Alexander's, Inc. (NYSE:ALX) Q3 2021 Earnings Conference Call November 2, 2021 10:00 AM ET Company Participants Steven Roth - Chairman and Chief Executive Officer Michael Franco - President and Chief Financial Officer Glen Weiss - Executive Vice President of Office Leasing and Co-Head of Real Estate Catherine Creswell - Director of Investor Relations Conference Call Participants Michael Bilerman - Citigroup Steve Sakwa - Evercore ISI Nick Yulico - Scotiabank Jamie Feldman - Bank of America John Kim - BMO Ca ...

Vornado Realty Trust and Alexander's, Inc. (NYSE:ALX) Q1 2021 Results Earnings Conference Call May 4, 2021 10:00 AM ET Company Participants Cathy Creswell - Director of Investor Relations Steven Roth - Chairman & Chief Executive Officer Michael Franco – President & Chief Financial Officer Glen Weiss - Executive Vice President, Office Leasing & Co-Head of Real Estate Haim Chera - Executive Vice President & Head of Retail Conference Call Participants Steve Sakwa - Evercore ISI Manny Korchman - Citi John Kim - ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Alexander's, Inc. is a REIT managing seven NYC metropolitan area properties, externally managed by Vornado Realty Trust, with Bloomberg L.P. contributing approximately **55%** of 2020 revenues - The company's portfolio consists of seven properties in the greater New York City metropolitan area, including six operating properties and one property to be developed[11](index=11&type=chunk)[12](index=12&type=chunk) - Alexander's is managed, leased, and developed by Vornado Realty Trust, which owned **32.4%** of the company's common stock as of December 31, 2020. Key executives of Alexander's also hold senior positions at Vornado[13](index=13&type=chunk)[14](index=14&type=chunk) Significant Tenant Revenue Contribution (Bloomberg L.P.) | Year | Revenue (in thousands) | Percentage of Total Revenue | | :--- | :--- | :--- | | 2020 | $109,066 | ~55% | | 2019 | $109,113 | ~48% | | 2018 | $107,356 | ~46% | - The company is considered a "controlled" company under NYSE Rules due to the combined ownership of Vornado and Interstate Properties, which exempts it from certain corporate governance requirements like having a majority of independent directors[20](index=20&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from COVID-19 impacts, NYC geographic concentration, single-tenant reliance, substantial debt, and Vornado-related conflicts of interest [Risks Related to Our Properties and Industry](index=7&type=section&id=Risks%20Related%20to%20Our%20Properties%20and%20Industry) COVID-19, NYC geographic concentration, and significant revenue reliance on 731 Lexington Avenue and Bloomberg L.P. pose material property and industry risks - The COVID-19 pandemic has adversely affected the business, leading to temporary closures of "non-essential" retail tenants and agreements for rent deferrals and abatements[23](index=23&type=chunk) - On September 10, 2020, tenant Century 21, which leased **135,000 square feet** at the Rego Park II shopping center, filed for Chapter 11 bankruptcy and closed its store[24](index=24&type=chunk)[39](index=39&type=chunk) - All company properties are located in the greater New York City metropolitan area, making the business highly susceptible to local economic cycles and risks[27](index=27&type=chunk)[28](index=28&type=chunk) Revenue Concentration by Property and Tenant | Entity | Revenue Contribution (2020, in thousands) | Percentage of Total Revenue (2020) | | :--- | :--- | :--- | | 731 Lexington Avenue | $137,718 | ~69% | | Bloomberg L.P. | $109,066 | ~55% | [Risks Related to Our Indebtedness and Access to Capital](index=12&type=section&id=Risks%20Related%20to%20Our%20Indebtedness%20and%20Access%20to%20Capital) Substantial mortgage indebtedness of **$1.16 billion** as of year-end 2020, secured by four properties, restricts flexibility and poses refinancing and cash flow risks - As of December 31, 2020, the company had outstanding mortgage indebtedness of **$1.16 billion**, secured by four of its properties, which contains restrictive covenants[51](index=51&type=chunk) - The company's ratio of total debt to total enterprise value was **54.1%** as of December 31, 2020. Cash payments for principal and interest were **$72.5 million** for the year[53](index=53&type=chunk) [Risks Related to Our Organization and Structure](index=12&type=section&id=Risks%20Related%20to%20Our%20Organization%20and%20Structure) Dependence on CEO Steven Roth, substantial influence from Vornado and Interstate (**58.5%** ownership), and charter provisions create organizational risks and potential conflicts of interest - The company is dependent on the efforts of its CEO, Steven Roth, and the loss of his services could harm operations[54](index=54&type=chunk) - Vornado, Interstate, and its partners collectively own approximately **58.5%** of the company's outstanding common stock, giving them substantial influence over the company and potentially creating conflicts of interest[58](index=58&type=chunk)[63](index=63&type=chunk) - The company's charter includes provisions that may delay or prevent a change in control, such