UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM10-Q

(Mark one)


☑
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)

☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)


OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   September 30, 2017                                                 

2021                                                

Or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)


OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:to
Commission File Number:001-06064
ALEXANDERS INC
(Exact name of registrant as specified in its charter)
For the transition period from:Delaware

to

51-0100517
Commission File Number:

                                 001-06064

ALEXANDER’S, INC.

(Exact name of registrant as specified in its charter)

Delaware

51-0100517

(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)

210 Route 4 East,

 Paramus,New Jersey

07652

(Address of principal executive offices)(Zip Code)
(Zip Code)
(201)587-8541

(201)587-8541

(Registrant’s telephone number, including area code)

N/A

N/A
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1 par value per shareALXNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☑ Yes ☐ No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.

☑ ☐

Large Accelerated Filer

☑

☐ Accelerated Filer

☐

Non-Accelerated Filer (Do not check if smaller  reporting company)

☐

☐ Smaller Reporting Company

☐

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). ☐ Yes ☑ No

As of October 30,2017,29, 2021, there were 5,107,290 shares of common stock, par value $1 per share, outstanding.

ALEXANDER’S, INC.

INDEX



ALEXANDER’S, INC.
INDEX
Page Number

Page Number
PART I.

Financial Information
Item 1.Financial Statements:
Consolidated Balance Sheets (Unaudited) as of September 30, 2021 and December 31, 2020
4

Item 1.

Financial Statements:

Consolidated Balance Sheets (Unaudited) as of
September  30, 2017 and December 31, 2016

3     

Consolidated Statements of Income (Unaudited) for the
Three and Nine Months Ended September 30, 20172021 and 2016

2020		4     
5

Consolidated Statements of Comprehensive Income (Unaudited) for the
Three and Nine Months Ended September 30, 20172021 and 2016

2020		5     
6

Consolidated Statements of Changes in Equity (Unaudited) for the
Three and Nine Months Ended September 30, 20172021 and 2016

2020		6     
7

Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 20172021 and 2016

2020		7     
8

Notes to Consolidated Financial Statements (Unaudited)

8     
9

Report of Independent Registered Public Accounting Firm

16

Item 2.

Management’s Discussion and Analysis of
Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures about Market Risk26     
25

Item 4.

Controls and Procedures26     
25

PART II.

Other Information
Item 1.Legal Proceedings
26

Item 1.

1A.		Risk Factors
Legal Proceedings26
27     

Item 1A.

Risk Factors27     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds27     
26

Item 3.

Defaults Upon Senior Securities27     
26

Item 4.

Mine Safety Disclosures27     
26

Item 5.

Other Information27     
26

Item 6.

Exhibits
Exhibits26
27     

Exhibit Index

28     
27

Signatures

29     
28

3

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)

ASSETS 

    September 30,    
2017

    

    December 31,    
2016

 

Real estate, at cost:

       

Land

  $    44,971   $    44,971 

Buildings and leasehold improvements

    988,261      985,800 

Development and construction in progress

    3,276      2,780 
   

 

 

 

    

 

 

 

Total

    1,036,508      1,033,551 

Accumulated depreciation and amortization

    (273,898)      (252,737) 
   

 

 

 

    

 

 

 

Real estate, net

    762,610      780,814 

Cash and cash equivalents

    280,010      288,926 

Restricted cash

    84,504      85,752 

Rego Park II loan participation

    199,275      - 

Marketable securities

    29,424      37,918 

Tenant and other receivables, net of allowance for doubtful accounts of $1,476 and $1,473, respectively

    4,003      3,056 

Receivable arising from the straight-lining of rents

    175,787      179,010 

Deferred leasing costs, net, including unamortized leasing fees to Vornado
of $34,251 and $36,960, respectively

    44,951      48,387 

Other assets

    41,493      27,367 
   

 

 

 

    

 

 

 

  $    1,622,057   $    1,451,230 
   

 

 

 

    

 

 

 

LIABILITIES AND EQUITY

       

Mortgages payable, net of deferred debt issuance costs

  $    1,240,069   $    1,052,359 

Amounts due to Vornado

    533     897

Accounts payable and accrued expenses

    36,461      42,200 

Other liabilities

    2,908      2,929 
   

 

 

 

    

 

 

 

Total liabilities

    1,279,971      1,098,385 
   

 

 

 

    

 

 

 

       

Commitments and contingencies

       
       

Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares;
issued and outstanding, none

    -      - 

Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued, 5,173,450 shares; outstanding, 5,107,290 and, 5,106,196 shares, respectively

    5,173      5,173 

Additional capital

    31,577      31,189 

Retained earnings

    306,403      308,995 

Accumulated other comprehensive (loss) income

    (699)      7,862 
   

 

 

 

    

 

 

 

    342,454      353,219 

Treasury stock: 66,160 shares and 67,254 shares respectively, at cost

    (368)      (374) 
   

 

 

 

    

 

 

 

Total equity

    342,086      352,845 
   

 

 

 

    

 

 

 

  $    1,622,057   $    1,451,230 
   

 

 

 

    

 

 

 

ASSETSSeptember 30, 2021December 31, 2020
Real estate, at cost:
Land$44,804 $44,971 
Buildings and leasehold improvements1,013,011 1,014,311 
Development and construction in progress18,945 11,761 
Total1,076,760 1,071,043 
Accumulated depreciation and amortization(364,290)(350,122)
Real estate, net712,470 720,921 
Cash and cash equivalents448,913 428,710 
Restricted cash20,858 21,167 
Marketable securities9,435 6,024 
Tenant and other receivables6,619 8,116 
Receivable arising from the straight-lining of rents137,863 145,274 
Deferred leasing costs, net, including unamortized leasing fees to Vornado
of $24,633 and $27,851, respectively
32,265 36,524 
Other assets45,163 37,402 
$1,413,586 $1,404,138 
LIABILITIES AND EQUITY
Mortgages payable, net of deferred debt issuance costs$1,157,263 $1,156,170 
Amounts due to Vornado2,092 1,516 
Accounts payable and accrued expenses53,200 35,342 
Other liabilities6,720 7,882 
Total liabilities1,219,275 1,200,910 
Commitments and contingencies00
Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares;
issued and outstanding, none
— — 
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued, 5,173,450 shares; outstanding, 5,107,290 shares5,173 5,173 
Additional capital33,415 32,965 
Retained earnings152,186 166,165 
Accumulated other comprehensive income (loss)3,905 (707)
194,679 203,596 
Treasury stock: 66,160 shares, at cost(368)(368)
Total equity194,311 203,228 
$1,413,586 $1,404,138 

See notes to consolidated financial statements (unaudited).

4

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)

  

Three Months Ended
September 30,

  Nine Months Ended
September 30,		 
  

2017

  2016  2017  2016 

REVENUES

        

Property rentals

 $  37,970  $   37,598  $   114,507  $   113,129 

Expense reimbursements

   20,124    19,522    58,006    56,554 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total revenues

   58,094    57,120    172,513    169,683 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

EXPENSES

        

Operating, including fees to Vornado of $1,146, $1,082,
$3,365 and $3,389, respectively

   21,272    21,714    62,937    60,702 

Depreciation and amortization

   8,430    8,045    24,613    25,745 

General and administrative, including management fees
to Vornado of $595 and $1,785 in each three and nine
month period, respectively

   1,228    1,225    4,080    4,285 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total expenses

   30,930    30,984    91,630    90,732 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

        

OPERATING INCOME

   27,164    26,136    80,883    78,951 
        

Interest and other income, net

   2,081    522   4,105    2,388 

Interest and debt expense

   (8,940)    (5,615)    (22,355)    (16,476) 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Income before income taxes

   20,305    21,043    62,633    64,863 

Income tax expense

   (6)    (7)    (7)    (41) 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Net income

 $  20,299  $   21,036  $   62,626  $   64,822 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

        

Net income per common share – basic and diluted

 $  3.97  $   4.11  $   12.24  $   12.68 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

        

Weighted average shares outstanding – basic and diluted

   5,115,982    5,114,701    5,115,339    5,113,877 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

        

Dividends per common share

 $  4.25  $   4.00  $   12.75  $   12.00 
  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
REVENUES
Rental revenues$48,950 $43,499 $156,491 $143,087 
EXPENSES
Operating, including fees to Vornado of $1,536, $1,177, $4,585 and $3,795, respectively(21,433)(22,448)(68,655)(63,979)
Depreciation and amortization(9,008)(7,587)(25,682)(23,129)
General and administrative, including management fees to Vornado of $595 and $1,785 in each three and nine month period, respectively(1,272)(1,386)(4,638)(4,948)
Total expenses(31,713)(31,421)(98,975)(92,056)
Interest and other income, net157 220 480 2,473 
Interest and debt expense(5,124)(4,463)(15,350)(19,208)
Change in fair value of marketable securities(869)(1,231)3,411 (10,789)
Net gain on sale of real estate— — 9,124 — 
Net income$11,401 $6,604 $55,181 $23,507 
Net income per common share - basic and diluted$2.22 $1.29 $10.77 $4.59 
Weighted average shares outstanding - basic and diluted5,124,478 5,122,206 5,123,321 5,120,490 
See notes to consolidated financial statements (unaudited).

5

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands)

  Three Months Ended
September 30,		  Nine Months Ended
September 30,
  2017  2016  2017 2016 

Net income

 $    20,299  $    21,036  $    62,626   $    64,822 

Other comprehensive (loss) income:

            

Change in unrealized net gain or loss onavailable-for-sale
securities

    (1,653)     (2,419)     (8,494)     96 

Change in value of interest rate cap

    (11)     37     (67)     80 
   

 

 

 

   

 

 

    

 

 

    

 

 

 

Comprehensive income

 $    18,635  $    18,654  $    54,065   $    64,998 
   

 

 

 

   

 

 

    

 

 

    

 

 

 

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net income$11,401 $6,604 $55,181 $23,507 
Other comprehensive income (loss):
Change in fair value of interest rate derivatives165 (14)4,612 7 
Comprehensive income$11,566 $6,590 $59,793 $23,514 
See notes to consolidated financial statements (unaudited).

