ALEXANDERS INC

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our consolidated financial statements for the three and six months ended June 30, 2024 and 2023. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the operating results for the full year.

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our consolidated financial statements for the three and nine months ended September 30, 2024 and 2023. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results for the full year.

Previous wording

A summary of the critical accounting estimates used in the preparation of our consolidated financial statements is included in our Annual Report on Form 10-K for the year ended December 31, 2023 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and a summary of our significant accounting policies is included in “Note 2 – Summary of Significant Accounting Policies” to the consolidated financial statements included therein. For the six months ended June 30, 2024, there were no material changes to these estimates or policies.

Current wording

A summary of the critical accounting estimates used in the preparation of our consolidated financial statements is included in our Annual Report on Form 10-K for the year ended December 31, 2023 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and a summary of our significant accounting policies is included in “Note 2 – Summary of Significant Accounting Policies” to the consolidated financial statements included therein. For the nine months ended September 30, 2024, there were no material changes to these estimates or policies.

Previous wording

Funds from operations (“FFO”) (non-GAAP) for the three months ended June 30, 2024 was $17,009,000, or $3.31 per diluted share, compared to $18,208,000 or $3.55 per diluted share in the prior year’s three months.

Current wording

Funds from operations (“FFO”) (non-GAAP) for the three months ended September 30, 2024 was $14,582,000, or $2.84 per diluted share, compared to $18,623,000 or $3.63 per diluted share in the prior year’s three months.

Previous wording

Six Months Ended June 30, 2024 Financial Results Summary

Current wording

Nine Months Ended September 30, 2024 Financial Results Summary

Previous wording

Net income for the three months ended June 30, 2024 was $8,380,000, or $1.63 per diluted share, compared to $64,147,000 or $12.51 per diluted share in the prior year’s three months. Net income for the three months ended June 30, 2023 included $53,952,000, or $10.52 per diluted share, of income as a result of a net gain from the sale of the Rego Park III land parcel.

Current wording

Net income for the nine months ended September 30, 2024 was $31,167,000, or $6.07 per diluted share, compared to $86,127,000 or $16.79 per diluted share in the prior year’s nine months. Net income for the nine months ended September 30, 2023 included $53,952,000, or $10.52 per diluted share, of income as a result of a net gain from the sale of the Rego Park III land parcel.

Previous wording

On June 11, 2024, we entered into a four-month extension of the $500,000,000 interest-only mortgage loan on the office condominium of our 731 Lexington Avenue property and simultaneously paid down the principal balance by $10,000,000 to $490,000,000. The interest-only mortgage loan remains at the Prime rate (8.50% as of June 30, 2024) through the extended loan maturity of October 11, 2024.

Current wording

On June 11, 2024, we entered into a four-month extension of the $500,000,000 interest-only mortgage loan on the office condominium of our 731 Lexington Avenue property and simultaneously paid down the principal balance by $10,000,000 to $490,000,000.

Previous wording

Our portfolio is comprised of five properties aggregating 2,456,000 square feet. As of June 30, 2024, the commercial occupancy rate was 92.1% and the residential occupancy rate was 98.7%.

Current wording

Our portfolio is comprised of five properties aggregating 2,456,000 square feet. As of September 30, 2024, the commercial occupancy rate was 92.1% and the residential occupancy rate was 96.5%.

Previous wording

Bloomberg L.P. (“Bloomberg”) accounted for revenue of $60,946,000 and $59,177,000 for the six months ended June 30, 2024 and 2023, respectively, representing approximately 53% and 56% of our rental revenues in each period, respectively. No other tenant accounted for more than 10% of our rental 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.

Current wording

Bloomberg L.P. (“Bloomberg”) accounted for revenue of $93,179,000 and $89,863,000 for the nine months ended September 30, 2024 and 2023, respectively, representing approximately 55% of our rental revenues in each period. No other tenant accounted for more than 10% of our rental 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.

Previous wording

Rental revenues were $53,392,000 for the three months ended June 30, 2024, compared to $53,673,000 for the prior year’s three months, a decrease of $281,000. This was primarily due to (i) $1,081,000 of lower rental revenue from IKEA’s lease expiration at Rego Park I and (ii) $1,001,000 of lower lease termination fee income, partially offset by (iii) $1,163,000 of higher straight-line rental revenue from Bloomberg’s lease extension at 731 Lexington Avenue and (iv) $857,000 of higher reimbursable operating expenses and capital expenditures.

Current wording

Rental revenues were $55,675,000 for the three months ended September 30, 2024, compared to $55,413,000 for the prior year’s three months, an increase of $262,000. This was primarily due to (i) $1,740,000 of higher straight-line rental revenue from Bloomberg’s lease extension at 731 Lexington Avenue and (ii) $775,000 of higher lease termination fee income, partially offset by (iii) $1,523,000 of lower rental revenue from IKEA’s lease expiration at Rego Park I and (iv) $416,000 of lower operating expense reimbursements.