as a classified board of directors and limits on stock ownership[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [General Risks](index=18&type=section&id=General%20Risks) General risks include cybersecurity threats, economic volatility, potential underinsured losses (e.g., terrorism), and the financial impact of the upcoming LIBOR phase-out - The company faces risks from security breaches and cyber attacks, which could disrupt operations, compromise confidential information, and negatively impact financial results[81](index=81&type=chunk)[82](index=82&type=chunk) - The company maintains all-risk property insurance of **$1.7 billion** per occurrence, including terrorism coverage. A wholly-owned subsidiary, FNSIC, acts as a direct insurer for certain terrorism acts under the Terrorism Risk Insurance Act[86](index=86&type=chunk)[87](index=87&type=chunk) - The planned phase-out of LIBOR after 2021 presents a risk, as the company has outstanding variable-rate debt based on LIBOR. The transition to an alternative rate like SOFR could change interest payments[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved comments from the Securities and Exchange Commission staff as of the Annual Report date - There are no unresolved comments from the SEC staff as of the filing date of this Form 10-K[93](index=93&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) The company's portfolio comprises seven properties in the greater NYC metropolitan area, including office, retail, and residential assets, with detailed information on each Summary of Properties (as of December 31, 2020) | Property | Type | Total Sq. Ft. | Occupancy Rate | Key Tenants/Info | | :--- | :--- | :--- | :--- | :--- | | 731 Lexington Ave | Office/Retail | 1,075,000 | 100% (Office), 93% (Retail) | Bloomberg L.P., The Home Depot | | Rego Park I | Retail | 338,000 | 100% (in service) | IKEA, Burlington, Bed Bath & Beyond | | Rego Park II | Retail | 609,000 | 96% | Costco, Kohl's (subleased) | | The Alexander | Residential | 255,000 (312 units) | 82% | Residential tenants | | Paramus, NJ | Land (Ground Lease) | 30.3 acres | 100% | IKEA (ground lessee) | | Flushing, NY | Retail (Sub-lease) | 167,000 | 100% | New World Mall LLC | | Rego Park III | Land for Development | 3.2 acres | N/A | To be developed | - The 731 Lexington Avenue property is encumbered by two separate mortgage loans: a **$500 million** loan on the office portion maturing in June 2021 (with extensions) and a **$300 million** loan on the retail portion maturing in August 2025[98](index=98&type=chunk)[99](index=99&type=chunk) - The Paramus, NJ property is ground leased to IKEA until 2041, with a purchase option for IKEA in October 2021 for **$75 million**. If exercised, it would result in a gain on sale of approximately **$60 million**[104](index=104&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company faces ordinary course legal actions, including a stayed Sears lawsuit for approximately **$650,000** in property damages at Rego Park I - In June 2014, Sears filed a lawsuit regarding its former lease at the Rego Park I property. The remaining claim is for property damages estimated at approximately **$650,000**. The case is currently stayed due to Sears' bankruptcy filing in October 2018[109](index=109&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[110](index=110&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) ALX common stock is listed on the NYSE, with a **$100** investment in 2015 yielding **$92** by 2020, underperforming key market indices - The company's common stock is traded on the New York Stock Exchange under the symbol "ALX"[111](index=111&type=chunk) Five-Year Cumulative Return Comparison (2015-2020) | Index | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Alexander's | $100 | $116 | $112 | $90 | $103 | $92 | | S&P 500 Index | $100 | $112 | $136 | $130 | $171 | $203 | | NAREIT All Equity Index | $100 | $109 | $118 | $113 | $146 | $138 | [Selected Financial Data](index=27&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is omitted due to the early adoption of SEC amendments eliminating the Selected Financial Data requirement - The company has omitted this section due to the early adoption of SEC Final Rule Release No. 33-10890, which eliminates the requirement for Selected Financial Data[116](index=116&type=chunk)[120](index=120&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) COVID-19 significantly impacted 2020 financial performance, decreasing rental revenues and FFO, despite **95%** Q4 rent collection and **$455.9 million** year-end liquidity [Overview](index=28&type=section&id=Overview) COVID-19 adversely affected retail tenants, leading to decreased Net Income and FFO in 2020, despite **95%** Q4 rent collection and significant financing activities - The company collected approximately **95%** of rent billed for Q4 2020 (**96%** including deferrals). This includes **100%** from its office tenant, **90%** from retail tenants, and **98%** from residential tenants[122](index=122&type=chunk) - Due to tenant credit issues, the company wrote off **$4.1 million** in tenant receivables and **$10.8 