6

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

(Amounts in thousands)

                       Accumulated    
Other
   Comprehensive   
     Income (Loss)    		             
  Common Stock    Additional  
Capital		    Retained  
  Earnings  		       Treasury  
Stock		  Total
  Equity  		 
    Shares      Amount          

Balance, December 31, 2015

  5,173   $     5,173  $   30,739   $   304,340    $   13,002   $   (374)   $   352,880  

Net income

  -    -    -    64,822     -    -    64,822  

Dividends paid

  -    -    -    (61,363)     -    -    (61,363) 

Change in unrealized net gain on
available-for-sale securities

  -    -    -    -     96    -    96  

Change in value of interest rate cap

  -    -    -    -     80    -    80  

Deferred stock unit grants

  -    -    450    -     -    -    450 
 

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance, September 30, 2016

  5,173   $   5,173  $   31,189   $   307,799    $   13,178   $   (374)   $   356,965  
 

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
              

Balance, December 31, 2016

  5,173   $     5,173  $   31,189   $   308,995    $   7,862   $   (374)   $   352,845  

Net income

  -    -    -    62,626     -    -    62,626  

Dividends paid

  -    -    -    (65,218)     -    -    (65,218) 

Change in unrealized net gain or loss on
available-for-sale securities

  -    -    -    -     (8,494)    -    (8,494) 

Change in value of interest rate cap

  -    -    -    -     (67)    -    (67) 

Deferred stock unit grants

  -    -    394   -     -    -    394 

Other

  -    -    (6)    -     -    6    -   
 

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance, September 30, 2017

  5,173   $     5,173  $   31,577   $   306,403    $   (699)   $   (368)   $   342,086  
 

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

thousands, except per share amounts)

 Additional
Capital		Retained  
Earnings  		Accumulated 
Other
Comprehensive Income (Loss)		Treasury
Stock		Total Equity
Common Stock
 SharesAmount
Three Months Ended September 30, 2021
Balance, June 30, 20215,173 $5,173 $33,415 $163,845 $3,740 $(368)$205,805 
Net income— — — 11,401 — — 11,401 
 Dividends paid ($4.50 per common share)— — — (23,060)— — (23,060)
Change in fair value of interest rate derivatives— — — — 165 — 165 
Balance, September 30, 20215,173 $5,173 $33,415 $152,186 $3,905 $(368)$194,311 
Three Months Ended September 30, 2020
Balance, June 30, 20205,173 $5,173 $32,965 $187,229 $(28)$(368)$224,971 
Net income— — — 6,604 — — 6,604 
 Dividends paid ($4.50 per common share)— — — (23,050)— — (23,050)
Change in fair value of interest rate derivatives— — — — (14)— (14)
Balance, September 30, 20205,173 $5,173 $32,965 $170,783 $(42)$(368)$208,511 
 Additional
Capital		Retained  
Earnings  		Accumulated 
Other
Comprehensive (Loss) Income		Treasury
Stock		Total Equity
Common Stock
 SharesAmount
Nine Months Ended September 30, 2021
Balance, December 31, 20205,173 $5,173 $32,965 $166,165 $(707)$(368)$203,228 
Net income— — — 55,181 — — 55,181 
 Dividends paid ($13.50 per common share)— — — (69,160)— — (69,160)
Change in fair value of interest rate derivatives— — — — 4,612 — 4,612 
Deferred stock unit grants— — 450 — — — 450 
Balance, September 30, 20215,173 $5,173 $33,415 $152,186 $3,905 $(368)$194,311 
Nine Months Ended September 30, 2020
Balance, December 31, 20195,173 $5,173 $32,365 $216,394 $(49)$(368)$253,515 
Net income— — — 23,507 — — 23,507 
 Dividends paid ($13.50 per common share)— — — (69,118)— — (69,118)
Change in fair value of interest rate derivatives— — — — 7 — 7 
Deferred stock unit grants— — 600 — — — 600 
Balance, September 30, 20205,173 $5,173 $32,965 $170,783 $(42)$(368)$208,511 
See notes to consolidated financial statements (unaudited).

7

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)

  Nine Months Ended
September 30,		 
CASH FLOWS FROM OPERATING ACTIVITIES 2017  2016 

Net income

 $   62,626   $   64,822  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization, including amortization of debt issuance costs

   27,049     27,666  

Straight-lining of rental income

   3,223     1,594  

Stock-based compensation expense

   394    450 

Changes in operating assets and liabilities:

    

Tenant and other receivables, net

   (947)    1,081  

Other assets

   (14,209)    (23,088) 

Amounts due to Vornado

   (334)    (1,951) 

Accounts payable and accrued expenses

   (5,571)    11,346  

Other liabilities

   (21)    (22) 
  

 

 

   

 

 

 

Net cash provided by operating activities

   72,210     81,898  
  

 

 

   

 

 

 
    

CASH FLOWS FROM INVESTING ACTIVITIES

    

Construction in progress and real estate additions

   (3,155)    (13,441) 

Rego Park II loan participation payment

   (200,000)    -  

Principal repayment proceeds from Rego Park II loan participation

   725     -  
  

 

 

   

 

 

 

Net cash used in investing activities

   (202,430)    (13,441) 
  

 

 

   

 

 

 
    

CASH FLOWS FROM FINANCING ACTIVITIES

    

Debt repayments

   (302,754)    (2,555) 

Proceeds from borrowing

   500,000     -  

Dividends paid

   (65,218)    (61,363) 

Debt issuance costs

   (11,972)    (16) 
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

   120,056     (63,934) 
  

 

 

   

 

 

 
    

Net (decrease) increase in cash and cash equivalents and restricted cash

   (10,164)    4,523  

Cash and cash equivalents and restricted cash at beginning of period

   374,678     344,656  
  

 

 

   

 

 

 

Cash and cash equivalents and restricted cash at end of period

 $   364,514   $   349,179  
  

 

 

   

 

 

 
    

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

    

Cash and cash equivalents at beginning of period

 $   288,926   $   259,349  

Restricted cash at beginning of period

   85,752     85,307  
  

 

 

   

 

 

 

Cash and cash equivalents and restricted cash at beginning of period

 $   374,678   $   344,656  
  

 

 

   

 

 

 
    

Cash and cash equivalents at end of period

 $   280,010   $   264,147  

Restricted cash at end of period

   84,504     85,032  
  

 

 

   

 

 

 

Cash and cash equivalents and restricted cash at end of period

 $   364,514   $   349,179  
  

 

 

   

 

 

 
    

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

    

Cash payments for interest

 $   19,358   $   14,469  
  

 

 

   

 

 

 

NON-CASH TRANSACTIONS

    

Liability for real estate additions, including $24 and $92 for development fees due to Vornado
in 2017 and 2016, respectively

 $   124   $   1,053  

Write-off of fully amortized and/or depreciated assets

   4,265     1,691  

Change in unrealized net gain or loss onavailable-for-sale securities

   (8,494)    96  

 Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES20212020
Net income$55,181 $23,507 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including amortization of debt issuance costs26,923 25,554 
Net gain on sale of real estate(9,124)— 
Straight-lining of rental income7,411 18,306 
Write-off of tenant receivables— 4,122 
Stock-based compensation450 600 
Change in fair value of marketable securities(3,411)10,789 
Dividends received in stock— (214)
Changes in operating assets and liabilities:
Tenant and other receivables1,497 (4,886)
Other assets(9,146)(33,731)
Amounts due to Vornado1,032 (697)
Accounts payable and accrued expenses20,601 12,646 
Other liabilities(495)(475)
Net cash provided by operating activities90,919 55,521 
CASH FLOWS FROM INVESTING ACTIVITIES
Construction in progress and real estate additions(14,711)(23,630)
Proceeds from sale of real estate9,291 — 
Return of short-term investment3,600 — 
Net cash used in investing activities(1,820)(23,630)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid(69,160)(69,118)
Debt issuance costs(45)(2,680)
Proceeds from borrowing— 145,708 
Debt repayments— (50,000)
Net cash (used in) provided by financing activities(69,205)23,910 
Net increase in cash and cash equivalents and restricted cash19,894 55,801 
Cash and cash equivalents and restricted cash at beginning of period449,877 313,977 
Cash and cash equivalents and restricted cash at end of period$469,771 $369,778 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period$428,710 $298,063 
Restricted cash at beginning of period21,167 15,914 
Cash and cash equivalents and restricted cash at beginning of period$449,877 $313,977 
Cash and cash equivalents at end of period$448,913 $355,712 
Restricted cash at end of period20,858 14,066 
Cash and cash equivalents and restricted cash at end of period$469,771 $369,778 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest$14,182 $17,959 
NON-CASH TRANSACTIONS
Liability for real estate additions, including $109 and $456 for development fees due to Vornado in 2021 and 2020, respectively$1,832 $3,622 
Write-off of fully depreciated assets5,628 457 

See notes to consolidated financial statements (unaudited).

8
ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.

Organization



1.Organization
Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to “we,” “us,” “our,” “Company” and “Alexander’s” refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (“Vornado”) (NYSE: VNO). We have sevenAs of September 30, 2021, we had 7 properties in the greater New York City metropolitan area.

2.

Basis of Presentation

area, including 30.3 acres of land located in Paramus, New Jersey (“Paramus Property”) which we sold in October 2021. See Note 5 - Real Estate Sales for further details.

2.Basis of Presentation
The accompanying consolidated financial statements are unaudited and include the accounts of Alexander’s and its consolidated subsidiaries. All intercompany amounts have been eliminated. In our opinion,eliminated and all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form10-Q of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form10-K for the year ended December 31, 2016,2020, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 20172021 are not necessarily indicative of the operating results for the full year.