Previous wording

Rental revenues were $114,789,000 for the six months ended June 30, 2024, compared to $106,614,000 for the prior year’s six months, an increase of $8,175,000. This was primarily due to (i) $6,641,000 of higher rental revenue from IKEA’s lease modification at Rego Park I, (ii) $1,163,000 of higher straight-line rental revenue from Bloomberg’s lease extension at 731 Lexington Avenue and (iii) $1,620,000 of higher reimbursable operating expenses and capital expenditures, partially offset by (iv) $651,000 of lower lease termination fee income.

Current wording

Rental revenues were $170,464,000 for the nine months ended September 30, 2024, compared to $162,027,000 for the prior year’s nine months, an increase of $8,437,000. This was primarily due to (i) $5,117,000 of higher rental revenue from IKEA’s lease modification at Rego Park I, (ii) $2,903,000 of higher straight-line rental revenue from Bloomberg’s lease extension at 731 Lexington Avenue and (iii) $1,204,000 of higher reimbursable operating expenses and capital expenditures, partially offset by (iv) $875,000 of lower rental revenue from Bed Bath & Beyond’s lease rejection at Rego Park I.

Previous wording

Depreciation and amortization was $18,174,000 for the six months ended June 30, 2024, compared to $15,559,000 for the prior year’s six months, an increase of $2,615,000. This was due to (i) $1,304,000 of higher depreciation expense on capital projects placed into service, (ii) $964,000 of accelerated depreciation and amortization related to IKEA’s lease modification at Rego Park I and (iii) $347,000 of higher amortization expense associated with leasing commissions paid in connection with Bloomberg’s lease extension at 731 Lexington Avenue.

Current wording

Depreciation and amortization was $26,146,000 for the nine months ended September 30, 2024, compared to $23,492,000 for the prior year’s nine months, an increase of $2,654,000. This was primarily due to (i) $1,748,000 of higher depreciation expense on capital projects placed into service and (ii) $840,000 of accelerated depreciation and amortization related to IKEA’s lease modification at Rego Park I.

Previous wording

General and administrative expenses were $2,159,000 for the three months ended June 30, 2024, compared to $1,906,000 for the prior year’s three months, an increase of $253,000. This was primarily due to higher professional fees.

Current wording

General and administrative expenses were $5,058,000 for the nine months ended September 30, 2024, compared to $4,845,000 for the prior year’s nine months, an increase of $213,000. This was primarily due to higher professional fees.

Previous wording

Interest and other income was $7,054,000 for the three months ended June 30, 2024, compared to $4,523,000 for the prior year’s three months, an increase of $2,531,000. This was primarily due to an increase in average interest rates.

Current wording

Interest and other income was $20,321,000 for the nine months ended September 30, 2024, compared to$15,464,000 for the prior year’s nine months, an increase of$4,857,000. This was primarily due to an increase in average interest rates.

Previous wording

Net gain on sale of real estate was $53,952,000 for the prior year’s three months, resulting from the sale of the Rego Park III land parcel in Queens, New York.

Current wording

Net gain on sale of real estate was $53,952,000 for the prior year’s nine months, resulting from the sale of the Rego Park III land parcel in Queens, New York.

Previous wording

As of June 30, 2024, we had $524,377,000 of liquidity comprised of cash and cash equivalents and restricted cash. Recent increases in interest rates and inflation could adversely affect our cash flow from continuing operations but we anticipate that cash flow from continuing operations over the next twelve months, together with existing cash balances, will be adequate to fund our business operations, cash dividends to stockholders, debt service and capital expenditures. We may refinance our maturing debt as it comes due or choose to pay it down. However, there can be no assurance that additional financing or capital will be available to refinance our debt, or that the terms will be acceptable or advantageous to us.

Current wording

As of September 30, 2024, we had $397,176,000 of liquidity comprised of cash and cash equivalents and restricted cash. Recent increases in interest rates and inflation could adversely affect our cash flow from continuing operations but we anticipate that cash flow from continuing operations over the next twelve months, together with existing cash balances, will be adequate to fund our business operations, cash dividends to stockholders, debt service and capital expenditures. We may refinance our maturing debt as it comes due or choose to pay it down. However, there can be no assurance that additional financing or capital will be available to refinance our debt, or that the terms will be acceptable or advantageous to us.

Previous wording

Cash and cash equivalents and restricted cash were $524,377,000 as of June 30, 2024, compared to $552,977,000 as of December 31, 2023, a decr ease of $28,600,000. This decrease resulted from (i) $57,308,000 of net cash used in financing activities, partially offset by (ii) $28,327,000 of net cash provided by operating activities and (iii) $381,000 of net cash provided by investing activities.

Current wording

Cash and cash equivalents and restricted cash were $397,176,000 as of September 30, 2024, compared to $552,977,000 as of December 31, 2023, a decr ease of$155,801,000. This decrease resulted from (i)$175,824,000 of net cash used in financing activities and (ii)$3,273,000 of net cash used in investing activities, partially offset by (iii)$23,296,000 of net cash provided by operating activities.

