,000, respectively, and “expense
reimbursements” of $80,030,000 and $77,717,000, respectively, were grouped into “rental revenues” on our consolidated
statements of income in accordance with Accounting Standards Codification (“ASC”) Topic 205 Presentation of Financial
Statements.
Recently Issued Accounting Literature – In February 2016, the Financial Accounting Standards Board (“FASB”) issued an
update (“ASU 2016-02”) establishing ASC Topic 842, Leases (“ASC 842”), as amended by subsequent ASUs on the topic, which
sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU
2016-02 requires lessees to apply a two- method approach, classifying leases as either finance or operating leases based on the
principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a
lease liability for all leases with a term of greater than 12 months. Lease liabilities equal the present value of future lease payments.
Right-of-use assets equal the lease liabilities adjusted for accrued rent expense, initial direct costs, lease incentives and prepaid
lease payments. Leases with a term of 12 months or less will be accounted for similar to the previously existing guidance for
operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line
basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under ASC Topic 840,
Leases (“ASC 840”). We adopted this standard effective January 1, 2019 using the modified retrospective approach. In transitioning
to ASC 842, we elected to use the practical expedient package available to us and did not elect to use hindsight. These elections
have been applied consistently to all of our leases. On January 1, 2019, for our Flushing property ground lease, which is classified
as an operating lease, we recorded a right- of-use asset of $5,058,000 (included in “other assets”) and a lease liability of $5,428,000
(included in “other liabilities”) (see Note 9 - Leases).
In June 2016, the FASB issued an update (“ASU 2016-13”) Measurement of Credit Losses on Financial Instruments establishing
ASC Topic 326, Financial Instruments - Credit Losses, as amended by subsequent ASUs on the topic. ASU 2016-13 changes how
entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value
through net income. The guidance replaces the current “incurred loss” model with an “expected loss” model that requires
consideration of a broader range of information to estimate expected credit losses over the lifetime of the financial asset. ASU
2016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. We are currently
evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements, but do not believe the adoption
of this standard will have a material impact on our consolidated financial statements.
In August 2018, the FASB issued an update (“ASU 2018-13”) Disclosure Framework - Changes to the Disclosure Requirements
for Fair Value Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”). ASU 2018-13 modifies the disclosure
requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018-13 is effective
for interim and annual reporting periods in fiscal years beginning after December 15, 2019. We elected to early adopt ASU 2018-13
effective January 1, 2019. The adoption of this update did not have a material impact on our consolidated financial statements and
disclosures.
45
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
In October 2018, the FASB issued an update (“ASU 2018-16”) Inclusion of the Secured Overnight Financing Rate (SOFR)
Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC 815. ASU 2018-16
expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based
on SOFR as an eligible benchmark interest rate. ASU 2018-16 is effective for interim and annual reporting periods in fiscal years
beginning after December 15, 2018, with early adoption permitted. We adopted this update effective January 1, 2019. The adoption
of this update did not have a material impact on our consolidated financial statements.
Real Estate – Real estate is carried at cost, net of accumulated depreciation and amortization. As of December 31, 2019 and
2018, the carrying amount of our real estate, net of accumulated depreciation and amortization, was $716,843,000 and $730,270,000,
respectively. Maintenance and repairs are expensed 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.
We capitalize all property operating expenses directly associated with and attributable to, the development and construction of a
project, including interest expense. The capitalization period begins when development activities are underway and ends when it
is determined that the asset is substantially complete and ready for its intended use, which is typically evidenced by the receipt of
a temporary certificate of occupancy. General and administrative costs are expensed as incurred.
Our properties, including properties to be developed in the future, 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, including an estimated terminal value calculated using an appropriate capitalization rate. 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 and are carried at cost, which approximates fair value, due to their short-term maturities. The majority of our cash
and cash equivalents consist of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance
Corporation limit, (ii) United States Treasury Bills, (iii) money market funds, which invest in United States Treasury Bills and
(iv) certificates of deposit placed through an account registry service (“CDARS”). To date we have not experienced any losses
on our invested cash.
Restricted Cash – Restricted cash primarily consists of security deposits and other cash escrowed under loan agreements,
including for debt service, real estate taxes, property insurance and capital improvements.
Marketable Securities – Our marketable securities consist of common shares of The Macerich Company (“Macerich”) (NYSE:
MAC), which are classified as available-for-sale. Available-for-sale securities are presented at fair value on our consolidated
balance sheets. Prior to January 1, 2018, unrealized gains and losses resulting from the mark-to-market of these securities were
included in “other comprehensive income (loss).” Effective January 1, 2018, changes in the fair value of these securities are
recognized in current period earnings in accordance with ASC Topic 825 (“ASC 825”), Financial Instruments (see Note 5).
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.
46
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Income Taxes – We operate in a manner intended to enable us to continue to qualify as a 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. We distribute to our stockholders 100% of our
taxable income and therefore, no provision for Federal income taxes is required. Dividends distributed for the year ended December
31, 2019 were characterized, for federal income tax purposes, as 99.6% ordinary income and 0.4% long-term capital gain income.
Dividends distributed for the year ended December 31, 2018 were characterized, for federal income tax purposes, as 100.0%
ordinary income. Dividends distributed for the year ended December 31, 2017 were categorized, for federal income tax purposes,
as 99.5% ordinary income and 0.5% long-term capital gain income.
The following table reconciles our net income to estimated taxable income for the years ended December 31, 2019, 2018 and
2017.
(Unaudited and in thousands)
Net income
Straight-line rent adjustments
Depreciation and amortization timing differences
Change in fair value of marketable securities (see Note 5)
Loss from discontinued operations (see Note 6)
Other
Estimated taxable income
Year Ended December 31,
2019
2018
2017
$
60,075
$
32,844
$
2,359
2,751
8,757
—
137
5,870
(6,586)
11,990
23,797
440
$
74,079
$
68,355
$
80,509
4,250
3,084
—
—
(343)
87,500
As of December 31, 2019, the net basis of our assets and liabilities for tax purposes is approximately $171,331,000 lower than
the amount reported for financial statement purposes.
47
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. REVENUE RECOGNITION
Our rental revenues include revenues from the leasing of space to tenants at our properties and revenues from parking and
tenant services. We have the following revenue recognition policies:
• Lease revenues from the leasing of space to tenants at our properties. Revenues derived from base rent are recognized
over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent
abatements. We commence rental revenue recognition when the underlying asset is available for use by the lessee. 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.
Revenues derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses
are generally recognized in the same period as the related expenses are incurred. As lessor, we have elected to combine
the lease components (base and variable rent), non-lease components (reimbursements of common area maintenance
expenses) and reimbursement of real estate taxes and insurance expenses from our operating lease agreements and account
for the components as a single lease component in accordance with ASC 842.