million** in straight-line rent receivables during 2020, reducing rental revenues. A significant portion of these write-offs was attributable to Century 21[123](index=123&type=chunk) Financial Results Summary (FY 2020 vs. FY 2019) | Metric | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Net Income | $41,939 | $60,075 | | Diluted EPS (per share) | $8.19 | $11.74 | | FFO (non-GAAP) | $82,509 | $99,670 | | FFO per Diluted Share | $16.11 | $19.47 | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Rental revenues decreased by **$27.2 million** in 2020 (due to write-offs and vacancies) and **$6.5 million** in 2019 (Sears vacancy), while interest expense decreased due to lower LIBOR Comparison of Operations (2020 vs. 2019) | Account | 2020 (in thousands) | 2019 (in thousands) | Change (in thousands) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Rental Revenues | $199,142 | $226,350 | ($27,208) | Write-offs of straight-line rent, uncollectible retail rents, and retail vacancies. | | Operating Expenses | $88,403 | $89,738 | ($1,335) | Lower recoverable operating expenses. | | Interest and Debt Expense | $24,204 | $38,901 | ($14,697) | Decrease in LIBOR. | Comparison of Operations (2019 vs. 2018) | Account | 2019 (in thousands) | 2018 (in thousands) | Change (in thousands) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Rental Revenues | $226,350 | $232,825 | ($6,475) | Sears vacancy at Rego Park I property. | | Operating Expenses | $89,738 | $93,775 | ($4,037) | Lower bad debt expense compared to 2018 (Sears bankruptcy). | | Interest and Debt Expense | $38,901 | $44,533 | ($5,632) | Refinancing of Rego Park II shopping center loan. | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity of **$455.9 million** at year-end 2020, with **$1.16 billion** in total debt, and completed significant financing activities including a new **$94 million** loan for The Alexander - As of December 31, 2020, the company had **$455.9 million** of liquidity, comprised of **$449.9 million** in cash and restricted cash, and **$6.0 million** in marketable securities[154](index=154&type=chunk) - In 2020, the company paid down its 731 Lexington Avenue retail loan by **$50 million** to **$300 million** and extended the maturity to 2025. It also completed a new **$94 million** financing for The Alexander apartment tower at a fixed rate of 2.63%[126](index=126&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) Outstanding Debt Summary (as of December 31, 2020) | Property | Balance (in thousands) | Interest Rate | Maturity | | :--- | :--- | :--- | :--- | | Paramus | $68,000 | 4.72% | Oct. 2021 | | 731 Lexington Ave, office | $500,000 | 1.06% | Jun. 2024 | | 731 Lexington Ave, retail | $300,000 | 1.55% | Aug. 2025 | | Rego Park II | $202,544 | 1.50% | Dec. 2025 | | The Alexander tower | $94,000 | 2.63% | Nov. 2027 | | **Total** | **$1,164,544** | | | [Funds from Operations (FFO) (non-GAAP)](index=38&type=section&id=Funds%20from%20Operations%20%28FFO%29%20%28non-GAAP%29) Full-year FFO (non-GAAP) decreased to **$82.5 million** (**$16.11** per share) in 2020 from **$99.7 million** in 2019, though Q4 2020 FFO slightly increased Reconciliation of Net Income to FFO (non-GAAP) | (in thousands) | For the Year Ended Dec 31, 2020 | For the Year Ended Dec 31, 2019 | For the Qtr Ended Dec 31, 2020 | For the Qtr Ended Dec 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net income | $41,939 | $60,075 | $18,432 | $14,434 | | Depreciation and amortization | $31,971 | $30,838 | $9,165 | $7,692 | | Change in fair value of marketable securities | $8,599 | $8,757 | ($2,190) | $2,500 | | **FFO (non-GAAP)** | **$82,509** | **$99,670** | **$25,407** | **$24,626** | [Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate risk from **$1.0 billion** in variable-rate debt, with a **1%** rate increase potentially adding **$10.0 million** in annual interest expense, partially mitigated by derivatives Interest Rate Sensitivity (as of December 31, 2020) | Debt Type | Balance (in thousands) | Weighted Avg. Interest Rate | Effect of 1% Change in Base Rates (in thousands) | | :--- | :--- | :--- | :--- | | Variable rate | $1,002,544 | 1.30% | $10,025 | | Fixed rate | $162,000 | 3.51% | $0 | | **Total** | **$1,164,544** | **1.60%** | **$10,025** | - The company utilizes derivatives to manage interest rate risk, including an interest rate cap with a notional amount of **$500 million** that caps LIBOR at 6.0%, and an interest rate swap with a notional amount of **$300 million** that fixes the rate at 1.72%[183](index=183&type=chunk)[184](index=184&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for FY2020, including balance sheets, income statements, and cash flow statements, along with the independent auditor's report Consolidated Balance Sheet Summary | (in thousands) | Dec 31, 2020 (in thousands) | Dec 31, 2019 (in thousands) | | :--- | :--- | :--- | | Total Real estate, net | $720,921 | $716,843 | | Cash and cash equivalents | $428,710 | $298,063 | | **Total Assets** | **$1,404,138** | **$1,265,511** | | Mortgages payable, net | $1,156,170 | $970,961 | | **Total Liabilities** | **$1,200,910** | **$1,011,996** | | **Total