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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ýx | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year endedFiscal Year Ended: | |
|
OR
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
For the transition period from | to | |
Commission File Number: | 001-6064 | |
Commission file number:ALEXANDER’S, INC.001-6064
ALEXANDER'S, INC.
(Exact name of registrant as specified in its charter)
Delaware | |
51-0100517
|
(State or other jurisdiction of incorporation or organization) | | 51-0100517
(IRS Employer Identification No.) |
210 Route 4 East, Paramus, New Jersey | |
07652
|
(Address of principal executive offices) |
|
07652
(Zip Code) |
Registrant’s telephone number, including area code | (201)Registrant's telephone number, including area code(201) 587-8541 |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class
| | | | Name of each exchange on which registered
|
|---|
Common Stock, $1 par value per share | | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act. YES Act.YES o NO ýx
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 o NO ýx
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 ýx NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ýo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a non-acceleratedsmaller
reporting company. See the definitions of “large accelerated filer, (as defined ” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Act). Large accelerated filer Exchange Act.
o Accelerated filer ý Non-accelerated filer o Large Accelerated Filer | | x Accelerated Filer |
o Non-Accelerated Filer (Do not check if smaller reporting company) | | o Smaller Reporting Company |
Indicate by check mark if whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO ýx
The aggregate market value of the voting and non-voting common shares held by non-affiliates of the registrant, (i.e., by persons other than officers and directors of Alexander's,Alexander’s, Inc.) as ofwas $631,159,078 at June 30, 2005 was $495,974,000.2008.
As of February 1, 20063, 2009 there were 5,024,0005,091,590 of the registrant’s common shares of the registrant's common stock, par value $1 per share,beneficial interest outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III:III: Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 18, 200614, 2009.
| | TABLE OF CONTENTS | |
| Item | | Page |
Part I. | | | |
| 1. | Business | 4 |
| 1A. | Risk Factors | 7 |
| 1B. | Unresolved Staff Comments | 15 |
| 2. | Properties | 16 |
| 3. | Legal Proceedings | 20 |
| 4. | Submission of Matters to a Vote of Security Holders | 20 |
| | Executive Officers of the Registrant | 20 |
| | | |
Part II. | | | |
| 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 21 |
| 6. | Selected Financial Data | 23 |
| 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 24 |
| 7A. | Quantitative and Qualitative Disclosures about Market Risk | 36 |
| 8. | Financial Statements and Supplementary Data | 37 |
| 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 56 |
| 9A. | Controls and Procedures | 56 |
| 9B. | Other Information | 59 |
| | | |
Part III. | | | |
| 10. | Directors, Executive Officers and Corporate Governance (1) | 59 |
| 11. | Executive Compensation (1) | 59 |
| 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (1) | 59 |
| 13. | Certain Relationships and Related Transactions, and Director Independence (1) | 60 |
| 14. | Principal Accounting Fees and Services (1) | 60 |
| | | |
Part IV. | | | |
| 15. | Exhibits, Financial Statement Schedules | 61 |
| | | |
Signatures | | | 62 |
_____________________________
| (1) | These items are omitted in part or in whole because the registrant will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later than 120 days after December 31, 2008, portions of which are incorporated by reference herein. See “Executive Officers of the Registrant” on page 20 of this Annual Report on Form 10-K for information relating to executive officers. |
2TABLE OF CONTENTS
| | Item
| |
| | Page
|
|---|
| PART I. | | 1. | | Business | | 4 |
| | | 1A. | | Risk Factors | | 7 |
| | | 1B. | | Unresolved Staff Comments | | 14 |
| | | 2. | | Properties | | 15 |
| | | 3. | | Legal Proceedings | | 19 |
| | | 4. | | Submission of Matters to a Vote of Security Holders | | 19 |
| | | | | Executive Officers of the Registrant | | 20 |
PART II. |
|
5. |
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities |
|
21 |
| | | 6. | | Selected Financial Data | | 22 |
| | | 7. | | Management's Discussion and Analysis of Financial Condition and
Results of Operations | |
23 |
| | | 7A. | | Quantitative and Qualitative Disclosures About Market Risk | | 32 |
| | | 8. | | Financial Statements and Supplementary Data | | 33 |
| | | 9. | | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure | | 52 |
| | | 9A. | | Controls and Procedures | | 52 |
| | | 9B. | | Other Information | | 52 |
PART III. |
|
10. |
|
Directors and Executive Officers of the Registrant(1) |
|
54 |
| | | 11. | | Executive Compensation(1) | | 54 |
| | | 12. | | Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters(1) | | 54 |
| | | 13. | | Certain Relationships and Related Transactions(1) | | 54 |
| | | 14. | | Principal Accountant Fees and Services(1) | | 54 |
PART IV. |
|
15. |
|
Exhibits and Financial Statement Schedules |
|
55 |
SIGNATURES |
|
56 |
(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 for the election of directors with the Securities and Exchange Commission not later than 120 days after December 31, 2005, portions of which are incorporated by reference herein. See "Executive Officers of the Registrant" on page 20 of this Annual Report on Form 10-K for information relating to executive officers.
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 involve risks, uncertainties and assumptions. Our future results, financial condition, results of operations and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans" "would," "may," "will"“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. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. See "Item 1A—Many of the factors that will determine these items 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"Factors” in this Annual Report on Form 10-K, for more information about important factors that would cause actual results to differ materially from the results anticipated by10-K.
For these forward-looking statements.
Westatements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for these forward-looking statements.1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or the date of the applicableany 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 noany obligation to release publicly, update or revise any revisions to our forward-looking statements whether as a result of new information, futureto reflect events or otherwise.circumstances after the date of this Annual Report on Form 10-K.
PART I
ITEM 1. BUSINESS
GENERAL
Alexander's,Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust ("REIT"(“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to "we", "us", "our", "Company"“we,” “us,” “our,” “Company” and "Alexander's"“Alexander’s” refer to Alexander'sAlexander’s, Inc. and its wholly ownedconsolidated subsidiaries. Alexander's activitiesWe are conducted through its manager,managed by, and our properties are leased and developed by, Vornado Realty Trust ("Vornado"(“Vornado”) (NYSE: VNO).
Alexander's has six
We have seven properties in the greater New York City metropolitan area consisting of:
Operating properties
| (i) | the 731 Lexington Avenue property, a 1,307,000 square foot multi-use building which comprises the entire square block bounded by Lexington Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan, New York. The building contains 885,000 and 174,000 of net rentable square feet of office and retail space, respectively, which we own, and 248,000 square feet of residential space consisting of 105 condominium units, which we sold. The building is 100% leased. Principal office tenants include Bloomberg L.P. (697,000 square feet) and Citibank N.A. (176,000 square feet). On December 29, 2008, Citibank N.A. notified us of its intent to assign its lease to Bloomberg L.P. To the extent the assignment is completed, Bloomberg L.P. would occupy 99% of the office space. Principal retail tenants include The Home Depot (83,000 square feet), The Container Store (34,000 square feet) and Hennes & Mauritz (27,000 square feet); |
| (ii) | the Kings Plaza Regional Shopping Center, located on Flatbush Avenue in Brooklyn, New York, which contains 1,098,000 square feet that is 94% leased and is comprised of a two-level mall containing 470,000 square feet, a 289,000 square foot Sears department store and a 339,000 square foot Macy’s department store, which is owned by Macy’s, Inc.; |
| (iii) | the Rego Park I property, located on Queens Boulevard and 63rd Road in Queens, New York, which contains 351,000 square feet and is 86% leased to Sears, Bed Bath & Beyond, Marshalls and Old Navy; |
| (iv) | the Paramus property, which consists of 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey, which is leased to IKEA Property, Inc.; |
| (v) | the Flushing property, located at Roosevelt Avenue and Main Street in Queens, New York, which contains a 177,000 square foot building that was sub-leased in February 2009 to a developer for the remainder of our ground lease term; |
Property under development
(i)the 731 Lexington Avenue property, a 1.1 million square foot multi-use building located on Lexington Avenue and 59th Street in Manhattan, New York. 731 Lexington Avenue contains 885,000 net rentable square feet of office space and 174,000 net rentable square feet of retail space. 731 Lexington Avenue also contains approximately 248,000 net saleable square feet (which is not included in the 1.1 million square feet above) of residential space consisting of 105 condominium units (though a taxable REIT subsidiary ("TRS")).
The Company has leased all of the office space of which 697,000 square feet is leased to Bloomberg L.P., and 176,000 square feet is leased to Citibank N.A. In addition, the Company has leased 169,000 square feet of retail space to, among others, The Home Depot, Hennes & Mauritz, The Container Store, Wachovia Bank and Bank of America. | (vi) | the Rego Park II property, containing approximately 6.6 acres of land adjacent to our Rego Park I property in Queens, New York, which comprises the entire square block bounded by the Horace Harding Service Road (of the Long Island Expressway), 97th Street, 62nd Drive and Junction Boulevard. The development at Rego Park II consists of a 600,000 square foot shopping center on four levels and a parking deck containing approximately 1,400 spaces. Construction is expected to be completed in 2009 and estimated to cost approximately $410,000,000, of which $292,000,000 has been expended as of December 31, 2008. The development plans for an apartment tower containing 315 apartments have been deferred indefinitely. |
As of December 31, 2005, 1002008, $181,695,000 was drawn on the $350,000,000 construction loan. The loan has an interest rate of the 105 residential condominium units were soldLIBOR plus 1.20% (3.08% at December 31, 2008), and closed;
(ii)the Kings Plaza Regional Shopping Center, located on Flatbush Avenuematures in Brooklyn, New York, which contains 1,098,000 square feet and is comprised ofDecember 2010, with a two-level mall containing 470,000 square feet,one-year extension option. The shopping center will be anchored by a 289,000134,000 square foot Century 21 department store, leaseda 138,000 square foot Home Depot and 132,000 square foot Kohl’s.There can be no assurance that this project will be completed, completed on time, or completed for the budgeted amount;
Property to Searsbe developed
| (vii) | the Rego Park III property, containing approximately 3.4 acres of land adjacent to our Rego Park II property in Queens, New York, which comprises a one-quarter square block at the intersection of Junction Boulevard and the Horace Harding Service Road. |
Business Environment
In the second half of 2007 the residential mortgage and another anchor departmentcapital markets began showing signs of stress, primarily in the form of escalating default rates on sub-prime mortgages, declining home values and increasing inventory nationwide. In 2008, the “credit crisis” spread to the broader commercial credit and financial markets resulting in illiquidity and volatility in the bond and equity markets. We are currently in an economic recession, which has negatively affected all businesses, including ours. During the past year, real estate transactions have diminished significantly and capitalization rates have risen. Our real estate portfolio may be affected by declining demand for office and retail space and tenant bankruptcies, store ownedclosures, lower occupancy and operated aseffective rents, which would result in a Macy's by Federated Department Stores, Inc.;
(iii)thecorresponding decrease in net income, funds from operations and cash flow. For example, Circuit City, a tenant which leases space at our Rego Park I location aggregating 50,000 square feet, approximately $2,600,000 of annual property located on Queens Boulevardrental income, recently announced that it is liquidating pursuant to Bankruptcy Court approval. As a result, we wrote-off approximately $4,909,000 of unamortized costs at December 31, 2008, including tenant improvements and 63rd Road in Queens, New York, which contains a 351,000 square foot building that is 100% leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy;
(iv)- receivables arising from the
Paramus property, which consistsstraight-lining of 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey, which is leased to IKEA Property, Inc;
(v)the Flushing property, located at Roosevelt Avenue and Main Street in Queens, New York, which contains a 177,000 square foot building that is currently vacant; and
rent.Property to be developed
(vi)the Rego Park II property, which comprises one and one-half square blocks of vacant land adjacent to the Rego Park I property.
Significant Tenants
Bloomberg L.P. accounted for 34%31%, 32% and 36%34% of the Company'sour consolidated revenues forin the years ended December 31, 20052008, 2007 and 2004, respectively. Sears accounted for 11% and 18% of the Company's consolidated revenues in 2004 and 2003,2006, respectively. No other tenant accounted for more than 10% of revenues in any of the last three years.
Relationship with Vornado
At December 31, 2008, Vornado owned 33.0%32.5% of theour outstanding common stock of Alexander's as of December 31, 2005.stock. Steven Roth is the Chairman of theour Board of Directors and our Chief Executive Officer, of the Company, the Managing General Partner of Interstate Properties ("Interstate"(“Interstate”), a New Jersey general partnership, and the Chairman of the Board of Trustees and Chief Executive Officer of Vornado. At December 31, 2005,2008, Mr. Roth, Interstate and its other two general partners, David Mandelbaum and Russell B. Wight, Jr. (who are also directors of the Company and trustees of Vornado) owned, in the aggregate, 27.7%27.0% of theour outstanding common stock, of Alexander's, and 9.2% ofin addition to the outstanding common shares of beneficial interest of2.7% they indirectly own through Vornado.
The Company is
We are managed by, and itsour properties are leased and developed by, Vornado, pursuant to agreements with one-year terms, expiringwhich expire in March of each year whichand are automatically renewable. Vornado is a fully-integrated REIT with significant experience in managing, leasing, developing, and operating retail and office properties.
At December 31, 2005, the Company2008, we owed Vornado $32,804,000$31,079,000 for leasing fees, $11,496,000 for development fees and $1,520,000$1,511,000 for management, property management and cleaning fees.
Environmental Matters
In June 1997, theJuly 2006, we discovered an oil spill at our Kings Plaza Regional Shopping Center, commissioned an Environmental Study and Contamination Assessment Site Investigation (the "Phase II Study") to evaluate and delineate environmental conditions disclosed in a Phase I study. The results ofnotified the Phase II Study indicated the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and groundwater. The Company has delineated the contamination and has developed a remediation approach, which is ongoing. The New York State Department of Environmental Conservation ("NYSDEC"(“NYSDEC”) and developed a remediation plan. The NYSDEC has approved a portion of the remediation approach.plan and clean up is ongoing. The Company accrued $2,675,000 in previous years,estimated costs associated with the clean up aggregate approximately $2,500,000. We paid $500,000 of which $2,612,000 has been paid as of December 31, 2005, for its estimated obligation with respect to the cleanup of the site, which includes costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial action and (v) professional fees. If NYSDEC insists on a more extensive remediation approach, the Company could incur additional obligations.
The Company has concluded that most of the contamination at the site is historicthis amount and the result of past activities of third parties. In connection with the pursuit of claims against third parties, on January 31, 2005 and November 14, 2005, the Company received settlements from such parties of $337,500 and $1,750,000, respectively.remainder is covered under our insurance policy.
Competition
The Company operatesWe operate in a highly competitive environment. All of itsour properties are located in the greater New York City metropolitan area. The Company competesWe compete with a large number of real estate property owners and developers. Principal factors of competition are the amount of rent charged, attractiveness of location and quality and breadth of services provided. The Company'sOur success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and theour ability of the Company to lease, sublease or sell itsour properties, at profitable levels. The Company'sOur success is also subject to itsour ability to refinance existing debtsdebt as they comeit comes due and on acceptable terms.
Employees
We currently have 82 employees.
The Company currently has 96 employees.
Executive Office
The Company's
Our principal executive office is located at 210 Route 4 East, Paramus, New Jersey, 07652 and itsour telephone number is (201) 587-8541.
Available Information
Copies of the Company'sour Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, as well as Reports on Forms 3, 4 and 5 regarding officers, directors, and 10% beneficial owners of the Company, 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 through the Company'son 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"(“SEC”). The Company also has madeAlso available on itsour website are copies of the Company'sour (i) Audit Committee charter, (ii) Compensation Committee Charter, (iii) Code of Business Conduct and Ethics and (iv) Corporate Governance Guidelines. In the event of any changes to these items, revised copies will be made available on theour website. Copies of these documents are also available directly from us, free of charge.
On April 11, 2000, Vornado and Interstate filed on April 11, 2000,with the SEC, the 26th amendment to a Form 13D with the SEC indicating that they, as a group, own in excess of 51% of theour common stock of the Company.stock. This ownership level makes the Companyus a "controlled"“controlled” company for the purposes of the New York Stock Exchange, Inc.'s’s Corporate Governance Standards (the "NYSE Rules"“NYSE Rules”). This means that the Company iswe are not required by the NYSE Rules,to, among other things, to have a majority of the members of itsour Board of Directors be independent under the NYSE Rules, to have all of itsthe members of itsour Compensation Committee be independent under the NYSE Rules or to have a Nominating Committee. While the Company haswe have voluntarily complied with a majority of the majority independence requirements it isof the NYSE Rules, we are under no obligation to do so and this situation may change at anytime.
6ITEM 1A. RISK FACTORS
Set forth below are material
Material factors that may adversely affect our business and operations.
Real Estate Investments' Value and Income Fluctuate Due to Various Factors.operations are summarized below.
REAL ESTATE INVESTMENTS’ VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also limit our revenues and available cash.
The factors that affect the value of our real estate include, among other things:
•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;
•competition from other available space;•whether tenantshow well we manage our properties;
changes in market rental rates;
the timing and users such as customerscosts associated with property improvements and shoppers consider a property attractive;
•the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;•- rentals;
whether we are able to pass some or all of any increased operating costs through to tenants;
•how well we manage our properties;•fluctuations in interest rates;•changes in real estate taxes and other expenses;
•changes in market rental rates;•whether tenants and users such as customers and shoppers consider a property attractive;
the timing and costs associated with property improvements and rentals;
•changes in taxationfinancial condition of our tenants, including the extent of tenant bankruptcies or zoning laws;•government regulation;•Alexander's failure to continue to qualify as a real estate investment trust;•- defaults;
availability of financing on acceptable terms or at all;
•fluctuations in interest rates;
our ability to secure adequate insurance;
changes in taxation or zoning laws;
consequences of any armed conflict involving, or terrorist attacksattack against, the United States;
•our ability to secure adequate insurance;•potential liability under environmental or other laws or regulations; and
•general competitive factors.
The rents we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If our rental revenues and/or occupancy levels decline, we generally would expect to have less cash available to pay our indebtedness and distribute to our stockholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs, generally do not decline when the related rents decline.
Capital markets and economic conditions can materially affect our financial condition and results of operations and the value of our debt and equity securities.
There are many factors that can affect the value of our investments in debt and equity securities, including the state of the capital markets and economy. In the second half of 2007 the residential mortgage and capital markets began showing signs of stress, primarily in the form of escalating default rates on sub-prime mortgages, declining home values and increasing inventory nationwide. In 2008, the “credit crisis” spread to the broader commercial credit and financial markets resulting in illiquidity and volatility in the bond and equity markets. We are currently in an economic recession which has negatively affected all businesses including ours. These conditions have contributed to volatility of unprecedented levels. As a result, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers, and may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. If these market conditions continue, they may limit our ability and the ability of our tenants, to timely refinance maturing liabilities and access the capital markets to meet liquidity needs, resulting in materially adverse effects on our financial condition and results of operations and the value of our debt and equity securities.
We depend on leasing space to tenants on economically favorable terms and collecting rent from our 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 substantial majority of our income comesis derived from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to our stockholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain our level of occupancy on favorable terms. If a tenant does not pay its rent, we might not be able to enforce our rights as landlord without delays and might incur substantial legal and other costs.
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. If a major tenant declares bankruptcy or becomes insolvent, the rental property at which it leases space may have lower revenues and operational difficulties. In the case of our shopping centers, the bankruptcy or insolvency of a major tenant could cause us to have difficulty leasing the remainder of the affected property. Our leases generally do not contain restrictions designed to ensure the creditworthiness of our tenants. As a result, the bankruptcy or insolvency of a major tenant could result in a lower level of net income and funds available for the payment of our indebtedness or distribution to our stockholders. For example, Circuit City, a tenant who leases space at our Rego Park I location aggregating 50,000 square feet, approximately $2,600,000 of annual property rental income, recently announced that it is liquidating its assets pursuant to Bankruptcy Court approval. As a result, we wrote-off approximately $4,909,000 of unamortized costs at December 31, 2008, including tenant improvements and receivables arising from the straight-lining of rent.
Some of the our tenants represent a significant portion of our revenues. Loss of these tenant relationships or deterioration in the tenants'tenants’ credit quality could adversely affect results.
Bloomberg L.P. accounted for 34%31%, 32% and 36%34% of our consolidated revenues forin the years ended December 31, 20052008, 2007 and 2004,2006, respectively. Sears accounted for 11% of our consolidated revenues for the year ended December 31, 2004. If we fail to maintain a relationship with Bloomberg L.P. or any of our significant tenants or fail to perform our obligations under agreements with these tenants, or if any of these tenants failsfail or becomesbecome unable to perform itstheir obligations under the agreements, we expect that any one or more of these events would adversely affect our results of operations and financial condition.
Inflation or deflation may adversely affect our financial condition and results of operations.
Although neither inflation nor deflation has materially impacted our operations in the recent past, increased inflation could have a pronounced negative impact on our mortgages and interest rates and general and administrative expenses, as these costs could increase at a rate higher than our rents. Inflation could also have an adverse effect on consumer spending which could impact our tenants’ sales and, in turn, our percentage rents, where applicable. Conversely, deflation could lead to downward pressure on rents and other sources of income.
Real estate is a competitive business.
We operate in a highly competitive environment. All of our properties are located in the greater New York City metropolitan area. We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of location, the quality of the property and breadth and quality of services provided. Our success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.
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 thesuch release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure at or from our properties.
In July 2006, we discovered an oil spill at our Kings Plaza Regional Shopping Center, notified the New York State Department of Environmental Conservation (“NYSDEC”) and developed a remediation plan. The NYSDEC has approved a portion of the remediation plan and clean up is ongoing. The estimated costs associated with the clean up aggregate approximately $2,500,000. We paid $500,000 of this amount and the remainder is covered under our insurance policy.
Each of our properties has been subjected to varying degrees of environmental assessment at various times. Except as referenced below, the environmental assessments did not, as of the date of this date,Annual Report on Form 10-K, reveal any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human exposure to the contamination or changes in cleanup or compliance requirements could result in significant costs to us.
In June 1997, the Kings Plaza Regional Shopping Center commissioned the Phase II Study to evaluate and delineate environmental conditions disclosed in a Phase I study. The results of the Phase II study indicated the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and groundwater. We have delineated the contamination and have developed a remediation approach, which is ongoing. The New York State Department of Environmental Conservation ("NYSDEC") has approved a portion of the remediation approach. We accrued $2,675,000 in previous years, of which $2,612,000 has been paid as of December 31, 2005, for our estimated obligation with respect to the cleanup of the site, and which includes costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial action and (v) professional fees. If NYSDEC insists on a more extensive remediation approach, we could incur additional obligations. We can make no assurance that we will not incur additional environmental costs with respect to this property.
We carry comprehensivecommercial liability with limits of $200,000,000 per location and all risk property insurance ((i)for (i) fire, (ii) flood, (iii) rental loss, (iv) extended coverage, (iv) "actsand (v) “acts of terrorism"terrorism,” as defined in the Terrorism Risk Insurance ExtensionProgram Reauthorization Act (“TRIPRA”) of 2005 which expires in 2007, and (v) rental loss insurance) with respect to our assets.
On June 30, 2005, we renewed our annual all risk policyassets, with limits of (i) $960,000,000$1.7 billion per occurrence, including certified terrorist acts, and $350,000,000as defined, for non-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remainingall of our properties. To the extent that we incur losses in excess of our insurance coverage, these losses would be borne by us and could be material.
Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to Alexander's)us), contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage underfor the 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, or if the Terrorism Risk Insurance Extension Act of 2005 is not extended past 2007, it could adversely affect our ability to finance and/or refinance our properties.
Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.
The Americans with Disabilities Act generally requires that public buildings, including our properties, be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. If, under the Americans with Disabilities Act, 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 our 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.
Our Investments Are Concentrated in the Greater New York City Metropolitan Area. Circumstances Affecting These Areas Generally Could Adversely Affect Our Business.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.
During the years ended December 31, 2005, 20042008, 2007, and 2003,2006, all of our revenues came from properties located in the greater New York City metropolitan area. Like other real estate markets, the real estate market in this area has experienced economic downturns, in the past, and we cannot predict how economic conditions will impact this market in botheither the short andor long term. DeclinesContinued declines in the economy or a decline in the real estate market in this area could further hurt the value of our properties and our financial performance. The factors affecting economic conditions in this region include:
•business layoffs or downsizing;•industry slowdowns;•relocations of businesses;•changing demographics;•increased telecommuting and use of alternative work places;•financial performance and productivity of the publishing, advertising, financial, technology, retail, insurance and real estate industries;
•business layoffs or downsizing;
relocations of businesses;
increased telecommuting and use of alternative work places;
infrastructure quality; and
•any oversupply of, or reduced demand for, real estate.
It is impossible for us to assess with certainty the future effects of the current uncertainadverse 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. If these conditions persist, or if there is any further local, national or global economic downturn, our businesses and future profitability may be adversely affected.
A substantial proportion of our properties are in the retail shopping center real estate market. This means that we are subject to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites and catalog companies. These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our shopping centers.
Terrorist attacks, such as those of September 11, 2001 in New York City, may adversely affect the value of our properties and our ability to generate cash flow.
All of our properties are located in the greater New York City metropolitan area. In the aftermath of anya terrorist attacks,attack, tenants in this area may choose to relocate their businesses to less populated, lower-profile areas of the United States that are not as likely to be targets of future terrorist activity and fewer customers may choose to patronize businesses in this area. This would trigger a decrease in the demand for space in these markets, which could increase vacancies in our properties and force us to lease our properties on less favorable terms. As a result, the value of our properties and the level of our revenues could decline materially.
We May Acquire or Sell Additional Assets or Develop Additional Properties. Our Failure or Inabilityare subject to Consummaterisks that affect the general retail environment.
A substantial proportion of our properties are in the retail shopping center real estate market. This means that we are subject to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites and catalog companies. These Transactions or Managefactors could adversely affect the Resultsfinancial condition of These Transactions Could Adversely Affect Our Operationsour retail tenants and Financial Results.the willingness of retailers to lease space in our shopping centers.
WE MAY ACQUIRE OR SELL ADDITIONAL ASSETS OR DEVELOP ADDITIONAL PROPERTIES. OUR FAILURE OR INABILITY TO CONSUMMATE THESE TRANSACTIONS OR MANAGE THE RESULTS OF THESE TRANSACTIONS COULD ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS.
WeAlthough 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 strategies, although currently our stated business strategy is not to engage in acquisitions.strategy. We may not, however, succeed in consummating desired acquisitions or in completing developments on time or within budget. In addition, we may face competition in pursuing acquisition or development opportunities that could increase our costs. When we do pursue a project or acquisition, we may not succeed in leasing newly developed or acquired properties at rents sufficient to cover their costs of acquisition or development and operations. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management'smanagement’s attention. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in poorer than anticipated performance. We may abandon acquisition or development opportunities that we have begun pursuing and consequently fail to recover expenses already incurred and have devoted management time to a matter not consummated.
Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or other conditions. Moreover, our ability to buy, sell, or finance real estate assets may be adversely affected during periods of uncertainty or unfavorable conditions in the credit markets as we, or potential buyers of our assets, may experience difficulty in obtaining financing.
Our Organizational and Financial Structure Gives Rise to Operational and Financial Risks.OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND FINANCIAL RISKS.
Alexander's dependsWe depend on dividends and distributions from itsour direct and indirect subsidiaries. The creditors of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to Alexander's, Inc.us.
Substantially all of Alexander'sour properties and assets are held through subsidiaries. Alexander's dependsWe depend on cash distributions and dividends from itsour subsidiaries for substantially all of itsour cash flow. The creditors of each of itsour direct and indirect subsidiaries are entitled to payment of that subsidiary'ssubsidiary’s obligations to them when due, and payable before that subsidiary may make distributions or dividends to Alexander's.us. Thus, Alexander'sour ability to pay its indebtedness and to pay dividends, if any, to itsour security holders depends on its subsidiaries'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, Alexander'sour participation in any distribution of the assets of any of itsour 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 and restrict or prohibitflexibility.
At December 31, 2008, substantially all of the individual properties we own were encumbered by mortgages. These mortgages contain covenants that limit our ability to make payments upon securities.
At December 31, 2005, substantially allincur 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 properties were pledged to secure obligations under $1,079,465,000 of existing secured indebtedness. Ifoperational 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 a holderother creditors or to any holders of our securities. In addition, the existing financing documents contain restrictive covenants which limit the ability to incur indebtedness and make prepayments of indebtedness. These covenants may significantly restrict our operational and financial flexibility and may restrict its ability to obtain additional financing or pursue other business activities that may be beneficial.
We have indebtedness, and this indebtedness, and itsthe cost to service it, may increase.increase and debt refinancing may not be available on acceptable terms.
As of December 31, 2005,2008, we had approximately $1,079,465,000$1,221,255,000 in total debt outstanding. Our ratio of total debt to total enterprise value was 62.2%61.3% at December 31, 2005. "Enterprise value"2008. “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, 2005,2008, our scheduled cash payments for principal and interest were $70,216,000.$82,947,000. 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 that 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. Furthermore, in the current “credit crisis” environment, we may not be able to refinance existing indebtedness in sufficient amounts or on acceptable terms.
We have issued outstanding and exercisable stock appreciation rights. The exercise of these stock appreciation rights may impact our liquidity.
As of JanuaryDecember 31, 2006, 850,0002008, 300,000 stock appreciation rights ("SARs"(“SARs”) were outstanding and exercisable at a weighted-averageexercisable. These SARs have an adjusted exercise price of $141.80.$63.38, and are scheduled to expire on March 4, 2009. Since the SARs agreements require that they be settled in cash, the Companywe would have hadpaid $57,458,000 to pay $89,295,000 if the holders of these SARs had they exercised their SARs on JanuaryDecember 31, 2006.2008. Any change in the Company'sour stock price from the closing price of $246.85$254.90 at JanuaryDecember 31, 20062008 would increase or decrease the amount the Companywe would have to pay upon exercise.
Alexander'sWe might fail to qualify or remain qualified as a REIT, and may be required to pay income taxes at corporate rates.
Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we might fail to remain qualified. Qualification as a REIT for federal income tax purposes is governed by highly technical and complex provisions of the Internal Revenue Code (the "Code"“Code”) for which there are only limited judicial or administrative interpretations. Qualification as a REIT also depends on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions might significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualification as a REIT.