We operate in one1 reportable segment.

3.

Recently Issued Accounting Literature

3.Recently Issued Accounting Literature
In May 2014,March 2020, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU2014-09” 2020-04”) establishing Accounting Standards Codification (“ASC”) Topic 606,Revenue from Contracts with Customers (“ASC 606”). 848, Reference Rate Reform. ASU2014-09, 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as amended by subsequent ASUsreference rate reform activities occur. We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the topic, establishes a single comprehensive model for entitiescorresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to use in accounting for revenue arising from contracts with customers and supersedes mostevaluate the impact of the existing revenue recognition guidance. This standard, which is effective for interimguidance and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certainmay apply other elections as applicable as additional disclosures. We will adopt this standard effective January 1, 2018, with the exception of the components of revenue from leases, which has been deferred until the adoption of the update ASU2016-02 to ASC Topic 842,Leases, on January 1, 2019. We will utilize the modified retrospective method when adopting ASU2014-09, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We have analyzed our revenue streams and identified the areas that we expect to be impacted by the adoption of this standard. We expect that this standard will have an impact on the classification of reimbursements of real estate taxes and insurance expenses and certainnon-lease components of revenue (e.g., reimbursements of common area maintenance expenses) from leases on our consolidated statements of income, with no impact on “total revenues” for new leases executed on or after January 1, 2019. We arechanges in the process of completing the evaluation of the overall impact of this standard on our consolidated financial statements, including required informational disclosures for our revenue streams beginning with the first reporting period after adoption.

market occur.

In January 2016,July 2021, the FASB issued an update (“ASU2016-01” 2021-05”)Recognition and Measurement of Financial Assets and Financial LiabilitiesLessors - Certain Leases with Variable Lease Payments to ASC Topic 825, Financial Instruments842, Leases (“ASC 842”). ASU2016-01 amends 2021-05 provides additional ASC 842 classification guidance as it relates to a lessor’s accounting for certain aspects of recognition, measurement, presentation and disclosure of financial instruments.leases with variable lease payments. ASU2016-01 2021-05 requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-one loss. ASU 2021-05 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. While2021, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2021-05 on our consolidated financial statements, but do not believe the adoption of this standard requires us to continue to measure “marketable securities” at fair value at each reporting date, the changes in fair value will be recognized in current period earnings as opposed to “other comprehensive income (loss).”

have a material impact on our consolidated financial statements.

9
ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

3.

Recently Issued Accounting Literature – continued

In February 2016,



4.Revenue Recognition
Our rental revenues include revenues from the FASB issued an update ASU2016-02 establishing ASC Topic 842,Leases, which sets outleasing of space to tenants at our properties and revenues from parking and tenant services. We have the principles forfollowing revenue recognition policies:  
•Lease revenues from the recognition, measurement, presentation and disclosureleasing of leases for both lessees and lessors. ASU2016-02 requires lesseesspace to apply a dual approach, classifying leases as either finance or operating leases based ontenants at our properties. Revenues derived from base rent are recognized over the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record aright-of-use asset and a lease liability for all leases with anon-cancelable term of greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for financerelated leases or on a straight-line basis which includes the effects of rent steps and rent abatements. We commence rental revenue recognition when the underlying asset is available for operating leases. Weuse by the lessee. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are currently evaluatingowned by the overall impacttenant, we recognize the allowance as a reduction of the adoption of ASU2016-02 on our consolidated financial statements and believe that the standard will more significantly impact the accounting for leases in which we are a lessee. We will be required to record aright-of-use asset and lease liability for our Flushing property ground lease, equal to the present value of the remaining minimum lease payments upon adoption of this standard. We also expect that this standard will require us to allocate total consideration from leases between lease andnon-lease components based on the estimated stand-alone selling prices of the components. The lease components (e.g., base rent) will continue to be recognizedrental revenue on a straight-line basis over the term of the lease and certainnon-lease components (e.g., reimbursements of common area maintenance expenses) will be accounted for underlease. Revenues derived from the new revenue recognition guidance of ASU2014-09. As a result, we expect that this standard will have an impact on the classification of reimbursementsreimbursement of real estate taxes, insurance expenses and common area maintenance expenses on our consolidated statements of income, with no impact on “total revenues” for new leases executed on or after January 1, 2019. ASU2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We will adopt this standard as of January 1, 2019 under the modified retrospective approach and will elect to use the practical expedients provided by this standard.

In March 2016, the FASB issued an update (“ASU2016-09”)Improvements to Employee Share-Based Payment Accounting to ASC Topic 718,Compensation – Stock Compensation(“ASC 718”). ASU2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU2016-09 was effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. The adoption of this update as of January 1, 2017, did not have any impact on our consolidated financial statements.

In August 2016, the FASB issued an update (“ASU2016-15”)Classification of Certain Cash Receipts and Cash Payments to ASC Topic 230,Statement of Cash Flows. ASU2016-15 clarifies guidance on the classification of certain cash receipts and paymentsare generally recognized in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement ofzero-coupon debt instruments or other debt instruments with coupon interest rates thatsame period as the related expenses are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. ASU2016-15 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. Weincurred. As lessor, we have elected to early adopt ASU2016-15 effective January 1, 2017. The adoptioncombine the lease components (base and variable rent), non-lease components (reimbursements of this update did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued an update (“ASU2016-18”)Restricted Cash to ASC Topic 230,Statementcommon area maintenance expenses) and reimbursement of Cash Flows. ASU2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. ASU2016-18 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We elected to early adopt ASU2016-18 effective January 1, 2017, with retrospective application to our consolidated statements of cash flows. Accordingly, the consolidated statements of cash flows present a reconciliation of the changes in cash and cash equivalents and restricted cash. Restricted cash primarily consists of cash held in anon-interest bearing escrow account in connection with our Rego Park I 100% cash collateralized mortgage, as well as security deposits and other cash escrowed under loan agreements for debt service, real estate taxes propertyand insurance expenses from our operating lease agreements and capital improvements.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

3.

Recently Issued Accounting Literature – continued

In February 2017,account for the FASB issued an update (“ASU2017-05”)Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets tocomponents as a single lease component in accordance with ASC Subtopic610-20,Other Income – Gains and Losses842.

•Parking revenue arising from the Derecognitionrental of Nonfinancial Assets. ASU2017-05 clarifies the scope of recently established guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets.parking spaces at our properties. This update conforms the derecognition guidance on nonfinancial assets with the model for transactions in ASC 606. ASU2017-05 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The adoption of this standard is not expected to have an impact on our consolidated financial statements.

In August 2017, the FASB issued an update (“ASU2017-12”)Targeted Improvements to Accounting for Hedging Activitiesto ASC Topic 815,Derivatives and Hedging(“ASC 815”). ASU2017-12 amends the hedge accounting recognition and presentation requirements in ASC 815. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. ASU2017-12 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

4.

Rego Park II Loan Participation

On July 28, 2017, we entered into a participation and servicing agreement with the lender on our Rego Park II shopping center loan, which matures on November 30, 2018. We paid $200,000,000 to participate in the loan and are entitled to interest of LIBOR plus 1.60% (2.84% as of September 30, 2017). The investment is presented as “Rego Park II loan participation” on our consolidated balance sheet as of September 30, 2017 and interest earnedincome is recognized as “interestthe services are transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

•Tenant services is revenue arising from sub-metered electric, elevator and other services provided to tenants at their request. This revenue is recognized as the services are transferred in accordance with ASC 606.
Under ASC 842, we must assess on an individual lease basis whether it is probable that we will collect substantially all of the future lease payments. We consider the tenant’s payment history, current credit status and other factors when assessing collectability. When collectability is not deemed probable, we write-off the tenant’s receivables, including straight-line rent receivable, and limit lease income net”to cash received. We recognize changes in the collectability assessment of our consolidated statementsoperating leases as adjustments to rental revenues. During the quarter ended September 30, 2021, there were no changes to our lease collectability assessment.
The following is a summary of incomerevenue sources for the three and nine months ended September 30, 2017.

5.

Related Party Transactions

2021 and 2020.

Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands)2021202020212020
Lease revenues$46,535 $41,394 $149,850 $137,479 
Parking revenue1,207 1,106 3,215 3,046 
Tenant services1,208 999 3,426 2,562 
Rental revenues$48,950 $43,499 $156,491 $143,087 

The components of lease revenues for the three and nine months ended September 30, 2021 and 2020 are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands)2021202020212020
Fixed lease revenues$31,072 $33,609 $97,115 $101,348 
Variable lease revenues15,463 7,785 52,735 36,131 
Lease revenues$46,535 $41,394 $149,850 $137,479 

Bloomberg L.P. (“Bloomberg”) accounted for revenue of $85,057,000 and $80,696,000 for the nine months ended September 30, 2021 and 2020, respectively, representing approximately 54% and 56% of our total revenues in each period, respectively. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data.

10
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

5.Real Estate Sales
On June 4, 2021, we sold a parcel of land in the Bronx, New York (“Bronx Land Parcel”) for $10,000,000. Net proceeds from the sale were $9,291,000 after closing costs and the financial statement gain was $9,124,000.
On October 4, 2021, we sold our Paramus Property to IKEA Property, Inc. (“IKEA”), the tenant at the property, for $75,000,000, pursuant to IKEA’s purchase option contained in the lease. Net proceeds from the sale were $4,580,000 after closing costs and the repayment of the $68,000,000 mortgage loan. The financial statement gain was $60,826,000, which will be recognized in the fourth quarter of 2021.
We do not expect to pay a special dividend related to these transactions.
6.Related Party Transactions
Vornado

As of September 30, 2017,2021, Vornado owned 32.4% of our outstanding common stock. We are managed by, and our properties are leased and developed by, Vornado, pursuant to the agreements described below, which expire in March of each year and are automatically renewable.

