Alexander’s(US:ALX)2023-08-01 19:54Financial Data and Key Metrics Changes - The second quarter comparable FFO as adjusted was $0.72 per share, down from $0.83 in the same quarter last year, representing a decrease of $0.11 or 13.3%, primarily due to higher net interest expense from increased rates [10][11] - The principal difference in numbers compared to last year is attributed to the rise in interest rates, with the overall economy being more resilient than expected despite the Fed's historic interest rate hikes [8][11] Business Line Data and Key Metrics Changes - The New York cash same-store office business was up 3%, while the overall New York business increased by 2.7% [11] - During the second quarter, 19 leases totaling 279,000 square feet were completed, with starting rents at $91.57 per square foot, reflecting a positive mark-to-market of 5.7% cash and 9.9% GAAP [14] - The average starting rents for the first six months of the year were $99 per square foot, indicating a trend upward in rental rates [14] Market Data and Key Metrics Changes - Leasing activity was led by strong demand from traditional industries, particularly financial services and law firms, which accounted for almost 40% of the 5.2 million square feet leased in the quarter [13] - Midtown accounted for 70% of the quarter's leasing activity, with 75% of that leasing occurring in Class A properties, reinforcing the flight to quality theme [13] Company Strategy and Development Direction - The company aims to conserve cash, protect its balance sheet, and raise cash through selective asset sales to reduce debt and buy back stock [9] - The Penn District is highlighted as a key area for growth, with significant potential for shareholder value creation as new developments come online [9] Management's Comments on Operating Environment and Future Outlook - Management believes that the current narrative around office spaces is shortsighted, similar to the past perceptions of malls, and expects a recovery in the office sector [8] - The financing markets remain highly constrained, particularly for office assets, but the company is in a strong position with no material maturities until mid-2024 [18][20] Other Important Information - The company has a strong liquidity position of $3.2 billion, including $1.3 billion in cash and restricted cash [20] - The company is actively working on selling assets, including four small retail assets in Manhattan, which are expected to close in the third quarter [19] Q&A Session Summary Question: Can you elaborate on the leasing pipeline and how much relates to PENN2? - Approximately 40% of the leasing activity was at PENN1, with a strong pipeline of nearly 600,000 square feet of leases in negotiation [23][25] Question: What is the updated thought on the dividend and asset sales? - The company is opportunistic about selling assets and will evaluate the dividend based on cash versus stock mix at the end of the year [26][27] Question: Can you provide insight into leasing activity in San Francisco and Chicago? - San Francisco has seen success with 555 Cal, while Chicago has a lack of tenant demand, particularly for larger spaces [46][48] Question: What are the expectations for NOI in retail and office for the second half of the year? - The company is not providing specific forecasts for the second half of the year [54] Question: Are there plans to sell a joint venture stake in the Farley building? - The company is not commenting on future plans for the Farley building but acknowledges its strong asset quality [56][59]