In order to qualify and maintain our qualification as a REIT for federal income tax purposes, we are required, among other conditions, to distribute as dividends to our stockholders, at least 90% of annual REIT taxable income. As of December 31, 2005,2008, we had reported net operating loss carryovers ("NOLs"(“NOLs”) of $31,739,000,$29,211,000, which generally would be available to offset the amount of REIT taxable income that we otherwise would be required to distribute. However, the NOLs reported on the tax returns are not binding on the Internal Revenue Service and are subject to adjustment as a result of future audits. In addition, under Section 382 of the Code, the ability to use our NOLs could be limited if, generally, there are significant changes in the ownership of our outstanding stock. Since our reorganization as a REIT commencing in 1995, we have not paid regular dividends and do not believe that we will be required to, and may not, pay regular dividends until the NOLs have been fully utilized.
From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for payment of dividends.
Loss of our key personnel could harm our operations and adversely affect the value of our common stock.
We are dependent on the efforts of Steven Roth, our Chief Executive Officer, and Michael D. Fascitelli, our President. While we believe that we could find replacements for these key personnel, the loss of their services could harm our operations and adversely affect the value of our common stock.
Alexander's charter documents and applicable law may hinder any attempt to acquire us.
ALEXANDER’S CHARTER DOCUMENTS AND APPLICABLE LAW MAY HINDER ANY ATTEMPT TO ACQUIRE US.
Provisions in Alexander'sAlexander’s certificate of incorporation and by laws, as well as provisions of the Code and Delaware corporate law, may delay or prevent a change ofin control overof the Company or a tender offer, even if such action might be beneficial to stockholders, and limit the stockholders'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'sAlexander’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'sAlexander’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. SharesStocks 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
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'sAlexander’s charter documents authorize the Board of Directors to:
•cause Alexander'sAlexander’s to issue additional authorized but unissued shares of common stock or preferred stock; and
•classify or reclassify, in one or more series, any unissued preferred stock;
set the preferences, rights and other terms of any classified or reclassified stock that Alexander’s issues; and
increase, without stockholder approval, the number of shares of beneficial interest that Alexander's issues without any further action by our stockholders.Alexander’s may issue.
The Board of Directors could establish a series of preferred stock whosewith terms that could delay, deter or prevent a change in control of Alexander'sAlexander’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, nowat present, intend to establish a series of preferred stock of this kind. Alexander'sAlexander’s charter documents contain other provisions that may delay, deter or prevent a change in control of the Company or other transaction that might involve a premium price or otherwise be in the best interest of our stockholders.
In addition, Vornado and Interstate Properties (the three general partners of which are both trustees of Vornado and Directors of Alexander's)Alexander’s) together beneficially own approximately 60.5%59.5% of our outstanding shares of common stock. This degree of ownership may also reduce the possibility of a tender offer or an attempt to change control of the Company.
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.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 ofAt December 31, 2005,2008, Interstate and its partners owned approximately 9.2%8.8% of the common shares of beneficial interest of Vornado our manager, and approximately 27.7%27.0% of theour outstanding common stock of Alexander's.stock. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the partners of Interstate. Mr. Roth is the Chairman of theour Board of Directors and Chief Executive Officer, of the Company, 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 the Company'sour Board of Directors. In addition, Vornado manages and leases the real estate assets of Interstate.
As of
At December 31, 2005,2008, Vornado owned 33%32.5% of our outstanding common stock, in addition to thatthe 27.0% owned by Interstate and its partners. In addition to the relationships described in the immediately preceding paragraph, Michael D. Fascitelli, the President and a trustee of Vornado, is our President and a member of our Board of Directors. Richard West is a trustee of Vornado and a member of our Board of Directors. In addition, Joseph Macnow, our Executive Vice President and Chief Financial Officer, holds the same positions with Vornado.
Because of their overlapping interests, Vornado, Mr. Roth, Interstate and the other individuals noted in the preceding paragraphs may have substantial influence over both Vornado and Alexander's,Alexander’s, and on the outcome of any matters submitted to Vornado shareholders or Alexander'sAlexander’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 Vornado or 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 Vornado or 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 and Vornado share common senior management with Vornado and because five of the trustees of Vornado also constitute the majority of our directors, the terms of the foregoing agreements and any future agreements between us and Vornado and its affiliates may not be comparable to those we could have negotiated with an unaffiliated third party.
For a description of Interstate'sInterstate’s ownership of Vornado and Alexander's,Alexander’s, see"Steven “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.” above.
THE NUMBER OF SHARES OF ALEXANDER’S COMMON STOCK AND THE MARKET FOR THOSE SHARES GIVE RISE TO VARIOUS RISKS.
The Numberprice of Sharesour common shares has recently been volatile and may fluctuate.
The trading price of Alexander's Common Stockour common shares has recently been volatile and may continue to fluctuate widely as a result of a number of factors, many of which are outside of our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have adversely affected and may continue to 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 conditions of our tenants, including the extent of tenant bankruptcies or defaults;
actual or anticipated quarterly fluctuations in our operating results and financial condition;
the reputation of REITs and real estate investments generally and the Marketattractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;
the effect of the “credit crisis” on the broader commercial credit and financial markets and the resulting illiquidity and volatility in the equity and bond markets;
changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other real estate investment trusts;
failure to meet analysts’ revenue or earnings estimates;
speculation in the press or investment community;
strategic actions by us or our competitors, such as acquisitions or restructurings;
the extent of institutional 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 Those Shares Give Risereal estate investment trusts and other real estate related companies;
domestic and international economic factors unrelated to Various Risks.our performance; and
all other risk factors addressed elsewhere in this document.
A significant decline in our stock price could result in substantial losses for shareholders.
Alexander'sAlexander’s has available for issuance, shares of its common stock and outstanding and exercisable options to purchase its common stock. The issuance of this stock or the exercise of these options could decrease the market price of the shares of common stock currently outstanding.
As of December 31, 2005, Alexander's2008, we had authorized but unissued 4,826,550 shares of its common stock, par value of $1.00 per share and 3,000,000 shares of its preferred stock, par value $1.00 per share. In addition, as of December 31, 2005, 81,8502008, 14,260 options were outstanding and exercisable at a weighted-average exercise price of $70.38$63.38 and as of JanuaryDecember 31, 2006, 850,0002007, 300,000 SARs were outstanding and exercisable at a weighted-averagean adjusted exercise price of $141.80.$63.38. Additionally, 895,000 shares are available for future grant under the terms of our 2006 Omnibus Stock Plan thatPlan. These awards may be granted in the form of options, restricted stock, SARs or other equity-based interests. Since the SARs agreements requireinterests, and if granted, would reduce that they be settled in cash, the number of shares available for future grant, provided however that an award that may be settled only in cash, would not reduce the number of shares available under the terms of our Omnibus Stock Plan will increase upon the exercise of the outstanding SARs. The Companyplan. 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 itsour common stock.
The value of our securities depends on various market conditions, which may change from time to time. Among the market conditions that may affect the value of our securities are the following:
•the extent of institutional investor interest in us;•the reputation of REITs generally and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;•our NOLs which are generally available to offset the amount of the REIT taxable income that we otherwise would be required to distribute as dividends;•our financial condition and performance; and•general financial market conditions.
The stock market in recent years has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
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.
The following table shows the location, ownership, approximate size and leasing status of each of the Company'sour properties as of December 31, 2005.2008.
Property
| | Land Area
| | Building
Area/ Number of
Floors
| | Average
Annualized
Base Rent
Per Square
Foot
| | Percent
Leased
| | Significant
Tenants
| | Square
Footage
Leased
| | Lease
Expiration/
Option
Expiration
|
|---|
| Operating Properties | | | | | | | | | | | | | | | |
731 Lexington Avenue
New York, New York
Office and Retail | | 84,420 | sq. ft. | 1,059,000 | (1)/31 | $ | 65.92 | | 99 | % | Bloomberg L.P.
Citibank N.A.
The Home Depot
The Container Store
Hennes & Mauritz | | 697,000
176,000
83,000
34,000
27,000 |
(2)
| 2030/2040
2016
2025/2035
2021
2020 |
Kings Plaza Regional
Shopping Center
Brooklyn, New York |
|
24.3 |
acres |
759,000 |
(3)(4)/2 |
|
36.14 |
|
98 |
% |
Sears
123 Mall tenants |
|
289,000
455,000 |
|
2023/2033
Various |
Rego Park I
Queens Boulevard and
63rd Road
Queens, New York |
|
4.8 |
acres |
351,000 |
(3)/3 |
|
32.18 |
|
100 |
% |
Sears
Circuit City
Bed Bath & Beyond
Marshalls |
|
195,000
50,000
46,000
39,000 |
|
2021/2031
2021
2013/2021
2008/2021 |
Routes 4 and 17
Paramus, New Jersey |
|
30.3 |
acres |
N/A,
Ground
Lease |
|
|
N/A,
Ground
Lease |
|
100 |
% |
IKEA |
|
N/A, Ground Lease |
|
2041 |
Roosevelt Avenue and
Main Street(5)
Queens, New York |
|
44,975 |
sq. ft. |
177,000 |
(3)/4 |
|
|
|
0 |
% |
|
|
|
|
|
| | | | |
| | | | | | | | | | | |
| | | | | 2,346,000 | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | |
| Property to Be Developed | | | | | | | | | | | | | | | |
Rego Park II
Adjacent to Rego Park I
Queens, New York |
|
10 acres |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Excludes 248,000 net saleable square feet of residential space consisting of 105 condominium units.(2)Excludes 14,800 square feet of mezzanine space.(3)Excludes parking garages.(4)Excludes the 339,000 square foot Macy's store, owned and operated by Federated Department Stores, Inc.(5)Leased to the Company through January 2027.
| | | | | | Average
Annualized
Rent Per
Square Foot | | | | | | | | Lease
Expiration/
Option
Expiration(s) | | |
Operating Properties: | | | | | | | | | | | | | | | | | |
731 Lexington Avenue,
New York, New York | | 84,420 sq.ft. | | | | | | | | | | | | | | | |
Office | | | | 885,000 | | $ | 79.14 | | 100% | | Bloomberg L.P.
Citibank N.A. | | 697,000
176,000 | | 2030/2040
2015 | | |
| | | | | | | | | | | | | | | | | |
Retail | | | | 174,000 | | $ | 147.23 | | 100% | | The Home Depot
The Container Store
Hennes & Mauritz | | 83,000
34,000
27,000 | | 2025/2035
2021
2020 | | |
| | | | 1,059,000 | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Kings Plaza Regional Shopping Center | | | | | | | | | | | | | | | | | |
Brooklyn, New York | | 24.3 acres | | 759,000(1) | | $ | 39.78 | | 94% | | Sears
111 Mall tenants
Lowe’s (ground lessee)
Macy’s (2) | | 289,000
422,000
—
N/A | | 2023/2033
Various
2028/2053
N/A | | |
| | | | | | | | | | | | | | | | | |
Rego Park I | | | | | | | | | | | | | | | | | |
Queens Boulevard and 63rd Rd, Queens,
New York | | 4.8 acres | | 351,000(1) | | $ | 27.57 | | 86% | | Sears
Bed Bath & Beyond
Marshalls | | 195,000
46,000
39,000 | | 2021/2031
2013/2021
2021 | | |
| | | | | | | | | | | | | | | | | |
Routes 4 and 17 | | | | | | | | | | | | | | | | | |
Paramus, New Jersey | | 30.3 acres | | — | | | — | | 100% | | IKEA (ground lessee) | | — | | 2041 | | |
| | | | | | | | | | | | | | | | | |
Roosevelt Avenue and Main Street(3) | | | | | | | | | | | | | | | | | |
Queens, New York | | 44,975 sq. ft. | | 177,000(1) | | $ | 14.12 | | 100% | | New World Mall LLC | | 177,000 | | 2027/2037 | | |
| | | | | | | | | | | | | | | | | |
Property Under Development: | | | | | | | | | | | | | | | | | |
Rego Park II (600,000 square feet under
development), adjacent to Rego Park I | | | | | | | | | | | | | | | | | |
Queens, New York | | 6.6 acres | | — | | | — | | 67% | | Home Depot
Century 21
Kohl’s | | 138,000
134,000
132,000 | | — | | |
| | | | | | | | | | | | | | | | | |
Property to be Developed: | | | | | | | | | | | | | | | | | |
Rego Park III, adjacent to Rego Park II | | | | | | | | | | | | | | | | | |
Queens, New York | | 3.4 acres | | — | | | — | | — | | — | | — | | — | | |
| | | | 2,346,000 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
__________________________
(1) | Excludes parking garages. |
(3) | Ground leased through January 2037. |
For details of encumbrances, see descriptions of properties which follows.
Operating Properties
The 731 Lexington Avenue property is located onwhich comprises the entire square block bounded by Lexington Avenue, andEast 59th Street, Third Avenue and East 58th Street, is situated in the heart of one of Manhattan'sManhattan’s busiest business and shopping districts, with convenient access to several subway and bus lines. The property is located directly across the street from Bloomingdale'sBloomingdale’s flagship store and only a few blocks away from Fifth Avenue and 57th Street.
731 Lexington Avenue is a 1.1 million1,307,000 square foot multi-use building. The building contains approximatelycontaining 885,000 and 174,000 of net rentable square feet of office and retail space, respectively, which we own, and approximately 174,000 net rentable248,000 square feet of retail space. 731 Lexington Avenue also contains approximately 248,000 net saleable square feet (which is not included in the 1.1 million square feet above) of residential space consisting of 105 condominium units, (through a taxable REIT subsidiary ("TRS"))which we sold. The building is 100% leased. Principal office tenants include Bloomberg L.P. (697,000 square feet) and Citibank N.A. (176,000 square feet). On December 29, 2008, Citibank N.A notified us of its intent to assign its lease aggregating 176,000 square feet to Bloomberg L.P. To the extent the assignment is completed, Bloomberg L.P. will occupy approximately 99% of the office space. Principal retail tenants include The Home Depot (83,000 square feet), The Container Store (34,000 square feet) and Hennes & Mauritz (27,000 square feet).
As
The office and retail spaces are encumbered by first mortgage loans with balances of $373,637,000 and $320,000,000, respectively, as of December 31, 2005, the Company has leased all of the office space, of which 697,000 square feet of office space is leased to Bloomberg L.P., and 176,000 square feet of office space is leased to Citibank N.A. In addition, the Company has leased 169,000 square feet of retail space to, among others, The Home Depot, Hennes & Mauritz, The Container Store, Wachovia Bank and Bank of America.
As of December 31, 2005, 100 of the 105 residential condominium units were sold and closed.
On July 6, 2005, the Company completed a $320,000,000 mortgage financing on the retail space. The loan is interest only at a fixed rate of 4.93% and matures in July 2015. Of the net proceeds of approximately $312,000,000 (net of mortgage recording tax and closing costs), $90,000,000 was used to repay the construction loan and $124,000,000 was used to repay the2008. Such loans from Vornado. In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
The office space is encumbered by a first mortgage loan with a balance of $400,000,000 at December 31, 2005. The loan maturesmature in February 2014 and bearsJuly 2015 and bear interest at 5.33%. and 4.93%, respectively.
The Kings Plaza Regional Shopping Center (the "Center"“Center”) contains 1,098,000 square feet that is 94% leased and is comprised of a two-level mall (the "Mall"“Mall”) containing 470,000 square feet and two four-level anchor stores. One of the anchor stores is owned by the Company and leased to Sears, while the other anchor store is ownedMacy’s, Inc. and operated as a Macy's store by Federated.Macy’s store. The Center occupies a 24.3an 18.5 acre site at the intersection of Flatbush Avenue and Avenue U in Brooklyn, New York. Among the Center'sCenter’s features are a marina, a five-level parking garage and an energy plant that generates electrical power at the Center.
The Company plans to construct a freestanding building
We have leased approximately 5.8 acres of land adjacent to the Mall containing approximately 120,000 square feet, which has been leasedCenter to Lowe'sLowe’s Home Improvement Warehouse ("Lowe's"(“Lowe’s”). This for a 20-year term with five 5-year renewal options. The ground lease is expected to commence incommenced on February 26, 2007. The cost of this project will be approximately $11.5 million, which is net of a tenant reimbursement of $16.5 million. This cost includes construction of structured elements, which will support a second and third level. There can be no assurance that this project will commence, be completed, completed on time or completed for the budgeted amount.
The following table sets forth lease expirations for the Mall tenants in the Center as of December 31, 2005,2008, for each of the next ten years, assuming none of the tenants exercise their renewal options.
| |
| |
| | Annual Fixed Rent of Expiring Leases
| |
| |
| | |
|---|
| |
| |
| |
| | Percent of
2005 Gross
Annual Base
Rentals
| | | Number of
Expiring Leases | | Square Feet of
Expiring Leases | | Annual Rent of Expiring Leases | | Percent of
Total Leased Square Feet | | Percent of 2008 Gross
Annual Rentals | |
|---|
Year
| | Number of
Expiring
Leases
| | Square Feet of Expiring Leases
| | Total
| | Per Square Foot
| | Percent of
Total Leased
Square Feet
| | | | | | | |
|---|
| 2006 | | 16 | | 110,517 | | 3,653,555 | | 33.06 | | 24.4 | % | 15.8 | % | |
| 2007 | | 15 | | 48,326 | | 2,438,857 | | 50.47 | | 10.7 | % | 10.5 | % | |
| 2008 | | 10 | | 17,970 | | 1,223,465 | | 68.08 | | 4.0 | % | 5.3 | % | |
Month to month | | | 7 | | 53,075 | $ | 859,338 | $ | 16.19 | | 12.6% | | 3.6% | |
| 2009 | | 16 | | 69,144 | | 4,150,714 | | 60.03 | | 15.3 | % | 17.9 | % | | 12 | | 33,743 | | 2,093,709 | | 62.05 | | 8.0% | | 8.7% | |
| 2010 | | 13 | | 22,166 | | 1,716,707 | | 77.45 | | 4.9 | % | 7.4 | % | | 12 | | 20,284 | | 1,723,243 | | 84.96 | | 4.8% | | 7.2% | |
| 2011 | | 11 | | 33,629 | | 2,113,680 | | 62.85 | | 7.4 | % | 9.1 | % | | 13 | | 34,067 | | 2,481,200 | | 72.83 | | 8.1% | | 10.3% | |
| 2012 | | 11 | | 45,038 | | 2,290,900 | | 50.87 | | 9.9 | % | 9.9 | % | | 12 | | 40,532 | | 2,433,653 | | 60.04 | | 9.6% | | 10.1% | |
| 2013 | | 12 | | 38,540 | | 2,430,889 | | 63.07 | | 8.5 | % | 10.5 | % | | 11 | | 38,863 | | 2,491,347 | | 64.11 | | 9.2% | | 10.4% | |
| 2014 | | 7 | | 31,133 | | 1,967,954 | | 63.21 | | 6.9 | % | 8.5 | % | | 7 | | 42,400 | | 2,572,242 | | 60.67 | | 10.0% | | 10.7% | |
| 2015 | | 5 | | 11,385 | | 548,148 | | 48.15 | | 2.5 | % | 2.4 | % | | 4 | | 8,396 | | 520,156 | | 61.95 | | 2.0% | | 2.2% | |
| 2016 | | 3 | | 25,038 | | 485,730 | | 19.40 | | 5.5 | % | 2.1 | % | | 8 | | 26,571 | | 1,762,085 | | 66.32 | | 6.3% | | 7.3% | |
2017 | | | 12 | | 45,327 | | 2,873,275 | | 63.39 | | 10.7% | | 12.0% | |
2018 | | | 8 | | 27,622 | | 1,863,051 | | 67.45 | | 6.5% | | 7.8% | |
2019 | | | 5 | | 51,235 | | 2,327,960 | | 45.44 | | 12.1% | | 9.7% | |
The following table sets forth the occupancy rate and the average annual rent per square foot for the Mall stores for each of the past five years.
As of December 31,
| | Occupancy Rate
| | Average
Annual Base Rent
Per Square Foot
| | | | Average Annual Base Rent Per Square Foot | |
|---|
| | | | | | | |
2008 | | | 94% | | $ | 56.86 | |
2007 | | | 94% | | 55.95 | |
2006 | | | 94% | | 52.78 | |
| 2005 | | 96% | | $ | 51.15 | | 96% | | | 51.15 | |
| 2004 | | 97% | | | 49.65 | | 97% | | | 49.65 | |
| 2003 | | 98% | | | 47.95 | |
| 2002 | | 97% | | | 45.59 | |
| 2001 | | 96% | | | 45.97 | |
The Center is encumbered by a first mortgage loan with a balance of $210,539,000$199,537,000 at December 31, 2005.2008. The loan matures in June 2011 and bears interest at 7.46%.
The Rego Park I property, located in Queens, New York, encompasses the entire block fronting on Queens Boulevard and bounded by 63rd Road, 62nd Drive, 97th Street and Junction Boulevard. The existing 351,000 square foot building was redeveloped in 1996 and is fully86% leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy. In conjunction with the redevelopment, a multi-level parking structure was constructed to provideand provides paid parking spaces for approximately 1,200 vehicles.
The property is encumbered by a first mortgage loan with a balance of $80,926,000$78,386,000 at December 31, 2005.2008. The loan matures in June 2009 and bears interest at 7.25%.
The Company owns
Paramus
We own 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey. The Company's property is located directly across from the Garden State Plaza regional shopping mall and is within two miles of three other regional shopping malls and ten miles of New York City. This land is leased to IKEA Property, Inc. The lease has a 40-year term expiring in 2041, with a purchase option at the end of the twentieth yearin 2021 for $75,000,000. The Company hasWe have a $68,000,000 interest only, non-recourse mortgage loan on the property from a third partythird-party lender. The fixed interest rate on the debt is 5.92% with interest payable monthly until maturity in October 2011. The annual triple-net rent each year is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is exercised, the Companywe will receive net cash proceeds of approximately $7,000,000 and recognize a net gain on the sale of the land of approximately $62,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years must include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
Flushing
The Flushing property 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 vacant four-floor building containing 177,000 square feet and a parking garage.
In the fourth quarter of 2003, the Companywe recognized $1,289,000 of income representing a non-refundable purchase deposit of $1,875,000, net of $586,000 of costs associated with the transaction, from a party that had agreed to purchase this property, as such party had not met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8, 2004, the Companywe received letters from the party demanding return of the deposit. On December 28, 2005, the party filed a complaint against the Companyus in the Supreme Court of the State of New York alleging the Companythat we failed to honor the terms and conditions of the agreement. The complaint seeks specific performance and, if specific performance is denied, it seeks the return of the deposit plus interest and $50,000 in costs. The Company,In our opinion, after consultingconsultation with its legal counsel, doeswe do not believe the party is entitled to either specific performance or a return of the deposit and iswe are defending against the action. Accordingly, we have not recorded a loss contingency for this matter.
The Company is currently in negotiations with various retailers
In February 2009, we sub-leased the Flushing property to a developer for the remainder of our ground lease all or a portion of the property.term.
Property to Be DevelopedUnder Development
The Company owns twoWe own approximately 6.6 acres of land parcels containing approximately 10 acres adjacent to itsour Rego Park I property in Queens, New York. One parcelYork, which comprises the entire square block bounded by the Horace Harding Service Road (of the Long Island Expressway), 97th Street, 62nd Drive and Junction Boulevard.
The otherdevelopment at Rego Park II consists of a 600,000 square foot shopping center on four levels and a parking deck containing approximately 1,400 spaces. Construction is expected to be completed in 2009 and estimated to cost approximately $410,000,000, of which $292,000,000 has been expended as of December 31, 2008. As of December 31, 2008, $181,695,000 was drawn on the $350,000,000 construction loan. The loan has an interest rate of LIBOR plus 1.20% (3.08% at December 31, 2008), and matures in December 2010, with a parcelone-year extension option. The shopping center will be anchored by a 134,000 square foot Century 21 department store, a 138,000 square foot Home Depot and a 132,000 square foot Kohl’s. The development plans for an apartment tower containing 315 apartments have been deferred indefinitely.
There can be no assurance that this project will be completed, completed on time, or completed for the budgeted amount.
Property to be Developed
Rego Park III
We own approximately 3.4 acres of approximatelyland adjacent to our Rego Park II property in Queens, New York, which comprises a one-quarter square block and is located at the intersection of Junction Boulevard and the Horace Harding Service Road.
The Company's planland is currently being used for the entire square block parcel is a mixed-use, development containing approximately 600,000 square feet of retail space on four levels, apublic paid parking deck of approximately 1,400 spaces and may also include up to 450 apartment units in two towers. On September 20, 2005, the Company received governmental approvals for this project. The Company has entered into a lease with Century 21 for 134,000 square feet of retail space at this project.
Whilewhile the current plans for the one-quarter square blockdevelopment of this parcel are very preliminary, we anticipate it may include up to 80,000 square feet of retail space.
There can be no assurance that these projectsthis project will commence, be completed, completed on time or completed for the budgeted amount.
Insurance
We carry comprehensivecommercial liability with limits of $200,000,000 per location and all risk property insurance ((i)for (i) fire, (ii) flood, (iii) rental loss, (iv) extended coverage, (iv) "actsand (v) “acts of terrorism"terrorism,” as defined in the Terrorism Risk Insurance ExtensionProgram Reauthorization Act (“TRIPRA”) of 2005 which expires in 2007, and (v) rental loss insurance) with respect to our assets.
On June 30, 2005, we renewed our annual all risk policyassets, with limits of (i) $960,000,000$1.7 billion per occurrence, including certified terrorist acts, and $350,000,000as defined, for non-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remainingall of our properties. To the extent that we incur losses in excess of our insurance coverage, these losses would be borne by us and could be material.
Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to Alexander's)us), contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage underfor the 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, or if the Terrorism Risk Insurance Extension Act of 2005 is not extended past 2007, it could adversely affect our ability to finance and/or refinance our properties and expand our portfolio.properties.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries is a partyWe are from time to nor is their property the subject of, any material pending legal proceeding other than routine litigation incidental to their businesses. The Company believes that thesetime 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 behave a material to the Company'seffect on our financial condition, or results of operations.operations or cash flows.
For a discussion of the litigation concerning the sale of the Company's subsidiary which owns the building and has the ground lease for the Company's property inour Flushing, New York, property, see "Item“Item 2. Properties—Properties – Operating Properties—Properties – Flushing."”
For discussion concerning environmental matters, see "Item“Item 1. Business—Business – Environmental Matters."”
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 2005.2008.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the names, ages, principal occupations and positions with the Companyus of theour executive officers of the Company and the positions held by such officers during the past five years.
| | | | | Principal OccupationsOccupation, Position and Offices (currentOffice (Current and during the past five years with the Company unless otherwise stated)
|
|---|
| | | | |
Steven Roth | | 6467 | | Chairman of the Board of Directors since May 2004 and Chief Executive Officer since March 1995; Chairman of the Board and Chief Executive Officer of Vornado Realty Trust since May 1989; Chairman of Vornado Realty Trust'sTrust’s Executive Committee of the Board since April 1980; and a trustee of Vornado Realty Trust since 1979; and Managing General Partner of Interstate Properties. |
| | | | |
Michael D. Fascitelli |
|
4952 |
|
President since August 2000; Director of the Company and President and trustee of Vornado Realty Trust since December 1996; Partner at Goldman Sachs & Co., in charge of its real estate practice, from December 1992 to December 1996; and, prior thereto, Vice President at Goldman Sachs & Co. |
Stephen Mann |
|
70 |
|
Chief Operating Officer since May 2004; Chairman of the Board of Directors from March 1995 to May 2004; Interim Chairman of the Board of Directors from August 1994 to March 1995; Chief Executive Officer of Prescott Funding Company since January 2003; and Chairman of the Clifford Companies from 1990 to January 2003. |
Joseph Macnow |
|
6063 |
|
Executive Vice President and Chief Financial Officer since June 2002; Executive Vice President —– Finance and Administration from March 2001 to June 2002; Vice President and Chief Financial Officer from August 1995 to March 2001; Executive Vice President —– Finance and Administration of Vornado Realty Trust since January 1998 and Chief Financial Officer of Vornado Realty Trust since March 2001; and Vice President and Chief Financial Officer of Vornado Realty Trust from 1985 to January 1998. |
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company's
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."“ALX.” Set forth below are the high and low sales prices for the shares of our common stock for each full quarterly period within the two most recent years.
| | Year Ended December 31,
| | | |
|---|
| | 2005
| | 2004
| | | | | | | |
|---|
Quarter
| | | | | | | | | | | |
|---|
| | High
| | Low
| | High
| | Low
| |
|---|
| | | | | | | | | | | | | | | | |
| First | | $ | 257.75 | | $ | 210.48 | | $ | 162.45 | | $ | 124.91 | | $ | 376.75 | | $ | 296.01 | | | | $ | 471.00 | | $ | 372.00 | |
| Second | | 259.29 | | 223.00 | | 172.00 | | 146.00 | | | 387.75 | | | 310.01 | | | | | 441.02 | | | 373.60 | |
| Third | | 295.00 | | 248.00 | | 203.50 | | 164.00 | | | 431.10 | | | 289.07 | | | | | 425.00 | | | 330.00 | |
| Fourth | | 271.63 | | 231.75 | | 230.05 | | 195.00 | | | 399.67 | | | 133.05 | | | | | 422.79 | | | 343.00 | |
As of February 1, 2006,3, 2009, there were approximately 484422 holders of record of the Company'sour common stock. The Company pays dividends only if, as and when declared by its Board of Directors. No dividends were paid in 2005 and 2004. In order to qualify and maintain itsour qualification as a REIT, the Company iswe are required, among other conditions, to distribute as dividends to itsour stockholders at least 90% of annual REIT taxable income. As of December 31, 2005, the Company2008 and 2007, we had Net Operating Loss Carryovers ("NOLs"(“NOLs”) of approximately $31,739,000,$29,211,000 and $1,597,000, respectively, which generally would be available to offset the amount of REIT taxable income that otherwise would be required to be distributed as a dividend to our stockholders.
Item 6. SELECTED FINANCIAL DATA Accordingly, no regular dividends were paid in 2008 and 2007.