• Parking revenue arising from the rental of parking spaces at our properties. This income is recognized as the services are
transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).
• Tenant services is revenue arising from sub-metered electric, elevator and other services provided to tenants at their
request. This revenue is recognized as the services are transferred in accordance with ASC 606.
The following is a summary of revenue sources for the years ended December 31, 2019, 2018 and 2017.
(Amounts in thousands)
Lease revenues
Parking revenue
Tenant services
Rental revenues
For the Year Ended December 31,
2018
2019
2017
$
$
217,251
5,608
3,491
226,350
$
$
223,388
5,680
3,757
232,825
$
$
220,764
5,850
3,960
230,574
The components of lease revenues for the year ended December 31, 2019 are as follows:
(Amounts in thousands)
Fixed lease revenues
Variable lease revenues
Lease revenues
For the Year Ended
December 31, 2019
$
$
142,679
74,572
217,251
48
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. RELATED PARTY TRANSACTIONS
Vornado
As of December 31, 2019, 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 and Chief Executive Officer
of Vornado. As of December 31, 2019, 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, 26.1% of our outstanding
common stock, in addition to the 2.3% they indirectly own through Vornado. Joseph Macnow, our Treasurer, is the Executive Vice
President - Chief Financial Officer and Chief Administrative Officer of Vornado. Matthew Iocco, our Chief Financial Officer, is
the Executive Vice President - Chief Accounting Officer of Vornado.
Management and Development Agreements
We pay Vornado an annual management fee equal to the sum of (i) $2,800,000, (ii) 2% of gross revenue from the Rego Park
II shopping center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue, and (iv)
$324,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue. Vornado is also entitled to a
development fee equal to 6% of development costs, as defined.
Leasing and Other 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.
We also have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise (i) cleaning,
engineering and security services at our Lexington Avenue property and (ii) security services at our Rego Park I and Rego Park
II properties and The Alexander apartment tower.
The following is a summary of fees to Vornado under the various agreements discussed above.
(Amounts in thousands)
Company management fees
Development fees
Leasing fees
Property management, cleaning, engineering
and security fees
Year Ended December 31,
2018
2019
2017
$
2,800
$
2,800
$
29
4,786
5,015
$
12,630
$
125
13
4,101
7,039
$
2,800
29
1,829
4,114
8,772
As of December 31, 2019, the amounts due to Vornado were $795,000 for management, property management, cleaning,
engineering and security fees; $563,000 for leasing fees; and $68,000 for development fees. As of December 31, 2018, the amounts
due to Vornado were $549,000 for management, property management, cleaning, engineering and security fees; $146,000 for
development fees; and $13,000 for leasing fees.
49
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. RELATED PARTY TRANSACTIONS - continued
Toys “R” Us, Inc. (“Toys”)
Our affiliate, Vornado, owned 32.5% of Toys as of December 31, 2018. On February 1, 2019, in connection with the Toys
Chapter 11 bankruptcy, the plan of reorganization for Toys was declared effective and Vornado’s ownership in Toys was canceled
and Toys’ Board of Directors was dissolved. Joseph Macnow, Vornado’s Executive Vice President and Chief Financial Officer
and Wendy A. Silverstein, a member of our Board of Directors, represented Vornado as members of Toys’ Board of Directors.
Also in connection with the Toys Chapter 11 bankruptcy, Toys rejected its 47,000 square foot lease at our Rego Park II shopping
center ($2,600,000 of annual revenue) effective June 30, 2018 and possession of the space was returned to us.
5. MARKETABLE SECURITIES
As of December 31, 2019 and 2018, we owned 535,265 common shares of Macerich. These shares have an economic cost
of $56.05 per share, or $30,000,000 in the aggregate. As of December 31, 2019 and 2018, the fair value of these shares was
$14,409,000 and $23,166,000, respectively, based on Macerich’s closing share price of $26.92 per share and $43.28 per share,
respectively. These shares are included in “marketable securities” on our consolidated balance sheets and are classified as available-
for-sale. Available-for-sale securities are presented at fair value on our consolidated balance sheets and gains and losses resulting
from the mark-to-market of these securities are recognized in current period earnings. Prior to January 1, 2018, unrealized gains
and losses resulting from the mark-to-market of these securities were included in “other comprehensive income (loss).” Effective
January 1, 2018, changes in the fair value of these securities are recognized in current period earnings in accordance with ASC
825.
6. DISCONTINUED OPERATIONS
In 2012, we sold the Kings Plaza Regional Shopping Center (“Kings Plaza”) and paid real property transfer taxes to New
York City in connection with the sale. In 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of
Determination to us assessing an additional New York City real property transfer tax amount, including interest.
In 2014, in a case with similar facts, the NYC DOF issued a Notice of Determination to a Vornado joint venture assessing
an additional New York City real property transfer tax amount, including interest. In January 2017, a New York City administrative
law judge made a determination upholding the Vornado joint venture’s position that such additional real property transfer taxes
were not due. On February 16, 2018, the New York City Tax Appeals Tribunal (the “Tribunal”) overturned the January 2017
determination. The Vornado joint venture appealed the Tribunal’s decision to the Appellate Division of the Supreme Court of the
State of New York and on April 25, 2019, the Tribunal’s decision was unanimously upheld. The Vornado joint venture filed a
motion to reargue the Appellate Division’s decision or for leave to appeal to the New York State Court of Appeals. On December
12, 2019, that motion was denied and the case can no longer be appealed.
Based on the precedent of the Tribunal’s decision, we accrued an expense for the potential additional real property transfer
taxes of $23,797,000 ($15,874,000 of real property transfer tax and $7,923,000 of interest) during the three months ended March
31, 2018. On April 5, 2018, we paid this amount in order to stop the interest from accruing. As the results related to Kings Plaza
were previously classified as discontinued operations, we have classified the expense as “loss from discontinued operations” on
our consolidated statement of income for the year ended December 31, 2018 in accordance with the provisions of ASC Topic 360,
Property, Plant and Equipment. We are currently evaluating our options relating to this matter.
50
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. MORTGAGES PAYABLE
On October 3, 2018, we extended our mortgage loan on our Paramus property. The $68,000,000 interest-only loan has a fixed
rate of 4.72% and matures in October 2021. Previously the loan bore interest at a fixed rate of 2.90%. The tenant pays all of the
interest on this mortgage loan as part of its rent.
On December 12, 2018, we completed a refinancing of our Rego Park II shopping center in the amount of $252,544,000. The
interest-only loan is at LIBOR plus 1.35% (3.15% as of December 31, 2019) and matures in December 2025. As of December 31,
2019, we have a participation in the mortgage in the amount of $195,708,000 which for GAAP purposes is netted against the
mortgage balance. Therefore, the balance sheet amount of the mortgage loan is $56,836,000. On February 14, 2020, we reduced
our participation in the mortgage loan to $50,000,000 and received cash proceeds of approximately $145,000,000.