Equity** | **$203,228** | **$253,515** | Consolidated Statement of Income Summary | (in thousands) | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | :--- | | Rental Revenues | $199,142 | $226,350 | $232,825 | | Total Expenses | ($127,067) | ($126,861) | ($132,207) | | **Net Income** | **$41,939** | **$60,075** | **$32,844** | | **Diluted EPS** | **$8.19** | **$11.74** | **$6.42** | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=61&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure were reported - None reported[296](index=296&type=chunk) [Controls and Procedures](index=61&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with no material changes in Q4 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[297](index=297&type=chunk) - Management's assessment, based on the COSO framework, determined that the company's internal control over financial reporting was effective as of December 31, 2020. This assessment was audited by Deloitte & Touche LLP, which issued an unqualified opinion[301](index=301&type=chunk)[303](index=303&type=chunk)[306](index=306&type=chunk) [Other Information](index=64&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item - None[312](index=312&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and corporate governance is incorporated by reference from the Proxy Statement, identifying Steven Roth (CEO) and Matthew Iocco (CFO) who also hold Vornado roles - Most information for this section is incorporated by reference from the forthcoming Proxy Statement[313](index=313&type=chunk) Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Steven Roth | 79 | Chairman of the Board and Chief Executive Officer | | Matthew Iocco | 50 | Chief Financial Officer | [Executive Compensation](index=65&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the Proxy Statement[317](index=317&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=65&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the Proxy Statement, detailing **14,916** securities for exercise and **490,871** available for future issuance Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Approved by security holders | 14,916 | 490,871 | [Certain Relationships and Related Transactions, and Director Independence](index=65&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement - Information is incorporated by reference from the Proxy Statement[320](index=320&type=chunk) [Principal Accounting Fees and Services](index=65&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the Proxy Statement[321](index=321&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=66&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists Form 10-K exhibits, including consolidated financial statements, Schedule III, and various governance, management, and financing agreements, many with Vornado Realty Trust - The filing includes Financial Statement Schedule III – Real Estate and Accumulated Depreciation[324](index=324&type=chunk) - Exhibits filed include governance documents, descriptions of securities, and numerous material contracts such as management and leasing agreements with Vornado Realty Trust and loan agreements for major properties[332](index=332&type=chunk) [Form 10-K Summary](index=75&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary is provided under this item - None[349](index=349&type=chunk)

Alexander's, Inc. (NYSE:ALX) Q3 2020 Earnings Conference Call November 4, 2020 10:00 AM ET Company Participants Cathy Creswell – Director of Investor Relations Steven Roth – Chairman and Chief Executive Officer Michael Franco – President Haim Chera – Executive Vice President and Head of Retail Glen Weiss – Executive Vice President Office Leasing and Co-Head of Real Estate Joseph Macnow – Executive Vice President, Chief Financial Officer and Chief Administrative Officer Conference Call Participants Manny Kor ...

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements show a significant decline in net income and rental revenues due to the COVID-19 pandemic [Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | September 30, 2020 | December 31, 2019 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,327,905 | $1,265,511 | +$62,394 | | Cash and cash equivalents | $355,712 | $298,063 | +$57,649 | | Mortgages payable, net | $1,066,403 | $970,961 | +$95,442 | | Total Equity | $208,511 | $253,515 | -$45,004 | [Consolidated Statements of Income (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20(Unaudited)) Consolidated Statements of Income (Amounts in thousands, except per share) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Change | | :--- | :--- | :--- | :--- | | Rental revenues | $43,499 | $57,760 | -$14,261 | | Net income | $6,604 | $16,493 | -$9,889 | | Net income per common share - basic and diluted | $1.29 | $3.22 | -$1.93 | | **Metric** | **Nine Months Ended Sep 30, 2020** | **Nine Months Ended Sep 30, 2019** | **Change** | | Rental revenues | $143,087 | $170,470 | -$27,383 | | Net income | $23,507 | $45,641 | -$22,134 | | Net income per common share - basic and diluted | $4.59 | $8.92 | -$4.33 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Consolidated