On September 9, 2008, our Board of Directors declared a special dividend of $7.00 per share, or $35,571,000 in the aggregate, which was paid on October 30, 2008, to stockholders of record on October 14, 2008. The dividend was attributable to the liquidation of the wholly owned 731 Lexington Avenue taxable REIT subsidiary into Alexander’s.
Recent Sales of Unregistered Securities
During 2008, we did not sell any unregistered securities.
Recent Purchases of Equity Securities
During the fourth quarter of 2008, we did not repurchase any of our equity securities.
Performance Graph
The following graph is a comparison of the five-year cumulative return of our common stock, the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index (excluding health care real estate investment trusts), a peer group index. The graph assumes that $100 was invested on December 31, 2003 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.
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 |
Alexander’s | 100 | 172 | 197 | 337 | 283 | 137 |
S&P 500 Index | 100 | 111 | 116 | 135 | 142 | 90 |
The NAREIT All Equity Index | 100 | 132 | 148 | 199 | 168 | 105 |
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“Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” in this Annual Report on Form 10-K. This data may not be comparable to, or indicative of, future operating results.
| | Year Ended December 31,
|
|---|
(Amounts in thousands, except per share data)
| | 2005
| | 2004
| | 2003
| | 2002
| | 2001
|
|---|
| Total revenues | | $ | 187,085 | | $ | 148,895 | | $ | 87,162 | | $ | 76,800 | | $ | 67,792 |
| | |
| |
| |
| |
| |
|
| Income (loss) from continuing operations | | $ | 21,298(1 | ) | $ | (37,331 | )(1) | $ | (18,948 | )(1) | $ | 12,400 | | $ | 7,414 |
| Income from discontinued operations | | | — | | | — | | | 1,206 | | | 11,184 | | | 19,972 |
Net gain on sale of condominiums in 2005 and
other real estate in 2004, after income taxes | | | 60,943 | | | 3,862 | | | — | | | — | | | — |
| | |
| |
| |
| |
| |
|
| Net income (loss) | | $ | 82,241 | | $ | (33,469 | ) | $ | (17,742 | ) | $ | 23,584 | | $ | 27,386 |
| | |
| |
| |
| |
| |
|
Income (loss) per common share (basic and
diluted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income (loss) from continuing
operations—basic |
|
$ |
4.24 |
|
$ |
(7.45 |
) |
$ |
(3.79 |
) |
$ |
2.48 |
|
$ |
1.48 |
| | Income (loss) from continuing
operations—diluted | | | 4.19 | | | (7.45 | ) | | (3.79 | ) | | 2.48 | | | 1.48 |
| | Income (loss) per common share—basic | | | 16.38 | | | (6.68 | ) | | (3.53 | ) | | 4.72 | | | 5.48 |
| | Income (loss) per common share—diluted | | | 16.19 | | | (6.68 | ) | | (3.53 | ) | | 4.72 | | | 5.48 |
Balance sheet data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | Total assets | | $ | 1,403,317 | | $ | 1,244,801 | | $ | 920,996 | | $ | 664,912 | | $ | 583,339 |
| | Real estate, at cost | | | 699,136 | | | 955,107 | | | 826,546 | | | 600,661 | | | 434,344 |
| | Accumulated depreciation | | | 88,976 | | | 74,028 | | | 62,744 | | | 57,686 | | | 56,383 |
| | Debt | | | 1,079,465 | | | 952,528 | | | 731,485 | | | 543,807 | | | 515,831 |
| | Stockholders' equity | | | 101,324 | | | 18,368 | | | 50,923 | | | 68,665 | | | 45,081 |
| | | |
(Amounts in thousands, except per share data) | | | | | | | | | | | |
| | | | | | | | | | | |
Total revenues | | $ | 211,097 | | $ | 207,980 | | $ | 198,772 | | $ | 187,085 | | $ | 148,895 | |
| | | | | | | | | | | | | | | | |
Income (loss) before net gain on sale of condominiums
and other real estate | | $ | 76,288 | (1) | $ | 114,341 | (1) | $ | (88,239 | )(1) | $ | 21,298 | (1) | $ | (37,331 | )(1) |
Net gain on sale of condominiums in 2006 and 2005
and other real estate in 2004, after income taxes | | | — | | | — | | | 13,256 | | | 60,943 | | | 3,862 | |
Net income (loss) | | $ | 76,288 | | $ | 114,341 | | $ | (74,983 | ) | $ | 82,241 | | $ | (33,469 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) per common share: | | | | | | | | | | | | | | | | |
Income (loss) per common share – basic | | $ | 15.05 | | $ | 22.68 | | $ | (14.92 | ) | $ | 16.38 | | $ | (6.68 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) per common share – diluted | | $ | 14.96 | | $ | 22.44 | | $ | (14.92 | ) | $ | 16.19 | | $ | (6.68 | ) |
| | | | | | | | | | | | | | | | |
Balance sheet data: | | | | | | | | | | | | | | | | |
Total assets | | $ | 1,603,568 | | $ | 1,532,410 | | $ | 1,447,242 | | $ | 1,403,317 | | $ | 1,244,801 | |
Real estate, at cost | | | 967,975 | | | 835,081 | | | 692,388 | | | 699,136 | | | 955,107 | |
Accumulated depreciation and amortization | | | 114,235 | | | 96,183 | | | 80,779 | | | 88,976 | | | 74,028 | |
Debt | | | 1,221,255 | | | 1,110,197 | | | 1,068,498 | | | 1,079,465 | | | 952,528 | |
Stockholders’ equity | | | 179,096 | | | 135,103 | | | 27,182 | | | 101,324 | | | 18,368 | |
__________________________
| (1) | Includes a reversal of SARs compensation expense of $20,254 and $43,536 in 2008 and 2007, respectively, and accruals for SARs compensation expense of $148,613, $27,588 and $76,789 in 2006, 2005, and 2004, respectively. |
(1)Includes SARs compensation expense accruals of $27,588,000, $76,789,000 and $44,917,000 in 2005, 2004 and 2003, respectively.
ITEM 7.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONCONDITIONS AND RESULTS OF
OPERATIONS
Overview
Alexander's,Alexander’s, Inc. (the "Company" or "Alexander's")(NYSE: ALX) is a real estate investment trust ("REIT"(“REIT”) engaged in leasing, managing, developing and redeveloping properties. Alexander's conductsAll references to “we,” “us,” “our,” “Company,” and “Alexander’s”, refer to Alexander’s, Inc. and its activities through its manager,consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust ("Vornado"(“Vornado”) (NYSE: VNO). Alexander's has sixWe have seven properties in the greater New York City metropolitan area including the 731 Lexington Avenue property, a 1,300,0001,307,000 square foot multi-use building in Manhattan, and the Kings Plaza Regional Shopping Center located in Brooklyn.
The Company competes
We compete with a large number of real estate property owners and developers. The Company'sOur success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and theour ability of the Company to lease, sublease or sell itsour properties, at profitable levels. The Company'sOur success is also subject to itsour ability to refinance existing debtsdebt as they comeit comes due and on acceptable terms.
The Company
In the second half of 2007 the residential mortgage and capital markets began showing signs of stress, primarily in the form of escalating default rates on sub-prime mortgages, declining home values and increasing inventory nationwide. In 2008, the “credit crisis” spread to the broader commercial credit and financial markets resulting in illiquidity and volatility in the bond and equity markets. We are currently in an economic recession, which has substantially completednegatively affected all businesses, including ours. During the developmentpast year, real estate transactions have diminished significantly and capitalization rates have risen. Our real estate portfolio may be affected by declining demand for office and retail space and tenant bankruptcies, store closures, lower occupancy and effective rents, which would result in a corresponding decrease in net income, funds from operations and cash flow. For example, Circuit City, a tenant which leases space at our Rego Park I location aggregating 50,000 square feet, approximately $2,600,000 of 731 Lexington Avenue and placed theannual property into service during 2005.rental income, recently announced that it is liquidating pursuant to Bankruptcy Court approval. As a result, the Company's revenues, expenses and cash flows from operating activities increased substantially over the prior year. See "Resultswe wrote-off approximately $4,909,000 of Operations" and "Liquidity and Capital Resources" for further details.
On July 6, 2005, the Company completed a $320,000,000 mortgage financing on the retail space. The loan is interest onlyunamortized costs at a fixed rate of 4.93% and matures in July 2015. Of the net proceeds of approximately $312,000,000 (net of mortgage recording tax and closing costs), $90,000,000 was used to repay the construction loan and $124,000,000 was used to repay the loans from Vornado. In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
As of December 31, 2005, 1002008, including tenant improvements and receivables arising from the straight-lining of the 105 residential condominium units were sold and closed, which resulted in an after-tax net gain of $62,851,000, of which $60,943,000 was recognized inrent.
Year Ended December 31, 2008 Financial Results Summary
Net income for the year ended December 31, 2005, under2008 was $76,288,000, or $14.96 per diluted share, compared to net income of $114,341,000, or $22.44 per diluted share, for the percentage of completion method. Subsequent toyear ended December 31, 2005,2007. Funds from operations (“FFO”) for the Companyyear ended December 31, 2008 was $99,916,000, or $19.60 per diluted share, compared to FFO of $136,284,000, or $26.75 per diluted share, for the year ended December 31, 2007.
Net income and FFO for the year ended December 31, 2008 include $20,254,000, or $3.97 per diluted share, for the reversal of a portion of stock appreciation rights (“SARs”) compensation expense, compared to $43,536,000, or $8.55 per diluted share, for such reversal in the prior year.
Rego Park Shopping Center
The development at our Rego Park II location consists of a 600,000 square foot shopping center on four levels and a parking deck containing approximately 1,400 spaces. As of December 31, 2008, $181,695,000 was drawn on the construction loan. The loan has entered into sales contractsan interest rate of LIBOR plus 1.20% (3.08% at December 31, 2008), and matures in December 2010, with a one-year extension option. The shopping center will be anchored by a 134,000 square foot Century 21 department store, a 138,000 square foot Home Depot and 132,000 square foot Kohl’s.
Flushing
In February 2009, we leased the Flushing property to a developer for 3the remainder of our ground lease term.
Overview - Continued
Stock Appreciation Rights
On September 15 and October 14, 2008, Steven Roth, the Chairman of our Board of Directors and Chief Executive Officer, exercised an aggregate of 200,000 of his existing SARs, which were scheduled to expire on March 4, 2009, and received gross proceeds of $62,809,000.
Special Dividend
On September 9, 2008, our Board of Directors declared a special dividend of $7.00 per share, or $35,571,000 in the aggregate, which was paid on October 30, 2008, to stockholders of record on October 14, 2008. The dividend was attributable to the liquidation of the remaining 5 residential condominium units.wholly owned 731 Lexington Avenue taxable REIT subsidiary into Alexander’s.
Critical Accounting Policies and Estimates
The preparation ofOur financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which requires managementus 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 theour accounting policies that management believeswe believe are critical to the preparation of the Company'sour consolidated financial statements. This summary should be read in conjunction with thea more complete discussion of the Company'sour accounting policies included in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.
Real estate is carried at cost, net of accumulated depreciation and amortization. As of December 31, 2008 and 2007, the carrying amount of our real estate, net of accumulated depreciation, was $853,740,000 and $738,898,000, respectively. Depreciation is provided on a straight-line basis over the assets'assets’ estimated useful lives, which range from seven7 to 50 years. Betterments, significant renewals and certain costs directly related to the acquisition, improvement and leasing of real estate are capitalized. Maintenance and repairs are charged to operations as incurred. As real estate is undergoing development activities, all property operating expenses, including interest expense, are capitalized to the cost of the real property to the extent that management believeswe believe such costs are recoverable through the value of the property. The recognition of depreciation expense requires estimates by managementus of the useful life of each property and improvement, as well as an allocation of the costs associated with a property including capitalized costs, to its various components. If the Company doeswe do not allocate these costs appropriately or incorrectly estimatesestimate the useful lives of itsour real estate, depreciation expense could be misstated.
The Company's
Our properties, including any related intangible assets, are individually reviewed for impairment if events or circumstances change indicating that the carrying amount of the propertyassets may not be recoverable. In such an event, a comparison is made ofAn impairment exists when the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis to the carrying amount of the property. The carrying amount of an asset would be adjusted, if necessary, to reflectexceeds the aggregate projected future cash flows over our anticipated holding period on an undiscounted basis. An impairment inloss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, our anticipated holding period for properties, or the estimated fair value of the asset. If the Company incorrectly estimates undiscounted cash flows,properties change based on market conditions or otherwise, our evaluation of impairment charges may be different. The impact ofdifferent and such estimates in connection with future impairment analysesdifferences could be material to the Company'sour consolidated financial statements. The evaluation of anticipated cash flows is subjective and is 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.
The Company
We periodically evaluatesevaluate the collectibility of amounts due from tenants and maintainsmaintain an allowance for doubtful accounts ($1,357,000 and $667,000 as of December 31, 2008 and 2007, respectively) for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. The CompanyWe also maintainsmaintain an allowance for receivables arising from the straight-lining of rents.rents, if necessary. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercisesAs of December 31, 2008 and 2007, there were no allowances for receivables arising from the straight lining of rents. We exercise judgment in establishing these allowances and considersconsider payment history and current credit status in developing these estimates. These estimates may differ from actual results, which could be material to our consolidated financial statements.
The Company hasWe have the following revenue sources and revenue recognition policies:
•Base rentRent (revenue arising from tenant leases)— – These rents are recognized over the non-cancelable term of the related leases on a straight-line basis, which includes the effects of rent steps and free rent abatements under the leases.
•Percentage Rents (revenue arising from retail We commence rental revenue recognition when the tenant leasestakes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a tenant improvement allowance for improvements that is contingent uponare owned by the salestenant, we recognize the allowance as a reduction of tenants exceeding defined thresholds)—These rents are recognized in accordance with Staff Accounting Bulletin No. 104,Revenue Recognition, which states that this contingentrental revenue is only to be recognized afteron a straight-line basis over the contingency has been removed (i.e.,term of the sales threshold has been achieved).
•- lease.
| • | Percentage Rent (revenue arising from retail tenant leases that is contingent upon the sales of tenants exceeding defined thresholds) – These rents are recognized in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition, which states that this contingent revenue is only to be recognized after the contingency has been removed (i.e., the sales threshold has been achieved). |
Expense ReimbursementsReimbursement (revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective properties)— – This revenue is accrued in the same periods as the expenses are incurred.
•Condominium Sales (incomeParking income (revenue arising from the salesrental of condominium unitsparking space at the Lexington Avenue property)—Income on deposits received for sales of condominium units has been deferred in accordance with the deposit method of SFAS No. 66,Accounting for Sales of Real Estate. Gains on sales of condominium units areour properties) – This income is recognized under the percentage of completion method.as cash is received.
The Company assesses,
We assess, among other things, the collectibility of revenue before recognition. If the Companywe incorrectly assessesassess collectibility of revenue, net earnings and assets could be misstated.
Stock Appreciation Rights
Stock Appreciation Rights (“SARs”) are granted at 100% of the market price of our common stock on the date of grant. Because the SARs were granted in 1999, they are accounted for under the intrinsic value method in accordance with FASB Interpretation (“FIN”), an interpretation Accounting Principles Board (“APB”) Opinions 15 and 25. Accordingly, compensation expense for each SAR is measured by the excess of the stock price at the current balance sheet date over the stock price at the previous balance sheet date. If the stock price is lower at the current balance sheet date, previously recognized expense is reversed, but not below zero.
Income Taxes
The Company operatesWe operate in a manner intended to enable itus to continue to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"“Code”). Under the Code, the Company'sIn order to maintain our qualification as a REIT, we are required, among other conditions, to distribute as dividends to our stockholders at least 90% of annual REIT taxable income. As of December 31, 2008 and 2007, we had net operating loss carryovers ("NOLs"(“NOLs”) of approximately $29,211,000 and $1,597,000, respectively. Pursuant to the Code, our NOLs generally would be available to offset the amount of the Company'sour REIT taxable income that would otherwise be required to be distributed as dividends to itsour stockholders. Accordingly, no regular dividends were paid in 2008 and 2007.
The Company has elected
Prior to treat its liquidation on September 12, 2008, our wholly owned subsidiary, 731 Residential LLC, was treated as a taxable REIT subsidiary ("TRS"(“TRS”). The TRS iswas subject to income tax at regular corporate tax rates. The Company'sOur NOLs willwere not be available to offset taxable income of the TRS. As of December 31, 2005, 100 ofIn the 105 residential condominium units were sold and closed. In connection therewith, TRS recognized $51,825,000 of income tax expense, of which $13,870,000 was paid in the yearyears ended December 31, 2005.2008 and 2007, the TRS paid no income taxes in 2004 or 2003. TRS deferred income taxes, where applicable, are accounted for in accordance with Statements$1,742,000 and $1,580,000, respectively. Under Statement of Financial Accounting Standards ("SFAS"(“SFAS”) No. 109, Accounting For Income Taxes using the asset and liability method. Under this method,, deferred income taxes arewould be recognized for temporary differences between the financial reporting basis of assets and liabilities and their respective tax basis and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors. As of December 31, 2008 and 2007, there were no deferred tax assets or liabilities on our consolidated balance sheets.
26
Stock Appreciation Rights ("SARs") are granted at 100% of the market price of the Company's common stock on the date of grant. Compensation expense for each SAR is measured by the excess of the stock price at the current balance sheet date over the stock price at the previous balance sheet date. If the stock price is lower at the current balance sheet date, previously recognized expense is reversed, but not below zero.
Recently Issued Accounting Literature
On December 16, 2004,In September 2006, the Financial Accounting Standards Board ("FASB")FASB issued SFAS 153, ExchangesNo. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 became effective for our financial assets and liabilities on January 1, 2008. The FASB has deferred the implementation of Nonmonetary Assets—An Amendmentthe provisions of APB OpinionSFAS No. 29. 157 relating to certain non-financial assets and liabilities until January 1, 2009. SFAS No. 157 did not materially affect how we measure and value financial assets and will not have a material impact on how we measure and value non-financial assets.
In February 2007, the FASB issued SFAS No. 159, The amendments made byFair Value Option for Financial Assets and Financial Liabilities. SFAS 153 are based159 permits companies to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for us on the principle that exchanges of nonmonetary assets should be measured based onJanuary 1, 2008. We did not elected the fair value option for any of our existing financial instruments on the effective date and have not determined whether or not we will elect this option for any eligible financial instruments we acquire in the future.
In December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R broadens the guidance of SFAS No. 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations; and stipulates that acquisition related costs be expensed rather than included as part of the assets exchanged. Further,basis of the amendments eliminateacquisition. SFAS No. 141R expands required disclosures to improve the narrow exception for nonmonetary exchangesability to evaluate the nature and financial effects of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance."business combinations. SFAS 153No. 141R is effective for nonmonetary asset exchanges occurring in fiscal periods beginningall transactions entered into, on or after June 15, 2005. TheJanuary 1, 2009. We believe that the adoption of SFAS 153this standard on its effective date didJanuary 1, 2009, will not have a material effect on the Company'sour consolidated financial statements.
On
In December 16, 2004,2007, the FASB issued SFAS 123: (Revised 2004), Share-Based Payment ("SFAS 123R")No. 160, Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51. SFAS 123R replacesNo. 160 requires a noncontrolling interest in a subsidiary to be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest to be identified in the consolidated financial statements. SFAS 123, usingNo. 160 also calls for consistency in the prospective method,manner of reporting changes in the parent’s ownership interest and supersedes APB Opinion No. 25: Accounting for Stock Issued to Employees. SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements and be measured based on the fair value measurement of theany noncontrolling equity or liability instruments issued.investment retained in a deconsolidation. SFAS 123RNo. 160 is effective as of the first interim or annual reporting period beginning after December 15, 2005. The Company does noton January 1, 2009. We believe that the adoption of SFAS 123Rthis standard on January 1, 2009, will not have a material effect on itsour consolidated financial statements.
In March 2005,
Results of Operations
Years Ended December 31, 2008 and December 31, 2007
Net income was $76,288,000 for the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143, Asset Retirement Obligations. FIN 47 provides clarification of the term "conditional asset retirement obligation" as used in SFAS 143, defined as a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. Under this standard, a company must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated. FIN 47 became effective in the Company's fiscal quarteryear ended December 31, 2005. Upon review of its assets,2008, compared to $114,341,000 for the Company has concluded that no asset retirement obligation exists as ofyear ended December 31, 2005. Accordingly, the adoption of FIN 47 on its effective date had no impact on the Company's consolidated financial statements.
In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154 changes the requirements2007. Net income for the accounting and reportingyear ended December 31, 2008 includes $20,254,000 for the reversal of a changeportion of stock appreciation rights (“SARs”) compensation expense, compared to $43,536,000 for such reversal in accounting principle by requiring that a voluntary changethe prior year.
Property Rentals
Property rentals were $143,004,000 in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticableyear ended December 31, 2008, compared to do so. SFAS 154 also provides that$141,629,000 in the year ended December 31, 2007, an increase of $1,375,000. This increase was primarily attributable to the Lowe’s ground lease at Kings Plaza, which commenced at the end of February 2007.
Expense Reimbursements
Tenant expense reimbursements were $68,093,000 in the year ended December 31, 2008, compared to $66,351,000 in the year ended December 31, 2007, an increase of $1,742,000, which resulted primarily from higher real estate taxes.
Operating Expense
Operating expenses were $77,110,000 in the year ended December 31, 2008, compared to $70,496,000 in the year ended December 31, 2007, an increase of $6,614,000. This increase results primarily from (i) a change$3,707,000 write-off of the Circuit City receivables, primarily related to the straight-lining of rents, in the methodfourth quarter of depreciating or amortizing2008 (ii) higher real estate taxes of $1,601,000 and (iii) higher bad debt expense of $624,000.
General and Administrative
Excluding $20,254,000 for the reversal of a long-lived non-financial asset be accountedportion of SARs compensation expense in the year ended December 31, 2008 and $43,536,000 for assuch reversal in the prior year, general and administrative expenses were higher by $490,000 in the current year.
Depreciation and Amortization
Depreciation and Amortization was $24,066,000 in the year ended December 31, 2008, compared to $22,343,000 in the year ended December 31, 2007, an increase of $1,723,000. This increase resulted primarily from a changewrite-off of $1,430,000 of tenant improvements relating to Circuit City at Rego Park I.
Interest and Other Income, net
Interest and other income, net was $15,222,000 in estimate (prospectively) thatthe year ended December 31, 2008, compared to $27,351,000 in the year ended December 31, 2007, a decrease of $12,129,000. This decrease was effected byprimarily comprised of $12,584,000 from 2.3% lower average yields on existing cash balances and a change in accounting principle, and (2) corrections$1,349,000 gain on sale of errors in previously issued financial statements should be termed a "restatement". SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company does not believe that the adoption of SFAS 154 will have a material effect on its consolidated financial statements.
In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") on Issue No. 04-05, "Determining Whether a General Partner, or General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights" ("EITF 04-05"). EITF 04-05 provides a framework for determining whether a general partner controls, and should consolidate, a limited partnership or a similar entity. EITF 04-05 became effective on June 29, 2005, for all newly formed or modified limited partnership arrangements and January 1, 2006 for all existing limited partnership arrangements. The Company has electedcertain “emission reduction credits” attributable to early adopt the provisions of EITF 04-05 and accordingly, has consolidated its investment in the Kings Plaza energy plant joint venture in 2007, partially offset by $1,872,000 for the net gain on the sale of real estate tax abatement certificates in 2008.
Interest and Debt Expense
Interest and debt expense was $62,474,000 in the year ended December 31, 2008, compared to $65,322,000 in the year ended December 31, 2007, a decrease of $2,848,000. This decrease was primarily due to higher capitalized interest in the current year as a result of our Rego Park II development project, partially offset by higher average debt outstanding.
Minority Interest of Partially Owned Entity
Minority interest of partially owned entity represents our venture partner’s 75% pro rata share of net income or loss in our consolidated partially owned entity, the Kings Plaza energy plant joint venture, which became operational in March 2007. In the year ended December 31, 2008, we had $7,000 of minority interest expense, compared to $1,168,000 of such expense in the year ended December 31, 2007, a decrease of $1,161,000. This decrease results primarily from minority interest attributable to our venture partner for their share of the net gain on the sale of certain “emission reduction credits” in 2007.
Income Tax Expense of the Taxable REIT Subsidiary
Income tax expense was $941,000 in the year ended December 31, 2008, and relates primarily to the interest income of our taxable REIT subsidiary, which was liquidated during the fourth quarter of 2005.2008.
Results of Operations - Continued
Years Ended December 31, 20052007 and December 31, 20042006
The Company had netNet income of $82,241,000was $114,341,000 for the year ended December 31, 2005,2007, compared to a net loss of $33,469,000 in$74,983,000, for the prior year an increase of $115,710,000.ended December 31, 2006. Net income for 20052007 includes (i) $60,943,000$43,536,000 for the reversal of a portion of stock appreciation rights (“SARs”) compensation expense. Net loss for the year ended December 31, 2006 includes $148,613,000, for an accrual of SARs compensation expense, partially offset by a $13,256,000 after-tax net gain from the sale of residential condominium units at 731 Lexington Avenue. The net of these items decreased net income by $135,357,000.
Property Rentals
Property rentals were $141,629,000 in 2007, compared to $137,072,000 in 2006, an increase of $4,557,000. This increase was primarily attributable to rents from tenants at 731 Lexington Avenue (ii) $2,088,000as a result of incomethe lease-up of the remaining vacant space during the second half of 2006, as well as rent from the settlementcommencement of claims against third parties for environmental remediationthe Lowe’s ground lease at Kings Plaza partially offset by, (iii) $27,588,000 for an accrual of SARs compensation expense. Net loss for the year ended December 31, 2004 includes (i) $76,789,000 for an accrual of SARs compensation expense, (ii) $3,050,000 for the write-off of the proportionate share of unamortized debt issuance costs in connection with the reduction of the principal amount of a construction loan, partially offset by, (iii) $3,862,000 for a net gain on sale of non-depreciable real estate.February 2007.
Property rentals were $132,949,000 in 2005, compared to $110,541,000 in 2004, an increase of $22,408,000. The following table details the increase by property:
Tenant
| | Delivery Date
| | Increase
|
|---|
| 731 Lexington Avenue: | | | | | |
| | Citibank N.A. | | Feb. 2005 | | $ | 11,150,000 |
| | The Container Store | | Mar. 2005 | | | 4,132,000 |
| | Hennes & Mauritz | | May 2004 | | | 2,136,000 |
| | The Home Depot | | Mar. 2004 | | | 1,925,000 |
| | Other tenants | | Various | | | 2,145,000 |
| | | | |
|
| | | | | | 21,488,000 |
| Other properties | | | | | 920,000 |
| | | | |
|
| | | | | $ | 22,408,000 |
| | | | |
|
Expense Reimbursements
Tenant expense reimbursements were $54,136,000$66,351,000 in 2005,2007, compared to $38,354,000$61,700,000 in 2004,2006, an increase of $15,782,000.$4,651,000. This increase was largely due toresulted primarily from higher utility recoveries at Kings Plaza and real estate tax reimbursements in excess of expense recognized, from tenants at 731 Lexington Avenue, under leases that commenced subsequent to the second quarter of 2004.do not participate in a tax credit program.
Operating Expense
Operating expenses were $64,872,000$70,496,000 in 2005,2007, compared to $47,615,000$71,980,000 in 2004, an increase of $17,257,000. This increase was primarily due to lower amounts being capitalized in the current year period as well as additional operating costs being incurred at 731 Lexington Avenue as a result of the property being substantially placed into service during 2005.
General and administrative expenses were $32,393,000 in 2005, compared to $81,285,000 in 2004,2006, a decrease of $48,892,000.$1,484,000. This decrease was primarily due to $2,108,000 of lower operating costs at our Kings Plaza energy plant, due to start-up expenses and an oil spill in 2006, partially offset by higher costs for repairs and maintenance.
General and Administrative
Excluding $43,536,000 for the reversal of a $49,201,000 decrease in the accrual forportion of SARs compensation expense in 2005.2007 and $148,613,000 for an accrual of SARs compensation expense in 2006, general and administrative expenses were lower by $1,034,000 in 2007. This decrease resulted primarily from organization costs incurred in 2006 in connection with forming the Kings Plaza energy plant joint venture.
Depreciation
Interest and amortization expense was $19,877,000 in 2005, compared to $15,527,000 in 2004, an increase of $4,350,000. This increase was due to depreciation on the 731 Lexington Avenue building and improvements, which were substantially placed into service during 2005.Other Income, net
Interest and other income, net was $14,769,000$27,351,000 in 2005,2007, compared to $1,571,000$28,257,000 in 2004, an increase2006, a decrease of $13,198,000.$906,000. This increase wasdecrease resulted primarily due to (i) an increase infrom lower average cash balances of $274,000,000, (ii)$42,200,000 at an increase in the average yield on investments of approximately 2%4.6%, and (iii) income of $2,088,000partially offset by a net gain from the settlementssale of claims against third parties for environmental remediation atcertain “emission reduction credits” by our consolidated partially owned entity, the Kings Plaza.Plaza energy plant joint venture.
Interest and Debt Expense
Interest and debt expense was $62,678,000$65,322,000 in 2005,2007, compared to $40,320,000$67,726,000 in 2004, an increase2006, a decrease of $22,358,000.$2,404,000. This increasedecrease was primarily due to (i) lower amounts ofhigher capitalized interest of $4,567,000 in the current year2007 as a result of 731 Lexington Avenue being substantially placed into service during 2005 (interestour Rego Park development project, partially offset by, $2,466,000 of $6,935,000 was capitalized in 2005, compared to $25,087,000 in 2004) and (ii) an increase of $131,000,000 inaccrued interest on the average debt outstanding, primarily due to the 731 Lexington Avenue retail financing of $320,000,000 in July 2005.
Years Ended December 31, 2004 and December 31, 2003
The Company had a net loss of $33,469,000liability for the year ended December 31, 2004, compared to a net loss of $17,742,000 in the prior year. The net loss for 2004 includes (i) an accrual of $76,789,000 for SAR's compensation expense, (ii) a $3,050,000 write-off of for the proportionate share of unamortized deferred debt expenseunrecognized tax benefits, in connection with the reductionadoption of FASB Interpretation No. 48.