Previous wording

Net cash used in financing activities of $57,308,000 was comprised of (i) $46,176,000 of dividends paid, (ii) $10,000,000 of debt repayments and (iii) $1,132,000 of debt issuance costs.

Current wording

Net cash used in financing activities of$175,824,000 was comprised of (i)$500,000,000 of debt repayments, (ii)$69,277,000 of dividends paid and (iii)$6,547,000 of debt issuance costs, partially offset by (iv) proceeds from borrowing of$400,000,000.

Previous wording

Net cash provided by investing activities of $381,000 was comprised of $6,563,000 of proceeds from an interest rate cap, partially offset by construction in progress and real estate additions of $6,182,000.

Current wording

Net cash used in investing activities of $3,273,000 was comprised of $9,836,000 of construction in progress and real estate additions, partially offset by proceeds from an interest rate cap of $6,563,000.

Previous wording

Net cash provided by operating activities of $28,327,000 was comprised of (i) net income of $24,489,000 and (ii) adjustments for non-cash items of $32,748,000, partially offset by (iii) the net change in operating assets and liabilities of $28,910,000. The adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $19,118,000, (ii) straight-lining of rents of $11,076,000, (iii) interest rate cap premium amortization of $5,908,000 and (iv) stock-based compensation expense of $450,000, partially offset by (v) other non-cash adjustments of $3,804,000.

Current wording

Net cash provided by operating activities of$23,296,000 was comprised of (i) net income of $31,167,000 and (ii) adjustments for non-cash items of $45,349,000, partially offset by (iii) the net change in operating assets and liabilities of $53,220,000. The adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of$28,470,000, (ii) straight-lining of rents of$11,880,000, (iii) interest rate cap premium amortization of$6,213,000 and (iv) stock-based compensation expense of$450,000, partially offset by (v) other non-cash adjustments of$1,664,000.

Previous wording

Cash and cash equivalents and restricted cash were $552,755,000 as of June 30, 2023, compared to $214,478,000 as of December 31, 2022, an incr ease of $338,277,000. This increase resulted from (i) $318,550,000 of net cash provided by investing activities and (ii) $65,909,000 of net cash provided by operating activities, partially offset by (iii) $46,182,000 of net cash used in financing activities.

Current wording

Cash and cash equivalents and restricted cash were $529,081,000 as of September 30, 2023, compared to $214,478,000 as of December 31, 2022, an increase of $314,603,000. This increase resulted from (i) $319,537,000 of net cash provided by investing activities and (ii) $64,367,000 of net cash provided by operating activities, partially offset by (iii) $69,301,000 of net cash used in financing activities.

Previous wording

Net cash provided by investing activities of $318,550,000 was comprised of (i) $264,881,000 of proceeds from maturities of U.S. Treasury bills and (ii) $67,821,000 of proceeds from sale of real estate, partially offset by (iii) the purchase of an interest rate cap of $11,258,000 and (iv) construction in progress and real estate additions of $2,894,000.

Current wording

Net cash provided by investing activities of $319,537,000 was comprised of (i) $264,881,000 of proceeds from maturities of U.S. Treasury bills, (ii) $67,821,000 of proceeds from sale of real estate and (iii) $1,889,000 of proceeds from an interest rate cap, partially offset by (iv) the purchase of an interest rate cap of $11,258,000 and (v) construction in progress and real estate additions of $3,796,000.

Previous wording

Net cash provided by operating activities of$65,909,000 was comprised of (i) net income of $75,373,000, (ii) the net change in operating assets and liabilities of $19,039,000, partially offset by (iii)adjustments for non-cash items of $28,503,000. The adjustments for non-cash items were comprised of (i) net gain on sale of real estate of $53,952,000, partially offset by (ii) depreciation and amortization (including amortization of debt issuance costs) of $16,399,000, (iii) other non-cash adjustments of $4,431,000, (iv) straight-lining of rents of $4,169,000 and (v) stock-based compensation expense of $450,000.

Current wording

Net cash provided by operating activities of $64,367,000 was comprised of (i) net income of $86,127,000, partially offset by (ii) the net change in operating assets and liabilities of $4,322,000 and (iii) adjustments for non-cash items of $17,438,000. The adjustments for non-cash items were comprised of (i) net gain on sale of real estate of $53,952,000, partially offset by (ii) depreciation and amortization (including amortization of debt issuance costs) of $24,771,000, (iii) straight-lining of rents of $5,949,000, (iv) interest rate cap premium amortization of $4,049,000, (v) other non-cash adjustments of $1,295,000 and (vi) stock-based compensation expense of $450,000.

Previous wording

Net cash used in financing activities of $46,182,000 was comprised of dividends paid of $46,144,000 and debt issuance costs of $38,000.

Current wording

Net cash used in financing activities of $69,301,000 was comprised of dividends paid of $69,232,000 and debt issuance costs of $69,000.