Statements of Comprehensive Income (Amounts in thousands) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Change | | :--- | :--- | :--- | :--- | | Net income | $6,604 | $16,493 | -$9,889 | | Change in fair value of interest rate cap | -$14 | $22 | -$36 | | Comprehensive income | $6,590 | $16,515 | -$9,925 | | **Metric** | **Nine Months Ended Sep 30, 2020** | **Nine Months Ended Sep 30, 2019** | **Change** | | Net income | $23,507 | $45,641 | -$22,134 | | Change in fair value of interest rate cap | $7 | $54 | -$47 | | Comprehensive income | $23,514 | $45,695 | -$22,181 | [Consolidated Statements of Changes in Equity (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Unaudited)) Consolidated Statements of Changes in Equity (Nine Months Ended Sep 30, 2020, Amounts in thousands) | Metric | December 31, 2019 | September 30, 2020 | | :--- | :--- | :--- | | Balance, Total Equity | $253,515 | $208,511 | | Net income | $23,507 | $23,507 | | Dividends paid | -$69,118 | -$69,118 | | Deferred stock unit grants | $600 | $600 | | Change in fair value of interest rate cap | $7 | $7 | [Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Consolidated Statements of Cash Flows (Nine Months Ended Sep 30, Amounts in thousands) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $55,521 | $99,953 | -$44,432 | | Net cash used in investing activities | -$23,630 | -$6,566 | -$17,064 | | Net cash provided by (used in) financing activities | $23,910 | -$69,105 | +$93,015 | | Net increase in cash and cash equivalents and restricted cash | $55,801 | $24,282 | +$31,519 | | Cash and cash equivalents and restricted cash at end of period | $369,778 | $313,777 | +$56,001 | - Net cash provided by financing activities in 2020 was primarily driven by **$145,708,000 in proceeds from borrowing**, partially offset by $69,118,000 in dividends paid and $50,000,000 in debt repayments[16](index=16&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [1. Organization](index=9&type=section&id=1.%20Organization) - Alexander's, Inc is a real estate investment trust (REIT) incorporated in Delaware, engaged in leasing, managing, developing, and redeveloping properties[18](index=18&type=chunk) - The company is managed by **Vornado Realty Trust** and owns seven properties in the greater New York City metropolitan area[18](index=18&type=chunk) [2. COVID-19 Pandemic](index=9&type=section&id=2.%20COVID-19%20Pandemic) - The COVID-19 pandemic adversely affected the business, leading to temporary closures for non-essential retail tenants and agreements for **rent deferrals and abatements**[19](index=19&type=chunk)[20](index=20&type=chunk) Rent Collection Rates for Q3 2020 | Tenant Type | Collection Rate (including deferrals) | | :--- | :--- | | Office | 100% | | Retail | 89% | | Residential | 97% | | Overall | 96% | - **Century 21**, a tenant leasing 135,000 square feet at Rego Park II shopping center ($6.4 million annual revenue), filed for **Chapter 11 bankruptcy** on September 10, 2020[22](index=22&type=chunk) Rent Write-offs (Amounts in thousands) | Type of Write-off | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Uncollectible tenant receivables | $3,100 (Century 21: $2,716) | $4,122 (Century 21: $2,716) | | Straight-lining of rents receivables | $6,590 (Century 21: $5,919) | $10,837 (Century 21: $5,919) | [3. Basis of Presentation](index=9&type=section&id=3.%20Basis%20of%20Presentation) - The consolidated financial statements are unaudited and prepared in accordance with SEC Form 10-Q instructions, with all intercompany amounts eliminated[24](index=24&type=chunk) - The company operates in **one reportable segment**[26](index=26&type=chunk) [4. Recently Issued Accounting Literature](index=10&type=section&id=4.%20Recently%20Issued%20Accounting%20Literature) - The company is evaluating ASU 2020-04 (Reference Rate Reform) for its potential impact[27](index=27&type=chunk) - A policy election was made under FASB Staff Q&A for COVID-19 related rent concessions, allowing rent abatements to be recognized as reductions to rental revenue[28](index=28&type=chunk) [5. Revenue Recognition](index=10&type=section&id=5.%20Revenue%20Recognition) - Rental revenues include lease revenues (recognized straight-line), parking revenue, and tenant services[29](index=29&type=chunk)[30](index=30&type=chunk) Summary of Revenue Sources (Amounts in thousands) | Revenue Type | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Lease revenues | $41,394 | $55,267 | $137,479 | $163,597 | | Parking revenue | $1,106 | $1,366 | $3,046 | $4,222 | | Tenant services | $999 | $1,127 | $2,562 | $2,651 | | **Total Rental Revenues** | **$43,499** | **$57,760** | **$143,087** | **$170,470** | Components of Lease Revenues (Amounts in thousands) | Lease Type | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Fixed lease revenues | $33,609 | $36,025 | $101,348 | $107,657 | | Variable lease revenues | $7,785 | $19,242 | $36,131 | $55,940 | | **Total Lease Revenues** | **$41,394** | **$55,267** | **$137,479** | **$163,597** | - **Bloomberg** accounted for approximately **56% ($80,696,000) of total revenues** for the nine months ended September 30, 2020, making it a significant tenant[34](index=34&type=chunk) [6. Related Party Transactions](index=11&type=section&id=6.