Minority Interest of Partially Owned Entity
Minority interest of partially owned entity represents our venture partner’s 75% pro rata share of net income or loss in our consolidated partially owned entity, the principal amountKings Plaza energy plant joint venture, which became operational in March 2007. Minority interest of the construction loan for the 731 Lexington Avenue project, and (iii)partially owned entity was expense of $1,168,000 in 2007, compared to income of $3,862,000 from the sale$1,095,000 in 2006, a change of land in White Plains, New York. The net loss for 2003 includes (i) an accrual of $44,917,000 for SARs, (ii) $1,289,000 resulting from the recognition as income of the non-refundable deposit from the planned sale of the Flushing property of $1,875,000, net of $586,000 for costs associated with this transaction, and (iii) income from discontinued operations of $1,206,000 representing the reversal of previously accrued contingent liabilities.
Property rentals were $110,541,000 in 2004, compared to $56,785,000 in 2003, an increase of $53,756,000. The following table details the increase by property:
Tenant
| | Delivery Date
| | Increase
|
|---|
| 731 Lexington Avenue: | | | | | |
| | Bloomberg L.P. | | Various | | $ | 40,771,000 |
| | The Home Depot | | Mar. 2004 | | | 6,086,000 |
| | Hennes & Mauritz | | May 2004 | | | 3,622,000 |
| | Other tenants | | Various | | | 2,687,000 |
| | | | |
|
| | | | | | 53,166,000 |
| Other properties | | | | | 590,000 |
| | | | |
|
| | | | | $ | 53,756,000 |
| | | | |
|
Tenant expense reimbursements were $38,354,000 in 2004, compared to $30,377,000 in 2003, an increase of $7,977,000.$2,263,000. This increase was largely due to reimbursements from Bloomberg L.P.
Operating expenses were $47,615,000 in 2004, compared to $37,984,000 in 2003, an increase of $9,631,000. This increasechange resulted primarily from operating expenses at 731 Lexington Avenueincome in 2007 as a result of $9,435,000.
General and administrative expenses were $81,285,000 in 2004,a net gain on sale of certain “emission reduction credits,” compared to $48,921,000a loss in 2003, an increase2006 as a result of $32,364,000. This primarily resulted fromorganization cost expensed in connection with forming the increase in the accrual for SARs compensation expense.joint venture.
Depreciation
Related Party Transactions
Vornado
At December 31, 2008, Vornado owned 32.5% of our outstanding common stock. We are managed by, and amortization expense was $15,527,000 in 2004, compared to $7,497,000 in 2003, an increase of $8,030,000. This increase was due to depreciation on the space delivered to tenants at 731 Lexington Avenue, as noted above.
Interest and other income, net was $1,571,000 in 2004, compared to $1,983,000 in 2003, a decrease of $412,000. This decrease was due to $1,289,000 recognized in 2003 representing a non-refundable deposit from the planned sale of the Flushing property, offset by an increase in interest income from higher average cash balances in 2004.
Interest and debt expense was $40,320,000 in 2004, compared to $13,691,000 in 2003, an increase of $26,629,000. This increase resulted from (i) lower amounts of capitalized interest in the current year because of placing portions of 731 Lexington Avenue in service (interest of $25,087,000 has been capitalized in 2004, as compared to $37,516,000 in 2003) and (ii) an increase in average debt outstanding of $266,853,000, primarily due to the 731 Lexington Avenue office financing of $400,000,000, partially offset by a decline in average interest rates of 0.83%.
Relationship with Vornado
The Company is managed, and itsour properties are leased and developed by, Vornado, pursuant to the agreements with one-year terms, expiringdescribed below, which expire in March of each year whichand are automatically renewable.
In conjunction with the closing of the Rego Park II construction loan on December 21, 2007, we bifurcated the management, development and leasing agreements described below to cover the Rego Park II property separately. In addition, we amended the Rego Park II management and development agreement, to provide for a term through substantial completion of the construction, with automatic renewals, and for payment of the Rego Park II development fees upon the earlier of substantial completion of the construction, or the transfer of the property to an unaffiliated third party.
Management and Development Agreements
TheWe pay Vornado an annual fee payable to Vornado for management of the Company isfee equal to the sum of (i) $3,000,000, and(ii) 3% of gross income from the Kings Plaza Regional Shopping Center.Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue, and (iv) $234,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.
In addition, Vornado is entitled to a development fee equal toof 6% of development costs, as defined, with a minimum guaranteed feefees of $750,000 per annum.
Vornado also provides allus with leasing services for the Company 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 of the sale of an asset, the fee is 3% of the gross proceeds, as defined. Such amounts are payable annually in an amount not to exceed $2,500,000, until the present value of such installments, calculated at a discount rate of 9% per annum, equals the amount that would have been paid had they been paid at the time the transactions which gave rise to the commissions occurred. Pursuant to the leasing agreement, in the event third partythird-party real estate brokers are used, the fees to Vornado increase by 1% and Vornado is responsible for the fees to the third partythird-party real estate brokers, exceptbrokers. Vornado is also entitled to a commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000 and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable in connectionannual installments in an amount not to exceed $4,000,000, with the Bloomberg L.P. lease, where the tenant paid the third party broker directly.
On July 6, 2005, the Company completed a $320,000,000 mortgage financing of the retail space. In connection therewith, the Company repaid the remaining balance of the construction loan and the $124,000,000 loan to Vornado. In addition, the Company paid Vornadointerest on the unpaid balance of the development fee of $20,624,000 and $6,300,000 for the Completion Guarantee Fee.at LIBOR plus 1% (5.19% at December 31, 2008).
On May 27, 2004, Alexander's
Related Party Transactions – continued
Other Agreements
We have also entered into an agreement with Vornado under which it provides property management services at 731 Lexington Avenue for an annual fee of $0.50 per square foot of the tenant-occupied office and retail space. Further, the Company entered into an agreementagreements with Building Maintenance Services, ("BMS"), a wholly-ownedwholly owned subsidiary of Vornado, to supervise the cleaning, engineering and security services at the 731our Lexington Avenue propertyand Kings Plaza properties for an annual fee of the cost for such services plus 6%. In addition, in October 2004, the Company entered into an agreement with BMS to provide the same services at the Kings Plaza Regional Shopping Center. These agreements were negotiated and approved on behalf of the Company by a committee of directors of the Company unaffiliated with Vornado.
The following table shows the amounts incurred under the management, leasing and development agreements.agreements discussed above.
| | Year Ended December 31,
|
|---|
(Amounts in thousands)
| | 2005
| | 2004
| | 2003
|
|---|
| Company management fees | | $ | 3,000 | | $ | 3,000 | | $ | 3,000 |
| Development fee, guarantee fee and rent for development office | | | 4,431 | | | 5,955 | | | 10,292 |
| Leasing fees | | | 11,671 | | | 12,156 | | | 17,919 |
| Property management fees and payments for cleaning, engineering and security services | | | 4,776 | | | 2,481 | | | 887 |
| | |
| |
| |
|
| | | $ | 23,878 | | $ | 23,592 | | $ | 32,098 |
| | |
| |
| |
|
(Amounts in thousands) | | | |
| | | | | | | |
Company management fees | | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
Development fees | | | 6,520 | | | 6,476 | | | 755 | |
Leasing fees | | | 2,946 | | | 4,411 | | | 4,505 | |
Property management fees and payments for cleaning, engineering and security
services | | | 4,146 | | | 4,530 | | | 3,383 | |
| | $ | 16,612 | | $ | 18,417 | | $ | 11,643 | |
At December 31, 2005, the Company2008, we owed Vornado $32,804,000$31,079,000 for leasing fees, $11,496,000 for development fees and $1,520,000$1,511,000 for management, property management and cleaning fees.
LiquiditySpecial Dividend
On September 9, 2008, our Board of Directors declared a special dividend of $7.00 per share, or $35,571,000 in the aggregate, which was paid on October 30, 2008, to stockholders of record on October 14, 2008. The dividend was attributable to the liquidation of the wholly owned 731 Lexington Avenue taxable REIT subsidiary into Alexander’s. Accordingly, we paid Vornado $11,578,000 for their share of this dividend.
Other
In the years ended December 31, 2008, 2007 and Capital Resources2006, Winston & Strawn LLP, a law firm in which Neil Underberg, a member of our Board of Directors, is of counsel, performed legal services for us for which it was paid $46,000, $219,000, and $106,000, respectively.
The Company anticipates
LIQUIDITY AND CAPITAL RESOURCES
We anticipate that cash from operations, together with existing cash balances, will be adequate to fund itsour business operations, recurring capital expenditures, and debt amortization over the next twelve months.
Development Projects
Rego Park II
The Company owns twoWe own approximately 6.6 acres of land parcels containing approximately 10 acres adjacent to itsour Rego Park I property in Queens, New York. One parcelYork, which comprises the entire square block bounded by the Horace Harding Service Road (of the Long Island Expressway), 97th Street, 62nd Drive and Junction Boulevard. The other is a parcel of approximately one-quarter square block at the intersection of Junction Boulevard and the Horace Harding Service Road.
The Company's plan for the entire square block parcel isdevelopment at Rego Park II consists of a mixed-use, development containing approximately 600,000 square feet of retail spacefoot shopping center on four levels aboutand a 1,400 space parking deck and may also include up to 450 apartment units in two towers. On September 20, 2005, the Company received governmental approvals for this project. The Company has entered into a lease with Century 21 for 134,000 square feet of retail space at this project.
While the current plans for the one-quarter square block parcel are very preliminary, we anticipate it may include up to 80,000 square feet of retail space.
There can be no assurance that these projects will commence, be completed, completed on time or completed for the budgeted amount.
The Company plans to construct a freestanding building adjacent to the Mall containing approximately 120,000 square feet, which has been leased to Lowe's Home Improvement Warehouse ("Lowe's"). This lease1,400 spaces. Construction is expected to commencebe completed in 2007.2009 and estimated to cost approximately $410,000,000, of which $292,000,000 has been expended as of December 31, 2008. As of December 31, 2008, $181,695,000 was drawn on the $350,000,000 construction loan. The costloan has an interest rate of this projectLIBOR plus 1.20% (3.08% at December 31, 2008), and matures in December 2010, with a one-year extension option. The shopping center will be approximately $11.5 million, which is net ofanchored by a tenant reimbursement of $16.5 million. This cost includes construction of structured elements, which will support134,000 square foot Century 21 department store, a second138,000 square foot Home Depot and third level. There can be no assurance that this project will commence, be completed, completed on time or completed132,000 square foot Kohl’s. The development plans for the budgeted amount.an apartment tower containing 315 apartments have been deferred indefinitely.
Prior to April 15, 2005, the Company owned and operated an energy plant that generates electrical power at its Kings Plaza Regional Shopping Center. On April 15, 2005, the Company contributed this 35 year old plant, which has been fully depreciated, and $750,000 in cash to a joint venture for a 25% interest. Pursuant to the provisions of EITF 04-05, the Company is presumed to have "control" over the joint venture and accordingly, has consolidated its investment in this joint venture in the fourth quarter of 2005. The joint venture plans to rebuild the plant at a total cost of approximately $18,000,000.
There can be no assurance that this project will be completed, completed on time, or completed for the budgeted amount.
The Company carries comprehensive
Insurance
We carry commercial liability with limits of $200,000,000 per location and all risk property insurance ((i)for (i) fire, (ii) flood, (iii) rental loss, (iv) extended coverage, (iv) "actsand (v) “acts of terrorism"terrorism,” as defined in the Terrorism Risk Insurance ExtensionProgram Reauthorization Act (“TRIPRA”) of 2005 which expires in 2007, and (v) rental loss insurance) with respect to its assets.
On June 30, 2005, the Company renewed its annual all risk policyour assets, with limits of (i) $960,000,000$1.7 billion per occurrence, including certified terrorist acts, and $350,000,000as defined, for non-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remainingall of our properties. To the extent that the Company incurswe incur losses in excess of itsour insurance coverage, these losses would be borne by the Companyus and could be material.
The Company's
Our debt instruments, consisting of mortgage loans secured by itsour properties (which are generally non-recourse to Alexander's)us), contain customary covenants requiring the Companyus to maintain insurance. Although the Company believeswe believe that it haswe have adequate insurance coverage underfor the purposes of these agreements, itwe 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 the Company iswe are able to obtain, or if the Terrorism Risk Insurance Extension Act of 2005 is not extended past 2007, it could adversely affect the Company'sour ability to finance and/or refinance its properties and expand its portfolio.
Debt and Contractual Obligationsour properties.
Below is a summary
Stock Appreciation Rights
As of the Company's properties and their encumbrances at December 31, 2005:
(Amounts in thousands)
| | Balance
| | Interest Rate
| | Maturity
|
|---|
| Lexington Office | | $ | 400,000 | | 5.33 | % | Feb. 2014 |
| Lexington Retail(1) | | | 320,000 | | 4.93 | % | July 2015 |
| Kings Plaza | | | 210,539 | | 7.46 | % | June 2011 |
| Rego Park I | | | 80,926 | | 7.25 | % | July 2009 |
| Paramus | | | 68,000 | | 5.92 | % | Oct. 2011 |
| Rego Park II (raw land) | | | — | | N/A | | N/A |
| Flushing (leasehold interest) | | | — | | N/A | | N/A |
| | |
| | | | |
| | | $ | 1,079,465 | | | | |
| | |
| | | | |
(1)In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
Below is a summary of the Company's contractual obligations at December 31, 2005.
(Amounts in thousands)
| | Total
| | Less than One
Year
| | One to Two
Years
| | Three to
Five Years
| | More than
Five Years
|
|---|
| Contractual obligations | | | | | | | | | | | | | | | |
| | Long-term debt obligations | | $ | 1,515,798 | | $ | 74,004 | | $ | 152,638 | | $ | 535,661 | | $ | 753,495 |
| | Operating lease obligations | | | 16,989 | | | 785 | | | 1,581 | | | 2,407 | | | 12,216 |
| | Purchase obligations, primarily construction commitments | | | 3,654 | | | 3,654 | | | — | | | — | | | — |
| | Other obligations | | | 120,332 | | | 90,062 | (1) | | 5,000 | | | 7,500 | | | 17,770 |
| | |
| |
| |
| |
| |
|
| | | $ | 1,656,773 | | $ | 168,505 | | $ | 159,219 | | $ | 545,568 | | $ | 783,481 |
| | |
| |
| |
| |
| |
|
| Commitments | | | | | | | | | | | | | | | |
| | Standby letters of credit | | $ | 4,130 | | $ | 4,130 | | $ | — | | $ | — | | $ | — |
| | |
| |
| |
| |
| |
|
(1)This amount includes $87,563,000 of liabilities for SARs.
Stock Appreciation Rights
On December 29, 2005, Michael Fascitelli, the Company's President, exercised 350,000 of his existing2008, we had 300,000 stock appreciation rights ("SARs"(“SARs”) whichthat were outstanding and exercisable. These SARs have a weighted average exercise price of $63.38 and are scheduled to expire in December 2006 and received $173.82 for each SAR exercised, representing the difference between the Company's stock price of $247.70 (the average of the high and low market price) on the date of exercise and the exercise price of $73.88. This exercise was consistent with the Company's tax planning.
On January 10, 2006, the Omnibus Stock Plan Committee of the Board of Directors of the Company granted Mr. Fascitelli a SAR covering 350,000 shares of the Company's common stock. The exercise price of the SAR is $243.83 per share of common stock, which is the average of the high and low trading price of the Company's common stock on the date of grant. The SAR will become exercisable on July 10, 2006, provided Mr. Fascitelli is employed with the Company on such date, and will expire on March 14, 2007. Mr. Fascitelli's early exercise and the related tax consequences for the Company were factors in the Company's decision to make the new grant to him.
As of January 31, 2006, 850,000 SARs were outstanding and exercisable at a weighted-average exercise price of $141.80.4, 2009. Since the SARs agreements require that they be settled in cash, the Companywe would have had to pay $89,295,000paid $57,458,000 if the holders of these SARs had exercised their SARs on JanuaryDecember 31, 2006.2008. Any change in the Company'sour stock price from the closing price of $246.85$254.90 at JanuaryDecember 31, 20062008 would increase or decrease the amount the Companywe would have to pay upon exercise.
LIQUIDITY AND CAPITAL RESOURCES – continued
Debt and Contractual Obligations
Below is a summary of our properties and their encumbrances at December 31, 2008.
(Amounts in thousands) | | | | | | | |
| | | | | | | | |
Lexington Office | | $ | 373,637 | | 5.33% | | Feb. 2014 | |
Lexington Retail (1) | | | 320,000 | | 4.93% | | July 2015 | |
Kings Plaza | | | 199,537 | | 7.46% | | June 2011 | |
Rego Park II (under construction) | | | 181,695 | | 3.08% | (2) | Dec. 2010 | |
Rego Park I | | | 78,386 | | 7.25% | | June 2009 | |
Paramus | | | 68,000 | | 5.92% | | Oct. 2011 | |
Rego Park III (land) | | | — | | N/A | | N/A | |
Flushing (leasehold interest) | | | — | | N/A | | N/A | |
| | $ | 1,221,255 | | | | | |
__________________________
| (1) | In the event of a substantial casualty, up to $75,000 of this loan may become recourse. |
| (2) | This loan bears interest at LIBOR plus 1.20%. |
Below is a summary of our contractual obligations, including future interest as applicable, as of December 31, 2008.
(Amounts in thousands) | | | | | | | | | | | |
Contractual obligations: | | | | | | | | | | | | | | | | |
Long-term debt obligations | | $ | 1,482,536 | | $ | 156,532 | | $ | 574,717 | | $ | 428,991 | | $ | 322,296 | |
Operating lease obligations | | | 14,623 | | | 802 | | | 1,605 | | | 1,605 | | | 10,611 | |
Purchase obligations, primarily construction
commitments | | | 118,900 | | | 118,900 | | | — | | | — | | | — | |
Other obligations | | | 106,494 | | | 61,458 | (1) | | 8,000 | | | 12,000 | | | 25,036 | |
| | $ | 1,722,553 | | $ | 337,692 | | $ | 584,322 | | $ | 442,596 | | $ | 357,943 | |
| | | | | | | | | | | | | | | | |
Commitments: | | | | | | | | | | | | | | | | |
Standby letters of credit | | $ | 7,998 | | $ | 7,998 | | $ | — | | $ | — | | $ | — | |
__________________________
| (1) | Includes $57,458 of liabilities for SARs. |
The table above excludes $47,868,000 of FIN 48 liabilities for which the timing of future cash outflows is highly uncertain.
LIQUIDITY AND CAPITAL RESOURCES – Continued
Cash Flows
Rental income from our properties is our principal source of operating cash flow. Our property rental income 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, non-development capital improvements and interest expense. Other sources of liquidity to fund our cash requirements include our existing cash, proceeds from debt financings, including mortgage or construction loans secured by our properties and proceeds from asset sales.
Year Ended December 31, 20052008
Cash and cash equivalents were $515,940,000 at December 31, 2008, compared to $560,231,000 at December 31, 2007, a decrease of $44,291,000. This decrease resulted from $131,638,000 of net cash used in investing activities, primarily related to capital expenditures at our Rego Park II project, partially offset by, $78,088,000 of net cash provided by financing activities and $9,259,000 of net cash provided by operating activities.
Net cash provided by operating activities of $9,259,000 was primarily comprised of (i) net income of $76,288,000, partially offset by, (ii) the net change in operating assets and liabilities of $64,467,000 and (iii) adjustments for non-cash items of $2,562,000. The net change in operating assets and liabilities was primarily comprised of a $62,808,000 payment for a portion of the liability for SARs compensation expense. The adjustments for non-cash items were primarily comprised of (a) a reversal of a portion of the liability for SARs compensation expense of $20,254,000 and (b) straight-lining of rental income of $10,113,000, partially offset by (c) depreciation and amortization of $26,719,000.
Net cash used in investing activities of $131,638,000 was primarily comprised of capital expenditures of $134,554,000, primarily related to the development of our Rego Park II project.
Net cash provided by financing activities of $78,088,000 was primarily comprised of $125,909,000 of proceeds from a construction loan to fund expenditures for our Rego Park II project, partially offset by the payment of a special dividend of $35,571,000 and repayments of borrowings of $14,851,000.
Year Ended December 31, 2007
Cash and cash equivalents were $560,231,000 at December 31, 2007, compared to $615,516,000 at December 31, 2006, a decrease of $55,285,000. This decrease resulted primarily from $111,612,000 of net cash used in investing activities, primarily related to capital expenditures at our Rego Park II project, partially offset by $30,035,000 of net cash provided by financing activities and $26,292,000 of net cash provided by operating activities.
Net cash provided by operating activities of $26,292,000 was primarily comprised of (i) net income of $114,341,000, partially offset by, (ii) the net change in operating assets and liabilities of $55,216,000 and (iii) adjustments for non-cash items of $32,833,000. The net change in operating assets and liabilities was primarily comprised of a $50,465,000 payment for a portion of the liability for SARs compensation expense. The adjustments for non-cash items were primarily comprised of (a) a reversal of a portion of the liability for SARs compensation expense of $43,536,000 and (b) straight-lining of rental income of $15,456,000, partially offset by, (c) depreciation and amortization of $24,991,000 and (d) minority interest of $1,168,000.
Net cash used in investing activities of $111,612,000 was primarily comprised of capital expenditures of $110,307,000, primarily related to the development of our Rego Park II project.
Net cash provided by financing activities of $30,035,000 was primarily comprised of $55,786,000 of proceeds from a construction loan to fund expenditures, for our Rego Park II project, partially offset by $14,087,000 for scheduled repayments of borrowings and $12,227,000 for debt issuance costs in connection with obtaining a construction loan.
LIQUIDITY AND CAPITAL RESOURCES – Continued
Year Ended December 31, 2006
Cash and cash equivalents were $615,516,000 at December 31, 2006, compared to $578,406,000 at December 31, 2005, compared to $128,874,000 at December 31, 2004, an increase of $449,532,000.
Net$37,110,000. This increase resulted primarily from $56,844,000 of net cash provided by operating activities, partially offset by $9,608,000 of net cash used in investing activities and $10,126,000 of net cash used in financing activities.
Net cash provided by operating activities of $6,119,000$56,844,000 was primarily comprised of (i) adjustments for non-cash items of $116,244,000,$132,460,000, partially offset by, (ii) net incomeloss of $82,241,000$74,983,000 and (iii) a net change in operating assets and liabilities of $27,884,000.$633,000. The adjustments for non-cash items were primarily comprised of (i) liabilities for SARs compensation expense of $148,613,000, and (ii) depreciation and amortization of $24,461,000, partially offset by, (iii) a pre-tax net gain of $112,768,000$24,529,000 from the sale of residential condominiums at 731 Lexington Avenue, (ii) straight-lining of rental income of $29,298,000, partially offset by (iii) depreciation and amortization of $22,836,000,$14,990,000 and (iv) minority interest of $2,250,000.$1,095,000.
Net cash provided byused in investing activities of $337,516,000$9,608,000 was primarily comprised of (i)capital expenditures of $48,073,000 partially offset by, $39,383,000 of net proceeds from the sale of residential condominiums at 731 Lexington Avenue of $455,012,000, partially offset by (ii) capital expenditures of $110,481,000 and (iii) real estate acquisitions of $7,121,000.Avenue.
Net cash provided byused in financing activities of $118,135,000$10,126,000 was primarily comprised of (i) proceeds from borrowing of $344,832,000, partially offset by (ii) repayments of borrowings of $217,895,000 and (iii) debt issuance costs of $9,517,000.
Year Ended December 31, 2004
Net cash provided by operating activities of $27,853,000 was comprised of (i) the net change in operating assets and liabilities of $86,643,000,$10,967,000, partially offset by (ii) a net loss of $33,469,000 and (iii) non-cash items of $25,321,000. The adjustments for non-cash items were comprised of (a) the effect of straight-lining of rental income of $43,327,000, (b) the gain on sale of real estate of $3,862,000, partially offset by (c) $18,818,000 of depreciation and amortization and (d) $3,050,000 resulting from the write-off of unamortized deferred debt expense.
Net cash used in investing activities of $138,942,000 was comprised of (i) capital expenditures of $146,232,000, partially offset by (ii) net cash restricted for operating liabilities of $2,996,000 and (iii) proceeds from the sale of real estate of $4,294,000. The capital expenditures were primarily related to the 731 Lexington Avenue project.
Net cash provided by financing activities of $218,627,000 resulted primarily from (i) borrowings collateralized by 731 Lexington Avenue of $477,798,000, partially offset by (ii) debt repayments of $256,755,000 and (iii) debt issuance costs of $3,330,000.
Year Ended December 31, 2003
Net cash provided by operating activities of $7,023,000 was comprised of (i) non-cash items of $4,568,000 and (ii) the net change in operating assets and liabilities of $20,197,000, partially offset by (iii) a net loss of $17,742,000. The adjustments for non-cash items include depreciation and amortization of $11,310,000, partially offset by the effect of straight-lining of rental income of $6,742,000.
Net cash used in investing activities of $218,604,000 was largely comprised of capital expenditures of $215,158,000. The capital expenditures are primarily related to the Lexington Avenue development project.
Net cash provided by financing activities of $187,678,000 resulted from borrowings of $190,399,000, mainly to fund expenditures$841,000 for the Lexington Avenue development project, offset by debt repaymentsexercise of $2,721,000.share options.
Funds from Operations ("FFO"(“FFO”) for the Years Ended December 31, 20052008 and 20042007
FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"(“NAREIT”). NAREIT defines FFO as net income or loss determined in accordance with Generally Accepted Accounting Principles ("GAAP"(“GAAP”), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO and FFO per diluted share are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO and FFO per diluted share should be evaluated along with GAAP net income and income per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating activities, investing activities and financing activities, in evaluating the operating performance of equity REITs. Management believes that FFO and FFO per diluted share are helpful to investors as supplemental performance measures because these measures exclude the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, these non-GAAP measures can facilitate comparisons of operating performance between periods and among other equity REITs. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as disclosed in the Company'sCompany’s Statements of Cash Flows. FFO should not be considered as an alternative to net income as an indicator of the Company'sCompany’s operating performance or as an alternative to cash flows as a measure of liquidity.
FFO for the year ended December 31, 20052008 was $102,037,000,$99,916,000, or $20.09$19.60 per diluted share, compared to negative FFO of $18,014,000,$136,284,000, or $3.60$26.75 per diluted share, for the year ended December 31, 2004, an increase of $120,051,000, or $23.69 per diluted share.2007.
FFO for the year ended December 31, 20052008 includes (i) $60,943,000 for an after-tax net gain from the sale of residential condominium units at 731 Lexington Avenue, (ii) income of $2,088,000 from the settlement of claims against third parties for environmental remediation at Kings Plaza, partially offset by, (iii) $27,588,000 for an accrual of SARs compensation expense. These items, in the aggregate, increased FFO by $35,443,000,$20,254,000, or $6.98$3.97 per diluted share.
Negative FFOshare, for the year ended December 31, 2004 includes (i) $76,789,000 for an accrualreversal of a portion of SARs compensation expense, (ii) $3,050,000compared to $43,536,000, or $8.55 per diluted share, for the write-off of the proportionate share of unamortized debt issuance costs in connection with the reduction of the principal amount of a construction loan, partially offset by, (iii) $3,862,000 for a net gain on sale of non-depreciable real estate. These items,such reversal in the aggregate, decreased FFO by $75,977,000, or $15.17 per diluted share.prior year.
| | For the Year Ended December 31,
| |
|---|
(Amounts in thousands, except share and per share amounts)
| | 2005
| | 2004
| |
|---|
| Net income (loss) | | $ | 82,241 | | $ | (33,469 | ) |
| Depreciation and amortization of real property | | | 19,796 | | | 15,455 | |
| | |
| |
| |
| FFO (negative FFO) | | $ | 102,037 | | $ | (18,014 | ) |
| | |
| |
| |
| FFO (negative FFO) per common share—diluted | | $ | 20.09 | | $ | (3.60 | ) |
| | |
| |
| |
| Weighted average shares used in computing FFO per common share—diluted | | | 5,080,171 | | | 5,008,222 | |
| | |
| |
| |
| | For the Year Ended
December 31, | |
(Amounts in thousands, except share and per share amounts) | | | | | |
Net income | | $ | 76,288 | | $ | 114,341 | |
Depreciation and amortization of real property | | | 23,628 | | | 21,943 | |
FFO | | $ | 99,916 | | $ | 136,284 | |
| | | | | | | |
FFO per common share – diluted | | $ | 19.60 | | $ | 26.75 | |
| | | | | | | |
Weighted average shares used in computing
FFO per diluted share | | | 5,098,529 | | | 5,094,488 | |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At December 31, 2005, the Company had $1,079,465,000 of fixed rate debt at a weighted average interest rate of 5.81%, as such the Company has noWe have exposure to changesfluctuations in interest rates, forwhich are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates is summarized in the remaining terms of its existing debt.table below.
(Amounts in thousands, except per share amounts) | | Balance as of
December 31,
2008 | | Weighted-Average
Interest Rate | | Effect of 1%
Change in Base
Rates | |
Variable (including amounts due to Vornado) | | $ | 225,781 | | 3.49% | | $ | 2,258 | |
Fixed Rate | | | 1,039,560 | | 5.80% | | | — | |
| | $ | 1,265,341 | | | | $ | 2,258 | |
| | | | | | | | | |
Total effect on diluted earnings per share | | | | | | | $ | 0.44 | |
The fair value of the Company'sour debt, estimated by discounting the future contractual cash flows of our existing debt using the current rates available to borrowers with similar credit ratings for the remaining terms of such debt, iswas less than the aggregate carrying amount by approximately $15,710,000$118,485,000 at December 31, 2005.2008.