Management and Development Agreements

We pay Vornado an annual management fee equal to the sum of (i) $2,800,000, (ii) 2% of gross revenue from the Rego Park II shopping center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) $306,000,$344,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue. Vornado is also entitled to a development fee equal to 6% of development costs, as defined.

Leasing and Other Agreements

Vornado also provides us with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through the twentieth year of a lease term, and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by tenants. In the event third-party real estate brokers are used, the fees to Vornado increase by 1% and Vornado is responsible for the fees to the third-party real estate brokers.
Vornado is also entitled to a commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000 and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more.

Other Agreements

more (the “Sales Agreement”).

Pursuant to the Sales Agreement, we paid a $300,000 sales commission to Vornado in the second quarter of 2021 related to the sale of the Bronx Land Parcel. In addition, we will pay a $750,000 sales commission to Vornado in the fourth quarter of 2021 related to the Paramus Property sale.
We also have agreements with Building Maintenance Services LLC, a wholly owned subsidiary of Vornado, to supervise (i) cleaning, engineering and security services at our 731 Lexington Avenue property and (ii) security services at our Rego Park I and Rego Park II properties and The Alexander apartment tower.


11
ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5.

Related Party Transactions – continued


6.Related Party Transactions - continued
The following is a summary of fees incurred to Vornado under the various agreements discussed above.

    Three Months Ended  
September 30,		  Nine Months Ended
September 30,		 
(Amounts in thousands)       2017              2016              2017              2016       

Company management fees

 $   700   $   700   $   2,100   $   2,100 

Development fees

   -     44    32    163

Leasing fees

   3    106    18     7,397 

Property management fees and payments for cleaning and security services

   1,006     938    2,947     2,969 
  

 

 

   

 

 

   

 

 

   

 

 

 
 $   1,709   $   1,788   $   5,097   $   12,629 
  

 

 

   

 

 

   

 

 

   

 

 

 

 Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands)2021202020212020
Company management fees$700 $700 $2,100 $2,100 
Development fees30 188 109 456 
Leasing fees1,291 113 1,730 172 
Commission on sale of real estate— — 300 — 
Property management, cleaning, engineering and security fees1,468 1,074 4,279 3,519 
$3,489 $2,075 $8,518 $6,247 
As of September 30, 2017,2021, the amounts due to Vornado were $24,000$1,291,000 for developmentleasing fees; $507,000$692,000 for management, property management, cleaning, engineering and security fees; and $2,000$109,000 for leasingdevelopment fees. As of December 31, 2016,2020, the amounts due to Vornado were $54,000 for development fees; $428,000$845,000 for management, property management, cleaning, engineering and security fees; $557,000 for development fees; and $415,000$114,000 for leasing fees. In January 2016, we paid an $8,916,000 leasing commission related to the Bloomberg L.P. (“Bloomberg”) lease amendment, of which $7,200,000 was to a third party broker and $1,716,000 was to Vornado. In March 2016, we paid Vornado a development fee of $5,784,000 related to The Alexander apartment tower.

Toys “R” Us (“Toys”)

Our affiliate, Vornado, owns 32.5% of Toys. Joseph Macnow, Vornado’s Executive Vice President and Chief Financial Officer and Wendy A. Silverstein, a member of our Board of Directors, represent Vornado as members of Toys’ Board of Directors. Toys leases 47,000 square feet of retail space at our Rego Park II shopping center ($2,700,000 of annual revenue). On September 18, 2017, Toys filed for Chapter 11 bankruptcy relief. There are $1,617,000 of unamortized assets on our consolidated balance sheet related to the Toys lease as of September 30, 2017, including tenant improvements, deferred leasing costs and receivables arising from the straight-lining of rent.

6.

Marketable Securities

7.Marketable Securities
As of September 30, 20172021 and December 31, 2016,2020, we owned 535,265564,612 common shares of The Macerich Company (“Macerich”) (NYSE: MAC). These shares have an economic cost of $56.05 per share, or $30,000,000 in the aggregate. As of September 30, 20172021 and December 31, 2016,2020, the fair value of these shares was $29,424,000$9,435,000 and $37,918,000,$6,024,000, respectively, based on Macerich’s closing share price of $54.97$16.71 per share and $70.84$10.67 per share, respectively. These shares are included inpresented at fair value as “marketable securities” on our consolidated balance sheets and are classified asavailable-for-sale.Available-for-sale securities are presented at fair value and unrealizedthe gains and losses resulting from themark-to-market of these securities are includedrecognized in “other comprehensive (loss) income.”

current period earnings.


8.Mortgages Payable
The following is a summary of our outstanding mortgages payable as of September 30, 2021 and December 31, 2020. We may refinance our maturing debt as it comes due or choose to pay it down.
  Interest Rate at September 30, 2021Balance at
(Amounts in thousands)MaturitySeptember 30, 2021December 31, 2020
First mortgages secured by:
Paramus(1)
Oct. 04, 20214.72%$68,000 $68,000 
731 Lexington Avenue, office condominium(2)
Jun. 11, 20240.98%500,000 500,000 
731 Lexington Avenue, retail condominium(3)
Aug. 05, 20251.72%300,000 300,000 
Rego Park II shopping center(4)
Dec. 12, 20251.43%202,544 202,544 
The Alexander apartment towerNov. 01, 20272.63%94,000 94,000 
Total1,164,544 1,164,544 
Deferred debt issuance costs, net of accumulated amortization of $14,172 and $13,034, respectively(7,281)(8,374)
$1,157,263 $1,156,170 
(1)On October 4, 2021, the loan was repaid in connection with the sale of the property. See Note 5 - Real Estate Sales for further details.
(2)Interest at LIBOR plus 0.90%. Maturity represents the extended maturity based on our unilateral right to extend.
(3)Interest at LIBOR plus 1.40% which was swapped to a fixed rate of 1.72%.
(4)Interest at LIBOR plus 1.35%. The loan balance of $252,544 as of December 31, 2020 is presented net of our participation of $50,000. On April 7, 2021, we used our participation in this loan to reduce the loan balance to $202,544.

12
ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

7.

Significant Tenant

Bloomberg accounted for revenue of $78,786,000 and $78,567,000 for the nine months ended September 30, 2017 and 2016, respectively, representing approximately 46% of our total revenues in each period. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data.

8.

Stock-Based Compensation



9.Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718.Topic 718, Compensation – Stock Compensation (“ASC 718”). Our 2016 Omnibus Stock Plan (the “Plan”) provides for grants of incentive andnon-qualified stock options, restricted stock, stock appreciation rights, deferred stock units (“DSUs”) and performance shares, as defined, to the directors, officers and employees of the Company and Vornado.

On

In May 18, 2017,2021, we granted each of the members of our Board of Directors 183284 DSUs with a market value of $75,000 per grant. The grant date fair value of these awards was $56,250 per grant, or $394,000$450,000 in the aggregate.aggregate, in accordance with ASC 718. The DSUs entitle the holders to receive shares of the Company’s common stock without the payment of any consideration. The DSUs vested immediately and accordingly, were expensed on the date of grant, but the shares of common stock underlying the DSUs are not deliverable to the grantee until the grantee is no longer serving on the Company’s Board of Directors. As of September 30, 2017,2021, there were 8,692 17,188DSUs outstanding and 497,095 488,599shares were available for future grant under the Plan.

9.

Mortgages Payable

On June 1, 2017, we completed a $500,000,000 refinancing of the office portion of 731 Lexington Avenue. The interest-only loan is at LIBOR plus 0.90% and matures in June 2020, with fourone-year extension options. In connection therewith, we purchased an interest rate cap with a notional amount of $500,000,000 that caps LIBOR at a rate of 6.0%. The property was previously encumbered by a $300,000,000 interest-only mortgage at LIBOR plus 0.95% which was scheduled to mature in March 2021.

The following is a summary of our outstanding mortgages payable as of September 30, 2017 and December 31, 2016.

         Balance at 
(Amounts in thousands)  Maturity(1)       Interest Rate at    
September 30, 2017		     September 30,    
2017		       December 31,    
2016		 

First mortgages secured by:

         

Rego Park I shopping center (100% cash
collateralized)(2)

   Mar. 2018   0.35% $   78,246    $   78,246  

Paramus

   Oct. 2018   2.90%   68,000      68,000  

Rego Park II shopping center(3)

   Nov. 2018   3.09%   257,147      259,901  

731 Lexington Avenue, retail space(4)

   Aug. 2022   2.63%   350,000      350,000  

731 Lexington Avenue, office space(5)

   Jun. 2024   2.14%   500,000      300,000  
      

 

 

    

 

 

 

Total

   1,253,393      1,056,147  

Deferred debt issuance costs, net of accumulatedamortization of $4,995 and $6,824 respectively

       (13,324)     (3,788) 
      

 

 

    

 

 

 
     $   1,240,069    $   1,052,359  
      

 

 

    

 

 

 

(1)

Represents the extended maturity where we have the unilateral right to extend.

(2)

Extended in March 2016 for two years.

(3)

Interest at LIBOR plus 1.85%. See page 10 for details of our Rego Park II loan participation.

(4)

Interest at LIBOR plus 1.40%.

(5)

Interest at LIBOR plus 0.90%.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10.

Fair Value Measurements

ASC 820,


10.Fair Value Measurements and Disclosures

ASC Topic 820, Fair Value Measurement (“ASC 820”) defines fair value and establishes a framework for measuring fair value. ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.


Financial Assets and Liabilities Measured at Fair Value

Financial assets measured at fair value on our consolidated balance sheetssheet as of September 30, 20172021 consist of marketable securities and an interest rate swap, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of September 30, 2021. There were no financial liabilities measured at fair value as of September 30, 2021.
 As of September 30, 2021
(Amounts in thousands)TotalLevel 1Level 2Level 3
Assets:
Marketable securities$9,435 $9,435 $— $— 
Interest rate swap (included in other assets)3,960 — 3,960 — 
$13,395 $9,435 $3,960 $— 
Financial assets measured at fair value on our consolidated balance sheet as of December 31, 2016,2020 consist of marketable securities, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of September 30, 2017 and December 31, 2016. There were no financial2020. Financial liabilities measured at fair value as of September 30, 2017 and December 31, 2016.