%20Related%20Party%20Transactions) - **Vornado Realty Trust**, which owns **32.4%** of the company's common stock, manages the company and its properties[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) Fees Paid to Vornado (Amounts in thousands) | Fee Type | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Company management fees | $700 | $700 | $2,100 | $2,100 | | Development fees | $188 | $0 | $456 | $0 | | Leasing fees | $113 | $1,422 | $172 | $4,000+ (partial data) | | Property management, cleaning, engineering, security fees | $1,074 | $1,239 | $3,519 | $3,000+ (partial data) | | **Total** | **$2,075** | **$3,361** | **$6,247** | **$9,000+ (partial data)** | - Amounts due to Vornado as of September 30, 2020, totaled **$1,178,000**[41](index=41&type=chunk) [7. Marketable Securities](index=12&type=section&id=7.%20Marketable%20Securities) - The company owned **564,612 common shares** of The Macerich Company (MAC) as of September 30, 2020[42](index=42&type=chunk) Fair Value of Marketable Securities (Amounts in thousands) | Date | Fair Value | | :--- | :--- | | September 30, 2020 | $3,834 | | December 31, 2019 | $14,409 | *The decrease is primarily due to Macerich's share price declining from $26.92 to $6.79 per share* [8. Mortgages Payable](index=12&type=section&id=8.%20Mortgages%20Payable) - In February 2020, the company reduced its participation in the Rego Park II shopping center loan to **$50,000,000**, receiving approximately **$145,000,000 in cash proceeds**[43](index=43&type=chunk) - In September 2020, the **$350,000,000 mortgage loan** on the 731 Lexington Avenue retail condominium was amended and extended, with a **$50,000,000 paydown**[44](index=44&type=chunk) - In October 2020, a **$94,000,000 interest-only loan** with a fixed rate of **2.63%** was completed for The Alexander apartment tower[45](index=45&type=chunk) Summary of Outstanding Mortgages Payable (September 30, 2020, Amounts in thousands) | Property | Maturity | Interest Rate | Balance | | :--- | :--- | :--- | :--- | | Paramus | Oct. 04, 2021 | 4.72% | $68,000 | | 731 Lexington Avenue, office | Jun. 11, 2024 | 1.05% | $500,000 | | 731 Lexington Avenue, retail | Aug. 05, 2025 | 1.56% | $300,000 | | Rego Park II shopping center | Dec. 12, 2025 | 1.50% | $202,544 | | **Total** | | | **$1,070,544** | [9. Stock-Based Compensation](index=13&type=section&id=9.%20Stock-Based%20Compensation) - In May 2020, the company granted **Deferred Stock Units (DSUs)** to Board members and a newly appointed Director[48](index=48&type=chunk) - These DSUs **vested immediately** and were expensed on the grant date[48](index=48&type=chunk) - As of September 30, 2020, there were **14,916 DSUs outstanding**[48](index=48&type=chunk) [10. Fair Value Measurements](index=13&type=section&id=10.%20Fair%20Value%20Measurements) - The company uses a fair value hierarchy (Level 1, 2, 3) to measure financial assets and liabilities[49](index=49&type=chunk) Financial Assets Measured at Fair Value (Amounts in thousands) | Asset | September 30, 2020 (Total) | September 30, 2020 (Level 1) | | :--- | :--- | :--- | | Marketable securities | $3,834 | $3,834 | | **Asset** | **December 31, 2019 (Total)** | **December 31, 2019 (Level 1)** | | Marketable securities | $14,409 | $14,409 | - Cash equivalents are classified as **Level 1**, and mortgages payable are classified as **Level 2**[53](index=53&type=chunk) Financial Assets and Liabilities Not Measured at Fair Value (Amounts in thousands) | Instrument | September 30, 2020 (Carrying Amount) | September 30, 2020 (Fair Value) | | :--- | :--- | :--- | | Cash equivalents | $318,260 | $318,260 | | Mortgages payable (excluding deferred debt issuance costs, net) | $1,070,544 | $1,032,000 | | **Instrument** | **December 31, 2019 (Carrying Amount)** | **December 31, 2019 (Fair Value)** | | Cash equivalents | $263,688 | $263,688 | | Mortgages payable (excluding deferred debt issuance costs, net) | $974,836 | $974,000 | [11. Commitments and Contingencies](index=14&type=section&id=11.%20Commitments%20and%20Contingencies) - The company maintains general liability insurance (**$300M per occurrence**) and all-risk property and rental value insurance (**$1.7B per occurrence**)[55](index=55&type=chunk) - Fifty Ninth Street Insurance Company, LLC (FNSIC), a wholly-owned subsidiary, acts as a direct insurer for NBCR acts of terrorism[56](index=56&type=chunk) - IKEA Property, Inc has a purchase option for **$75,000,000** on the Paramus land in October 2021, with an expected **$60,000,000 gain on sale** if exercised[59](index=59&type=chunk) - The Rego Park I litigation with Sears Roebuck and Co has a remaining claim for property damages estimated at **$650,000**[60](index=60&type=chunk) - The company paid **$23,797,000** in April 2018 related to the Kings Plaza sale, following an unfavorable legal precedent[61](index=61&type=chunk) [12. Earnings Per Share](index=15&type=section&id=12.