The following is a summary of our outstanding mortgages payable. We may refinance our maturing debt as it comes due or
choose to repay it.
(Amounts in thousands)
First mortgages secured by:
Maturity
Interest Rate at
December 31, 2019
Balance at December 31,
2019
2018
Paramus
731 Lexington Avenue, retail condominium(1)
731 Lexington Avenue, office condominium(2)
Rego Park II shopping center(3)
Total
Deferred debt issuance costs, net of accumulated
amortization of $14,362 and $9,212, respectively
Oct. 2021
Aug. 2022
Jun. 2024
Dec. 2025
4.72%
3.10%
2.64%
3.15%
$
$
68,000
350,000
500,000
56,836
974,836
68,000
350,000
500,000
56,836
974,836
(3,875)
(9,010)
$
970,961
$
965,826
(1)
(2)
(3)
Interest at LIBOR plus 1.40%. Maturity date represents the extended maturity based on our conditional right to extend.
Interest at LIBOR plus 0.90%. Maturity date represents the extended maturity based on our unilateral right to extend.
Interest at LIBOR plus 1.35%. The amount of this loan is net of our $195,708 loan participation (see Note 2 - Summary of Significant
Accounting Policies).
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 $573,975,000 as of December 31, 2019. Our existing financing documents
contain covenants that limit our ability to incur additional indebtedness on these properties, and in certain circumstances, provide
for lender approval of tenants’ leases and yield maintenance to prepay them. As of December 31, 2019, the principal repayments
(based on the extended loan maturity dates) for the next five years and thereafter are as follows:
(Amounts in thousands)
Year Ending December 31,
2020
2021
2022
2023
2024
Thereafter
51
$
Amount
—
68,000
350,000
—
500,000
56,836
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. FAIR VALUE MEASUREMENTS
ASC 820 defines fair value and establishes a framework for measuring fair value. 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 and Liabilities Measured at Fair Value
Financial assets measured at fair value on our consolidated balance sheets as of December 31, 2019 and 2018 consist of
marketable securities, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate
cap, which fair value was insignificant as of December 31, 2019 and 2018. There were no financial liabilities measured at fair
value as of December 31, 2019 and 2018.
(Amounts in thousands)
Marketable securities
(Amounts in thousands)
Marketable securities
As of December 31, 2019
Total
Level 1
Level 2
Level 3
14,409
$
14,409
$
— $
—
As of December 31, 2018
Total
Level 1
Level 2
Level 3
23,166
$
23,166
$
— $
—
$
$
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents
and mortgages payable. Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities and
are classified as Level 1. The fair value of our mortgages payable is calculated by discounting the future contractual cash flows
of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a
third-party specialist, and is classified as Level 2. The table below summarizes the carrying amount and fair value of these financial
instruments as of December 31, 2019 and 2018.
(Amounts in thousands)
Assets:
Cash equivalents
Liabilities:
As of December 31, 2019
As of December 31, 2018
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
$
263,688
$
263,688
$
173,858
$
173,858
Mortgages payable (excluding deferred debt issuance costs, net)
$
974,836
$
974,000
$
974,836
$
969,000
52
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. LEASES
As Lessor
We lease space to tenants under operating leases in an office building and in retail centers. 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 may also provide for the payment by the lessee
of additional rents based on a percentage of their sales. We also lease residential space at The Alexander apartment tower with 1
or 2 year lease terms. We have elected to account for lease revenues (including fixed and variable rent) and the reimbursement of
common area maintenance expenses as a single lease component presented as “rental revenues” in our consolidated statements
of income.
Under ASC 842, we must assess on an individual lease basis whether it is probable that we will collect the future lease payments.
We consider the tenant’s payment history and current credit status when assessing collectability. When collectability is not deemed
probable, we write-off the tenant’s receivables, including straight-line rent receivable, and limit lease income to cash received.
Changes to the collectability of our operating leases are recorded as adjustments to “rental revenues” on our consolidated statements
of income, which resulted in a decrease in income of $209,000 for the year ended December 31, 2019. As a result, there is no
allowance for doubtful accounts as of December 31, 2019. The table below summarizes our allowance for doubtful accounts as
of December 31, 2018 and 2017.
(Amounts in thousands)
Allowance for doubtful accounts:
Year Ended December 31, 2018
Year Ended December 31, 2017
Balance at
Beginning
of Year
Additions:
Charged
Against
Operations
Deductions:
Uncollectible
Accounts
Written Off
Balance at
End
of Year
$
$
1,501
$
4,459
$
(5,289) $
671
1,473
$
53
$
(25) $
1,501
Future undiscounted cash flows under our non-cancelable operating leases are as follows:
(Amounts in thousands)
For the year ending December 31,
2020
2021
2022
2023
2024
Thereafter
(Amounts in thousands)
For the year ending December 31,
2019
2020
2021
2022
2023
Thereafter
$
$
Under ASC 842
As of December 31, 2019
141,875
134,877
127,691
129,054
137,234
624,239
Under ASC 840
As of December 31, 2018
138,784
131,647
120,450
111,532
111,962
671,111
These amounts do not include reimbursements or additional rents based on a percentage of retail tenants’ sales.
53
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. LEASES - continued
Bloomberg accounted for revenue of $109,113,000, $107,356,000, and $105,224,000 in the years ended December 31, 2019,
2018 and 2017, respectively, representing approximately 48%, 46% and 46% of our total revenues in each year, respectively. No
other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were
to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In
order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial
information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from
other private sources, as well as publicly available data.
On June 28, 2019, we entered into a lease agreement with Bloomberg for an additional 49,000 square feet at our 731 Lexington
Avenue property
As Lessee
We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and
has one 10-year extension option. On January 1, 2019, we recorded a right-of-use asset and lease liability related to this ground
lease equal to the present value of the remaining minimum lease payments. As of December 31, 2019, the right-of-use asset of
$4,529,000 and the lease liability of $4,845,000, are included in “other assets” and “other liabilities,” respectively, on our
consolidated balance sheet. The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental
borrowing rate (“IBR”) for the property of 4.53%. We initially consider the general economic environment and factor in various
financing and asset specific adjustments so that the IBR is appropriate to the intended use of the underlying lease. As we did not
elect to apply hindsight, the lease term assumption determined under ASC 840 was carried forward and applied in calculating our
lease liability recorded under ASC 842.