        As of September 30, 2017 
(Amounts in thousands)             Total              Level 1              Level 2              Level 3       

Marketable securities

  $   29,424  $       29,424   $             -     $             -   
   

 

 

   

 

 

   

 

 

   

 

 

 
        As of December 31, 2016 
(Amounts in thousands)       Total  Level 1  Level 2  Level 3 

Marketable securities

  $   37,918  $       37,918   $   -     $   -   
   

 

 

   

 

 

   

 

 

   

 

 

 

2020 consist of an interest rate swap, which is presented in the table below based on its level in the fair value hierarchy.

 As of December 31, 2020
(Amounts in thousands)TotalLevel 1Level 2Level 3
Assets:
Marketable securities$6,024 $6,024 $— $— 
Liabilities:
Interest rate swap (included in other liabilities)$667 $— $667 $— 

13
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

10.Fair Value Measurements - continued
Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include the Rego Park II loan participation,cash equivalents and mortgages payable. Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities and are classified as Level 1. The fair value of our mortgages payable and cash equivalents. The fair values of the Rego Park II loan participation and mortgages payable areis calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist, and areis classified as Level 2. Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities and is classified as Level 1. The table below summarizes the carrying amounts and fair valuevalues of these financial instruments as of September 30, 20172021 and December 31, 2016.

  As of September 30, 2017  As of December 31, 2016 
(Amounts in thousands)     Carrying    
Amount		      Fair    
Value		      Carrying    
Amount		      Fair    
Value		 

Assets:

        

Rego Park II loan participation

  $   199,275   $   199,275   $   -   $   - 

Cash equivalents

   246,541    246,541    256,370    256,370 
  

 

 

   

 

 

   

 

 

   

 

 

 
  $   445,816   $   445,816   $   256,370   $   256,370 
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

        

Mortgages payable (excluding deferred debt issuance costs)

  $   1,253,393   $   1,241,000   $   1,056,147   $   1,045,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

11.

Commitments and Contingencies

2020.


 As of September 30, 2021As of December 31, 2020
(Amounts in thousands)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Assets:
Cash equivalents$412,592 $412,592 $393,070 $393,070 
Liabilities:
Mortgages payable (excluding deferred debt  issuance costs, net)$1,164,544 $1,130,000 $1,164,544 $1,130,000 

11.Commitments and Contingencies
Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which the first $30,000,000 includes communicable disease coverage, andall-risk property and rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, withsub-limits for certain perils such as floods and earthquakes on each of our properties.

properties and excluding communicable disease coverage.

Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act of 2002, as amended to date and which expires inhas been extended through December 2020.2027. Coverage for acts of terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For NBCR acts, FNSIC is responsible for a $293,000$275,000 deductible and 17%20% of the balance of a covered loss, and the Federal government is responsible for the remaining 83%80% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC.

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.terrorism or other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.

Our mortgage loans arenon-recourse to us and contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

Tenant Matters

On April 4, 2017, Sears closed its 195,000 square foot store it leases from us at our Rego Park I property. Annual revenue is approximately $10,337,000, under a lease which expires in March of 2021. In its 2016 annual report on Form10-K, Sears indicated that substantial doubt exists related to its ability to continue as a going concern. There is a straight-line rent receivable of approximately $4,160,000


14
ALEXANDER’S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

11.Commitments and unamortized deferred leasing costs of approximately $437,000 on our consolidated balance sheet as of September 30, 2017 which we will continue to assess for recoverability.

On September 19, 2017, the bankruptcy court approved the terms of an order stipulation between Le Cirque, a restaurant operator which leases 13,000 square feet at our 731 Lexington Avenue property (approximately $1,200,000 of annual revenue), and the Company which terminates the lease on January 5, 2018 (original lease expiration was May of 2021). As a result, we began accelerating depreciation and amortization of approximately $2,780,000 of tenant improvements and deferred leasing costs over the new lease term, of which approximately $280,000 was recognized in the quarter ended September 30, 2017 and approximately $2,370,000 and $130,000 will be recognized in the quarters ending December 31, 2017 and March 31, 2018, respectively.

Contingencies - continued

Rego Park I Litigation

In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado and us (and certain of our subsidiaries) with regard to spacethe 195,000 square foot store that Sears leasesleased at our Rego Park I property alleging that the defendants are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) two2 fires in February 2014 that caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than $4 million$4,000,000 and future damages it estimated would not be less than $25 million.$25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears. We intend to defend the remaining claim vigorously. The amount or range of reasonably possible losses, if any, is not expected to be greater than $650,000.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

11.

Commitments and Contingencies – continued

Paramus

In 2001, we leased 30.3 acres On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief resulting in an automatic stay of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 2.90%, which matures on October 5, 2018. The annualtriple-net rent is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a gain on sale of land of approximately $60,000,000. If the purchase option is not exercised, thetriple-net rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining20-year lease term.

this case.

Letters of Credit

Approximately $1,474,000$960,000 of standby letters of credit were issued and outstanding as of September 30, 2017.

2021.

Other

In October 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of Determination to us assessing an additional $22,490,000 of transfer taxes (including interest and penalties as of September 30, 2017) in connection with the sale of Kings Plaza Regional Shopping Center in November 2012. We believe that the NYC DOF’s claim is without merit and intend to vigorously contest this assessment. We have determined that the likelihood of a loss related to this issue is not probable and, after consultation with legal counsel, that the outcome of this assessment is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters in the aggregate will not have a material effect on our financial position, results of operations or cash flows.

12.

Earnings Per Share


12.Earnings Per Share
The following table sets forth the computation of basic and diluted income per share. Basic income per share is determined using the weighted average shares of common stock outstanding during the period. Diluted income per share is determined using the weighted average shares of common stock outstanding during the period, and assumes all potentially dilutive securities were converted into common shares at the earliest date possible. There were no potentially dilutive securities outstanding during the three and nine months ended September 30, 20172021 and 2016.

  Three Months Ended
September 30,		  Nine Months Ended
September 30,		 
(Amounts in thousands, except share and per share amounts) 2017  2016  2017  2016 

Net income

  $   20,299   $   21,036   $   62,626   $   64,822 
  

 

 

   

 

 

   

 

 

   

 

 

 
        

Weighted average shares outstanding – basic and diluted

   5,115,982    5,114,701    5,115,339    5,113,877 
  

 

 

   

 

 

   

 

 

   

 

 

 
        

Net income per common share – basic and diluted

  $   3.97   $   4.11   $   12.24   $   12.68 
  

 

 

   

 

 

   

 

 

   

 

 

 

2020.     
 Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands, except share and per share amounts)2021202020212020
Net income$11,401 $6,604 $55,181 $23,507 
Weighted average shares outstanding – basic and diluted5,124,478 5,122,206 5,123,321 5,120,490 
Net income per common share – basic and diluted$2.22 $1.29 $10.77 $4.59 

15

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of

Alexander’s, Inc.

Paramus, New Jersey


Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated balance sheet of Alexander’s, Inc. and subsidiaries (the “Company”) as of September 30, 2017, and2021, the related consolidated statements of income, and comprehensive income, and changes in equity, for the threethree-month and nine monthnine-month periods ended September 30, 20172021 and 2016,2020, and changes in equity andof cash flows for the nine monthnine-month periods ended September 30, 20172021 and 2016. These2020, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements areinformation for it to be in conformity with accounting principles generally accepted in the responsibilityUnited States of the Company’s management.

America.


We conducted our reviewshave previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 16, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States),PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Alexander’s, Inc. and subsidiaries as of December 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended (not presented herein); and in our report dated February 13, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2016 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.


/s/ DELOITTE & TOUCHE LLP

Parsippany,


New Jersey

October 30, 2017

York, New York

November 1, 2021

16

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this Quarterly Report 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” or other similar expressions in this Quarterly Report on Form10-Q. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict.
Currently, one of the most significant factors is the ongoing adverse effect of the COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect it has had and may continue to have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration of the pandemic, current and future variants, the efficacy and durability of vaccines against the variants and the potential for increased government restrictions, which continue to be uncertain at this time but that impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified in “Item 1A. – Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2020.
For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A1A. – Risk Factors” in our Annual Report onForm 10-K for the year ended December 31, 2016.2020. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly, any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our consolidated financial statements for the three and nine months ended September 30, 20172021 and 2016.2020. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 20172021 are not necessarily indicative of the operating results for the full year.

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form10-K for the year ended December 31, 20162020 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 23 – Summary of Significant Accounting Policies” to the consolidated financial statements included therein. There have beenFor the nine months ended September 30, 2021, there were no significantmaterial changes to these policies during 2017.

policies.

17

Overview

Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to “we,” “us,” “our,” “Company,”“Company” and “Alexander’s”, refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (“Vornado”) (NYSE: VNO). We haveAs of September 30, 2021, we had seven properties in the greater New York City metropolitan area.

area, including 30.3 acres of land located in Paramus, New Jersey (“Paramus Property”) which we sold in October 2021.

We compete with a large number of property owners and developers. Our success depends upon, among other factors, trends of the world, national and local economies, the financial condition and operating results of current and prospective tenants and customers, the availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population trends, zoning laws, and our ability to lease, sublease or sell our properties, at profitable levels. Our success is also subject to our ability to refinance existing debt on acceptable terms as it comes due.

Our business has been adversely affected by the ongoing COVID-19 pandemic. Although substantially all our retail tenants are currently open and operating and previous government restrictions have been lifted, there continue to be economic conditions and other factors that adversely affect the financial health of our retail tenants.