ITEM 8.Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
| | | Index to Consolidated Financial Statements | |
|---|
| |
Report of Independent Registered Public Accounting Firm | | 3438 |
| |
Consolidated Balance Sheets at December 31, 20052008 and 20042007 |
|
3539 |
| |
Consolidated Statements of Operations for the
Years Ended December 31, 2005, 20042008, 2007 and 20032006 |
|
3640 |
| |
Consolidated Statements of Stockholders'Stockholders’ Equity for the
Years Ended December 31, 2005, 20042008, 2007 and 20032006 |
|
3741 |
| |
Consolidated Statements of Cash Flows for the
Years Ended December 31, 2005, 20042008, 2007 and 20032006 |
|
3842 |
| |
Notes to Consolidated Financial Statements |
|
3943 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Alexander's,
Alexander’s, Inc.
Paramus, New Jersey
We have audited the accompanying consolidated balance sheets of Alexander's,Alexander’s, Inc. and subsidiaries (the "Company"“Company”) as of December 31, 20052008 and 2004,2007, and the related consolidated statements of operations, stockholders'stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005.2008. Our audits also included the financial statement schedules includedlisted in the indexIndex at item 15(a) (2).Item 15. These financial statements and financial statement schedules are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the CompanyAlexander’s, Inc. and subsidiaries at December 31, 20052008 and 2004,2007, and the results of itstheir operations and itstheir cash flows for each of the three years in the period ended December 31, 2005,2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 2005,2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 200623, 2009 expressed an unqualified opinion on management's assessment of the effectiveness of the Company'sCompany’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 27, 200623, 2009
ALEXANDER'S,ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
| | December 31,
| |
|---|
| | 2005
| | 2004
| |
|---|
| ASSETS | | | | | | | |
| Real estate, at cost: | | | | | | | |
| | Land | | $ | 69,455 | | $ | 69,455 | |
| | Buildings, leaseholds and leasehold improvements | | | 594,574 | | | 466,593 | |
| | Construction in progress | | | 35,107 | | | 419,059 | |
| | |
| |
| |
| | | Total | | | 699,136 | | | 955,107 | |
| Accumulated depreciation and amortization | | | (88,976 | ) | | (74,028 | ) |
| | |
| |
| |
| Real estate, net | | | 610,160 | | | 881,079 | |
Cash and cash equivalents |
|
|
578,406 |
|
|
128,874 |
|
| Deposits on the sale of condominium units and restricted cash | | | 2,764 | | | 66,930 | |
| Accounts receivable, net of allowance for doubtful accounts of $526 and $379 | | | 3,215 | | | 4,872 | |
| Receivable arising from the straight-lining of rents | | | 100,037 | | | 70,739 | |
Deferred lease and other property costs, net (including unamortized leasing fees to
Vornado Realty Trust ("Vornado") of $44,831 and $38,819) | | | 72,600 | | | 68,148 | |
| Deferred debt issuance costs, net | | | 20,849 | | | 15,027 | |
| Other assets | | | 15,286 | | | 9,132 | |
| | |
| |
| |
| TOTAL ASSETS | | $ | 1,403,317 | | $ | 1,244,801 | |
| | |
| |
| |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
| Debt (2004 includes $124,000 due to Vornado) | | $ | 1,079,465 | | $ | 952,528 | |
| Amounts due to Vornado | | | 34,324 | | | 49,225 | |
| Accounts payable and accrued expenses | | | 44,867 | | | 37,706 | |
| Liability for stock appreciation rights | | | 87,563 | | | 121,706 | |
| Other liabilities (including taxes payable of $37,955 in 2005) | | | 53,524 | | | 65,268 | |
| | |
| |
| |
| TOTAL LIABILITIES | | | 1,299,743 | | | 1,226,433 | |
| | |
| |
| |
MINORITY INTEREST |
|
|
2,250 |
|
|
— |
|
| | |
| |
| |
| COMMITMENTS AND CONTINGENCIES | | | | | | | |
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued,
none | | | — | | | — | |
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued
and outstanding, 5,173,450 shares | | | 5,173 | | | 5,173 | |
| Additional capital | | | 26,343 | | | 25,685 | |
| Retained earnings (deficit) | | | 70,639 | | | (11,602 | ) |
| | |
| |
| |
| | | | 102,155 | | | 19,256 | |
| Treasury stock: 149,450 and 159,600 shares, at cost | | | (831 | ) | | (888 | ) |
| | |
| |
| |
| TOTAL STOCKHOLDERS' EQUITY | | | 101,324 | | | 18,368 | |
| | |
| |
| |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 1,403,317 | | $ | 1,244,801 | |
| | |
| |
| |
| | | |
ASSETS | | | | | |
Real estate, at cost: | | | | | | | |
Land | | $ | 74,974 | | $ | 69,455 | |
Buildings, leaseholds and leasehold improvements | | | 598,114 | | | 593,818 | |
Construction in progress | | | 294,887 | | | 171,808 | |
Total | | | 967,975 | | | 835,081 | |
Accumulated depreciation and amortization | | | (114,235 | ) | | (96,183 | ) |
Real estate, net | | | 853,740 | | | 738,898 | |
| | | | | | | |
Cash and cash equivalents | | | 515,940 | | | 560,231 | |
Restricted cash | | | 5,057 | | | 4,987 | |
Accounts receivable, net of allowance for doubtful accounts of $1,357 and $667, respectively | | | 6,580 | | | 6,217 | |
Receivable arising from the straight-lining of rents | | | 137,117 | | | 130,483 | |
Deferred lease and other property costs, net (including unamortized leasing fees to Vornado of
$38,698 and $41,988, respectively) | | | 61,525 | | | 66,243 | |
Deferred debt issuance costs, net of accumulated amortization of $13,120, and $10,468, respectively | | | 12,910 | | | 15,553 | |
Other assets | | | 10,699 | | | 9,798 | |
TOTAL ASSETS | | $ | 1,603,568 | | $ | 1,532,410 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Debt | | $ | 1,221,255 | | $ | 1,110,197 | |
Amounts due to Vornado | | | 44,086 | | | 40,561 | |
Accounts payable and accrued expenses | | | 51,192 | | | 55,655 | |
Liability for stock appreciation rights | | | 57,458 | | | 141,437 | |
Liability for income taxes and other | | | 48,826 | | | 47,134 | |
TOTAL LIABILITIES | | | 1,422,817 | | | 1,394,984 | |
| | | | | | | |
MINORITY INTEREST | | | 1,655 | | | 2,323 | |
| | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | |
| | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | |
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, 5,091,590 and 5,043,950 shares, respectively | | | 5,173 | | | 5,173 | |
Additional paid-in capital | | | 30,647 | | | 27,636 | |
Retained earnings | | | 143,731 | | | 103,014 | |
| | | 179,551 | | | 135,823 | |
Treasury stock: 81,860 and 129,500 shares, at cost | | | (455 | ) | | (720 | ) |
TOTAL STOCKHOLDERS' EQUITY | | | 179,096 | | | 135,103 | |
| | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 1,603,568 | | $ | 1,532,410 | |
See notes to consolidated financial statements.
ALEXANDER'S,ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
| | Year Ended December 31,
| |
|---|
| | 2005
| | 2004
| | 2003
| |
|---|
| REVENUES | | | | | | | | | | |
| | Property rentals | | $ | 132,949 | | $ | 110,541 | | $ | 56,785 | |
| | Expense reimbursements | | | 54,136 | | | 38,354 | | | 30,377 | |
| | |
| |
| |
| |
| Total revenues | | | 187,085 | | | 148,895 | | | 87,162 | |
| | |
| |
| |
| |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
| | Operating (including fees to Vornado of $2,451, $1,937 and $1,475,
respectively) | | | 64,872 | | | 47,615 | | | 37,984 | |
| | General and administrative (including stock appreciation rights
compensation expense of $27,588, $76,789 and $44,917,
respectively, and management fees to Vornado of $2,160 in each
year) | | | 32,393 | | | 81,285 | | | 48,921 | |
| | Depreciation and amortization | | | 19,877 | | | 15,527 | | | 7,497 | |
| | |
| |
| |
| |
| Total expenses | | | 117,142 | | | 144,427 | | | 94,402 | |
| | |
| |
| |
| |
OPERATING INCOME (LOSS) |
|
|
69,943 |
|
|
4,468 |
|
|
(7,240 |
) |
| | Interest and other income, net | | | 14,769 | | | 1,571 | | | 1,983 | |
| | Interest and debt expense (including interest to Vornado of $8,853,
$14,554 and $15,746, respectively) | | | (62,678 | ) | | (40,320 | ) | | (13,691 | ) |
| | Write off of unamortized deferred debt expense | | | (736 | ) | | (3,050 | ) | | — | |
| | |
| |
| |
| |
| | Income (loss) from continuing operations | | | 21,298 | | | (37,331 | ) | | (18,948 | ) |
| | Income from discontinued operations | | | — | | | — | | | 1,206 | |
| | |
| |
| |
| |
| | Income (loss) before gain on sale of real estate and income taxes | | | 21,298 | | | (37,331 | ) | | (17,742 | ) |
| | Net gain on sale of condominiums in 2005 and other real estate in
2004 | | | 112,768 | | | 3,862 | | | — | |
| | Income tax expense of taxable REIT subsidiary | | | (51,825 | ) | | — | | | — | |
| | |
| |
| |
| |
| NET INCOME (LOSS) | | $ | 82,241 | | $ | (33,469 | ) | $ | (17,742 | ) |
| | |
| |
| |
| |
| Income (loss) per common share—Basic: | | | | | | | | | | |
| | Income (loss) from continuing operations | | $ | 4.24 | | $ | (7.45 | ) | $ | (3.79 | ) |
| | Income from discontinued operations | | | — | | | — | | | .26 | |
| | Net gain on sale of condominiums in 2005 and other real estate in
2004, after income taxes | | | 12.14 | | | .77 | | | — | |
| | |
| |
| |
| |
| | Net income (loss) per common share | | $ | 16.38 | | $ | (6.68 | ) | $ | (3.53 | ) |
| | |
| |
| |
| |
| Income (loss) per common share—Diluted: | | | | | | | | | | |
| | Income (loss) from continuing operations | | $ | 4.19 | | $ | (7.45 | ) | $ | (3.79 | ) |
| | Income from discontinued operations | | | — | | | — | | | .26 | |
| | Net gain on sale of condominiums in 2005 and other real estate in
2004, after income taxes | | | 12.00 | | | .77 | | | — | |
| | |
| |
| |
| |
| | Net income (loss) per common share | | $ | 16.19 | | $ | (6.68 | ) | $ | (3.53 | ) |
| | |
| |
| |
| |
| | | |
| | | | | | | |
REVENUES | | | | | | | | | | |
Property rentals | | $ | 143,004 | | $ | 141,629 | | $ | 137,072 | |
Expense reimbursements | | | 68,093 | | | 66,351 | | | 61,700 | |
Total revenues | | | 211,097 | | | 207,980 | | | 198,772 | |
| | | | | | | | | | |
EXPENSES | | | | | | | | | | |
Operating (including fees to Vornado of $4,986, $5,370 and $4,223, respectively) | | | 77,110 | | | 70,496 | | | 71,980 | |
General and administrative (including a reversal of stock appreciation rights (“SARs”)
expense of $20,254 and $43,536 in 2008 and 2007, respectively, and SARs expense
of $148,613 in 2006, and management fees to Vornado of $2,160 in each year) | | | (14,567 | ) | | (38,339 | ) | | 154,844 | |
Depreciation and amortization | | | 24,066 | | | 22,343 | | | 21,813 | |
Total expenses | | | 86,609 | | | 54,500 | | | 248,637 | |
| | | | | | | | | | |
OPERATING INCOME (LOSS) | | | 124,488 | | | 153,480 | | | (49,865 | ) |
| | | | | | | | | | |
Interest and other income, net | | | 15,222 | | | 27,351 | | | 28,257 | |
Interest and debt expense (including interest to Vornado of $1,705, $2,187,
and $3,025, respectively) | | | (62,474 | ) | | (65,322 | ) | | (67,726 | ) |
Minority interest of partially owned entity | | | (7 | ) | | (1,168 | ) | | 1,095 | |
Income (loss) before income tax expense and net gain on sale of condominiums | | | 77,229 | | | 114,341 | | | (88,239 | ) |
Income tax expense of the taxable REIT subsidiary | | | (941 | ) | | — | | | (11,273 | ) |
Net gain on sale of condominiums | | | — | | | — | | | 24,529 | |
NET INCOME (LOSS) | | $ | 76,288 | | $ | 114,341 | | $ | (74,983 | ) |
| | | | | | | | | | |
Net income (loss) per common share – basic | | $ | 15.05 | | $ | 22.68 | | $ | (14.92 | ) |
| | | | | | | | | | |
Net income (loss) per common share – diluted | | $ | 14.96 | | $ | 22.44 | | $ | (14.92 | ) |
See notes to consolidated financial statements.
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in thousands)
| | Common
Stock
| | Additional
Capital
| | Retained
Earnings
(Accumulated
Deficit)
| | Treasury
Shares
| | Total
Stockholders'
Equity
| |
|---|
| Balance, January 1, 2003 | | $ | 5,173 | | $ | 24,843 | | $ | 39,609 | | $ | (960 | ) | $ | 68,665 | |
| Net loss | | | — | | | — | | | (17,742 | ) | | — | | | (17,742 | ) |
| | |
| |
| |
| |
| |
| |
| Balance, December 31, 2003 | | | 5,173 | | | 24,843 | | | 21,867 | | | (960 | ) | | 50,923 | |
Net loss |
|
|
— |
|
|
— |
|
|
(33,469 |
) |
|
— |
|
|
(33,469 |
) |
Common shares issued under share
option plan | | | — | | | 842 | | | — | | | 72 | | | 914 | |
| | |
| |
| |
| |
| |
| |
| Balance, December 31, 2004 | | | 5,173 | | | 25,685 | | | (11,602 | ) | | (888 | ) | | 18,368 | |
Net income |
|
|
— |
|
|
— |
|
|
82,241 |
|
|
— |
|
|
82,241 |
|
Common shares issued under share
option plan | | | — | | | 658 | | | — | | | 57 | | | 715 | |
| | |
| |
| |
| |
| |
| |
| Balance, December 31, 2005 | | $ | 5,173 | | $ | 26,343 | | $ | 70,639 | | $ | (831 | ) | $ | 101,324 | |
| | |
| |
| |
| |
| |
| |
| | | | Additional
Paid-In
Capital | | Retained
Earnings
(Accumulated
Deficit) | | | | Total
Stockholders’
Equity | |
| | | | | | | | | | | | | | | | |
Balance, January 1, 2006 | | $ | 5,173 | | $ | 26,343 | | $ | 70,639 | | $ | (831 | ) | $ | 101,324 | |
| | | | | | | | | | | | | | | | |
Net loss | | | — | | | — | | | (74,983 | ) | | — | | | (74,983 | ) |
Common shares issued under share option plan | | | — | | | 775 | | | — | | | 66 | | | 841 | |
Balance, December 31, 2006 | | | 5,173 | | | 27,118 | | | (4,344 | ) | | (765 | ) | | 27,182 | |
| | | | | | | | | | | | | | | | |
Cumulative effect of change in accounting principle | | | — | | | — | | | (6,983 | ) | | — | | | (6,983 | ) |
Balance, January 1, 2007 | | | 5,173 | | | 27,118 | | | (11,327 | ) | | (765 | ) | | 20,199 | |
| | | | | | | | | | | | | | | | |
Net income | | | — | | | — | | | 114,341 | | | — | | | 114,341 | |
Common shares issued under share option plan | | | — | | | 518 | | | — | | | 45 | | | 563 | |
Balance, December 31, 2007 | | | 5,173 | | | 27,636 | | | 103,014 | | | (720 | ) | | 135,103 | |
| | | | | | | | | | | | | | | | |
Net income | | | — | | | — | | | 76,288 | | | — | | | 76,288 | |
Special dividend ($7.00 per share) | | | — | | | — | | | (35,571 | ) | | — | | | (35,571 | ) |
Common shares issued under share option plan | | | — | | | 3,011 | | | — | | | 265 | | | 3,276 | |
Balance, December 31, 2008 | | $ | 5,173 | | $ | 30,647 | | $ | 143,731 | | $ | (455 | ) | $ | 179,096 | |
| | | | | | | | | | | | | | | | |
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| | Year Ended December 31,
| |
|---|
| | 2005
| | 2004
| | 2003
| |
|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | |
| Net income (loss): | | $ | 82,241 | | $ | (33,469 | ) | $ | (17,742 | ) |
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities: | | | | | | | | | | |
| | Net gain on sale of condominiums in 2005 and other real estate in
2004 | | | (112,768 | ) | | (3,862 | ) | | — | |
| | Straight-lining of rental income | | | (29,298 | ) | | (43,327 | ) | | (6,742 | ) |
| | Depreciation and amortization (including amortization of debt
issuance costs) | | | 22,836 | | | 18,818 | | | 11,310 | |
| | Minority interest | | | 2,250 | | | — | | | — | |
| | Write-off of unamortized deferred debt expense | | | 736 | | | 3,050 | | | — | |
| Change in operating assets and liabilities: | | | | | | | | | | |
| | Accounts receivable, net | | | 1,657 | | | (1,771 | ) | | (593 | ) |
| | Amounts due to Vornado | | | 8,628 | | | 9,977 | | | 14,012 | |
| | Accounts payable and accrued expenses | | | 7,840 | | | 5,564 | | | (379 | ) |
| | Liability for stock appreciation rights | | | (34,143 | ) | | 76,789 | | | 44,917 | |
| | Income tax expense of taxable REIT subsidiary | | | 37,955 | | | — | | | — | |
| | Other liabilities | | | 14,361 | | | (210 | ) | | (34,931 | ) |
| | Other assets | | | (8,414 | ) | | (3,706 | ) | | (2,829 | ) |
| | |
| |
| |
| |
| Net cash (used in) provided by operating activities | | | (6,119 | ) | | 27,853 | | | 7,023 | |
| | |
| |
| |
| |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| | Net proceeds from sale of condominiums in 2005 and other real
estate in 2004 | | | 455,012 | | | 4,294 | | | — | |
| | Additions to real estate | | | (110,481 | ) | | (146,232 | ) | | (215,158 | ) |
| | Real estate acquisitions | | | (7,121 | ) | | — | | | — | |
| | Cash restricted for operating liabilities | | | 106 | | | 2,996 | | | (3,446 | ) |
| | |
| |
| |
| |
| Net cash provided by (used in) investing activities | | | 337,516 | | | (138,942 | ) | | (218,604 | ) |
| | |
| |
| |
| |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| | Proceeds from borrowings (including $5,000 from Vornado in
2003) | | | 344,832 | | | 477,798 | | | 190,399 | |
| | Repayments of borrowings | | | (217,895 | ) | | (256,755 | ) | | (2,721 | ) |
| | Debt issuance costs | | | (9,517 | ) | | (3,330 | ) | | — | |
| | Exercise of share options | | | 715 | | | 914 | | | — | |
| | |
| |
| |
| |
| Net cash provided by financing activities | | | 118,135 | | | 218,627 | | | 187,678 | |
| | |
| |
| |
| |
| Net increase (decrease) in cash and cash equivalents | | | 449,532 | | | 107,538 | | | (23,903 | ) |
| Cash and cash equivalents at beginning of year | | | 128,874 | | | 21,336 | | | 45,239 | |
| | |
| |
| |
| |
| Cash and cash equivalents at end of year | | $ | 578,406 | | $ | 128,874 | | $ | 21,336 | |
| | |
| |
| |
| |
SUPPLEMENTAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
Cash payments for interest (of which $6,935, $25,087 and $37,516
have been capitalized) | | $ | 66,321 | | $ | 60,968 | | $ | 46,861 | |
| | |
| |
| |
| |
| Cash payments for income taxes | | $ | 13,870 | | $ | — | | $ | — | |
| | |
| |
| |
| |
See notes to consolidated financial statements.
ALEXANDER'S,ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| | | |
| | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | |
Net income (loss): | | $ | 76,288 | | $ | 114,341 | | $ | (74,983 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | |
Depreciation and amortization (including amortization of debt issuance costs) | | | 26,719 | | | 24,991 | | | 24,461 | |
Liability for stock appreciation rights | | | (20,254 | ) | | (43,536 | ) | | 148,613 | |
Straight-lining of rental income | | | (10,113 | ) | | (15,456 | ) | | (14,990 | ) |
Net gain on sale of real estate tax abatement certificates | | | (1,872 | ) | | — | | | — | |
Reversal of FIN 48 income tax liability | | | (800 | ) | | — | | | — | |
Other non-cash adjustments | | | 3,751 | | | — | | | — | |
Minority interest of partially owned entity | | | 7 | | | 1,168 | | | (1,095 | ) |
Net gain on sale of condominiums | | | — | | | — | | | (24,529 | ) |
Change in operating assets and liabilities: | | | | | | | | | | |
Accounts receivable, net | | | (635 | ) | | (2,624 | ) | | (378 | ) |
Other assets | | | (3,947 | ) | | (1,631 | ) | | (4,017 | ) |
Payment for stock appreciation rights | | | (62,808 | ) | | (50,465 | ) | | — | |
Accounts payable and accrued expenses | | | (4,467 | ) | | (8,117 | ) | | 4,070 | |
Amounts due to Vornado | | | 4,898 | | | 5,195 | | | 1,042 | |
Income tax liability of taxable REIT subsidiary | | | 2,549 | | | 2,466 | | | (1,285 | ) |
Other liabilities | | | (57 | ) | | (40 | ) | | (65 | ) |
Net cash provided by operating activities | | | 9,259 | | | 26,292 | | | 56,844 | |
| | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
Construction in progress and real estate additions | | | (134,554 | ) | | (110,307 | ) | | (48,073 | ) |
Proceeds from the sale of real estate tax abatement certificates | | | 2,986 | | | — | | | — | |
Restricted cash | | | (70 | ) | | (1,305 | ) | | (918 | ) |
Net proceeds from sale of condominiums | | | — | | | — | | | 39,383 | |
Net cash used in investing activities | | | (131,638 | ) | | (111,612 | ) | | (9,608 | ) |
| | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | |
Proceeds from borrowings | | | 125,909 | | | 55,786 | | | — | |
Payment of special dividend | | | (35,571 | ) | | — | | | — | |
Debt repayments | | | (14,851 | ) | | (14,087 | ) | | (10,967 | ) |
Proceeds from the exercise of stock options | | | 3,276 | | | 563 | | | 841 | |
Distributions to minority partners | | | (675 | ) | | — | | | — | |
Debt issuance costs | | | — | | | (12,227 | ) | | — | |
Net cash provided by (used in) financing activities | | | 78,088 | | | 30,035 | | | (10,126 | ) |
| | | | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (44,291 | ) | | (55,285 | ) | | 37,110 | |
Cash and cash equivalents at beginning of year | | | 560,231 | | | 615,516 | | | 578,406 | |
Cash and cash equivalents at end of year | | $ | 515,940 | | $ | 560,231 | | $ | 615,516 | |
| | | | | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | | | |
Cash payments for interest (of which $10,584, $4,567 and $1,378 have been capitalized) | | $ | 68,097 | | $ | 64,839 | | $ | 66,526 | |
Cash payments for income taxes | | $ | 1,742 | | $ | 1,580 | | $ | 12,558 | |
Non-cash additions to real estate included in accounts payable and accrued expenses | | $ | — | | $ | 21,894 | | $ | — | |
See notes to consolidated financial statements.
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Alexander's,
Alexander’s, Inc. (the "Company" or "Alexander's")(NYSE: ALX) is a real estate investment trust ("REIT"(“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. The Company conductsAll references to “we,” “us,” “our,” “Company” and “Alexander’s” refer to Alexander’s, Inc. and its activities through its manager,consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust ("Vornado"(“Vornado”) (NYSE: VNO).
Alexander's has six
We have seven properties in the greater New York City metropolitan area consisting of:
Operating properties
(i)the 731 Lexington Avenue property, a 1.1 million square foot multi-use building located on Lexington Avenue and 59th Street in Manhattan, New York. 731 Lexington Avenue contains 885,000 net rentable square feet of office space and 174,000 net rentable square feet of retail space. 731 Lexington Avenue also contains approximately 248,000 net saleable square feet (which is not included in the 1.1 million square feet above) of residential space consisting of 105 condominium units (though a taxable REIT subsidiary ("TRS")).
The Company has leased all of the office space of which 697,000 square feet is leased to Bloomberg L.P., and 176,000 square feet is leased to Citibank N.A. In addition, the Company has leased 169,000 square feet of retail space to, among others, The Home Depot, Hennes & Mauritz, The Container Store, Wachovia Bank and Bank of America. As of December 31, 2005, 100 of the 105 residential condominium units were sold and closed;
(ii)the Kings Plaza Regional Shopping Center, located on Flatbush Avenue in Brooklyn, New York, which contains 1,098,000 square feet and is comprised of a two-level mall containing 470,000 square feet, a 289,000 square foot department store leased to Sears and another anchor department store owned and operated as a Macy's by Federated Department Stores, Inc.;
(iii) | (i) | the 731 Lexington Avenue property, a 1,307,000 square foot multi-use building which comprises the entire square block bounded by Lexington Avenue, East 59th Street, Third Avenue and East 58th Street in Manhattan, New York. The building contains 885,000 and 174,000 of net rentable square feet of office and retail space, respectively, which we own, and 248,000 square feet of residential space consisting of 105 condominium units, which we sold. The building is 100% leased. Principal office tenants include Bloomberg L.P. (697,000 square feet) and Citibank N.A. (176,000 square feet). On December 29, 2008, Citibank N.A. notified us of its intent to assign its lease to Bloomberg L.P. To the extent the assignment is completed, Bloomberg L.P. would occupy 99% of the office space. Principal retail tenants include The Home Depot (83,000 square feet), The Container Store (34,000 square feet) and Hennes & Mauritz (27,000 square feet); |
| (ii) | the Kings Plaza Regional Shopping Center, located on Flatbush Avenue in Brooklyn, New York, which contains 1,098,000 square feet that is 94% leased and is comprised of a two-level mall containing 470,000 square feet, a 289,000 square foot Sears department store and a 339,000 square foot Macy’s department store, which is owned by Macy’s, Inc.; |
| (iii) | the Rego Park I property, located on Queens Boulevard and 63rd Road in Queens, New York, which contains 351,000 square feet and is 86% leased to Sears, Bed Bath & Beyond, Marshalls and Old Navy; |
| (iv) | the Paramus property, which consists of 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey, which is leased to IKEA Property, Inc.; |
| (v) | the Flushing property, located at Roosevelt Avenue and Main Street in Queens, New York, which contains a 177,000 square foot building that was sub-leased in February 2009 to a developer for the remainder of our ground lease term; |
Property under development
| (vi) | the Rego Park II property, containing approximately 6.6 acres of land adjacent to our Rego Park I property in Queens, New York, which comprises the entire square block bounded by the Horace Harding Service Road (of the Long Island Expressway), 97th Street, 62nd Drive and Junction Boulevard; |
Property to be developed
(vii) the Rego Park III property, containing approximately 3.4 acres of land adjacent to our Rego Park II property in Queens, New York, which contains a 351,000comprises one-quarter square foot building that is 100% leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy;
(iv)the Paramus property, which consists of 30.3 acres of land locatedblock at the intersection of Routes 4Junction Boulevard and 17 in Paramus, New Jersey, which is leased to IKEA Property, Inc;
(v)- the
Flushing property, located at Roosevelt Avenue and Main Street in Queens, New York, which contains a 177,000 square foot building that is currently vacant; and
Property to be developedHorace Harding Service Road.
(vi)the Rego Park II property, which comprises one and one-half square blocks of vacant land adjacent to the Rego Park I property.
The Company defines each of its properties as an individual operating segment. It has
We have determined that allour properties have similar economic characteristics and meet the other criteria which permit the properties to be aggregated into one reportable segment (the leasing, management, development and redeveloping of properties in the greater New York City metropolitan area). The Company'sOur chief operating decision-maker assessassesses and measuremeasures 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 its net rental revenues less its real estate operating expenses.
ALEXANDER'S,ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation— – The accompanying consolidated financial statements include theour accounts and those of the Company and all of its wholly ownedour consolidated subsidiaries. All significant intercompany amounts have been eliminated. The preparation ofOur financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Real Estate— – Real estate is carried at cost, net of accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the assets'assets’ estimated useful lives, which range from seven7 to 50 years. Betterments, significant renewals and certain costs directly related to the acquisition, improvement and leasing of real estate are capitalized. Maintenance and repairs are charged to operations as incurred. As real estate is undergoing development activities, all property operating expenses, including interest expense,costs, are capitalized to the cost of the real property to the extent that management believeswe believe such costs are recoverable through the value of the property.
The Company's
Our properties, including any related intangible assets, are individually reviewed for impairment if events or circumstances change indicating that the carrying amount of the propertyassets may not be recoverable. In such an event, a comparison is made ofAn impairment exists when the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis to the carrying amount of the property. The carrying amount of an asset would be adjusted, if necessary, to reflectexceeds the aggregate projected future cash flows over our anticipated holding period on an undiscounted basis. An impairment inloss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, our anticipated holding period for properties, or the estimated fair value of properties 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. The evaluation of anticipated cash flows is subjective and is 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 asset.likelihood of recording impairment losses.
Cash and Cash Equivalents— – Cash and cash equivalents consist of highly liquid investments purchased with original maturities of three months or less. Cash and cash equivalents do not include deposits received on sales of condominium units at the Lexington Avenue property or cash restricted under financing arrangements. Such cash is reflected on the consolidated balance sheets as "Deposits on the sale of condominium units and restricted“restricted cash."”
Allowance for Doubtful Accounts—The Company – We periodically evaluatesevaluate the collectibility of amounts due from tenants and maintainsmaintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. The CompanyWe also maintainsmaintain an allowance for receivables arising from the straight-lining of rents.rents, if necessary. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercisesWe exercise judgment in establishing these allowances and considersconsider payment history and current credit status in developing these estimates. As of December 31, 2008 and 2007, there were $1,357,000 and $667,000 in allowances for doubtful accounts.
Deferred Charges— – Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest and debt expense. Direct costs related to leasing activities are capitalized and amortized on a straight-line basis over the lives of the related leases. All other deferred charges are amortized on a straight-line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.
Fair Value of Financial Instruments—Instruments – The fair value of the Company'sour debt, estimated by discounting the future contractual cash flows of our existing debt using the current rates available to borrowers with similar credit ratings for the remaining terms of such debt, iswas less than theits aggregate carrying amount by approximately $15,710,000$118,485,000 at December 31, 2005.2008, and exceeded its aggregate carrying amount by approximately $19,254,000 at December 31, 2007. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition of our financial instruments.