Future lease payments under this operating lease, excluding the extension option, are as follows:
(Amounts in thousands)
For the year ending December 31,
2020
2021
2022
2023
2024
Thereafter
Total undiscounted cash flows
Present value discount
Lease liability as of December 31, 2019
(Amounts in thousands)
For the year ending December 31,
2019
2020
2021
2022
2023
Thereafter
Under ASC 842
As of December 31, 2019
$
$
$
800
800
800
800
800
1,600
5,600
(755)
4,845
Under ASC 840
As of December 31, 2018
800
800
800
800
800
2,467
We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-
line basis. Rent expense was $746,000 in each of the years ended December 31, 2019, 2018 and 2017, respectively. Cash paid
for rent expense was $800,000, $800,000 and $792,000 in the years ended December 31, 2019, 2018 and 2017, respectively.
54
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. STOCK-BASED COMPENSATION
We account for stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. Our
2016 Omnibus Stock Plan (the “Plan”) provides for grants of incentive and non-qualified stock options, restricted stock, stock
appreciation rights, deferred stock units (“DSUs”) and performance shares, as defined, to the directors, officers and employees of
the Company and Vornado.
On May 16, 2019, we granted each of the members of our Board of Directors 193 DSUs with a grant date fair value of
$56,250 per grant, or $394,000 in the aggregate. The DSUs entitle the holders to receive shares of the Company’s common stock
without the payment of any consideration. The DSUs vested immediately and accordingly, were expensed on the date of grant,
but the shares of common stock underlying the DSUs are not deliverable to the grantee until the grantee is no longer serving on
the Company’s Board of Directors. As of December 31, 2019, there were 11,408 DSUs outstanding and 494,379 shares were
available for future grant under the Plan.
11. COMMITMENTS AND CONTINGENCIES
Insurance
We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, and all-risk property and
rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, with sub-limits
for certain perils such as floods and earthquakes on each of our properties.
Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for
coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism
Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027. Coverage for acts of
terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding
NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For
NBCR acts, FNSIC is responsible for a $268,000 deductible and 20% of the balance of a covered loss, and the Federal government
is responsible for the remaining 80% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism or other
events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are
responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our mortgage loans are non-recourse to us and contain customary covenants requiring us to maintain insurance. Although we
believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent
amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain, it
could adversely affect our ability to finance or refinance our properties.
Paramus
In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option
in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 4.72%,
which matures in October 2021. The annual triple-net rent is the sum of $700,000 plus the amount of interest 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 $60,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years would
include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
55
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. COMMITMENTS AND CONTINGENCIES - continued
Rego Park I Litigation
In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado
and us (and certain of our subsidiaries) with regard to space that Sears leased at our Rego Park I property alleging that the defendants
are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) two fires in February 2014 that
caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking
garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair
the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions
into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than $4,000,000 and future
damages it estimated would not be less than $25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a
remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears.
We intend to defend the remaining claim vigorously. The amount or range of reasonably possible losses, if any, is not expected to
be greater than $650,000.
On April 4, 2017, Sears closed its 195,000 square foot store at the property ($10,300,000 of annual revenue). On October 15,
2018, Sears filed for Chapter 11 bankruptcy relief and rejected its lease.
Letters of Credit
Approximately $1,030,000 of standby letters of credit were issued and outstanding as of December 31, 2019.
Other
There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters
in the aggregate will not have a material effect on our financial position, results of operations or cash flows.
12. MULTIEMPLOYER BENEFIT PLANS
Our subsidiaries make contributions to certain multiemployer defined benefit plans (“Multiemployer Pension Plans”) and
health plans (“Multiemployer Health Plans”) for our union represented employees, pursuant to the respective collective bargaining
agreements.
Multiemployer Pension Plans
Multiemployer Pension Plans differ from single-employer pension plans in that (i) contributions to multiemployer plans may
be used to provide benefits to employees of other participating employers and (ii) if other participating employers fail to make
their contributions, each of our subsidiaries may be required to bear their pro rata share of unfunded obligations. If a participating
subsidiary withdraws from a plan in which it participates, it may be subject to a withdrawal liability. As of December 31, 2019,
our subsidiaries’ participation in these plans were not significant to our consolidated financial statements.
In the years ended December 31, 2019, 2018 and 2017 our subsidiaries contributed $172,000, $161,000 and $162,000,
respectively, towards Multiemployer Pension Plans. Our subsidiaries’ contributions did not represent more than 5% of total
employer contributions in any of these plans for the years ended December 31, 2019, 2018 and 2017.
Multiemployer Health Plans
Multiemployer Health Plans in which our subsidiaries participate provide health benefits to eligible active and retired employees.
In the years ended December 31, 2019, 2018 and 2017 our subsidiaries contributed $686,000, $649,000 and $619,000, respectively,
towards these plans.
56
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. 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 (including DSUs) outstanding during the period. Diluted income per share is determined
using the weighted average shares of common stock (including DSUs) outstanding during the period, and assumes all potentially
dilutive securities were converted into common shares at the earliest date possible. There were no potentially dilutive securities
outstanding during the years ended December 31, 2019, 2018 and 2017.
(Amounts in thousands, except share and per share amounts)
2019
2018
2017
For the Year Ended December 31,
Income from continuing operations
Loss from discontinued operations (see Note 6)
Net income
Weighted average shares outstanding – basic and diluted
Income from continuing operations
Loss from discontinued operations (see Note 6)
Net income per common share – basic and diluted
$
$
$
$
60,075
—
60,075
5,118,198
11.74
—
11.74
$
$
$
$
56,641
(23,797)
32,844
5,116,838
11.07
(4.65)
6.42
$
$
$
$
80,509
—
80,509
5,115,501
15.74
—
15.74
14. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
(Amounts in thousands, except per share amounts)
Revenues
Net Income
(Loss)
Basic
Diluted
Net Income (Loss)
Per Common Share(1)
2019
December 31
September 30
June 30
March 31
December 31
September 30
June 30
March 31
2018
_______________________
$
$
$
$
55,880
57,760
55,932
56,778
57,567
59,125
58,253
57,880
$
$
14,434
16,493
11,283
17,865
9,971
15,003
17,570
(9,700) (2)
$
$
2.82
3.22
2.20
3.49
1.95
2.93
2.82
3.22
2.20
3.49
1.95
2.93
3.43
(1.90) (2)
3.43
(1.90) (2)
(1)
(2)
The total for the year may differ from the sum of the quarters as a result of weighting.
Includes $23,797, or $4.65 per common share, of expense for potential additional New York City real property transfer taxes on the
2012 sale of Kings Plaza.
57
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
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.
Internal Control Over Financial Reporting – There have not been any changes in our internal control over financial reporting
(as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the fourth quarter of the fiscal year
to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
58
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, 2019, 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 (2013) 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, 2019 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, 2019 has been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 60 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, 2019.
59
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Alexander’s, Inc.
Paramus, New Jersey
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Alexander’s, Inc. and subsidiaries (the “Company”) as of December
31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated
Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report
dated February 18, 2020, expressed an unqualified opinion on those financial statements.