Quarter Ended September 30, 20172021 Financial Results Summary

Net income for the quarter ended September 30, 20172021 was $20,299,000,$11,401,000, or $3.97$2.22 per diluted share, compared to $21,036,000,$6,604,000, or $4.11$1.29 per diluted share in the prior year’s quarter.
Funds from operations (“FFO”) (non-GAAP) for the quarter ended September 30, 2016. Funds from operations (“FFO”) for the quarter ended September 30, 20172021 was $28,598,000,$21,181,000, or $5.59$4.13 per diluted share, compared to $28,949,000,$15,363,000 or $5.66$3.00 per diluted share forin the quarter ended September 30, 2016.

prior year’s quarter.

Nine Months Ended September 30, 20172021 Financial Results Summary

Net income for the nine months ended September 30, 20172021 was $62,626,000,$55,181,000, or $12.24$10.77 per diluted share, compared to $64,822,000,$23,507,000, or $12.68$4.59 per diluted share in the prior year’s nine months.
FFO (non-GAAP) for the nine months ended September 30, 2016. FFO for the nine months ended September 30, 20172021 was $86,846,000,$68,095,000, or $16.98$13.29 per diluted share, compared to $90,198,000,$57,102,000 or $17.64$11.15 per diluted share forin the prior year’s nine months ended September 30, 2016. Net income and FFO for the nine months ended September 30, 2016 included rental income of $2,257,000, or $0.44 per diluted share, resulting from a tenant lease termination at our Rego Park II property in September 2016. Net income for the nine months ended September 30, 2016 also included additional depreciation and amortization of tenant improvements and deferred leasing costs of $1,077,000, or $0.21 per diluted share, related to this lease termination.

months.

Square Footage, Occupancy and Leasing Activity

As of September 30, 2017,2021, our portfolio was comprised of seven properties aggregating 2,437,000 square feet and was 99.3% occupied.

Tenant Matters

On April 4, 2017, Sears closed its 195,000 square foot store it leases from us at our Rego Park I property. Annual revenue is approximately $10,337,000, under a lease which expires in March of 2021. In its 2016 annual report on Form10-K, Sears indicated that substantial doubt exists related to its ability to continue as a going concern. There is a straight-line rent receivable of approximately $4,160,000 and unamortized deferred leasing costs of approximately $437,000 on our consolidated balance sheet as of September 30, 2017 which we will continue to assess for recoverability.

On September 18, 2017, Toys R Us (“Toys”), which leases 47,0002,454,000 square feet, of retailwhich 2,218,000 square feet was in service and236,000 square feet (primarily the former Century 21 space at our Rego Park II shopping center ($2,700,000property and a portion of annual revenue) filedthe former Sears space at our Rego Park I property) was out of service for Chapter 11 bankruptcy relief. There are $1,617,000 of unamortized assets on our consolidated balance sheet related toredevelopment. Excluding residential square feet, the Toys leasein service square feet was 96% occupied as of September 30, 2017, including2021. The in service residential square feet was 93% occupied as of September 30, 2021.

Real Estate Sales
On June 4, 2021, we sold a parcel of land in the Bronx, New York (“Bronx Land Parcel”) for $10,000,000. Net proceeds from the sale were $9,291,000 after closing costs, the financial statement gain was $9,124,000 and the tax gain was $9,123,000.
On October 4, 2021, we sold our Paramus Property to IKEA Property, Inc. (“IKEA”), the tenant improvements, deferred leasingat the property, for $75,000,000, pursuant to IKEA’s purchase option contained in the lease. Net proceeds from the sale were $4,580,000 after closing costs and receivables arising from the straight-liningrepayment of rent.

On September 19, 2017, the bankruptcy court approved the terms of an order stipulation between Le Cirque, a restaurant operator$68,000,000 mortgage loan. The financial statement gain was $60,826,000, which leases 13,000 square feet at our 731 Lexington Avenue property (approximately $1,200,000 of annual revenue), and the Company which terminates the lease on January 5, 2018 (original lease expiration was May of 2021). As a result, we began accelerating depreciation and amortization of approximately $2,780,000 of tenant improvements and deferred leasing costs over the new lease term, of which approximately $280,000 was recognized in the quarter ended September 30, 2017 and approximately $2,370,000 and $130,000 will be recognized in the quarters ending December 31, 2017fourth quarter of 2021, and March 31, 2018, respectively.

the tax gain was $63,898,000. Prior to the sale, the Paramus Property had annual rental revenues of $7,200,000, annual operating expenses of $3,200,000 and annual interest and debt expense of $3,300,000.

We do not expect to pay a special dividend related to these transactions.

18

Overview –- continued

Rego Park II Loan Participation

On July 28, 2017, we entered into a participation and servicing agreement with the lender on our Rego Park II shopping center loan, which matures on November 30, 2018. We paid $200,000,000 to participate in the loan and are entitled to interest of LIBOR plus 1.60% (2.84% as of September 30, 2017).

Financing

On June 1, 2017, we completed a $500,000,000 refinancing of the office portion of 731 Lexington Avenue. The interest-only loan is at LIBOR plus 0.90% and matures in June 2020, with fourone-year extension options. In connection therewith, we purchased an interest rate cap with a notional amount of $500,000,000 that caps LIBOR at a rate of 6.0%. The property was previously encumbered by a $300,000,000 interest-only mortgage at LIBOR plus 0.95% which was scheduled to mature in March 2021.

Significant Tenant

Bloomberg L.P. (“Bloomberg”) accounted for revenue of $78,786,000$85,057,000 and $78,567,000$80,696,000 for the nine months ended September 30, 20172021 and 2016,2020, respectively, representing approximately 46%54% and 56% of our total revenues in each period.period, respectively. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data.


19

Results of Operations – Three Months Ended September 30, 2017,2021, compared to September 30, 2016

Property Rentals

Property rentals2020

Rental Revenues
Rental revenues were $37,970,000$48,950,000 in the quarter ended September 30, 2017,2021, compared to $37,598,000$43,499,000 in the prior year’s quarter, an increase of $372,000.$5,451,000. This increase was primarily due to (i) $6,590,000 from write-offs in the prior year related to receivables arising from the straight-lining of rents from certain of our retail tenants who were put on a cash basis given the probability of collecting the rent due under the lease agreements and (ii) $2,130,000 of higher rental incomerevenue from The Alexander apartment tower, which was placed in service in phases beginning July 2015new tenants, partially offset by (iii) $3,707,000 from retail tenant vacancies at our 731 Lexington Avenue and leased up to stabilization in September 2016.

Expense Reimbursements

Tenant expense reimbursementsRego Park II properties.

Operating Expenses
Operating expenses were $20,124,000$21,433,000 in the quarter ended September 30, 2017,2021, compared to $19,522,000$22,448,000 in the prior year’s quarter, a decrease of $1,015,000. This was primarily due to lower operating expenses subject to recovery, including real estate taxes and common area maintenance.
Depreciation and Amortization
Depreciation and amortization was $9,008,000 in the quarter ended September 30, 2021, compared to $7,587,000 in the prior year’s quarter, an increase of $602,000.$1,421,000. This increase was primarily due to higher reimbursable real estate taxesthe acceleration of amortization of the deferred leasing commission at our Paramus property.
General and higher reimbursable operating expenses.

OperatingAdministrative Expenses

Operating

General and administrative expenses were $21,272,000$1,272,000 in the quarter ended September 30, 2017,2021, compared to $21,714,000$1,386,000 in the prior year’s quarter, a decrease of $442,000.$114,000. This decrease was primarily due to (i) lower bad debt expense of $539,000professional fees.
Interest and (ii) lower marketing expenses for The Alexander apartment tower of $330,000, partially offset by (iii) higher real estate taxes of $402,000.

DepreciationOther Income, net

Interest and Amortization

Depreciation and amortizationother income, net was $8,430,000$157,000 in the quarter ended September 30, 2017,2021, compared to $8,045,000$220,000 in the prior year’s quarter, a decrease of $63,000. This was primarily due to $81,000 of lower interest income due to a decrease in average interest rates.

Interest and Debt Expense
Interest and debt expense was $5,124,000 in the quarter ended September 30, 2021, compared to $4,463,000 in the prior year’s quarter, an increase of $385,000.$661,000. This increase was primarily due to additional depreciation and amortization$632,000 of tenant improvements and deferred leasing costs relatedhigher interest expense due to Le Cirque’s lease termination agreement at our 731 Lexington Avenue propertythe financing of The Alexander apartment tower in September 2017.

General and Administrative Expenses

General and administrative expenses were $1,228,000October 2020.

Change in Fair Value of Marketable Securities
Change in fair value of marketable securities was an expense of $869,000 in the quarter ended September 30, 2017,2021, compared to $1,225,000an expense of $1,231,000 in the prior year’s quarter, an increasea decrease of $3,000.

Interest and Other Income, net

Interest and other income, net$362,000. This was $2,081,000 in the quarter ended September 30, 2017, compared to $522,000 in the prior year’s quarter, an increase of $1,559,000. This increase was primarily due to higher interest income of $1,538,000 of which $899,000 was from higher average interest rates and $640,000 was from higher average investment balances.

Interest and Debt Expense

Interest and debt expense was $8,940,000the change in The Macerich Company’s (“Macerich”) share price during the quarter ended September 30, 2017, compared to $5,615,000 in the prior year’s quarter, an increase of $3,325,000. This increase was primarily due to additional interest expense of (i) $1,507,000 due to higher average LIBOR, (ii) $1,198,000 resulting from the refinancing of the office portion of 731 Lexington Avenue on June 1, 2017 for $500,000,000 at LIBOR plus 0.90% (previously a $300,000,000 loan at LIBOR plus 0.95%) and (iii) $642,000 of higher amortization of debt issuance costs.

Income Taxes

Income tax expense was $6,000 in the quarter ended September 30, 2017, compared to $7,000 in the prior year’s quarter.

periods.