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
Revenue Recognition—The Company has – We have the following revenue sources and revenue recognition policies:
Base rentRent (revenue arising from tenant leases)— – These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and free rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Percentage RentsRent (revenue arising from retail tenant leases that is contingent upon the sales of tenants exceeding defined thresholds)— – These rents are recognized in accordance with Staff Accounting Bulletin No. 104,Revenue Recognition, which states that this contingent revenue is only to be recognized after the contingency has been removed (i.e., the sales threshold has been achieved).
Expense ReimbursementsReimbursement (revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective properties)— – This revenue is accrued in the same periods as the expenses are incurred.
Parking Income (revenue arising from the rental of parking space at our properties) – This income is recognized as cash is received.
Condominium Sales (income in 2006 arising from the sales of condominium units at the Lexington Avenue property)— – Income on deposits received for sales of condominium units has been deferred in accordance with the deposit method of Statement of Financial Accounting Standards ("SFAS"(“SFAS”) No. 66,Accounting for Sales of Real Estate. Gains on sales of condominium, units are recognized under the percentage of completion method.
Income Taxes—The Company operates – We operate in a manner intended to enable itus to continue to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"“Code”). UnderPursuant to the Code, the Company'sour net operating loss carryovers ("NOLs"(“NOLs”) generally would be available to offset the amount of the Company'sour REIT taxable income that would otherwise be required to be distributed as dividends to itsour stockholders.
At December 31, 2005 the Company has2008 we have reported NOLs for federal tax purposes of approximately $31,739,000,$29,211,000, expiring from 2007 to 2020. The Companyin 2028. We also hashave investment and targeted jobs tax credits of approximately $2,755,000 expiring from 20082009 to 2014.
The following table reconciles net income (loss) to estimated REIT taxable income for the years ended December 31, 2005, 20042008, 2007 and 2003.2006.
(Unaudited and in thousands) | | | | |
| | Years Ended December 31,
| | | | | | | | |
|---|
(Amounts in thousands)
| | 2005
| | 2004
| | 2003
| | |
|---|
| Net income (loss) | | $ | 82,241 | | $ | (33,469 | ) | $ | (17,742 | ) | | $ | 76,288 | | $ | 114,341 | | $ | (74,983 | ) |
| Straight-line rent adjustments | | (29,298 | ) | | (43,327 | ) | | (6,668 | ) | | | (6,634 | ) | | (15,456 | ) | | (14,990 | ) |
| Depreciation and amortization timing differences | | 345 | | 1,480 | | 2,859 | | | | 16 | | | (746 | ) | | (1,256 | ) |
| Interest expense | | 3,622 | | (2,733 | ) | | (2,837 | ) | | | — | | | — | | | (410 | ) |
| Stock appreciation rights compensation expense | | 16,751 | | 76,789 | | 44,917 | | | | (83,973 | ) | | (94,739 | ) | | 148,613 | |
| Interest income | | 8,336 | | 17,684 | | 10,439 | | |
| Differences on gain of sale of assets | | (60,943 | ) | | — | | — | | |
Net income of the TRS | | | | (3,165 | ) | | (4,090 | ) | | (6,193 | ) |
Gain of sale of condominiums | | | | — | | | — | | | (13,256 | ) |
| Other | | (3,582 | ) | | (1,117 | ) | | (1,422 | ) | | | (10,146 | ) | | 1,094 | | | (7,787 | ) |
| | |
| |
| |
| | |
| Taxable income | | 17,472 | | 15,307 | | 29,546 | | |
Taxable (loss) income | | | | (27,614 | ) | | 404 | | | 29,738 | |
| NOL carry forward beginning balance | | (49,211 | ) | | (64,518 | ) | | (94,064 | ) | | | (1,597 | ) | | (2,001 | ) | | (31,739 | ) |
| | |
| |
| |
| | |
| NOL carry forward ending balance | | $ | (31,739 | ) | $ | (49,211 | ) | $ | (64,518 | ) | | $ | (29,211 | ) | $ | (1,597 | ) | $ | (2,001 | ) |
| | |
| |
| |
| | |
The
At December 31, 2008, the net basis of the Company'sour assets and liabilities for tax purposes isare approximately $28,000,000$64,054,000 lower than the amount reported for financial statement purposes.
The Company has elected
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
Prior to treat its liquidation on September 12, 2008, our wholly owned subsidiary, 731 Residential LLC, was treated as a taxable REIT subsidiary ("TRS"(“TRS”). The TRS iswas subject to income tax at regular corporate tax rates. The Company'sOur NOLs willwere not be available to offset taxable income of the TRS. As of December 31, 2005, 100 ofIn the 105 residential condominium units were sold and closed. In connection therewith, TRS recognized $51,825,000 of income tax expense, of which $13,870,000 was paid in the yearyears ended December 31, 2005.2008 and 2007, the TRS paid no income taxes in 2004 or 2003. TRS deferred income taxes, where applicable, are accounted for in accordance with Statements$1,719,000 and $1,580,000, respectively. Under Statement of Financial Accounting Standards ("SFAS"(“SFAS”) No. 109, Accounting For Income Taxes using the asset and liability method. Under this method,, deferred income taxes arewould be recognized for temporary differences between the financial reporting basis of assets and liabilities and their respective tax basis and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors. As of December 31, 2008 and 2007, there were no deferred tax assets or liabilities on our consolidated balance sheets.
Income Per Share—
Basic income per share is computed based on weighted average shares outstanding.of common stock outstanding during the period. Diluted income per share considersis computed based on the effectweighted average shares of common stock outstanding stock options.
Stock Options—The Company accounts for stock-based compensation usingduring the intrinsic value method. Under the intrinsic value method, compensation cost is measured as the excess, if any, of the quoted market price of the Company'speriod and assumes all potentially dilutive securities were converted into common stock at the earliest date of grant overpossible.
Stock-based Compensation
We account for all stock-based compensation in accordance with SFAS No. 123R: Share-Based Payment. We adopted SFAS No. 123R using the exercise price of the option granted. Compensation cost formodified prospective application, on January 1, 2006. There have been no stock options, if any, is recognized ratably over the vesting period. The Company's policy is to grant options with an exercise price equal to the quoted market price of the Company's common stock on the grant date. Accordingly, no compensation expense has been recognized for the Company's stock options. Since the Company had no option grants in each of the past five years, there were no pro forma effects for stock based compensation.since 1999.
On December 16, 2004,
Recently Issued Accounting Literature
In September 2006, the FASB issued SFAS 123: (Revised 2004), Share-Based Payment ("SFAS 123R")No. 157, Fair Value Measurements. SFAS 123R replacesNo. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 123, usingNo. 157 became effective for our financial assets and liabilities on January 1, 2008. The FASB has deferred the prospective method, and supersedes APB Opinionimplementation of the provisions of SFAS No. 25: Accounting for Stock Issued to Employees. SFAS 123R requires that the compensation cost157 relating to share-based payment transactions be recognized incertain non-financial assets and liabilities until January 1, 2009. SFAS No. 157 did not materially affect how we measure and value financial statementsassets and be measured basedwill not have a material impact on how we measure and value non-financial assets.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 159 permits companies to measure many financial instruments and certain other items at fair value. SFAS 159 became effective for us on January 1, 2008. We did not elect the fair value option for any of our existing financial instruments on the effective date and have not determined whether or not we will elect this option for any eligible financial instruments we acquire in the future.
In December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R broadens the guidance of SFAS No. 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations; and stipulates that acquisition related costs be expensed rather than included as part of the equity or liability instruments issued.basis of the acquisition. SFAS 123RNo. 141R expands required disclosures to improve the ability to evaluate the nature and financial effects of business combinations. SFAS No. 141R is effective as of the first interimfor all transactions entered into, on or annual reporting period beginning after December 15, 2005. The Company does notJanuary 1, 2009. We believe that the adoption of SFAS 123Rthis standard will have a material effect on its consolidated financial statements.
Stock Appreciation Rights—Stock Appreciation Rights ("SARs") are granted at 100% of the market price of the Company's common stock on the date of grant. Compensation expense for each SAR is measured by the excess of the stock price at the current balance sheet date over the stock price at the previous balance sheet date. If the stock price is lower at the current balance sheet date, previously recognized expense is reversed, but not below zero.
Other Recently Issued Accounting Literature—On December 16, 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets—An Amendment of APB Opinion No. 29. The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 on its effective date did not have a material effect on consolidated financial statements.
In March 2005, the FASB issued FIN 47,Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143,Asset Retirement Obligations. FIN 47 provides clarification of the term "conditional asset retirement obligation" as used in SFAS 143, defined as a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. Under this standard, a company must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated. FIN 47 became effective in the Company's fiscal quarter ended December 31, 2005. Upon review of its assets, the Company has concluded that no asset retirement obligation exists as of December 31, 2005. Accordingly, the adoption of FIN 47 on its effective date had no impact on the Company'sour consolidated financial statements.
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued |
In May 2005,December 2007, the FASB issued SFAS 154, Accounting ChangesNo. 160, Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51. SFAS No. 160 requires a noncontrolling interest in a subsidiary to be reported as equity and Error Corrections—a replacementthe amount of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154 changesconsolidated net income specifically attributable to the requirements for the accounting and reporting for a change in accounting principle by requiring that a voluntary change in accounting principlenoncontrolling interest to be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that (i) a changeidentified in the methodconsolidated financial statements. SFAS No. 160 also calls for consistency in the manner of depreciating or amortizingreporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a long-lived non-financial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) corrections of errors in previously issued financial statements should be termed a "restatement".deconsolidation. SFAS 154No. 160 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company does noton January 1, 2009. We believe that the adoption of SFAS 154this standard will not have a material effect on itsour consolidated financial statements.
In June 2005,March 2008, the FASB ratifiedissued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133. SFAS No. 161 enhances required disclosures regarding derivative instruments and hedging activities, including enhanced disclosures regarding how an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and the consensus reached by the Emerging Issues Task Force ("EITF")impact of derivative instruments and related hedged items on Issuean entity’s financial position, financial performance and cash flows. SFAS No. 04-05, "Determining Whether a General Partner, or General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights" ("EITF 04-05"). EITF 04-05 provides a framework for determining whether a general partner controls, and should consolidate, a limited partnership or a similar entity. EITF 04-05 became161 is effective on June 29, 2005, for all newly formed or modified limited partnership arrangements and January 1, 2006 for all existing limited partnership arrangements. The Company has elected to early adopt2009. We believe that the provisionsadoption of EITF 04-05 and accordingly, hasthis standard will not have a material effect on our consolidated its investment in the Kings Plaza energy plant joint venture in the fourth quarter of 2005 (see note 5).
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. RELATED PARTY TRANSACTIONS
Vornadofinancial statements.
The Company is
3. | RELATED PARTY TRANSACTIONS |
Vornado
At December 31, 2008, Vornado owned 32.5% of our outstanding common stock. We are managed by, and itsour properties are leased and developed by, Vornado, pursuant to the agreements with one-year terms, expiringdescribed below, which expire in March of each year whichand are automatically renewable.
In conjunction with the closing of the Rego Park II construction loan on December 21, 2007, we bifurcated the management, development and leasing agreements described below to cover the Rego Park II property separately. In addition, we amended the Rego Park II management and development agreement, to provide for a term through substantial completion of the construction, with automatic renewals, and for payment of the Rego Park II development fees upon the earlier of substantial completion of the construction, or the transfer of the property to an unaffiliated third party.
Management and Development Agreements
TheWe pay Vornado an annual fee payable to Vornado for management of the Company isfee equal to the sum of (i) $3,000,000, and(ii) 3% of gross income from the Kings Plaza Regional Shopping Center.Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) $234,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.
In addition, Vornado is entitled to a development fee equal toof 6% of development costs, as defined, with a minimum guaranteed feefees of $750,000 per annum.
Leasing Agreements
Vornado also provides allus with leasing services for the Company 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 of the sale of an asset, the fee is 3% of the gross proceeds, as defined. Such amounts are payable annually in an amount not to exceed $2,500,000, until the present value of such installments, calculated at a discount rate of 9% per annum, equals the amount that would have been paid had they been paid at the time the transactions which gave rise to the commissions occurred. Pursuant to the leasing agreement, in the event third partythird-party real estate brokers are used, the fees to Vornado increase by 1% and Vornado is responsible for the fees to the third partythird-party real estate brokers, exceptbrokers. Vornado is also entitled to a commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000 and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable in connectionannual installments in an amount not to exceed $4,000,000, with the Bloomberg L.P. lease, where the tenant paid the third party broker directly.
731 Lexington Avenue Fees
On July 6, 2005, the Company completed a $320,000,000 mortgage financing of the retail space. In connection therewith, the Company repaid the remaining balance of the construction loan and the $124,000,000 loan to Vornado. In addition, the Company paid Vornadointerest on the unpaid balance of the development fee of $20,624,000 and $6,300,000 for the Completion Guarantee Fee.at LIBOR plus 1.0% (5.19% at December 31, 2008).
On May 27, 2004, Alexander's
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. | RELATED PARTY TRANSACTIONS - Continued |
Other Agreements
We have also entered into an agreement with Vornado under which it provides property management services at 731 Lexington Avenue for an annual fee of $0.50 per square foot of the tenant-occupied office and retail space. The Company entered into an agreementagreements with Building Maintenance Services, ("BMS"), a wholly-ownedwholly owned subsidiary of Vornado, to supervise the cleaning, engineering and security services at the 731our Lexington Avenue propertyand Kings Plaza properties for an annual fee of the cost for such services plus 6%. In addition, in October 2004, the Company entered into an agreement with BMS to provide the same services at the Kings Plaza Regional Shopping Center. These agreements were negotiated and approved on behalf of the Company by a committee of directors of the Company unaffiliated with Vornado.
The following table shows the amounts incurred under the management, leasing and development agreements.agreements discussed above.
(Amounts in thousands) | | | | |
| | Years Ended December 31,
| | | | | | | |
|---|
(Amounts in thousands)
| | 2005
| | 2004
| | 2003
| |
|---|
| Company management fees | | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | | $ | 3,000 | |
Development fee, guarantee fee and rent for development
office | | 4,431 | | 5,955 | | 10,292 | |
Development fees | | | | 6,520 | | | 6,476 | | | 755 | |
| Leasing fees | | 11,671 | | 12,156 | | 17,919 | | | 2,946 | | | 4,411 | | | 4,505 | |
Property management fees and payments for cleaning,
engineering and security services | | 4,776 | | 2,481 | | 887 | | | 4,146 | | | 4,530 | | | 3,383 | |
| | |
| |
| |
| | $ | 16,612 | | $ | 18,417 | | $ | 11,643 | |
| | | $ | 23,878 | | $ | 23,592 | | $ | 32,098 | |
| | |
| |
| |
| |
At December 31, 2005, the Company2008, we owed Vornado $32,804,000$31,079,000 for leasing fees, $11,496,000 for development fees and $1,520,000$1,511,000 for management, property management and cleaning fees.
OtherSpecial Dividend
On September 9, 2008, our Board of Directors declared a special dividend of $7.00 per share, or $35,571,000 in the aggregate, which was paid on October 30, 2008, to stockholders of record on October 14, 2008. The dividend was attributable to the liquidation of the wholly owned 731 Lexington Avenue taxable REIT subsidiary into Alexander’s. Accordingly, we paid Vornado $11,578,000 for their share of this dividend.
Other
In the years ended December 31, 2005, 20042008, 2007 and 2003,2006, Winston & Strawn LLP, a law firm in which Neil Underberg, a directormember of the Company,our Board of Directors, is of counsel, performed legal services for the Companyus for which it was paid $368,000, $323,000$46,000, $219,000, and $100,000,$106,000, respectively.
4. DEBTWe own approximately 6.6 acres of land adjacent to our Rego Park I property in Queens, New York, which comprises the entire square block bounded by the Horace Harding Service Road (of the Long Island Expressway), 97th Street, 62nd Drive and Junction Boulevard. The development at Rego Park II consists of a 600,000 square foot shopping center on four levels and a parking deck containing approximately 1,400 spaces. Construction is expected to be completed in 2009 and estimated to cost approximately $410,000,000, of which $292,000,000 has been expended as of December 31, 2008. The shopping center will be anchored by a 134,000 square foot Century 21 department store, a 138,000 square foot Home Depot and a 132,000 square foot Kohl’s. The development plans for an apartment tower containing 315 apartments have been deferred indefinitely.
On July 6, 2005, the Company
There can be no assurance that this project will be completed, a $320,000,000 mortgage financingcompleted on the retail space. The loan is interest only at a fixed rate of 4.93% and matures in July 2015. Of the net proceeds of approximately $312,000,000 (net of mortgage recording tax and closing costs), $90,000,000 was used to repay the construction loan and $124,000,000 was used to repay the loans from Vornado. In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
On February 13, 2004, the 731 Lexington Avenue Construction Loan was modified so that the remaining availability was $237,000,000, which was approximately the amount estimated to complete the 731 Lexington Avenue project at the closing date (not including the development and guarantee fees to Vornado). The interest rate on the Construction Loan of LIBOR plus 2.5% and the maturity date of January 2006, with two one-year extensions, were not changed. The collateraltime, or completed for the Construction Loan was the same except that the office space had been removed from the lien. Further, the Construction Loan permitted the release of the retail space for a payment of $15 million and required all proceeds from the sale of the residential condominium units to be applied to the Construction Loan balance until it was finally repaid. In connection with reducing the principal amount of the Construction Loan, the Company wrote-off $3,050,000, representing the proportionate share of unamortized deferred debt expense, in the first quarter of 2004, which is included in the Company's Consolidated Statement of Operations for the year ended December 31, 2005.budgeted amount.
On February 13, 2004, the Company closed a $400,000,000 mortgage financing on the office space. The loan bears interest at 5.33%, matures in February 2014 and beginning in the third year, provides for principal payments based on a 25-year amortization schedule such that over the remaining eight years of the loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000 was used to repay the entire amount outstanding under the previously existing Construction Loan.
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a summary of the Company'sour outstanding debt, alldebt.
(Amounts in thousands) | | | | Interest
Rate at
December 31, | | | |
| | | | | | | | | |
First mortgage, secured by the office space at the
731 Lexington Avenue property | | Feb. 2014 | | 5.33% | | $ | 373,637 | | $ | 383,670 | |
First mortgage, secured by the retail space at the
731 Lexington Avenue property (1) | | Jul. 2015 | | 4.93% | | | 320,000 | | | 320,000 | |
First mortgage, secured by the Kings Plaza Regional
Shopping Center | | Jun. 2011 | | 7.46% | | | 199,537 | | | 203,456 | |
Construction loan, secured by the Rego Park II Shopping
Center(2) | | Dec. 2010 | | 3.08% | | | 181,695 | | | 55,786 | |
First mortgage, secured by the Paramus property | | Oct. 2011 | | 5.92% | | | 68,000 | | | 68,000 | |
First mortgage, secured by the Rego Park I property | | Jun. 2009 | | 7.25% | | | 78,386 | | | 79,285 | |
| | | | | | $ | 1,221,255 | | $ | 1,110,197 | |
__________________________
| (1) | In the event of a substantial casualty, up to $75,000 of this loan may become recourse to us. |
| (2) | On December 21, 2007, we obtained a construction loan providing up to $350,000 to finance the construction of our Rego Park project. The loan bears interest at LIBOR plus 1.20% and matures in December 2010, with a one-year extension option. |
As of which have fixed interest rates.
| |
| |
| | Balance at
December 31,
|
|---|
| |
| | Interest
Rate at
December 31,
2005
|
|---|
(Amounts in thousands)
| | Maturity
| | 2005
| | 2004
|
|---|
| First mortgage, secured by the office space at the 731 | | | | | | | | | | |
| | Lexington Avenue property | | Feb. 2014 | | 5.33% | | $ | 400,000 | | $ | 400,000 |
| First mortgage, secured by the retail space at the 731 | | | | | | | | | | |
| | Lexington Avenue property(1) | | Jul. 2015 | | 4.93% | | | 320,000 | | | — |
| First mortgage, secured by the Kings Plaza Regional | | | | | | | | | | |
| | Shopping Center | | Jun. 2011 | | 7.46% | | | 210,539 | | | 213,699 |
| First mortgage, secured by the Rego Park I Shopping | | | | | | | | | | |
| | Center | | Jun. 2009 | | 7.25% | | | 80,926 | | | 81,661 |
| First mortgage, secured by the Paramus property | | Oct. 2011 | | 5.92% | | | 68,000 | | | 68,000 |
| Term loan and line of credit to Vornado | | N/A | | N/A | | | — | | | 124,000 |
| Construction loan, secured by the retail and | | | | | | | | | | |
| | residential space at the Lexington Avenue property | | N/A | | N/A | | | — | | | 65,168 |
| | | | | | |
| |
|
| | | | | | | $ | 1,079,465 | | $ | 952,528 |
| | | | | | |
| |
|
(1)In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
At December 31, 2005,2008, the principal repayments for the next five years and thereafter are as follows:
(Amounts in thousands)
| |
| (Amounts in thousands) | |
|---|
Year Ending December 31,
| | Amount
| | | |
|---|
| 2006 | | $ | 10,966 | |
| 2007 | | 14,088 | |
| 2008 | | 14,850 | |
| 2009 | | 93,304 | | $ | 93,304 | |
| 2010 | | 15,842 | | | 197,537 | |
2011 | | | | 270,523 | |
2012 | | | | 12,465 | |
2013 | | | | 13,208 | |
| Thereafter | | 930,415 | | | 634,217 | |
All of the Company'sour 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 $599,863,000$849,792,000 at December 31, 2005.
The Company's2008. Our existing financing documents contain restrictive covenants whichthat limit theour ability to incur additional indebtedness make prepaymentson these properties, provide for lender approval of indebtedness, pay dividends, make investments, engagetenants’ leases in transactionscertain circumstances, and provide for yield maintenance to prepay them. As of December 31, 2008, we believe we are in compliance with affiliates, issue or sell capital stock of subsidiaries, create liens, sell assets, acquire or transfer property and engage in mergers and acquisitions.
5. MINORITY INTERESTour financial debt covenants.
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
We adopted the provisions of FIN 48 on January 1, 2007. Upon adoption, we recognized a $6,983,000 increase in the liability for unrecognized tax benefits, which was accounted for as an increase to the January 1, 2007 balance of accumulated deficit. At January 1, 2007 and December 31, 2007 and 2008, we had $43,653,000, $46,119,000 and $47,868,000, respectively, of unrecognized tax benefits that, if recognized, would result in non-cash income arising from the reversal of these items and a reduction of our effective tax rate. A reconciliation of the unrecognized tax benefits is summarized in the table below.
(Amounts in thousands) | | | | |
Balance at December 31, 2006 | | $ | 36,670 | |
Cumulative effect of change accounting principle | | | 6,983 | |
Balance at January 1, 2007 | | | 43,653 | |
| | | | |
Additions based on tax positions related to the current year | | | — | |
Additions for tax positions of prior years | | | 2,466 | |
Reduction for tax positions of prior years | | | — | |
Settlements | | | — | |
Balance at December 31, 2007 | | | 46,119 | |
| | | | |
Additions based on tax positions related to the current year | | | — | |
Additions for tax positions of prior years | | | 2,549 | |
Reduction for tax positions of prior years | | | (800 | ) |
Settlements | | | — | |
Balance at December 31, 2008 | | $ | 47,868 | |
The balances at December 31, 2007 and 2008 include $7,513,000 and $9,888,000, respectively, of accrued interest, which is included as a component of “liability for income taxes and other” in our consolidated balance sheets.
We recognize interest related to the unrecognized tax benefits in “interest and debt expense” in our consolidated statement of operations. During the years ended December 31, 2008 and 2007, we recognized $2,549,000 and $2,466,000, respectively, of interest related to the unrecognized tax benefits.
Prior to April 15,its liquidation on September 12, 2008, our wholly owned subsidiary, 731 Residential LLC, was treated as a TRS and subject to income tax at regular corporate tax rates. As of December 31, 2008, 2003-2008 TRS tax returns and 2006 to 2008 REIT tax returns remain open to examination by the major taxing jurisdictions to which we are subject. In 2008, the IRS completed the audit of our 2005 the CompanyREIT federal income tax return, which resulted in no changes. Accordingly, we recognized $800,000 of unrecognized tax benefits in 2008, of which $625,000 was recognized as a reduction of “income tax (expense) benefit.”
Prior to 2005, we owned and operated an energy plant that generatesgenerated all of the electrical power at itsour Kings Plaza Regional Shopping Center. OnIn April 15, 2005, the Companywe contributed this 35 year old plant which has been fully depreciated, and $750,000 in cash, to a joint venture for a 25% interest.interest in a joint venture. In addition, we provided the joint venture with a $15,350,000 loan (eliminated in consolidation). The joint venture plans to rebuildrebuilt the plant at a total cost of approximately $18,000,000.$18,350,000 and began operations in March 2007. Pursuant to the provisions of EITFEmerging Issues Task Force (“EITF”) Issue No. 04-05, the Company is presumed to have "control" overwe control the joint venture and accordingly, hasconsolidate its accounts into our consolidated its investment in the joint venture in the fourth quarter of 2005. As a result, the Company has a minority interest liability of $2,250,000 at December 31, 2005, representing the limited partner's investment in the joint venture.
6. DISCONTINUED OPERATIONSfinancial statements.
Income from discontinued operations of $1,206,000 for
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. | NET GAIN ON SALE OF CONDOMINIUMS |
In the year ended December 31, 2003 represents2006, we recognized $13,256,000 of after-tax net gain from the reversal of previously accrued contingent liabilities.
7. NET GAIN ON SALE OF CONDOMINIUMS AND OTHER REAL ESTATE
731 Lexington Avenue
As of December 31, 2005, 100sale of the 105remaining residential condominium units were sold and closed, which resulted in an after-tax net gain of $62,851,000, of which $60,943,000 was recognized in the year ended December 31, 2005, under the percentage of completion method.
Otherat our 731 Lexington Avenue property.
On August 12, 2004, the Company sold 1.29 acres of land in White Plains, New York for $4,500,000, resulting in a net gain on sale of $3,862,000. The Company paid a commission of $135,000 to Vornado, which was included in the expenses relating to the sale.
8. LEASES
As Lessor
The Company leasesWe lease space to tenants in retail centers and an office building. The rental terms range from approximately 5 to 25 years. The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs. Retail leases also provide for the payment by the lessee of additional rents based on a percentage of their sales.
Future base rental revenue under these non-cancelable operating leases is as follows:
(Amounts in thousands)
| |
| (Amounts in thousands) | |
|---|
Year Ending December 31,
| | Amount
| | | |
|---|
| 2006 | | $ | 108,394 | |
| 2007 | | 106,388 | |
| 2008 | | 109,005 | |
| 2009 | | 104,949 | | $ | 120,574 | |
| 2010 | | 104,142 | | | 120,831 | |
2011 | | | | 119,029 | |
2012 | | | | 117,637 | |
2013 | | | | 115,399 | |
| Thereafter | | 1,459,186 | | | 1,271,920 | |
These future minimum amounts do not include additional rents based on a percentage of tenants'tenants’ sales. For the years ended December 31, 2005, 20042008, 2007, and 2003,2006, these rents were $804,000, $911,000$784,000, $722,000, and $945,000,$649,000, respectively.
Bloomberg L.P. accounted for 34%31%, 32%, and 36%34% of the Company'sour consolidated revenues for the yearyears ended December 31, 20052008, 2007, and 2004, respectively. Sears accounted for 11% and 18% of the Company's consolidated revenues in 2004 and 2003,2006, respectively. No other tenant accounted for more than 10% of revenues in any of the last three years.
Circuit City, a tenant who leases space at our Rego Park I location aggregating 50,000 square feet (approximately $2,600,000 of annual property rental income) recently announced that it is liquidating its assets pursuant to Bankruptcy Court approval. As a result, we wrote-off approximately $4,909,000 of unamortized costs at December 31, 2008, including tenant improvements and receivables arising from the straight-lining of rent.
As Lessee
The Company isWe are a tenant under long-term leases that range from approximately 1312 to 2221 years. Future minimum lease payments under these operating leases are as follows:
(Amounts in thousands)
| |
| (Amounts in thousands) | |
|---|
Year Ending December 31,
| | Amount
| | | |
|---|
| 2006 | | $ | 785 | |
| 2007 | | 785 | |
| 2008 | | 795 | |
| 2009 | | 802 | | $ | 802 | |
| 2010 | | 802 | | | 802 | |
2011 | | | | 802 | |
2012 | | | | 802 | |
2013 | | | | 802 | |
| Thereafter | | 13,018 | | | 10,611 | |
Rent expense was $662,000, $416,000$841,000, $908,000, and $416,000$785,000 for the years ended December 31, 2005, 20042008, 2007 and 2003,2006, respectively.
9. COMMITMENTS AND CONTINGENCIES51
Neither the Company nor any
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. | COMMITMENTS AND CONTINGENCIES |
Insurance
We carry commercial liability with limits of its subsidiaries is a party to, nor is their property the subject of, any material pending legal proceeding other than routine litigation incidental to their businesses. The Company believes that these legal actions will not be material to the Company's financial condition or results of operations.
Insurance
The Company carries comprehensive liability$200,000,000 per location and all risk property insurance ((i)for (i) fire, (ii) flood, (iii) rental loss, (iv) extended coverage, (iv) "actsand (v) “acts of terrorism"terrorism,” as defined in the Terrorism Risk Insurance ExtensionProgram Reauthorization Act (“TRIPRA”) of 2005 which expires in 2007, and (v) rental loss insurance) with respect to its assets.
On June 30, 2005, the Company renewed its annual all risk policyour assets, with limits of (i) $960,000,000$1.7 billion per occurrence, including certified terrorist acts, and $350,000,000as defined, for non-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remainingall of our properties. To the extent that the Company incurswe incur losses in excess of itsour insurance coverage, these losses would be borne by the Companyus and could be material.