Basis for Opinion
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’s 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 are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 18, 2020
60
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information relating to our directors, including our audit committee and audit committee financial expert, 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, 2019. 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.
Executive Officers of the Registrant
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
78
PRINCIPAL OCCUPATION, POSITION AND OFFICE
(Current and during past five years with the Company unless otherwise stated)
Chairman of the Board 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 since April 2013 and from May 1989 to May 2009; a Trustee of Vornado Realty Trust since
1979; and Managing General Partner of Interstate Properties.
Matthew Iocco
49
Chief Financial Officer since April 2017; Executive Vice President - Chief Accounting Officer of
Vornado Realty Trust since May 2015; and Senior Vice President - Chief Accounting Officer of
Vornado Realty Trust from May 2012 to May 2015.
We have a code of business conduct and ethics that applies to, among others, our Chief Executive Officer and Chief Financial
Officer. 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 Chief Financial Officer by posting such
information on our website.
61
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, 2019, regarding our equity compensation.
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
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))
11,408
N/A
11,408
$
$
—
N/A
—
494,379
N/A
494,379
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.
62
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K.
PART IV
1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.
2. The following financial statement schedule should be read in conjunction with the financial statements included in
Item 8 of this Annual Report on Form 10-K.
Schedule III – Real Estate and Accumulated Depreciation as of
December 31, 2019, 2018 and 2017
Pages in this
Annual Report
on Form 10-K
64-65
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.
63
S
E
I
R
A
I
D
I
S
B
U
S
D
N
A
.
C
N
I
,
S
’
R
E
D
N
A
X
E
L
A
I
I
I
E
L
U
D
E
H
C
S
N
O
I
T
A
I
C
E
R
P
E
D
D
E
T
A
L
U
M
U
C
C
A
D
N
A
E
T
A
T
S
E
L
A
E
R
9
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
i
s
t
n
u
o
m
A
(
I
N
M
U
L
O
C
H
N
M
U
L
O
C
G
N
M
U
L
O
C
F
N
M
U
L
O
C
E
N
M
U
L
O
C
D
N
M
U
L
O
C
C
N
M
U
L
O
C
B
N
M
U
L
O
C
A
N
M
U
L
O
C
h
c
i
h
w
n
o
e
f
i
L
n
i
n
o
i
t
a
i
c
e
r
p
e
D
e
m
o
c
n
I
t
s
e
t
a
L
s
i
t
n
e
m
e
t
a
t
S
d
e
t
u
p
m
o
C
s
r
a
e
y
9
3
-
3
s
r
a
e
y
0
4
-
3
s
r
a
e
y
9
3
-
3
s
r
a
e
y
5
1
-
5
A
N
/
s
r
a
e
y
9
3
-
9
A
N
/
A
N
/
e
t
a
D
)
1
(
d
e
r
i
u
q
c
A
f
o
e
t
a
D
n
o
i
t
c
u
r
t
s
n
o
C
d
e
t
a
l
u
m
u
c
c
A
n
o
i
t
a
i
c
e
r
p
e
D
d
n
a
n
o
i
t
a
z
i
t
r
o
m
A
)
3
(
l
a
t
o
T
t
n
e
m
p
o
l
e
v
e
D
d
n
a
n
o
i
t
c
u
r
t
s
n
o
C
s
s
e
r
g
o
r
P
n
I
s
g
n
i
d
l
i
u
B
d
l
o
h
e
s
a
e
L
d
n
a
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
s
t
s
o
C
d
e
z
i
l
a
t
i
p
a
C
t
n
e
u
q
e
s
b
u
S
n
o
i
t
i
s
i
u
q
c
A
o
t
s
g
n
i
d
l
i
u
B
d
l
o
h
e
s
a
e
L
d
n
a
s
t
n
e
m
e
v
o
r
p
m
I
d
n
a
L
)
2
(
s
e
c
n
a
r
b
m
u
c
n
E
h
c
i
h
W
t
a
t
n
u
o
m
A
s
s
o
r
G
d
o
i
r
e
P
f
o
e
s
o
l
C
t
a
d
e
i
r
r
a
C
)
1
(
y
n
a
p
m
o
C
o
t
t
s
o
C
l
a
i
t
i
n
I
2
9
9
1
2
9
9
1
2
9
9
1
2
9
9
1
2
9
9
1
2
9
9
1
2
9
9
1
9
5
9
1
9
0
0
2
6
1
0
2
/
A
N
)
5
(
5
7
9
1
3
0
0
2
/
A
N
2
9
9
1
/
A
N
8
8
6
,
3
0
1
5
0
4
,
7
1
0
9
2
7
8
0
,
1
9
3
2
,
5
6
1
—
—
3
4
9
,
2
9
3
2
1
1
,
9
1
1
6
7
0
,
5
3
5
5
,
1
7
0
2
,
8
3
4
4
5
7
,
1
1
7
6
1
4
3
—
4
9
7
,
3
—
9
2
4
—
—
2
8
7
,
9
8
3
2
1
1
,
9
1
1
3
0
5
3
5
5
,
1
1
8
2
,
0
1
4
—
—
—
9
7
7
—
7
2
1
,
3
7
9
4
,
7
2
4
5
7
,
1
1
)
7
0
1
(
7
9
2
,
4
9
4
3
,
8
8
3
2
1
1
,
9
1
1
0
2
4
,
1
1
4
3
1
3
,
0
1
—
—
7
6
4
,
1
—
0
6
6
,
1
5
5
3
,
2
1
7
2
1
,
3
)
4
(
6
3
8
,
6
5
—
9
7
7
—
2
3
4
,
4
1
1
4
4
,
1
—
—
—
0
0
0
,
0
5
8
0
0
0
,
8
6
7
6
1
)
4
0
8
,
1
(
4
0
8
,
1
7
6
1
—
0
9
7
,
6
3
$
0
3
5
,
2
7
$
1
6
0
,
8
$
2
2
8
,
2
6
$
7
4
6
,
1
$
0
3
9
,
1
6
$
3
5
9
,
8
$
7
4
6
,
1
$
—
$
9
9
4
,
4
2
3
$
2
4
3
,
1
4
0
,
1
$
8
1
3
,
2
1
$
3
5
0
,
4
8
9
$
1
7
9
,
4
4
$
0
1
5
,
3
9
9
$
9
3
2
,
6
2
$
3
9
5
,
1
2
$
6
3
8
,
4
7
9
$
r
e
w
o
t
t
n
e
m
t
r
a
p
a
r
e
d
n
a
x
e
l
A
e
h
T
I
k
r
a
P
o
g
e
R
I
I
k
r
a
P
o
g
e
R
Y
N
,
k
r
o
Y
w
e
N
n
o
i
t
p
i
r
c
s
e
D
I
I
I
k
r
a
P
o
g
e
R
g
n
i
h
s
u
l
F
e
u
n
e
v
A
n
o
t
g
n
i
x
e
L
J
N
,
s
u
m
a
r
a
P
s
e
i
t
r
e
p
o
r
P
r
e
h
t
O
L
A
T
O
T
.
s
e
s
o
p
r
u
p
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
r
o
f
d
e
t
r
o
p
e
r
t
n
u
o
m
a
e
h
t
n
a
h
t
r
e
w
o
l
1
3
3
,
1
7
1
$
y
l
e
t
a
m
i
x
o
r
p
p
a
s
i
s
e
s
o
p
r
u
p
x
a
t
r
o
f
s
e
i
t
i
l
i
b
a
i
l
d
n
a
s
t
e
s
s
a
s
’
y
n
a
p
m
o
C
e
h
t
f
o
s
i
s
a
b
t
e
n
e
h
T
)
3
(
.