%20Earnings%20Per%20Share) Net Income Per Common Share (Amounts in thousands, except per share) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net income | $6,604 | $16,493 | $23,507 | $45,641 | | Weighted average shares outstanding | 5,122,206 | 5,118,698 | 5,120,490 | 5,118,030 | | Net income per common share – basic and diluted | $1.29 | $3.22 | $4.59 | $8.92 | [Report of Independent Registered Public Accounting Firm](index=16&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Deloitte & Touche LLP reviewed the interim financial information and found **no material modifications necessary** for conformity with GAAP[67](index=67&type=chunk) - The consolidated balance sheet as of December 31, 2019, was **fairly stated in all material respects**, as per their unqualified opinion[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The COVID-19 pandemic significantly impacted rental revenues, net income, and FFO, though the company maintains high occupancy and liquidity [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements subject to risks, with the **COVID-19 pandemic** being a significant factor affecting future results[72](index=72&type=chunk)[73](index=73&type=chunk) - Readers are cautioned not to place undue reliance on these statements[74](index=74&type=chunk) [Critical Accounting Policies](index=17&type=section&id=Critical%20Accounting%20Policies) - There were **no material changes** to the company's critical accounting policies for the nine months ended September 30, 2020[76](index=76&type=chunk) [Overview](index=18&type=section&id=Overview) - Alexander's, Inc is a REIT managed by Vornado Realty Trust, operating seven properties in the greater New York City metropolitan area[78](index=78&type=chunk) - The COVID-19 pandemic has adversely affected the business, leading to challenges in rent collection[80](index=80&type=chunk)[81](index=81&type=chunk) Key Financial Results Summary (Amounts in thousands, except per share) | Metric | Q3 2020 | Q3 2019 | Change | | :--- | :--- | :--- | :--- | | Net income | $6,604 | $16,493 | -$9,889 | | Net income per diluted share | $1.29 | $3.22 | -$1.93 | | FFO (non-GAAP) | $15,363 | $25,208 | -$9,845 | | FFO per diluted share | $3.00 | $4.92 | -$1.92 | | **Metric** | **Nine Months Ended Sep 30, 2020** | **Nine Months Ended Sep 30, 2019** | **Change** | | Net income | $23,507 | $45,641 | -$22,134 | | Net income per diluted share | $4.59 | $8.92 | -$4.33 | | FFO (non-GAAP) | $57,102 | $75,044 | -$17,942 | | FFO per diluted share | $11.15 | $14.66 | -$3.51 | - As of September 30, 2020, the portfolio comprised 2,449,000 square feet with **96% occupancy**[87](index=87&type=chunk) - Significant financing activities included reducing loan participation by **$145,000,000** and paying down **$50,000,000** on another loan[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - **Bloomberg** remains a significant tenant, accounting for approximately **56% of total revenues**[91](index=91&type=chunk) [Results of Operations – Three Months Ended September 30, 2020, compared to September 30, 2019](index=20&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20September%2030%2C%202020%2C%20compared%20to%20September%2030%2C%202019) - Rental revenues **decreased by $14,261,000**, primarily due to **$6,590,000 in straight-line rent write-offs** related to Century 21[93](index=93&type=chunk) - Operating expenses **decreased by $941,000** due to lower reimbursable operating expenses[94](index=94&type=chunk) - Interest and other income, net, **decreased by $1,855,000**, mainly from lower interest and dividend income[96](index=96&type=chunk) - Interest and debt expense **decreased by $5,309,000**, driven by lower LIBOR[97](index=97&type=chunk) - Change in fair value of marketable securities resulted in an **expense of $1,231,000** due to a decrease in Macerich's share price[98](index=98&type=chunk) [Results of Operations – Nine Months Ended September 30, 2020, compared to September 30, 2019](index=21&type=section&id=Results%20of%20Operations%20%E2%80%93%20Nine%20Months%20Ended%20September%2030%2C%202020%2C%20compared%20to%20September%2030%2C%202019) - Rental revenues **decreased by $27,383,000**, primarily due to **$10,837,000 in straight-line rent write-offs** and tenant vacancies[100](index=100&type=chunk) - Operating expenses **decreased by $2,926,000** due to lower reimbursable operating expenses[101](index=101&type=chunk) - General and administrative expenses **increased by $477,000**, mainly due to higher stock-based compensation and professional fees[103](index=103&type=chunk) - Interest and other income, net, **decreased by $3,955,000** from lower average interest rates[104](index=104&type=chunk) - Interest and debt expense **decreased by $10,888,000**, mainly from lower LIBOR[105](index=105&type=chunk) - Change in fair value of marketable securities resulted in an **expense of $10,789,000** from a **$20.13 decrease** in Macerich's share price[106](index=106&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) - Rental revenue, the primary source of cash flow, has been impacted by the COVID-19 pandemic and the **Century 21 bankruptcy**[108](index=108&type=chunk) - As of September 30, 