The Company's
Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to Alexander's)us), contain customary covenants requiring us to maintain insurance. Although the Company believeswe believe that it haswe have adequate insurance coverage underfor the purposes of these agreements, itwe 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 the Company iswe are able to obtain, or if the Terrorism Risk Insurance Extension Act of 2005 is not extended past 2007, it could adversely affect the Company'sour ability to finance and/or refinance its properties and expand its portfolio.our properties.
Environmental Remediation
In June 1997, theJuly 2006, we discovered an oil spill at our Kings Plaza Regional Shopping Center commissioned an Environmental Study and Contamination Assessment Site Investigation (the "Phase II Study") to evaluate and delineate environmental conditions disclosed in a Phase I study. The results ofCenter. We have notified the Phase II Study indicated the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and groundwater. The Company has delineated the contamination and has developed a remediation approach, which is ongoing. The New York State Department of Environmental Conservation ("NYSDEC"(“NYSDEC”) about the spill and have developed a remediation plan. The NYSDEC has approved a portion of the remediation approach.plan and clean up is ongoing. The Company accrued $2,675,000 in previous years,estimated costs associated with the clean up will aggregate approximately $2,500,000. We have paid $500,000 of which $2,612,000 has been paid as of December 31, 2005, for its estimated obligation with respect to the cleanup of the site, and which includes costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial action and (v) professional fees. If NYSDEC insists on a more extensive remediation approach, the Company could incur additional obligations.
The Company has concluded that most of the contamination at the site is historicsuch amount and the result of past activities of third parties. In connection with the pursuit of claims against third parties, on January 31, 2005 and November 14, 2005, the Company received settlements from such parties of $337,500 and $1,750,000, respectively, which are included in "Interest and Other Income on the Company's" consolidated statements of operations for the year ended December 31, 2005.remainder is covered under our insurance policy.
Flushing Property
In the fourth quarter of 2003, the Companywe recognized $1,289,000 of income representing a non-refundable purchase deposit of $1,875,000, net of $586,000 of costs associated with the transaction, from a party that had agreed to purchase this property, as such party had not met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8, 2004, the Companywe received letters from the party demanding return of the deposit. On December 28, 2005, the party filed a complaint against the Companyus in the Supreme Court of the State of New York alleging the Companythat we failed to honor the terms and conditions of the agreement. The complaint seeks specific performance and, if specific performance is denied, it seeks the return of the deposit plus interest and $50,000 in costs. The Company,In our opinion, after consultingconsultation with its legal counsel, doeswe do not believe the party is entitled to either specific performance or a return of the deposit and iswe are defending against the action. Accordingly, we have not recorded a loss contingency for this matter.
Rego Park II
Other
There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters will not have a material effect on our financial condition, results of operations or cash flows.
Paramus
In 2001 we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The Company owns two land parcels containing approximately 10 acres adjacent to its Rego Park Ilease has a 40-year term with a purchase option in 2021 for $75,000,000. We have a $68,000,000 interest only, non-recourse mortgage loan on the property from a third party lender. The fixed interest rate on the debt is 5.92% with interest payable monthly until maturity in Queens, New York. One parcel comprisesOctober 2011. The annual triple-net rent is the entire square block bounded bysum of $700,000 plus the Horace Harding Service Road, 97th Street, 62nd Drive and Junction Boulevard. The otheramount of debt service on the mortgage loan. If the purchase option is a parcelexercised, we will receive net cash proceeds of approximately one-quarter square block at$7,000,000 and recognize a gain on sale of land of approximately $62,000,000. If the intersection of Junction Boulevard andpurchase option is not exercised, the Horace Harding Service Road.
The Company's plantriple-net rent for the entire square block parcel is a mixed-use, development containing approximately 600,000 square feet of retail space on four levels, a parking deck of approximately 1,400 spaces and may alsolast 20 years must include upthe debt service sufficient to 450 apartment units in two towers. On September 20, 2005, the Company received governmental approvals for this project. The Company has entered into a lease with Century 21 for 134,000 square feet of retail space at this project.
While the current plans for the one-quarter square block parcel are very preliminary, we anticipate it may include up to 80,000 square feet of retail space.
There can be no assurance that these projects will commence, be completed, completed on time or completed for the budgeted amount.
Kings Plaza
The Company plans to construct a freestanding building adjacent to the Mall containing approximately 120,000 square feet, which has been leased to Lowe's Home Improvement Warehouse ("Lowe's"). This lease is expected to commence in 2007. The cost of this project will be approximately $11.5 million, which is net of a tenant reimbursement of $16.5 million. This cost includes construction of structured elements, which will support a second and third level. There can be no assurance that this project will commence, be completed, completed on time or completed for the budgeted amount.
Prior to April 15, 2005, the Company owned and operated an energy plant that generates electrical power at its Kings Plaza Regional Shopping Center. On April 15, 2005, the Company contributed this 35 year old plant, which has been fully depreciated, and $750,000 in cash to a joint venture for a 25% interest. Pursuant to the provisions of EITF 04-05, the Company is presumed to have "control"amortize $68,000,000 over the joint venture and accordingly, has consolidated its investment in this joint venture in the fourth quarter of 2005. The joint venture plans to rebuild the plant at a total cost of approximately $18,000,000. There can be no assurance that this project will be completed, completed on time or completed for the budgeted amount.remaining 20-year lease term.
Letters of Credit
Approximately $4,130,000$7,998,000 of standby letters of credit were issued and outstanding as of December 31, 2005.
10. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS2008.
Under the Company's
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. | STOCK-BASED COMPENSATION |
Our Omnibus Stock Plan (the "Plan"“Plan”), originallywhich was approved by the Company'sour stockholders inon May 1996,18, 2006, provides for grants of incentive and non-qualified stock options, restricted stock, SARs and performance shares, as defined, to the directors, officers and employees of the Company and Vornado, and any other person or entity as designated by the Omnibus Stock Plan Committee of the Company'sour Board of Directors are eligible(the “Committee”). At December 31, 2008, there were 895,000 shares available for grants of incentive and non-qualifiedfuture grant under the Plan.
We account for all stock-based compensation in accordance with SFAS 123R. We adopted SFAS 123R, using the modified prospective application, on January 1, 2006.
Stock Options
Stock options to purchase common shares. Options granted have exercise prices equal to 100% of the market price of the Company'sour common stock aton the date of grant, vest on a graduated basis, becoming fully vested 36 months after grant, and expire ten years after grant. The Plan also provides for the award of SARs, performance shares and restricted stock, as defined.
At December 31, 2005, 81,850 options were outstanding and exercisable with a remaining contractual life of 3.2 years and a weighted-average exercise price of $70.38. There were 10,150, 13,000 and 0 options exercised in 2005, 2004 and 2003, respectively. There were no option grants in 2005. At December 31, 2005, there were 1,745,000 shares available for future grant under the Plan.
On December 29, 2005, Michael Fascitelli, the Company's President, exercised 350,000 of his existing stock appreciation rights ("SARs") which were scheduled to expire in December 2006 and received $173.82 for each SAR exercised, representing the difference between the Company's stock price of $247.70 (the average of the high and low market price) onfrom the date of exercisegrant.
There have been no stock option grants since 1999; accordingly, no compensation expense was recognized during the years ended December 31, 2008, 2007 and 2006. There were 47,640, 8,000 and 11,950 options exercised during the exerciseyears ended December 31, 2008, 2007, and 2006, respectively. Cash received from option exercises in each of the years ended December 31, 2008, 2007 and 2006 was $3,276,000, $563,000 and $841,000, respectively. Below is a summary of our stock option activity under the Plan for the year ended December 31, 2008:
| | | | Weighted-
Average
Exercise
Price | | Weighted-
Average
Remaining
Contractual
Term | | | |
| | | | | | | | | | | | | |
Outstanding at January 1, 2008 | | | 61,900 | | $ | 70.38 | | | 1.2 | | | | |
Granted | | | — | | | — | | | | | | | |
Exercised | | | (47,640 | ) | | 68.76 | | | | | | | |
Cancelled | | | — | | | — | | | | | | | |
Outstanding at December 31, 2008 | | | 14,260 | | | 63.38 | (1) | | 0.2 | | $ | 2,731,000 | |
| | | | | | | | | | | | | |
Exercisable at December 31, 2008 | | | 14,260 | | | 63.38 | (1) | | 0.2 | | $ | 2,731,000 | |
__________________________
| (1) | In conjunction with the declaration of the special dividend, the Committee resolved to adjust all outstanding awards for the special dividend in accordance with the Plan. |
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11.STOCK-BASED COMPENSATION - Continued
Stock Appreciation Rights
Stock appreciation rights (“SARs”) are granted at 100% of the market price of $73.88. This exercise was consistent with the Company's tax planning.
On January 10, 2006, the Omnibus Stock Plan Committee of the Board of Directors of the Company granted Mr. Fascitelli a SAR covering 350,000 shares of the Company's common stock. The exercise price of the SAR is $243.83 per share of common stock, which is the average of the high and low trading price of the Company'sour common stock on the date of grant. TheBecause these SARs were granted in March 1999, they are accounted for under the intrinsic value method in accordance with FIN 28, an interpretation of APB Opinions 15 and 25. Accordingly, compensation expense for each SAR will become exercisable on July 10, 2006, provided Mr.is measured by the excess of stock price at the current balance sheet date over the stock price at the previous balance sheet date. If the stock price is lower at the current balance sheet date, previously recognized expense is reversed but not below zero.
On March 13, 2007, Michael Fascitelli, is employed with the Company on such date, and willour President, exercised 350,000 of his existing SARs, which were scheduled to expire on March 14, 2007. Mr. Fascitelli's early exercise2007, and the related tax consequences for the Company were factors in the Company's decision to make the new grant to him.he received gross proceeds of $50,465,000.
As
On September 15 and October 14, 2008, Steven Roth, the Chairman of Januaryour Board of Directors and Chief Executive Officer, exercised an aggregate of 200,000 of his existing SARs, which were scheduled to expire on March 4, 2009, and received gross proceeds of $62,809,000.
At December 31, 2006, 850,0002008, 300,000 SARs were outstanding and exercisable atexercisable. These SARs have a weighted-average exercise price of $141.80.$63.38 and are scheduled to expire on March 4, 2009. Since the SARs agreements require that they be settled in cash, the Companywe would have had to pay $89,295,000 if$57,458,000 to the holders of these SARs had they exercised their SARs on JanuaryDecember 31, 2006.2008. Any change in the Company'sour stock price from the closing price of $246.85$254.90 at JanuaryDecember 31, 20062008 would increase or decrease the amount the Companywe would have to pay upon exercise.
12.11. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share, including a reconciliation of net income (loss)and the number of shares used in computing basic and diluted earning per share.
(Amounts in thousands, except share and per share amounts)
| | For the Year Ended December 31,
| |
|---|
| | 2005
| | 2004
| | 2003
| |
|---|
| Numerator: | | | | | | | | | | |
| | Income (loss) from continuing operations | | $ | 21,298 | | $ | (37,331 | ) | $ | (18,948 | ) |
| | Income from discontinued operations | | | — | | | — | | | 1,206 | |
| | Net gain on sale of condominiums in 2005 and other real estate
in 2004, after income taxes | | | 60,943 | | | 3,862 | | | — | |
| | |
| |
| |
| |
| | Net income (loss) applicable to common shares—Basic and
Diluted | | $ | 82,241 | | $ | (33,469 | ) | $ | (17,742 | ) |
| | |
| |
| |
| |
| | Weighted average shares outstanding—Basic | | | 5,021,350 | | | 5,008,222 | | | 5,000,850 | |
| | Effect of stock options | | | 58,821 | | | — | | | — | |
| | |
| |
| |
| |
| | Weighted average shares outstanding—Diluted | | | 5,080,171 | | | 5,008,222 | | | 5,000,850 | |
| | |
| |
| |
| |
Income (loss) per common share—Basic: |
|
|
|
|
|
|
|
|
|
|
| | Income (loss) from continuing operations | | $ | 4.24 | | $ | (7.45 | ) | $ | (3.79 | ) |
| | Income from discontinued operations | | | — | | | — | | | .26 | |
| | Net gain on sale of condominiums in 2005 and other real estate
in 2004, after income taxes | | | 12.14 | | | .77 | | | — | |
| | |
| |
| |
| |
| | Net income (loss) per common share | | $ | 16.38 | | $ | (6.68 | ) | $ | (3.53 | ) |
| | |
| |
| |
| |
Income (loss) per common share—Diluted: |
|
|
|
|
|
|
|
|
|
|
| | Income (loss) from continuing operations | | $ | 4.19 | | $ | (7.45 | ) | $ | (3.79 | ) |
| | Income from discontinued operations | | | — | | | — | | | .26 | |
| | Net gain on sale of condominiums in 2005 and other real estate
in 2004, after income taxes | | | 12.00 | | | .77 | | | — | |
| | |
| |
| |
| |
| | Net income (loss) per common share | | $ | 16.19 | | $ | (6.68 | ) | $ | (3.53 | ) |
| | |
| |
| |
| |
Options to purchase 92,000 and 105,000 Basic earnings per share are determined using the weighted average shares of the Company's common stock were not included inoutstanding during the calculations of lossperiod. Diluted earnings per share inis determined using the years ended December 31, 2004weighted average shares of common stock outstanding during the period and 2003, respectively, as theyassumes all potentially dilutive securities were anti-dilutive.converted into common shares at the earliest date possible.
| | For the Year Ended December 31, | |
(Amounts in thousands, except share and per share amounts) | | | | | | | |
| | | | | | | | | | |
Net income (loss) applicable to common shares – Basic and Diluted | | $ | 76,288 | | $ | 114,341 | | $ | (74,983 | ) |
| | | | | | | | | | |
Weighted average shares outstanding – Basic | | | 5,067,426 | | | 5,041,572 | | | 5,025,726 | |
Effect of stock options | | | 31,103 | | | 52,916 | | | — | (1) |
Weighted average shares outstanding – Diluted | | | 5,098,529 | | | 5,094,488 | | | 5,025,726 | |
| | | | | | | | | | |
Net income (loss) per common share – Basic | | $ | 15.05 | | $ | 22.68 | | $ | (14.92 | ) |
| | | | | | | | | | |
Net income (loss) per common share – Diluted | | $ | 14.96 | | $ | 22.44 | | $ | (14.92 | ) |
| | | | | | | | | | |
12. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
________________
| |
| |
| | Income (Loss) Per
Common Share(1)
| |
|---|
| |
| | Net Income
(Loss)
Applicable to
Common Shares
| |
|---|
(Amounts in thousands, except per share amounts)
| | Revenue
| | Basic
| | Diluted
| |
|---|
| 2005 | | | | | | | | | | | | | |
| | December 31 | | $ | 50,286 | | $ | 40,313 | | $ | 8.02 | | $ | 7.93 | |
| | September 30 | | | 47,388 | | | (6,754 | ) | | (1.34 | ) | | (1.34 | ) |
| | June 30 | | | 45,735 | | | 17,464 | | | 3.48 | | | 3.44 | |
| | March 31 | | | 43,676 | | | 31,218 | | | 6.22 | | | 6.15 | |
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| | December 31 | | $ | 41,496 | | $ | (1,307 | ) | $ | (0.26 | ) | $ | (0.26 | ) |
| | September 30 | | | 38,835 | | | (11,693 | ) | | (2.33 | ) | | (2.33 | ) |
| | June 30 | | | 34,799 | | | 2,523 | | | 0.50 | | | 0.50 | |
| | March 31 | | | 33,765 | | | (22,992 | ) | | (4.60 | ) | | (4.60 | ) |
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| | December 31 | | $ | 27,381 | | $ | (4,590 | ) | $ | (0.92 | ) | $ | (0.92 | ) |
| | September 30 | | | 19,902 | | | (13,560 | ) | | (2.71 | ) | | (2.71 | ) |
| | June 30 | | | 20,156 | | | (4,396 | ) | | (0.88 | ) | | (0.88 | ) |
| | March 31 | | | 19,723 | | | 4,804 | | | 0.96 | | | 0.96 | |
(1)The total for the year may differ from the sum of the quarters as a result of weighting.
| (1) | Options to purchase 69,900 shares of our common stock were not included in the calculation of net loss per share in the year ended December 31, 2006, as they were anti-dilutive. |
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. | SUMMARY OF QUARTERLY RESULTS (UNAUDITED) |
| | | | Net Income (Loss)
Applicable to
Common Shares | | Income (Loss) Per
Common Share(1) | |
(Amounts in thousands, except per share amounts) | | | | | | | | |
2008 | | | | | | | | | | | | | |
December 31 | | $ | 54,900 | | $ | 54,125 | | $ | 10.63 | | $ | 10.60 | |
September 30 | | | 52,953 | | | (31,443 | ) | | (6.20 | ) | | (6.20 | ) |
June 30 | | | 51,478 | | | 38,454 | | | 7.59 | | | 7.54 | |
March 31 | | | 51,766 | | | 15,152 | | | 3.00 | | | 2.98 | |
| | | | | | | | | | | | | |
2007 | | | | | | | | | | | | | |
December 31 | | $ | 52,291 | | $ | 33,930 | | $ | 6.73 | | $ | 6.66 | |
September 30 | | | 52,424 | | | 28,626 | | | 5.68 | | | 5.62 | |
June 30 | | | 51,069 | | | 19,609 | | | 3.89 | | | 3.85 | |
March 31 | | | 52,196 | | | 32,176 | | | 6.39 | | | 6.32 | |
| | | | | | | | | | | | | |
2006 | | | | | | | | | | | | | |
December 31 | | $ | 50,226 | | $ | (74,361 | ) | $ | (14.79 | ) | $ | (14.79 | ) |
September 30 | | | 50,799 | | | (18,616 | ) | | (3.70 | ) | | (3.70 | ) |
June 30 | | | 49,371 | | | 36,851 | | | 7.33 | | | 7.25 | |
March 31 | | | 48,376 | | | (18,857 | ) | | (3.75 | ) | | (3.75 | ) |
| | | | | | | | | | | | | |
_______________________
(1) | The total for the year may differ from the sum of the quarters as a result of weighting. |
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A.CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures—The Company'sProcedures – Our management, with the participation of the Company'sour Chief Executive Officer and Chief Financial Officer, hashave evaluated the effectiveness of the Company'sour 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, the Company'sour Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company'sour disclosure controls and procedures are effective.
MANAGEMENT'SMANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
Management
The management of Alexander's,Alexander’s, Inc., together with its consolidated subsidiaries (the "Company"“Company”), is responsible for establishing and maintaining adequate internal control over financial reporting. The Company'sCompany’s internal control over financial reporting is a process designed under the supervision of the Company'sCompany’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company'sCompany’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
As of December 31, 2005,2008, management conducted an assessment of the effectiveness of the Company'sCompany’s internal control over financial reporting based on the framework established inInternal Control—Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company'sCompany’s internal control over financial reporting as of December 31, 20052008 is effective.
Our
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 U.S. generally accepted accounting principles, 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'sCompany’s assets that could have a material effect on ourthe Company’s financial statements.
Management's assessment of the
The effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 20052008 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 5358 of this Annual Report on Form 10-K, which expresses an unqualified opinions on management's assessment andopinion on the effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 2005.
ITEM 9B. OTHER INFORMATION2008.
None.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Alexander's,
Alexander’s, Inc.
Paramus, New Jersey
We have audited management's assessment, included within this December 31, 2005 Form 10-K of Alexander's, Inc. at Item 9A under the heading "Management's Report on Internal Control Over Financial Reporting," that Alexander's, Inc., together with its consolidated subsidiaries (the "Company") maintained effective internal control over financial reporting of Alexander’s, Inc. and subsidiaries (the “Company”) as of December 31, 2005,2008, based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company'sCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management report on internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment,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 opinions.opinion.
A company'scompany’s internal control over financial reporting is a process designed by, or under the supervision of, the company'scompany’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company'scompany’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’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'scompany’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005,2008, based on the criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and the related financial statement schedules as of and for the year ended December 31, 20052008 of the Company and our report dated February 27, 200623, 2009 expressed an unqualified opinion on those financial statements and financial statement schedules.schedules.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 27, 200623, 2009
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Information concerningrelating to our directors of the Company will be contained in a definitive Proxy Statement involving the election of directors and pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. The CompanyWe will file the Proxy Statement with the Securities and Exchange Commission notno later than 120 days after December 31, 2005.2008. Such information is incorporated by reference herein. For information concerning theour executive officers, of the Company, see "Executive“Executive Officers of the Registrant"Registrant” in Part I of this Annual Report on Form 10-K. Also incorporated herein by reference is the information under the caption "Section“Section 16(a) Beneficial Ownership Reporting Compliance"Compliance” of the Proxy Statement.
The Company has
We have a code of business conduct and ethics that applies to each of itsour Chief Executive Officer and Executive Vice President and Chief Financial Officer, among others. The code is posted on the Company'sour website at www.Alx-Inc.com. The Company intendsWe intend to satisfy itsour disclosure obligation regarding amendments and waivers of this code applicable to itsour Chief Executive Office and Executive Vice President and Chief Financial Officer by posting such information on itsour website.
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 11. EXECUTIVE COMPENSATION
Information concerningrelating to executive compensation will be contained in the Proxy Statement referred to above in "Item“Item 10. Directors, and Executive Officers and Corporate Governance” of the Registrant."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
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Information concerningrelating 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“Item 10. Directors, and Executive Officers of this Registrant"and Corporate Governance” of this Annual Report on Form 10-K. Such information is incorporated by reference herein.
A summary of the Company's equity compensation plans follows.
Equity Compensation Plan Information
| |
|---|
Plan Category
| | (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))
| |
|---|
| Equity compensation plans approved by security holders | | 81,850 | | $ | 70.38 | | 895,000(1 | ) |
| Equity compensation plans not approved by security holders | | N/A | | | N/A | | N/A | |
| | |
| |
| |
| |
| Total | | 81,850 | | $ | 70.38 | | 895,000(1 | ) |
| | |
| |
| |
| |
(1)Excludes 850,000 SARs outstandingEquity Compensation Plan Information
The following table provides information as of JanuaryDecember 31, 2006, which upon exercise, will increase the number of securities available for future grant under the2008, regarding our equity compensation plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONScompensation.
Plan Category | | (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)) | |
| | | | | | | | |
Equity compensation plans approved by security holders | | 14,260 | | $ | 63.38 | | 895,000 | |
Equity compensation plans not approved by security holders | | N/A | | | N/A | | N/A | |
Total | | 14,260 | | $ | 63.38 | | 895,000 | |
| | | | | | | | |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Information concerningrelating to certain relationships and related transactions and director independence will be contained in the Proxy Statement referred to above in "Item“Item 10. Directors, and Executive Officers and Corporate Governance” of the Registrant."this Annual Report on Form 10-K. Such information is incorporated by reference herein.
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information concerningrelating to principal accountantaccounting fees and services will be contained in the Proxy Statement referred to in "Item“Item 10. Directors, and Executive Officers and Corporate Governance” of the Registrant" of thethis Annual Report on Form 10-K. Such information is incorporated by reference herein.
PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(a)Documents filed as part of this Annual Report on Form 10-K
1.The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.
2.The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K.
| | | ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
|---|
(a) | The following documents are filed as part of this Annual Report on Form 10-K. |
| 1. | The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K. |
| 2. | The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K. |
| | Pages in this
Annual Report
on Form 10-K
| |
Schedule II—II – Valuation and Qualifying Accounts—Accounts – years ended
December 31, 2005, 20042008, 2007 and 20032006 | | 5763 | |
| | | |
Schedule III—III – Real Estate and Accumulated Depreciation as of
December 31, 20052008 | | 5864 | |
All other financial statement schedules are omitted because they are not applicable, not required, or the information is included elsewhere in the consolidated financial statements or the notes thereto.
3.The following exhibits listed on the Exhibit Index are filed with this Annual Report on Form 10-K.
| | 3. | The following exhibits listed on the Exhibit Index are filed with this Annual Report on Form 10-K. |
|---|
| | | |
21 | | —Subsidiaries of Registrant | |
23 | | Subsidiaries of Registrant |
23 |
|
— |
|
Consent of Independent Registered Public Accounting Firm | |
31.1 |
|
— |
|
Rule 13a-14 (a)13a-14(a) Certification of the Chief Executive Officer | |
31.2 |
|
— |
|
Rule 13a-14 (a)13a-14(a) Certification of the Chief Financial Officer | |
32.1 |
|
— |
|
Section 1350 Certification of the Chief Executive Officer | |
32.2 |
|
— |
|
Section 1350 Certification of the Chief Financial Officer | |
SIGNATURES
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,ALEXANDER’S, INC. |
|
|
By:(Registrant) |
|
| |
| | |
Date: February 23, 2009 | By: | /s/ JOSEPH MACNOW
Joseph Macnow |
| | Joseph Macnow,
Executive Vice President
and Chief Financial Officer |
|
|
Date: February 27, 2006 |
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
Steven Roth | | Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)Trustees | | February 27, 200623, 2009 |
| (Steven Roth) | | (Principal Executive Officer) | | |
| | | | | |
By: | /s/MICHAEL D. FASCITELLI
Michael D. Fascitelli |
|
President and DirectorTrustee |
|
February 27, 200623, 2009 |
| (Michael D. Fascitelli) | | | | |
| | | | | |
By: | /s/JOSEPH MACNOW
Joseph Macnow |
|
Executive Vice President and | | February 23, 2009 |
| (Joseph Macnow) | | Chief Financial Officer
(Principal Financial and Accounting Officer) |
|
February 27, 2006 |
| | | | | |
By: | /s/THOMAS R. DIBENEDETTO
Thomas R. DiBenedetto |
|
Director |
|
February 27, 200623, 2009 |
/s/ DAVID MANDELBAUM
David Mandelbaum |
(Thomas R. DiBenedetto) |
Director |
|
February 27, 2006 | |
/s/ STEPHEN MANN
Stephen Mann |
|
Chief Operating Officer and Director |
|
February 27, 2006 | |
By: | /s/ARTHUR I. SONNENBLICK
Arthur I. SonnenblickDavid Mandelbaum |
|
Director |
|
February 27, 200623, 2009 |
/s/ NEIL UNDERBERG
Neil Underberg |
(David Mandelbaum) |
Director |
|
February 27, 2006 | |
| | | | | |
By: | /s/RICHARD R. WEST
Arthur Sonnenblick | | Director | | February 23, 2009 |
| (Arthur Sonnenblick) | | | | |
| | | | | |
By: | /s/Neil Underberg | | Director | | February 23, 2009 |
| (Neil Underberg) | | | | |
| | | | | |
By: | /s/Richard R. West |
|
Director |
|
February 27, 200623, 2009 |
| (Richard R. West) | | | | |
| | | | | |
By: | /s/RUSSELL B. WIGHT, JR.