)
s
n
o
i
t
a
r
e
p
o
e
t
a
t
s
e
l
a
e
r
s
t
i
d
e
c
n
e
m
m
o
c
y
n
a
p
m
o
C
e
h
t
h
c
i
h
w
n
o
e
t
a
d
e
h
t
(
2
9
9
1
,
5
1
y
a
M
f
o
s
a
s
i
t
s
o
c
l
a
i
t
i
n
I
)
1
(
.
5
7
8
,
3
$
f
o
t
e
n
,
s
t
s
o
c
e
c
n
a
u
s
s
i
t
b
e
d
d
e
r
r
e
f
e
d
s
e
d
u
l
c
x
E
)
2
(
.
n
o
i
t
a
p
i
c
i
t
r
a
p
n
a
o
l
8
0
7
,
5
9
1
$
r
u
o
f
o
t
e
n
s
i
n
a
o
l
s
i
h
t
f
o
t
n
u
o
m
a
e
h
T
)
4
(
.
d
e
r
i
u
q
c
a
s
a
w
e
s
a
e
l
e
h
t
e
t
a
d
e
h
t
s
t
n
e
s
e
r
p
e
R
)
5
(
4
6
ALEXANDER’S, INC. AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
REAL ESTATE:
Balance at beginning of period
Changes 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
2019
December 31,
2018
2017
$
1,027,691
$
1,037,368
$
1,033,551
—
5,579
8,072
1,041,342
—
1,041,342
297,421
27,078
324,499
—
324,499
$
$
$
—
3,218
695
1,041,281
(13,590)
1,027,691
283,044
27,967
311,011
(13,590)
297,421
$
$
$
—
3,046
771
1,037,368
—
1,037,368
252,737
30,307
283,044
—
283,044
$
$
$
65
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES - continued
(b) Exhibits
Exhibit
No.
3.1
3.2
4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
-
-
-
-
-
-
-
-
-
-
-
-
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
By-laws, as amended. Incorporated herein by reference from Exhibit 3(ii) to the registrant’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
*
*
Description of the Alexander’s, Inc. securities registered pursuant to Section 12 of the Securities
Exchange Act
***
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 on 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
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
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
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
___________________
Incorporated by reference.
Filed herewith.
*
*
*
*
*
*
*
*
*
66
*
***
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
*
-
-
-
-
-
-
-
-
-
-
-
-
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
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
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
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
Loan Agreement dated as of March 10, 2009 between Alexander’s Rego 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 Form 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 Form 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 Form 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 Form 10-Q for the quarter
ended March 31, 2009, filed on May 4, 2009
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 Form 10-Q for the quarter ended March 31, 2009, filed on May 4, 2009
__________________
Incorporated by reference.
*
*
*
*
*
*
*
*
*
*
*
*
67
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
-
-
-
-
-
-
-
-
*
-
-
-
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 Form 10-Q for the quarter ended March 31, 2009, filed on May 4, 2009
Third Amendment to Amended and Restated Management and Development Agreement, dated
as of November 30, 2011, by and between Alexander’s, Inc., the subsidiaries party thereto and
Vornado Management Corp. Incorporated herein by reference from Exhibit 10.49 to the
registrant’s Annual Report on Form 10-K for the year ended December 31, 2011, filed on February
27, 2012
First Omnibus Loan Modification and Extension Agreement dated March 12, 2012 by and between
Alexander’s Rego 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 Form 10-Q for the quarter ended March 31, 2012, filed on May 7, 2012
- Mortgage Modification Agreement dated March 12, 2012 by and between Alexander’s Rego
Shopping Center, Inc., as Mortgagor and U.S. Bank National Association, as Mortgagee.
Incorporated herein by reference from Exhibit 10.56 to the registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2012, filed on May 7, 2012
Fourth Amendment to Amended and Restated Management and Development Agreement, dated
as of August 1, 2012, by and between Alexander’s, Inc., the subsidiaries party thereto and Vornado
Management Corp. Incorporated herein by reference from Exhibit 10.2 to the registrants Quarterly
Report on Form 10-Q for the quarter ended September 30, 2012, filed on November 1, 2012
Contribution Agreement and Joint Escrow Instructions, dated as of October 21, 2012, by and
between Alexander’s Kings Plaza LLC, Alexander’s of Kings LLC and Kings Parking LLC, and
Brooklyn Kings Plaza LLC. Incorporated herein by reference from Exhibit 10.53 to the registrant’s
Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 26, 2013
Fifth Amendment to Amended and Restated Management and Development Agreement, dated as
of December 1, 2012, by and between Alexander’s, Inc., the subsidiaries party thereto and Vornado
Management Corp. Incorporated herein by reference from Exhibit 10.54 to the registrant’s Annual
Report on Form 10-K for the year ended December 31, 2012, filed on February 26, 2013
Second Omnibus Loan Modification and Extension Agreement, dated March 8, 2013, by and
between Alexander’s Rego Shopping Center, Inc., as Borrower and U.S. Bank National
Association, as Lender. Incorporated herein by reference from Exhibit 10.3 to the registrant’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed on May 6, 2013
Second Mortgage Modification Agreement, dated March 8, 2013, by and between Alexander’s
Rego Shopping Center, Inc., as Mortgagor and U.S. Bank National Association, as Mortgagee.
Incorporated herein by reference from Exhibit 10.4 to the registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2013, filed on May 6, 2013
*
*
*
*
*
*
*
*
*
Loan Agreement, date as of February 28, 2014, by and between 731 Office One LLC, as Borrower,
and German American Capital Corporation, as Lender. Incorporated herein by reference from
Exhibit 10.1 to the registrant’s Quarterly report on Form 10-Q for the quarter ended March 31,
2014, filed on May 5, 2014
*
Consolidated, Amended and Restated Promissory Note, dated as of February 28, 2014, by and
between 731 Office One LLC, as Borrower, and German American Capital Corporation, as Lender.