2020, **liquidity totaled $373,612,000**[109](index=109&type=chunk) - Net cash provided by operating activities for the nine months was **$55,521,000**, a decrease from $99,953,000 in the prior year[110](index=110&type=chunk)[113](index=113&type=chunk) - Net cash provided by financing activities was **$23,910,000**, a significant shift from a net use of $69,105,000 in the prior year[112](index=112&type=chunk)[113](index=113&type=chunk) - The company expects existing cash and cash flows to be **adequate to fund operations** and dividends for the next twelve months[109](index=109&type=chunk) - The company paid **$23,797,000** in additional real property transfer taxes and interest related to the Kings Plaza sale[121](index=121&type=chunk) [Funds from Operations ("FFO") (non-GAAP)](index=25&type=section&id=Funds%20from%20Operations%20(%22FFO%22)%20(non-GAAP)) - FFO is a non-GAAP measure used to compare operating performance, excluding real estate depreciation and net gains on sales[124](index=124&type=chunk) FFO (non-GAAP) Summary (Amounts in thousands, except per share) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Change | | :--- | :--- | :--- | :--- | | FFO (non-GAAP) | $15,363 | $25,208 | -$9,845 | | FFO per diluted share | $3.00 | $4.92 | -$1.92 | | **Metric** | **Nine Months Ended Sep 30, 2020** | **Nine Months Ended Sep 30, 2019** | **Change** | | FFO (non-GAAP) | $57,102 | $75,044 | -$17,942 | | FFO per diluted share | $11.15 | $14.66 | -$3.51 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate fluctuations, with a 1% change in rates materially impacting diluted earnings per share Interest Rate Exposure (September 30, 2020, Amounts in thousands) | Debt Type | Balance | Weighted Average Interest Rate | | :--- | :--- | :--- | | Variable Rate | $1,002,544 | 1.29% | | Fixed Rate | $68,000 | 4.72% | | **Total** | **$1,070,544** | **1.51%** | *Effect of 1% change in rates on diluted earnings per share: $1.96* - The company holds an interest rate cap with a notional amount of **$500,000,000**, capping LIBOR at **6.0%**[129](index=129&type=chunk) Fair Value of Mortgages Payable (Amounts in thousands) | Date | Estimated Fair Value | | :--- | :--- | | September 30, 2020 | $1,032,000 | | December 31, 2019 | $974,000 | [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2020 - The Chief Executive Officer and Chief Financial Officer concluded that **disclosure controls and procedures were effective** as of September 30, 2020[131](index=131&type=chunk) - There were **no material changes** in internal control over financial reporting during the fiscal quarter[132](index=132&type=chunk) [PART II. Other Information](index=27&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) Legal actions in the ordinary course of business are not expected to have a material effect on the company's financial condition - Various legal actions in the ordinary course of business are **not expected to materially affect** financial position, results of operations, or cash flows[134](index=134&type=chunk) - Further discussion of the Rego Park I litigation is provided in Note 11 to the financial statements[134](index=134&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The COVID-19 pandemic continues to be a significant adverse risk factor impacting the company's business and financial condition - The **COVID-19 pandemic** continues to adversely affect the company's business, financial condition, results of operations, and cash flows[135](index=135&type=chunk)[138](index=138&type=chunk) - Specific impacts include rent deferrals, tenant bankruptcies (e.g., Century 21), and potential declines in real estate asset values[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - None reported[139](index=139&type=chunk) [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - None reported[139](index=139&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[140](index=140&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - None reported[140](index=140&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including loan documents, certifications, and iXBRL financial data [Exhibit Index](index=29&type=section&id=Exhibit%20Index) - Key exhibits include loan amendments, CEO and CFO certifications, and financial information formatted in Inline Extensible Business Reporting Language (iXBRL)[142](index=142&type=chunk) [Signatures](index=30&type=section&id=Signatures) The report is duly signed on behalf of Alexander's, Inc by the Chief Financial Officer on November 2, 2020 - The report was signed by **Matthew Iocco, Chief Financial Officer**, on November 2, 2020[144](index=144&type=chunk)

Alexander’s, Inc. (NYSE:ALX) Q2 2020 Results Earnings Conference Call August 4, 2020 10:00 AM ET Company Participants Cathy Creswell - Director, Investor Relations Steven Roth - Chairman of the Board and Chief Executive Officer Michael Franco - President Glen Weiss - Executive Vice President-Office Leasing-Co-Head of Real Estate David Greenbaum - Vice Chairman Joseph Macnow - Executive Vice President-Chief Financial Officer and Chief Administrative Officer Thomas Sanelli - Chief Financial Officer Conference ...