Russell B. Wight Jr. |
|
Director |
|
February 27, 200623, 2009 |
| (Russell B. Wight Jr) | | | | |
| | | | | |
ALEXANDER’S, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
Column A | | | | | | | | | |
Description | | Balance at
Beginning
of Year | | Additions:
Charged
Against
Operations | | Deductions:
Uncollectible
Accounts
Written Off | | | |
| | | | | | | | | | | | | |
Allowance for doubtful accounts: | | | | | | | | | | | | | |
Year Ended December 31, 2008 | | $ | 667 | | $ | 910 | | $ | 220 | | $ | 1,357 | |
| | | | | | | | | | | | | |
Year Ended December 31, 2007 | | $ | 481 | | $ | 247 | | $ | 61 | | $ | 667 | |
| | | | | | | | | | | | | |
Year Ended December 31, 2006 | | $ | 526 | | $ | 97 | | $ | 142 | | $ | 481 | |
| | | | | | | | | | | | | |
ALEXANDER'S, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATIONIII-REAL ESTATE AND QUALIFYING ACCOUNTS
ACCUMULATED DEPRECIATION
DECEMBER31, 2008
(Amounts in thousands)
| | Column B
| | Column C
| | Column D
| | Column E
|
|---|
| | Balance at
Beginning of
Year
| | Additions:
Charged
Against
Operations
| | Deductions:
Uncollectible
Accounts Written
Off
| | Balance at End
of Year
|
|---|
| | Column A — Description | | | | | | | | | | | | |
Allowance for doubtful accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
| Year Ended December 31, 2005 | | $ | 379 | | $ | 208 | | $ | 61 | | $ | 526 |
| | |
| |
| |
| |
|
| Year Ended December 31, 2004 | | $ | 55 | | $ | 384 | | $ | 60 | | $ | 379 |
| | |
| |
| |
| |
|
| Year Ended December 31, 2003 | | $ | 96 | | $ | 112 | | $ | 153 | | $ | 55 |
| | |
| |
| |
| |
|
(Amounts in thousands)
COLUMN A | | COLUMN B | COLUMN C | COLUMN D | COLUMN E | COLUMN F | COLUMN G | COLUMN H | COLUMN I |
| | | Initial Cost to Company (1) | | Gross Amount at Which
Carried at Close of Period | | | | Life on Which
Depreciation
in Latest
Income
Statement
is Computed |
Description | | Encumbrances | Land | Building,
Leaseholds
and Leasehold
Improvements | | Costs
Capitalized
Subsequent
to Acquisition (2) | Land | Building,
Leaseholds
and Leasehold
Improvements | Construction
In Progress | Total (2) | Accumulated
Depreciation
and
Amortization | Date of
Construction | Date
Acquired (1) |
Commercial Property: | | | | | | | | | | | | | | | | | | | | | | | |
New York, NY | | | | | | | | | | | | | | | | | | | | | | | |
Rego Park I | $ | 78,386 | | $ | 1,647 | $ | 8,953 | | $ | 49,960 | $ | 1,647 | $ | 58,124 | $ | 789 | $ | 60,560 | $ | 21,019 | 1959 | 1992 | 15-39 years |
Rego Park II | | 181,695 | | | 3,127 | | 1,467 | | | 290,746 | | 3,127 | | — | | 292,213 | | 295,340 | | — | 2009 | 1992 | N/A |
Rego Park III | | — | | | 779 | | — | | | 479 | | 779 | | — | | 479 | | 1,258 | | — | N/A | 1992 | N/A |
Flushing | | — | | | — | | 1,660 | | | 1,298 | | — | | 1,552 | | 1,406 | | 2,958 | | 436 | 1975 (3) | 1992 | 26 years |
Lexington Avenue | | 693,637 | | | 14,432 | | 12,355 | | | 424,893 | | 27,498 | | 424,182 | | — | | 451,680 | | 54,683 | 2003 | 1992 | 5-39 years |
Kings Plaza Regional
Shopping Center | | 199,537 | | | 497 | | 9,542 | | | 134,219 | | 30,002 | | 114,256 | | — | | 144,258 | | 38,097 | 1970 | 1992 | 7-50 years |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Paramus, NJ | | 68,000 | | | 1,441 | | — | | | 10,313 | | 11,754 | | — | | — | | 11,754 | | — | N/A | 1992 | N/A |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Other Properties | | — | | | 167 | | 1,804 | | | (1,804 | )(4) | 167 | | — | | — | | 167 | | — | N/A | 1992 | N/A |
TOTAL | $ | 1,221,255 | | $ | 22,090 | $ | 35,781 | | $ | 910,104 | $ | 74,974 | $ | 598,114 | $ | 294,887 | $ | 967,975 | $ | 114,235 | | | |
__________________________
(1) | Initial cost is as of May 15, 1992 (the date on which the Company commenced its real estate operations) unless acquired subsequent to that date. See Column H. |
(2) | The net basis of the Company’s assets and liabilities for tax purposes is approximately $64,054,000 lower than the amount reported for financial statement purposes. |
(3) | This date represents the lease acquisition date. |
(4) | Cost of fully depreciated assets. |
ALEXANDER'S,ALEXANDER’S, INC. AND SUBSIDIARIES
SCHEDULE III—III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2005
(Amounts in thousands)
|
|---|
Column A
| | Column B
| | Column C
| | Column D
| | Column E
| | Column F
| | Column G
| | Column H
| | Column I
|
|---|
|
|---|
| |
| | Initial Cost to Company(1)
| |
| | Gross Amount at Which Carried at Close of Period
| |
| |
| |
| |
|
|---|
Description
| | Encumbrances
| | Land
| | Building,
Leaseholds
and
Leasehold
Improvements
| | Cost
Capitalized
Subsequent to
Acquisition(2)
| | Land
| | Buildings,
Leasehold
and
Leaseholds
Improvements
| | Construction In Progress
| | Total(2)
| | Accumulated
Depreciation
and
Amortization
| | Date of Construction
| | Date Acquired(1)
| | Life on Which Depreciation in Latest Income Statement is Computed
|
|---|
| Commercial Property: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| New York, NY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Rego Park I | | $ | 80,926 | | $ | 1,647 | | $ | 8,953 | | $ | 57,641 | | $ | 1,647 | | $ | 66,594 | | $ | — | | $ | 68,241 | | $ | 23,856 | | 1959 | | 1992 | | 15-39 years |
| Rego Park II | | | — | | | 3,906 | | | 1,467 | | | 4,230 | | | 3,906 | | | 1,566 | | | 4,131 | | | 9,603 | | | 1,492 | | 1965 | | 1992 | | 38-39 years |
| Flushing | | | — | | | — | | | 1,660 | | | 2,277 | | | — | | | 3,213 | | | 724 | | | 3,937 | | | 1,918 | | 1975(3 | ) | 1992 | | 26 years |
| Lexington Ave. | | | 720,000 | | | 14,432 | | | 12,355 | | | 441,766 | | | 27,498 | | | 415,775 | | | 25,280 | | | 468,553 | | | 17,816 | | 2003 | | 1992 | | 5-39 years |
| Kings Plaza Regional Shopping Center | | | 210,539 | | | 497 | | | 9,542 | | | 125,036 | | | 24,483 | | | 105,620 | | | 4,972 | | | 135,075 | | | 42,088 | | 1970 | | 1992 | | 7-50 years |
| Paramus, NJ | | | 68,000 | | | 1,441 | | | — | | | 10,313 | | | 11,754 | | | — | | | — | | | 11,754 | | | — | | — | | 1992 | | — |
| Other properties | | | — | | | 167 | | | 1,804 | | | 2 | | | 167 | | | 1,806 | | | — | | | 1,973 | | | 1,806 | | Various | | 1992 | | 7-25 years |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| | | | | | |
| TOTAL | | $ | 1,079,465 | | $ | 22,090 | | $ | 35,781 | | $ | 641,265 | | $ | 69,455 | | $ | 594,574 | | $ | 35,107 | | $ | 699,136 | | $ | 88,976 | | | | | | |
| | |
| |
| |
| |
| |
| |
| |
| |
| |
| | | | | | |
(1)Initial cost is as of May 15, 1992 (the date on which the Company commenced its real estate operations) unless acquired subsequent to that date. See Column H.
(2)The net basis of the Company's assets and liabilities for tax purposes is approximately $44,000,000 higher than the amount reported for financial statement purposes.
(3)This date represents the lease acquisition date.
| | | |
| | | | | | | |
| | | | | | | | | | |
REAL ESTATE: | | | | | | | | | | |
Balance at beginning of period | | $ | 835,081 | | $ | 692,388 | | $ | 699,136 | |
Additions during the period: | | | | | | | | | | |
Land | | | 5,519 | | | — | | | — | |
Buildings, leaseholds and leasehold improvements | | | 5,043 | | | 15,958 | | | 9,864 | |
Construction in progress | | | 123,079 | | | 128,470 | | | 8,231 | |
| | | 968,722 | | | 836,816 | | | 717,231 | |
Fully depreciated assets | | | 747 | | | 1,735 | | | 24,843 | |
Balance at end of period | | $ | 967,975 | | $ | 835,081 | | $ | 692,388 | |
| | | | | | | | | | |
ACCUMULATED DEPRECIATION: | | | | | | | | | | |
Balance at beginning of period | | $ | 96,183 | | $ | 80,779 | | $ | 88,976 | |
Additions charged to operating expenses | | | 18,799 | | | 17,139 | | | 16,646 | |
| | | 114,982 | | | 97,918 | | | 105,622 | |
Fully depreciated assets | | | 747 | | | 1,735 | | | 24,843 | |
Balance at end of period | | $ | 114,235 | | $ | 96,183 | | $ | 80,779 | |
65
ALEXANDER'S, INC. AND SUBSIDIARIES
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION
(Amounts in thousands)
| | December 31,
| |
|---|
| | 2005
| | 2004
| | 2003
| |
|---|
| REAL ESTATE: | | | | | | | | | | |
| Balance at beginning of period | | $ | 955,107 | | $ | 826,546 | | $ | 600,661 | |
| Additions during the period: | | | | | | | | | | |
| | Land | | | — | | | 181 | | | 1,160 | |
| | Buildings, leaseholds and leasehold improvements | | | 127,981 | | | 95,240 | | | 194,772 | |
| | Construction in progress | | | (383,952 | ) | | 33,140 | | | 30,385 | |
| | |
| |
| |
| |
| | | | 699,136 | | | 955,107 | | | 826,978 | |
| Assets sold | | | — | | | — | | | (432 | ) |
| | |
| |
| |
| |
| Balance at end of period | | $ | 699,136 | | $ | 955,107 | | $ | 826,546 | |
| | |
| |
| |
| |
ACCUMULATED DEPRECIATION: |
|
|
|
|
|
|
|
|
|
|
| Balance at beginning of period | | $ | 74,028 | | $ | 62,744 | | $ | 57,686 | |
| Additions charged to operating expenses | | | 14,948 | | | 11,284 | | | 5,058 | |
| | |
| |
| |
| |
| | | | 88,976 | | | 74,028 | | | 62,744 | |
| Assets sold | | | — | | | — | | | — | |
| | |
| |
| |
| |
| Balance at end of period | | $ | 88,976 | | $ | 74,028 | | $ | 62,744 | |
| | |
| |
| |
| |
EXHIBIT INDEX
| | | | | |
|---|
3.1 |
|
| | |
3.1 | | - | Amended and Restated Certificate of Incorporation. Incorporated herein by reference from Exhibit 3.1 to the registrant'sregistrant’s Registration Statement on Form S-3 filed on September 20, 1995 |
|
* |
3.2 |
|
| | |
3.2 | | - | By-laws, as amended. Incorporated herein by reference from Exhibit 10.1 to the registrant'sregistrant’s Quarterly Report on Form 10-Q for the quarter ended March 31,June 30, 2000 |
|
* |
10.1 |
| | | |
10.1 | | - | 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 | * |
| | | | |
10.2 | | - | Extension Agreement to the Real Estate Retention Agreement, dated as of February 6, 1995, between the Company and Vornado Realty Trust. Incorporated herein by reference from Exhibit 10(i)(G)(2) to the registrant’s Annual Report Form 10-K for the year ended December 31, 1994 | * |
| | | | |
10.3 | ** | - | Registrant’s Omnibus Stock Plan, as amended, dated May 28, 1997. Incorporated herein by reference from Exhibit 10 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, filed on August 13, 1997 | * |
| | | | |
10.4 | | - | Amended, Restated and Consolidated Mortgage and Security Agreement, dated May 12, 1999, between The Chase Manhattan Bank, as mortgagee, and Alexander’s Rego Shopping Center Inc., as mortgagor. Incorporated herein by reference from Exhibit 10(i)(E) to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed on August 8, 2000 | * |
| | | | |
10.5 | | - | 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 | * |
| | | | |
10.6 | | - | Amended and Restated Consolidated Mortgage and Security Agreement dated as of May 31, 2001 among Alexander’s Kings Plaza LLC as mortgagor, Alexander’s of King LLC as mortgagor and Kings Parking LLC as mortgagor, collectively borrower, to Morgan Guaranty Trust Company of New York, as mortgagee. Incorporated herein by reference from Exhibit 10(v) A1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, filed on August 2, 2001 | * |
| | | | |
10.7 | | - | Amended, Restated and Consolidated Promissory Note, dated as of May 31, 2001 by and between Alexander’s Kings Plaza LLC, Alexander’s of Kings LLC, and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by reference from Exhibit 10(v) A2 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, filed on August 2, 2001 | * |
| | | | |
10.8 | | - | Cash Management Agreement dated as of May 31, 2001 by and between Alexander’s Kings Plaza LLC, Alexander’s of Kings LLC, and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by reference from Exhibit 10(v) A3 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, filed on August 2, 2001 | * |
| | | | |
|
***
| | ___________________
Incorporated by reference.
Management contract or compensatory agreement | |
10.9 | | - | Note modification and Severance Agreement dated as of November 26, 2001, between Alexander’s Kings Plaza LLC, Alexander’s of Kings LLC, and Kings Parking LLC collectively borrower and JP Morgan Chase Bank of New York, lender. Incorporated herein by reference from Exhibit 10(v)(A)(4) to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, filed on March 13, 2002 | * |
| | | | |
10.10 | | - | Loan Agreement dated as of October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(1) to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, filed on March 13, 2002 | * |
| | | | |
10.11 | | - | Mortgage, Security Agreement and Fixture Financing Statement dated as of October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(2) to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, filed on March 13, 2002 | * |
| | | | |
10.12 | | - | Environmental undertaking letter dated as of October 2, 2001 by and between ALX of Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(3) to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed on March 13, 2002 | * |
| | | | |
10.13 | | - | 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 | * |
| | | | |
10.14 | | - | 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 | * |
| | | | |
10.15 | | - | 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 | * |
| | | | |
10.16 | | - | 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 | * |
| | | | |
10.17 | | - | Kings Plaza Management Agreement, dated as of May 31, 2001, by and between Alexander’s Kings Plaza LLC and Vornado Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(3) to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 7, 2002 | * |
| | | | |
10.18 | | - | 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'sregistrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 7, 2002 |
|
* |
10.2 |
| | | |
|
*
| | ___________________
Incorporated by reference. | |
10.19 | | - | 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'sregistrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 7, 2002 |
|
* |
10.3 |
|
Amended and Restated Credit Agreement dated July 3, 2002 between 59th Street Corporation and Vornado Lending, LLC (evidencing $40,000,000 of debt on which 59th Street Corporation became the direct borrower). Incorporated herein by reference from Exhibit 10(i)(B)(1) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.410.20 |
|
Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending LLC evidencing a $20,000,000 loan. Incorporated herein by reference from Exhibit 10(i)(B)(2) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002- |
|
* |
10.5 |
|
Amended and Restated Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending LLC evidencing a $50,000,000 line of credit facility. Incorporated herein by reference from Exhibit 10(i)(B)(3) to the registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002. |
|
* |
10.6 |
|
Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending LLC evidencing a $35,000,000 loan. Incorporated herein by reference from Exhibit 10(i)(B)(4) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.7 |
|
Building Loan Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.8 |
|
Project Loan Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(1) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
*Incorporated by reference
Exhibit
No.
| |
| |
|
|---|
|
|
|
|
|
10.9 |
|
Supplemental Loan Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(2) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.10 |
|
Consolidated, Amended and Restated Building Loan Mortgage, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(3) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.11 |
|
Consolidated, Amended and Restated Building Loan Note, dated as of July 3, 2002 by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(4) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.12 |
|
Guaranty of Completion, dated as of July 3, 2002, executed by Vornado Realty L.P. for the benefit of Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C) (5) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.13 |
|
Guaranty of Carry Obligations, dated as of July 3, 2002, executed by Alexander's, Inc. for the benefit of Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i) (C)(6) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.14 |
|
Environmental Indemnity Agreement, dated as of July 3, 2002, executed by Alexander's, Inc., 731 Residential LLC and 731 Commercial LLC in favor of Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(7) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 |
|
* |
10.15 |
|
Reimbursement Agreement, dated as of July 3, 2002, by and between Alexander's,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'sregistrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 7, 2002 |
|
* |
10.16 |
|
| | |
10.21 | | - | First Omnibus Amendment to Loan Documents,of Lease, dated March 5, 2003, among 731 Commercial LLCas of April 19, 2002, between Seven Thirty One Limited Partnership, landlord and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders.Bloomberg L.P., tenant. Incorporated herein by reference from Exhibit 10.1610(v)(B)(2) to the registrant's Annualregistrant’s Quarterly Report on Form 10-K10-Q for the yearfiscal quarter ended December 31, 2003June 30, 2002, filed on August 7, 2002 |
|
* |
10.17 |
|
Second Omnibus Amendment to Loan Documents, dated February 13, 2004, among 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10.17 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003 |
|
* |
*Incorporated by reference
Exhibit
No.
| |
| |
|
|---|
10.18 |
|
First Amendment to Building Loan Agreement, dated March 5, 2003, between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10.18 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003 |
|
* |
10.1910.22 |
|
Second Amendment to Building Loan Agreement, dated February 13, 2004, between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10.19 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003- |
|
* |
10.20 |
|
Loan and Security Agreement, dated as of February 13, 2004, between 731 Office One LLC, as Borrower and German American Capital Corporation, as Lender. Incorporated herein by reference from Exhibit 10.20 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.21 |
|
| | |
10.23 | | - | Amended, Restated and Consolidated Mortgage, Security Agreement, Financing Statement and Assignment of Leases, Rent and Security Deposits by and between 731 Office One LLC as Borrower and German American Capital Corporation as Lender, dated as of February 13, 2004. Incorporated herein by reference from Exhibit 10.21 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.22 |
|
| | |
10.24 | | - | Amended, Restated and Consolidated Note, dated as of February 13, 2004, by 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.22 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.23 |
|
| | |
10.25 | | - | Assignment of Leases, Rents and Security Deposits from 731 Office One LLC to German American Capital Corporation, dated as of February 13, 2004. Incorporated herein by reference from Exhibit 10.23 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.24 |
|
| | |
10.26 | | - | Account and Control Agreement, dated as of February 13, 2004, by and among German American Capital Corporation as Lender, and 731 Office One LLC as Borrower, and JP Morgan Chase as Cash Management Bank. Incorporated herein by reference from Exhibit 10.24 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.25 |
|
Manager's | | |
10.27 | | - | Manager’s Consent and Subordination of Management Agreement dated February 13, 2004 by 731 Office One LLC and Alexander'sAlexander’s Management LLC and German American Capital Corporation. Incorporated herein by reference from Exhibit 10.25 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.26 |
|
| | |
10.28 | | - | Note Exchange Agreement dated as of February 13, 2004 by and between 731 Office One LLC and German American Capital Corporation. Incorporated herein by reference from Exhibit 10.26 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.27 |
*
| | ___________________
Incorporated by reference. | |
10.29 | | - | Promissory Note A-1 dated as of February 13, 2004 and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.27 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
* |
* |
*Incorporated by reference
Exhibit
No.
| |
| |
|
|---|
10.28 |
|
| | |
10.30 | | - | Promissory Note A-2 dated as of February 13, 2004 and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.28 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.29 |
|
| | |
10.31 | | - | Promissory Note A-3 dated as of February 13, 2004 and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.29 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.30 |
|
| | |
10.32 | | - | Promissory Note A-4 dated as of February 13, 2004, and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.30 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.31 |
|
| | |
10.33 | | - | Promissory Note A-X dated as of February 13, 2004, and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.31 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.32 |
|
| | |
10.34 | | - | Promissory Note B dated as of February 13, 2004, and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.32 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.33 |
|
| | |
10.35 | | - | Guaranty of Recourse Obligations dated as of February 13, 2004, by Alexander's,Alexander’s, Inc. to and for the benefit of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.33 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.34 |
|
| | |
10.36 | | - | Environmental Indemnity dated as of February 13, 2004, by Alexander's,Alexander’s, Inc. and 731 Office One LLC for the benefit of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.34 to the registrant'sregistrant’s Annual Report on Form 10-K for the year ended December 31, 2003, filed on March 2, 2004 |
|
* |
10.35 |
|
Amended, Restated and Consolidated Mortgage and Security | | |
10.37 | | - | Loan Agreement dated May 12, 1999,as of July 6, 2005, between The Chase Manhattan Bank,731 Retail One LLC, as mortgagee,Borrower and Alexander's Rego Shopping Center Inc.,Archon Financial, as mortgagor.Lender. Incorporated herein by reference from Exhibit 10(i)(E)10.1 to the registrant'sregistrant’s Current Report on Form 8-K, filed on July 12, 2005 | * |
| | | | |
10.38 | ** | - | Form of Stock Option Agreement between the Company and certain employees. Incorporated herein by reference from Exhibit 10.61 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended JuneSeptember 30, 20002005, filed on October 27, 2005 |
|
* |
10.36 |
|
Real Estate Retention | | |
10.39 | ** | - | Form of Restricted Stock Option Agreement dated as of July 20, 1992, between Vornado Realty Trustthe Company and Keen Realty Consultants, Inc., each as special real estate consultants, and the Company.certain employees. Incorporated herein by reference from Exhibit 10(i)(O)10.62 to the registrant's Annualregistrant’s Quarterly Report on Form 10-K10-Q for the fiscal yearquarter ended July 25, 1992September 30, 2005, filed on October 27, 2005 |
|
* |
10.37 |
|
Extension Agreement to the Real Estate Retention | | |
10.40 | ** | - | Stock Appreciation Right Agreement dated as of February 6, 1995,January 10, 2006, between the CompanyMichael D. Fascitelli and Vornado Realty Trust.Alexander’s Inc. Incorporated herein by reference from Exhibit 10(i)(G)(2)10.1 to the registrant's Annualregistrant’s Current Report on Form 10-K8-K for the year ended December 31, 1994January 10, 2006, filed on January 12, 2006 |
|
* |
10.38 |
***
| | ___________________
Incorporated by reference.
Management contract or compensatory agreement | |
| | | | |
10.41 | ** | - | Registrant’s 2006 Omnibus Stock Plan dated April 4, 2006. Incorporated herein by reference from Annex B to Schedule 14A, filed by the registrant on April 28, 2006 | * |
| | | | |
10.42 | | - | Second Amendment to Real Estate Retention Agreement, dated as of July 3, 2002,January 1, 2007, by and between Alexander's,Alexander’s, Inc. and Vornado Realty L.P. Incorporated herein by reference from Exhibit 10(i)(E)(3)10.64 to the registrant's Quarterlyregistrant’s Annual Report on Form 10-Q10-K for the quarteryear ended June 30, 2002December 31, 2006, filed on February 26, 2007 |
* |
* |
*Incorporated by reference
Exhibit
No.
| |
| |
|
|---|
10.39 |
| | | |
10.43 | | - |
Amendment to 59th Street Real Estate Retention Agreement,agreement, dated as of July 3, 2002, January 1, 2007, by and betweenamong Vornado Realty L.P., 731 ResidentialRetail One LLC, 731 Restaurant LLC, 731 Office One LLC and 731 CommercialOffice Two LLC. Incorporated herein by reference from Exhibit 10(i)(E)(4)10.65 to the registrant's Quarterlyregistrant’s Annual Report on Form 10-Q10-K for the quarteryear ended June 30, 2002December 31, 2006, filed on February 26, 2007
|
|
* |
10.40 |
| | | |
10.44 | | - | Building Loan Agreement, dated as of December 21, 2007, among Alexander’s of Rego Park II, Inc., as Borrower, PB Capital Corporation, as Lender, Norddeutsche Landesbank Girozentrale, New York Branch, as Lender, Wells Fargo Bank, National Association, as Lender, Landesbank Baden-Wurttemberg, New York Branch, as Lender, Bank of Ireland, Connecticut Branch, as Lender, PB Capital Corporation, as Administrative Agent, PB Capital Corporation and Norddeutsche Landesbank Girozentrale, New York Branch, as Co-Arrangers. Incorporated herein by reference from Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
10.45 | | - | Project Loan Agreement, dated as of December 21, 2007, among Alexander’s of Rego Park II, Inc., as Borrower, PB Capital Corporation, as Lender, Norddeutsche Landesbank Girozentrale, New York Branch, as Lender, Wells Fargo Bank, National Association, as Lender, Landesbank Baden-Wurttemberg, New York Branch, as Lender, Bank of Ireland, Connecticut Branch, as Lender, PB Capital Corporation, as Administrative Agent, PB Capital Corporation and Norddeutsche Landesbank Girozentrale, New York Branch, as Co-Arrangers. Incorporated herein by reference from Exhibit 10.2 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
10.46 | | - | Series I Building Loan Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders. Incorporated herein by reference from Exhibit 10.3 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
10.47 | | - | Series II Building Loan Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders. Incorporated herein by reference from Exhibit 10.4 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
10.48 | | - | Series I Project Loan Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders. Incorporated herein by reference from Exhibit 10.5 to the registrants Current Report on Form 8-K, filed on December 31, 2007 | * |
| | | | |
10.49 | | - | Series II Project Loan Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of December 21, 2007, from Alexander’s of Rego Park II, Inc., as Mortgagor, to PB Capital Corporation, as Administrative Agent for the Lenders. Incorporated herein by reference from Exhibit 10.6 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
|
***
| | ___________________
Incorporated by reference.
Management contract or compensatory agreement | |
10.50 | | - | Guaranty of Completion, dated as of December 21, 2007, executed by Alexander’s, Inc. for the benefit of PB Capital Corporation, as Administrative Agent for itself and the other Lenders Incorporated herein by reference from Exhibit 10.7 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
10.51 | | - | Guaranty of Payment, dated as of December 21, 2007, executed by Alexander’s, Inc. for the benefit of PB Capital Corporation, as Administrative Agent for itself and the other Lenders. Incorporated herein by reference from Exhibit 10.8 to the registrant’s Current Report on Form 8-K, filed on December 28, 2007 | * |
| | | | |
10.52 | | - | First Amendment to Amended and Restated Management and Development Agreement, dated as of July 3, 2002,6, 2005, by and between Alexander's,Alexander’s, Inc., the subsidiaries party thereto and Vornado Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(1)10.52 to the registrant's Quarterlyregistrant’s Annual Report on Form 10-Q for the quarter ended June 30, 200210-K, filed on February 25, 2008. |
|
* |
10.41 |
|
59th Street | | |
10.53 | | - | Second Amendment to Amended and Restated Management and Development Agreement, dated as of July 3, 2002,December 20, 2007, by and between 731 Commercial LLCAlexander’s, Inc., the subsidiaries party thereto and Vornado Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(2)10.53 to the registrant's Quarterlyregistrant’s Annual Report on Form 10-Q for the quarter ended June 30, 200210-K, filed on February 25, 2008 |
|
* |
10.42 |
|
Kings Plaza | | |
10.54 | | - | Rego II Management and Development Agreement, dated as of May 31, 2001,December 20, 2007, by and between Alexander's Kings Plaza LLCAlexander’s of Rego Park II, Inc., and Vornado Management Corp.Realty L.P. Incorporated herein by reference from Exhibit 10(i)(F)(3)10.54 to the registrant's Quarterlyregistrant’s Annual Report on Form 10-Q for the quarter ended June 30, 200210-K, filed on February 25, 2008 |
|
* |
10.43 |
|
| | |
10.55 | | - | Third Amendment to Real Estate Retention Agreement, dated as of Lease for Rego Park, Queens, New York,December 20, 2007, by and between Alexander's,Alexander’s, Inc., and Sears Roebuck & Co.Vornado Realty L.P. Incorporated herein by reference from Exhibit 10.110.55 to the registrant's Quarterlyregistrant’s Annual Report on Form 10-Q for the quarter ended March 31, 199410-K, filed on February 25, 2008 |
|
* |
10.44 |
|
Lease for Roosevelt Avenue, Flushing, New York, | | |
10.56 | | - | Rego II Real Estate Retention Agreement, dated as of December 1, 1992,20, 2007, by and between the Company, as landlord,Alexander’s, Inc., and Caldor, as tenant.Vornado Realty L.P. Incorporated herein by reference from Exhibit (ii)(E)(7)10.56 to the registrant'sregistrant’s Annual Report on Form 10-K, for the fiscal year ended Julyfiled on February 25, 19922008 |
|
* |
10.45 |
|
First Amendment to Sublease for Roosevelt Avenue, Flushing, New York, dated as of February 22, 1995 between the Company, as sublandlord, and Caldor, as tenant. Incorporated herein by reference from Exhibit 10(ii)(A)(8)(b) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1994 |
|
* |
10.4621 |
|
Lease Agreement, dated March 1, 1993 by and between the Company and Alex Third Avenue Acquisition Associates. Incorporated by reference from Exhibit 10(ii)(F) to the registrant's Annual Report on Form 10-K for the fiscal year ended July 31, 1993- |
|
* |
10.47 |
|
Agreement of Lease for Rego Park, Queens, New York, between the Company and Marshalls of Richfield, MN, Inc., dated as of March 1, 1995. Incorporated herein by reference from Exhibit 10(ii)(A)(12)(a) to the registrant s Annual Report on Form 10-K for the year ended December 31, 1994 |
|
* |
10.48 |
|
Guaranty, dated March 1, 1995, of the Lease described in Exhibit 10(ii)(A)(6)(a) above by the Company. Incorporated herein by reference from Exhibit 10(ii)(A)(12)(b) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1994 |
|
* |
10.49 |
|
Employment Agreement, dated February 9, 1995, between the Company and Stephen Mann. Incorporated herein by reference from Exhibit 10(iii)(B) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1994 |
|
* |
10.50 |
|
Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997. Incorporated herein by reference from Exhibit 10 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 |
|
* |
*Incorporated by reference
Exhibit
No.
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| |
|
|---|
|
|
|
|
|
10.51 |
|
Amended and Restated Consolidated Mortgage and Security Agreement dated as of May 31, 2001 among Alexander's Kings Plaza LLC as mortgagor, Alexander's of King LLC as mortgagor and Kings Parking LLC as mortgagor, collectively borrower, to Morgan Guaranty Trust Company of New York, as mortgagee. Incorporated herein by reference from Exhibit 10(v) A1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 |
|
* |
10.52 |
|
Amended, Restated and Consolidated Promissory Note, dated as of May 31, 2001 by and between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by reference from Exhibit 10(v) A2 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 |
|
* |
10.53 |
|
Cash Management Agreement dated as of May 31, 2001 by and between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by reference from Exhibit 10(v) A3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 |
|
* |
10.54 |
|
Note modification and Severance Agreement dated as of November 26, 2001, between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking LLC collectively borrower and JP Morgan Chase Bank of New York, lender. Incorporated herein by reference from Exhibit 10(v)(A)(4) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001 |
|
* |
10.55 |
|
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 |
|
* |
10.56 |
|
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 |
|
* |
10.57 |
|
Loan Agreement dated as of October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(1) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001 |
|
* |
10.58 |
|
Mortgage, Security Agreement and Fixture Financing Statement dated as of October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(2) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001 |
|
* |
10.59 |
|
Environmental undertaking letter dated as of October 2, 2001 by and between ALX of Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(3) to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 |
|
* |
10.60 |
|
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 |
|
* |
*Incorporated by reference
Exhibit
No.
| |
| |
|
|---|
10.61 |
|
Form of Stock Option Agreement between the Company and certain employees — Incorporated herein by reference from Exhibit 10.61 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 |
|
* |
10.62 |
|
Form of Restricted Stock Option Agreement between the Company and certain employees — Incorporated herein by reference from Exhibit 10.62 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 |
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* |
10.63 |
|
Stock Appreciation Right Agreement dated as of January 10, 2006, between Michael D. Fascitelli and Alexander's Inc. — Incorporated herein by reference from Exhibit 10.1 to the registrant's Current Report on Form 8-K for January 10, 2006 |
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* |
21 |
|
Subsidiaries of Registrant |
|
|
23 |
|
| | |
23 | | - | Consent of Independent Registered Public Accounting Firm |
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31.1 |
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| | |
31.1 | | - | Rule 13a-14 (a) Certification of the Chief Executive Officer |
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31.2 |
|
| | |
31.2 | | - | Rule 13a-14 (a) Certification of the Chief Financial Officer |
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|
32.1 |
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| | |
32.1 | | - | Section 1350 Certification of the Chief Executive Officer |
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|
32.2 |
|
| | |
32.2 | | | Section 1350 Certification of the Chief Financial Officer |
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| | | | |
|
*
| | ___________________
Incorporated by reference. | |
| | | | |
*Incorporated by reference
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FORWARD-LOOKING STATEMENTSPART IPART IIREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts)ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts)ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands)ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTSALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMPART IIIPART IVSIGNATURESALEXANDER'S, INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTSALEXANDER'S, INC. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2005 (Amounts in thousands)ALEXANDER'S, INC. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Amounts in thousands)EXHIBIT INDEX