Incorporated herein by reference from Exhibit 10.2 to the registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2014, filed on May 5, 2014
Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement, dated
as of February 28, 2014, by and between 731 Office One LLC, as Mortgagor, and German American
Capital Corporation, as Mortgagee. Incorporated herein by reference from Exhibit 10.3 to the
registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed on May
5, 2014
__________________
Incorporated by reference.
*
*
68
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
*
-
-
-
-
-
-
-
-
-
-
-
-
-
Assignment of Leases and Rents dated as of February 28, 2014, by and between 731 Office One
LLC, as Assignor, and German American Capital Corporation, as Assignee. Incorporated herein
by reference from Exhibit 10.4 to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2014, filed on May 5, 2014
Guaranty of Recourse Obligations dated as of February 28, 2014, by and between Alexander’s,
Inc., as Guarantor, and German American Capital Corporation, as Lender. Incorporated herein
by reference from Exhibit 10.5 to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2014, filed on May 5, 2014
Environmental Indemnity Agreement dated as of February 28, 2014, by and between 731 Office
One LLC, as Indemnitor, and German American Capital Corporation, as Indemnitee. Incorporated
herein by reference from Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014, filed on May 5, 2014
Termination Agreement dated as of February 28, 2014, by and among 731 Office One LLC,
Alexander’s Management LLC, Vornado Realty L.P., 731 Office Two LLC, 731 Residential LLC,
731 Commercial LLC, 731 Retail One LLC and 731 Restaurant LLC. Incorporated herein by
reference from Exhibit 10.7 to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2014, filed on May 5, 2014
Real Estate Sub-Retention Agreement dated as of February 28, 2014, by and between Alexander’s
Management LLC, as Agent, and Vornado Realty L.P., as Sub-Agent. Incorporated herein by
reference from Exhibit 10.8 to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2014, filed on May 5, 2014
Sixth Amendment to Amended and Restated Management and Development Agreement, dated
as of March 21, 2014, by and between Alexander’s, Inc., the subsidiaries party thereto and Vornado
Management Corp. Incorporated herein by reference from Exhibit 10.9 to the registrant’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed on May 5, 2014
Rego Park II Residential Management and Development Agreement, dated as of March 21, 2014
by and between Alexander’s of Rego Residential LLC and Vornado Management Corp.
Incorporated herein by reference from Exhibit 10.10 to the registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2014, filed on May 5, 2014
Fourth Amendment to Real Estate Retention Agreement, dated December 22, 2014 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, 2014, filed on
February 17, 2015
Second Amendment to 59th Street Real Estate Retention Agreement, dated December 22, 2014
by and between 731 Retail One LLC, 731 Restaurant LLC, 731 Office Two LLC and Vornado
Realty, L.P. Incorporated herein by reference from Exhibit 10.57 to the registrant’s Annual Report
on Form 10-K for the year ended December 31, 2014, filed on February 17, 2015
First Amendment to Rego II Real Estate Sub-Retention Agreement, dated December 22, 2014 by
and between Alexander’s, Inc. and Vornado Realty L.P. Incorporated herein by reference from
Exhibit 10.58 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2014, filed on February 17, 2015
First Amendment to Real-Estate Sub-Retention Agreement, dated December 22, 2014 by and
between Alexander’s Management LLC and Vornado Realty, L.P. Incorporated herein by
reference from Exhibit 10.59 to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2014, filed on February 17, 2015
Third Omnibus Loan Modification and Extension Agreement, dated March 10, 2015, by and
between Alexander’s Rego Shopping Center, Inc., as Borrower and U.S. Bank National
Association, as Lender. Incorporated herein by reference from Exhibit 10.1 to the registrant’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 4, 2015
Third Mortgage Modification Agreement, dated March 10, 2015, by and between Alexander’s
Rego Shopping Center, Inc., as Mortgagor and U. S. Bank National Association, as Mortgagee.
Incorporated herein by reference from Exhibit 10.2 to the registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2015, filed on May 4, 2015
__________________
Incorporated by reference.
69
*
*
*
*
*
*
*
*
*
*
*
*
*
10.47
10.48
+
10.49
10.50
10.51
**
10.52
10.53
10.54
10.55
10.56
10.57
-
-
-
-
-
-
-
-
-
-
-
Loan Agreement, dated as of August 5, 2015, by and between 731 Retail One LLC and 731
Commercial LLC, as Borrower, and JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., and
Landesbank Baden-Württemberg, New York Branch, as Lenders. Incorporated herein by
reference from Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2015, filed on November 2, 2015
Second Amendment of Lease, dated as of the 12th of January 2016 between 731 Office One LLC
and Bloomberg L.P. Incorporated herein by reference from Exhibit 10.1 to the registrant’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed on May 2, 2016
Fourth Omnibus Loan Modification and Extension Agreement, dated and made effective as of
March 8, 2016, by and between Alexander’s Rego Shopping Center and U.S. Bank National
Association. Incorporated herein by reference from Exhibit 10.2 to the registrant’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2016, filed on May 2, 2016
Fourth Mortgage Modification Agreement, dated and made effective as of March 8, 2016, by and
between Alexander’s Rego Shopping Center and U.S. Bank National Association. Incorporated
herein by reference from Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2016, filed on May 2, 2016
Form of Alexander’s Inc. 2016 Omnibus Stock Plan Deferred Stock Unit Grant Agreement
between the Company and certain employees. Incorporated herein by reference from Exhibit 10.4
to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed on
August 1, 2016
Loan Agreement, dated as of June 1, 2017, between 731 Office One LLC, as Borrower, and
Deutsche Bank AG, New York Branch and Citigroup Global Markets Realty Corp. collectively,
as Lender. Incorporated herein by reference from Exhibit 10.1 to the registrant’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2017, filed on July 31, 2017
Fifth Omnibus Loan Modification and Extension Agreement, dated and made effective as of March
12, 2018, by and between Alexander’s Rego Shopping Center, Inc., as Borrower, and U.S. Bank
National Association, as Lender. Incorporated herein by reference from Exhibit 10.1 to the
registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on April
30, 2018
Sixth Omnibus Loan Modification and Extension Agreement, dated and made effective as of April
12, 2018, by and between Alexander’s Rego Shopping Center, Inc., as Borrower, and U.S. Bank
National Association, as Lender. Incorporated herein by reference from Exhibit 10.2 to the
registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on April
30, 2018
Amended and Restated Loan and Security Agreement, dated and made effective as of December
12, 2018, by and between Rego II Borrower LLC, as Borrower, and Bank of China, New York
Branch, as Lender. Incorporated herein by reference from Exhibit 10.55 to the registrant’s Annual
Report on Form 10-K for the year ended December 31, 2018, filed on February 11, 2019
Second Amended and Restated Promissory Note, dated December 12, 2018, by and between Rego
II Borrower LLC, as Maker, and Bank of China, New York Branch, as Lender. Incorporated herein
by reference from Exhibit 10.56 to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2018, filed on February 11, 2019
Second Amended and Restated Mortgage, Assignment of Leases and Rents and Security
Agreement, dated December 12, 2018, by and between Rego II Borrower LLC, as Mortgagor,
and Bank of China, New York Branch, as Mortgagee. Incorporated herein by reference from
Exhibit 10.57 to the registrant’s Annual Report on Form 10-K for the year ended December 31,
2018, filed on February 11, 2019
*
*
*
*
*
*
*
*
*
*
*
*
**
+
__________________
Incorporated by reference.