20

Results of Operations – Nine Months Ended September 30, 2017,2021, compared to September 30, 2016

Property Rentals

Property rentals2020

Rental Revenues
Rental revenues were $114,507,000$156,491,000 in the nine months ended September 30, 2017,2021, compared to $113,129,000$143,087,000 in the prior year’s nine months, an increase of $1,378,000.$13,404,000. This increase was primarily due to (i) $10,837,000 from write-offs in the prior year related to receivables arising from the straight-lining of rents from certain of our retail tenants who were put on a cash basis, (ii) $6,436,000 of higher rental income of $3,763,000revenue from The Alexander apartment tower, which was placednew tenants and (iii) $4,836,000 from write-offs in service in phases beginning July 2015 and leased upthe prior year related to stabilization in September 2016,receivables from retail tenants who were put on a cash basis, partially offset by income of $2,257,000 in the prior year’s nine months resulting(iv) $9,604,000 from aretail tenant lease terminationvacancies at our 731 Lexington Avenue and Rego Park II property in June 2016.

Expense Reimbursements

Tenant expense reimbursementsproperties.

Operating Expenses
Operating expenses were $58,006,000$68,655,000 in the nine months ended September 30, 2017,2021, compared to $56,554,000$63,979,000 in the prior year’s nine months, an increase of $1,452,000.$4,676,000. This increase was primarily due to higher reimbursableoperating expenses subject to recovery, including real estate taxes and higher reimbursable operating expenses.

Operating Expenses

Operating expenses were $62,937,000common area maintenance.

Depreciation and Amortization
Depreciation and amortization was $25,682,000 in the nine months ended September 30, 2017,2021, compared to $60,702,000$23,129,000 in the prior year’s nine months, an increase of $2,235,000.$2,553,000. This increase was primarily due to (i) higher real estate taxesthe acceleration of $2,723,000amortization of the deferred leasing commission at our Paramus property.
General and (ii) higher reimbursable operatingAdministrative Expenses
General and administrative expenses of $555,000, partially offset by (iii) lower marketing costs for The Alexander apartment tower of $1,007,000 and (iv) lower bad debt expense of $270,000.

Depreciation and Amortization

Depreciation and amortization was $24,613,000were $4,638,000 in the nine months ended September 30, 2017,2021, compared to $25,745,000$4,948,000 in the prior year’s nine months, a decrease of $1,132,000.$310,000. This decrease was primarily due to additional depreciation and amortizationlower stock-based compensation expense related to an initial award of tenant improvements and deferred leasing costsstock units with a fair value of $1,077,000$150,000 granted to a newly appointed member of our Board of Directors in the prior year’s nine months related to a tenant lease termination at our Rego Park II property in June 2016.

Generalyear and Administrative Expenses

Generallower professional fees.

Interest and administrative expenses were $4,080,000Other Income, net
Interest and other income, net was $480,000 in the nine months ended September 30, 2017,2021, compared to $4,285,000$2,473,000 in the prior year’s nine months, a decrease of $205,000.$1,993,000. This decrease was primarily due to $1,514,000 of lower directors’ feesinterest income due to a decrease in average interest rates and stock-based compensation expense as a result$499,000 of having one less member on our Board of Directors than in the prior year’s nine months.

lower dividend income from Macerich.

Interest and Other Income, net

Debt Expense

Interest and other income, netdebt expense was $4,105,000$15,350,000 in the nine months ended September 30, 2017,2021, compared to $2,388,000$19,208,000 in the prior year’s nine months, a decrease of $3,858,000. This was primarily due to (i) $4,414,000 of lower interest expense due to a decrease in LIBOR and (ii) $1,276,000 of lower amortization of debt issuance costs, partially offset by (iii) $1,875,000 of higher interest expense due to the financing of The Alexander apartment tower in October 2020.
Change in Fair Value of Marketable Securities
Change in fair value of marketable securities was income of $3,411,000 in the nine months ended September 30, 2021, compared to an expense of $10,789,000 in the prior year’s nine months, an increase to income of $1,717,000.$14,200,000. This increase was primarily due to higher interest incomethe change in Macerich’s share price during the periods.
Net Gain on Sale of $2,130,000Real Estate
Net gain on sale of which $1,530,000real estate was from higher average interest rates and $616,000 was from higher average investment balances, partially offset by income of $367,000 included in the prior year’s nine months from a cost reimbursement settlement with a retail tenant at our 731 Lexington Avenue property.

Interest and Debt Expense

Interest and debt expense was $22,355,000$9,124,000 in the nine months ended September 30, 2017, compared to $16,476,000 in the prior year’s nine months, an increase of $5,879,000. This increase was primarily due to additional interest expense of (i) $3,890,000 due to higher average LIBOR, (ii) $1,479,0002021, resulting from the refinancingsale of the office portion of 731 Lexington Avenue on June 1, 2017 for $500,000,000 at LIBOR plus 0.90% (previously a $300,000,000 loan at LIBOR plus 0.95%) and (iii) $511,000 of higher amortization of debt issuance costs.

Income Taxes

Income tax expense was $7,000 in the nine months ended September 30, 2017, compared to $41,000 in the prior year’s nine months.

Bronx Land Parcel.

21

Liquidity and Capital Resources

Cash Flows

Property rental income

Rental revenue is our primary source of cash flow and is dependent on a number of factors, including the occupancy level and rental rates of our properties, as well as our tenants’ ability to pay their rents. Our properties provide us with a relatively consistent stream of cash flow that enables us to pay our operating expenses, interest expense, recurring capital expenditures and cash dividends to stockholders. Other sources of liquidity to fund cash requirements include our existing cash, proceeds from financings, including mortgage or construction loans secured by our properties and proceeds from asset sales.

As of September 30, 2021, we had $479,206,000 of liquidity comprised of $469,771,000 of cash and cash equivalents and restricted cash and $9,435,000 of marketable securities. We anticipate that cash flows from continuing operations over the next twelve months, together with existing cash balances, will be adequate to fund our business operations, cash dividends to stockholders, debt amortization and capital expenditures.

We may refinance our maturing debt as it comes due or choose to pay it down. However, there can be no assurance that additional financing or capital will be available to refinance our debt, or that the terms will be acceptable or advantageous to us. The challenges posed by the COVID-19 pandemic and the impact on our business and cash flows continue to evolve and cannot be predicted at this time but that impact could be material. Consequently, we will continue to evaluate our liquidity and financial position on an ongoing basis.

Nine Months Ended September 30, 2017

2021

Cash and cash equivalents and restricted cash were $364,514,000$469,771,000 as of September 30, 2017,2021, compared to $374,678,000$449,877,000 as of December 31, 2016, a decrease2020, an increase of $10,164,000.$19,894,000. This decreaseincrease resulted from (i) $202,430,000$90,919,000 of net cash provided by operating activities, partially offset by (ii) $69,205,000 of net cash used in financing activities and (iii) $1,820,000 of net cash used in investing activities, partially offset by (ii) $120,056,000 of net cash provided by financing activities and (iii) $72,210,000 of net cash provided by operating activities.

Net cash used in investing activities of $202,430,000 was primarily comprised of the Rego Park II loan participation payment of $200,000,000 and construction in progress and real estate additions of $3,155,000.

Net cash provided by financing activities of $120,056,000 was primarily comprised of (i) $500,000,000 of proceeds from the refinancing of the office portion of 731 Lexington Avenue, partially offset by (ii) debt repayments of $302,754,000 (primarily the repayment of the former loan on the office portion of 731 Lexington Avenue) and (iii) dividends paid of $65,218,000.

Net cash provided by operating activities of $72,210,000$90,919,000 was comprised of (i) net income of $62,626,000,$55,181,000, (ii) adjustments fornon-cash items of $30,666,000$22,249,000 and (iii) the net change in operating assets and liabilities of $21,082,000.$13,489,000. The adjustments fornon-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $27,049,000,$26,923,000, (ii) straight-lining of rental income of $3,223,000$7,411,000 and (iii) stock-based compensation expense of $394,000.

Liquidity$450,000, partially offset by (iv) net gain on sale of real estate of $9,124,000 and Capital Resources – continued

(v) the change in fair value of marketable securities of $3,411,000.

Net cash used in financing activities of $69,205,000 was primarily comprised of dividends paid of $69,160,000.
Net cash used in investing activities was comprised of (i) construction in progress and real estate additions of $14,711,000, partially offset by (ii) proceeds from the sale of real estate of $9,291,000 and (iii) the return of short-term investments of $3,600,000.
Nine Months Ended September 30, 2016

2020

Cash and cash equivalents and restricted cash were $349,179,000$369,778,000 as of September 30, 2016,2020, compared to $344,656,000$313,977,000 as of December 31, 2015,2019, an increase of $4,523,000.$55,801,000. This increase resulted from (i) $81,898,000$55,521,000 of net cash provided by operating activities and (ii) $23,910,000 of net cash provided by financing activities, partially offset by (ii) $63,934,000 of net cash used in financing activities and (iii) $13,441,000$23,630,000 of net cash used in investing activities.

Net cash provided by operating activities of $81,898,000$55,521,000 was comprised of (i) net income of $64,822,000,$23,507,000 and (ii) adjustments fornon-cash items of $29,710,000 and$59,157,000, partially offset by (iii) the net change in operating assets and liabilities of $12,634,000.$27,143,000. The adjustments fornon-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $27,666,000,$25,554,000, (ii) straight-lining of rental income of $1,594,000$18,306,000, (iii) the change in fair value of marketable securities of $10,789,000, (iv) write-off of tenant receivables of $4,122,000 and (iii)(v) stock-based compensation expense of $450,000.

$600,000, partially offset by (vi) $214,000 of dividends received in stock from Macerich.

Net cash used inprovided by financing activities of $63,934,000$23,910,000 was primarily comprised of (i) proceeds from the reduction of our participation in our Rego Park II mortgage loan of $145,708,000, partially offset by (ii) dividends paid of $61,363,000.

$69,118,000 and (iii) debt repayments of $50,000,000.