Management contract or compensatory agreement.
Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission under Rule 24b-2. The omitted confidential
material has been filed separately. The location of the redacted confidential information is indicated
in the exhibit as “redacted.”
70
10.58
10.59
10.60
10.61
21
23
31.1
31.2
32.1
32.2
101
104
-
-
-
Amended and Restated Guaranty of Recourse Carveouts, dated December 12, 2018, by
Alexander’s, Inc., as Guarantor, to and for the benefit of Bank of China, New York Branch, as
Lender. Incorporated herein by reference from Exhibit 10.58 to the registrant’s Annual Report on
Form 10-K for the year ended December 31, 2018, filed on February 11, 2019
Amended and Restated Environmental Indemnity Agreement, dated December 12, 2018, among
Rego II Borrower LLC and Alexander’s, Inc., individually or collectively as Indemnitor, in favor
of Bank of China, New York Branch, as Lender. Incorporated herein by reference from Exhibit
10.59 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2018,
filed on February 11, 2019
Amended and Restated Participation and Servicing Agreement for Amended and Restated Loan
and Security Agreement, dated December 12, 2018, between Bank of China, New York Branch,
individually as Lender, Initial A-1 Holder and as the Agent for the Holders, and Alexander’s of
Rego Park II Participating Lender LLC, individually as Initial A-2 Holder. Incorporated herein
by reference from Exhibit 10.60 to the registrant’s Annual Report on Form 10-K for the year ended
December 31, 2018, filed on February 11, 2019
- Waiver and Amendment No. 1 to Loan Agreement, dated October 10, 2019, by and among 731
Retail One LLC and 731 Commercial LLC, as Borrower, and JPMorgan Chase Bank, N.A., Wells
Fargo Bank, N.A., and Landesbank Baden-Württemberg, New York Branch, as Lenders
-
-
-
-
-
-
-
-
*
***
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
The following financial information from the Alexander’s, Inc. Annual Report on Form 10-K for
the year ended December 31, 2019 formatted in Inline Extensible Business Reporting Language
(iXBRL) includes: (i) consolidated balance sheets, (ii) consolidated statements of income, (iii)
consolidated statements of comprehensive income, (iv) consolidated statements of changes in
equity, (v) consolidated statements of cash flows and (vi) the notes to the consolidated financial
statements
The cover page from the Alexander’s, Inc. Annual Report on Form 10-K for the year ended
December 31, 2019, formatted as Inline XBRL and contained in Exhibit 101
__________________
Incorporated by reference.
Filed herewith.
*
*
*
***
***
***
***
***
***
***
***
***
71
ITEM 16. FORM 10-K SUMMARY
None.
72
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 18, 2020
By:
/s/ Matthew Iocco
Matthew Iocco, 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
Date
By:
/s/Steven Roth
Chairman of the Board of Directors and
February 18, 2020
(Steven Roth)
Chief Executive Officer
(Principal Executive Officer)
By:
/s/Matthew Iocco
Chief Financial Officer
February 18, 2020
(Matthew Iocco)
(Principal Financial and Accounting Officer)
By:
/s/Thomas R. DiBenedetto
Director
February 18, 2020
(Thomas R. DiBenedetto)
By:
/s/David Mandelbaum
Director
February 18, 2020
(David Mandelbaum)
By:
/s/Wendy Silverstein
Director
February 18, 2020
(Wendy Silverstein)
By:
/s/Arthur Sonnenblick
Director
February 18, 2020
(Arthur Sonnenblick)
By:
/s/Richard R. West
Director
February 18, 2020
(Richard R. West)
By:
/s/Russell B. Wight Jr.
Director
February 18, 2020
(Russell B. Wight Jr.)
73
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Board of Directors
Officers
CORPORATE INFORMATION
Steven Roth
Chairman of the Board and Chief Executive Officer
Matthew Iocco
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
Counsel
Shearman & Sterling LLP
New York, New York
Transfer Agent and Registrar
American Stock
Transfer & Trust Co.
New York, New York
Management Certifications
Our 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
our Annual Report on Form 10-K for the year ended
December 31, 2019. In addition, as required by Section
303A.12(a) of the New York Stock Exchange (NYSE)
Listed Company Manual, on May 21, 2019, our 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 our 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 our website at
www.alx-inc.com and referring to the Company’s SEC
Filings.
Stock Listing
New York Stock Exchange – ALX
Steven Roth
Chairman of the Board of Trustees and Chief Executive
Officer, Vornado Realty Trust; Partner, Interstate Properties
Thomas R. DiBenedetto*
President, Boston International Group, Inc.; President,
Junction Investors Ltd.; Managing Director, Olympic
Partners
David Mandelbaum
A member of the law firm of Mandelbaum & Mandelbaum,
P.C.; Partner, Interstate Properties; Trustee, Vornado Realty
Trust
Mandakini Puri*
Private Equity Consultant
Wendy A. Silverstein*
Former Executive Vice President and Co-Head of Capital
Markets and Acquisitions, Vornado Realty Trust
Arthur I. Sonnenblick
Former Senior Managing Director of Cushman & Wakefield
Sonnenblick Goldman
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 14, 2020 at the
Saddle Brook Marriott, Interstate 80 and the Garden State
Parkway, Saddle Brook, New Jersey, 07663.
IMPORTANT NOTICE REGARDING COVID-19
We intend to hold our annual meeting in person. However, we
are actively monitoring the status of the coronavirus (COVID-
19); we are sensitive to the public health and travel concerns
our stockholders may have and the protocols that federal, state,
and local governments may impose. In the event it is not
possible or advisable to hold our annual meeting in person, we
will announce by press release and on our website alternative
arrangements for the meeting. The announcement will include
details of how to participate, which may include holding the
meeting solely by means of remote communication. Please
monitor our website at www.alx-inc.com for updated
information. If you are planning to attend our meeting, please
check the website one week prior to the meeting date. As
always, we encourage you to vote your shares prior to the
annual meeting.
*Member of the Audit Committee