Net cash used in investing activities of $13,441,000 was comprised of construction in progress and real estate additions primarily due to The Alexander apartment tower, including the payment of a development fee to Vornado of $5,784,000.

$23,630,000.

22

Liquidity and Capital Resources - continued
Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which the first $30,000,000 includes communicable disease coverage, andall-risk property and rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, withsub-limits for certain perils such as floods and earthquakes on each of our properties.

properties and excluding communicable disease coverage.

Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act of 2002, as amended to date and which expires inhas been extended through December 2020.2027. Coverage for acts of terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For NBCR acts, FNSIC is responsible for a $293,000$275,000 deductible and 17%20% of the balance of a covered loss, and the Federal government is responsible for the remaining 83%80% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC.

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism.terrorism or other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.

Our mortgage loans arenon-recourse to us and contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

Liquidity and Capital Resources – continued

Rego Park I Litigation

In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado and us (and certain of our subsidiaries) with regard to spacethe 195,000 square foot store that Sears leasesleased at our Rego Park I property alleging that the defendants are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) two fires in February 2014 that caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than $4 million$4,000,000 and future damages it estimated would not be less than $25 million.$25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears. We intend to defend the remaining claim vigorously. The amount or range of reasonably possible losses, if any, is not expected to be greater than $650,000.

Paramus

In 2001, we leased 30.3 acres On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief resulting in an automatic stay of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 2.90%, which matures on October 5, 2018. The annualtriple-net rent is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a gain on sale of land of approximately $60,000,000. If the purchase option is not exercised, thetriple-net rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining20-year lease term.

this case.

Letters of Credit

Approximately $1,474,000$960,000 of standby letters of credit were issued and outstanding as of September 30, 2017.

2021.

Other

In October 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of Determination to us assessing an additional $22,490,000 of transfer taxes (including interest and penalties as of September 30, 2017) in connection with the sale of Kings Plaza Regional Shopping Center in November 2012. We believe that the NYC DOF’s claim is without merit and intend to vigorously contest this assessment. We have determined that the likelihood of a loss related to this issue is not probable and, after consultation with legal counsel, that the outcome of this assessment is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters in the aggregate will not have a material effect on our financial position, results of operations or cash flows.

23

Funds from Operations (“FFO”)

(non-GAAP)


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 defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciatedcertain real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specifiednon-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income to FFO is provided below.

FFO (non-GAAP) for the Threethree and Nine Months Endednine months ended September 30, 20172021 and 2016

2020

FFO (non-GAAP) for the quarter ended September 30, 20172021 was $28,598,000,$21,181,000, or $5.59$4.13 per diluted share, compared to $28,949,000,$15,363,000, or $5.66$3.00 per diluted share forin the prior year’s quarter.

FFO (non-GAAP) for the nine months ended September 30, 20172021 was $86,846,000,$68,095,000, or $16.98$13.29 per diluted share, compared to $90,198,000,$57,102,000, or $17.64$11.15 per diluted share forin the prior year’s nine months.

The following table reconciles our net income to FFO:

  Three Months Ended
September 30,		  Nine Months Ended
September 30,		 
(Amounts in thousands, except share and per share amounts) 2017  2016  2017  2016 

Net income

  $   20,299   $   21,036   $   62,626   $   64,822 

Depreciation and amortization of real property

   8,299    7,913    24,220    25,376 
  

 

 

   

 

 

   

 

 

   

 

 

 

FFO

  $   28,598   $   28,949   $   86,846   $   90,198 
  

 

 

   

 

 

   

 

 

   

 

 

 
        

FFO per diluted share

  $   5.59   $   5.66   $   16.98   $   17.64 
  

 

 

   

 

 

   

 

 

   

 

 

 
        

Weighted average shares used in computing FFO per diluted share

     5,115,982      5,114,701      5,115,339      5,113,877 
  

 

 

   

 

 

   

 

 

   

 

 

 

FFO (non-GAAP):

 Three Months EndedNine Months Ended
 September 30,September 30,
(Amounts in thousands, except share and per share amounts)2021 202020212020
Net income$11,401 $6,604 $55,181 $23,507 
Depreciation and amortization of real property8,911 7,528 25,449 22,806 
Net gain on sale of real estate— — (9,124)— 
Change in fair value of marketable securities869 1,231 (3,411)10,789 
FFO (non-GAAP)$21,181  $15,363 $68,095 $57,102 
FFO per diluted share (non-GAAP)$4.13  $3.00 $13.29 $11.15 
Weighted average shares used in computing FFO per diluted share 5,124,478   5,122,206 5,123,321 5,120,490 

24

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Item 3.Quantitative and Qualitative Disclosures About Market Risk
We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates is summarized in the table below.

  2017   2016 
(Amounts in thousands, except per share amounts) September 30,
    Balance    		   Weighted
Average
Interest Rate		  Effect of 1%
Change in
  Base Rates  		   December 31,
Balance		   Weighted
Average
Interest Rate		 

Variable Rate

 $    1,107,147    2.52%  $    11,071   $    909,901    2.08% 

Fixed Rate

    146,246    1.54%     -      146,246    1.54% 
   

 

 

 

     

 

 

     

 

 

   
 $    1,253,393    2.40%  $    11,071   $    1,056,147    2.01% 
   

 

 

 

     

 

 

     

 

 

   
              

Total effect on diluted earnings per share

      $    2.16       
        

 

 

       

As of September 30, 2017, we

 20212020
(Amounts in thousands, except per share amounts)September 30, BalanceWeighted
Average
Interest Rate		Effect of 1%
Change in
  Base Rates  		December 31,
Balance		Weighted
Average
Interest Rate
Variable Rate$702,544 1.11%$7,025 $702,544 1.19%
Fixed Rate462,000 2.35%— 462,000 2.35%
$1,164,544 1.60%$7,025 $1,164,544 1.65%
Total effect on diluted earnings per share$1.37 
We have an interest rate cap relating to the mortgage loan on the office condominium of our 731 Lexington Avenue property with a notional amount of $500,000,000 that caps LIBOR at a rate of 6.0%3.0%.


We have an interest rate swap relating to the mortgage loan on the retail condominium of our 731 Lexington Avenue property with a notional amount of $300,000,000 that swaps LIBOR plus 1.40% for a fixed rate of 1.72%.
Fair Value of Debt

The fair value of our mortgages payable is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. As of September 30, 20172021 and December 31, 2016,2020, the estimated fair value of our mortgages payable was $1,241,000,000 and $1,045,000,000, respectively.$1,130,000,000. Our fair value estimates, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.


Item 4.Controls and Procedures

Item 4.Controls and Procedures
(a) Disclosure Controls and Procedures:  Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting during the fiscal quarter to which this Quarterly Report on Form10-Q relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION


25

PART II.OTHER INFORMATION

Item 1.Legal Proceedings

Item 1.Legal Proceedings
We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters in the aggregate will not have a material effect on our financial condition, results of operations or cash flows.

For a discussion of the litigation concerning our Rego Park I property, see “Part I – Financial Information, Item 1 – Financial Statements, Note 11 – Commitments and Contingencies.”

Item 1A.Risk Factors

Item 1A.Risk Factors

There have been no material changes in our “Risk Factors” as previously disclosed in our Annual Report on Form10-K for the year ended December 31, 2016.

2020.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.

Item 3.Defaults Upon Senior Securities

Item 3.Defaults Upon Senior Securities
None.

Item 4.Mine Safety Disclosures

Item 4.Mine Safety Disclosures
Not applicable.

Item 5.Other Information

None.

Item 5.Other Information
Effective November 2, 2021, Gary Hansen has been appointed as Chief Financial Officer of the Company. Mr. Hansen succeeds Matthew Iocco, who will be retiring after 22 years with the Company and its affiliates. Mr. Iocco will remain with the Company through December 31, 2021 to assist with the transition. Mr. Hansen, age 43, was previously Controller of the Company since May 2015.
Item 6.Exhibits

Item 6.Exhibits
Exhibits required by Item 601 of RegulationS-K are filed herewith and are listed in the attached Exhibit Index.

26

EXHIBIT INDEX

Exhibit

No.

10.1-

Loan Agreement, dated as of June 1, 2017, between 731 Office One LLC, as Borrower, and Deutsche Bank AG, New York Branch and Citigroup Global Markets Realty Corp. collectively, as Lender*

10.2--

Participation and Servicing Agreement for Loan and Security Agreement, dated July  28, 2017, between Bank of China, New York Branch, individually as Lender, InitialA-1 Holder and as the Agent for the Holders, and Alexander’s of Rego Park II Participating Lender LLC, individually as InitialA-2 Holder

15.1-

Letter regarding unaudited interim financial information

--

Rule13a-14 (a) Certification of the Chief Executive Officer

--

Rule13a-14 (a) Certification of the Chief Financial Officer

--

Section 1350 Certification of the Chief Executive Officer

--

Section 1350 Certification of the Chief Financial Officer

101.INS-

XBRL Instance Document

101-The following financial information from the Alexander’s, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) consolidated balance sheets, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of changes in equity, (v) consolidated statements of cash flows and (vi) the notes to the consolidated financial statements
101.SCH-

XBRL Taxonomy Extension Schema

101.CAL104--

XBRL Taxonomy Extension Calculation Linkbase

The cover page from the Alexander’s, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 formatted as iXBRL and contained in Exhibit 101
101.DEF-

XBRL Taxonomy Extension Definition Linkbase

101.LAB-

XBRL Taxonomy Extension Label Linkbase

101.PRE-

XBRL Taxonomy Extension Presentation Linkbase

*

Incorporated by reference from Form10-Q filed on July 31, 2017.


27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ALEXANDER’S, INC.

(Registrant)

Date: October 30, 2017

November 1, 2021		By:By:

    /s//s/ Matthew Iocco

Matthew Iocco

Chief Financial Officer (duly authorized officer and

principal financial and accounting officer)

29


28