alx10q1q2015.htm - Generated by SEC Publisher for SEC Filing  

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark one)

 

x

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended: 

 

 

 March 31, 2015

 

 

Or

 

o

 

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:

001-6064

 

 

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)

 

(201) 587-8541

(Registrant’s telephone number, including area code)

 

N/A

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

 

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.  x Yes  o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-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).  x Yes  o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

x Large Accelerated Filer

o

 Accelerated Filer

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

o    Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes  x No

 

As of April 30, 2015, there were 5,106,196 shares of common stock, par value $1 per share, outstanding.

 

    

 


 
 

 

ALEXANDER’S, INC.

INDEX

Page Number

PART I.

Financial Information

Item 1.

Financial Statements:

Consolidated Balance Sheets (Unaudited) as of

March 31, 2015 and December 31, 2014

Consolidated Statements of Income (Unaudited) for the

Three Months Ended March 31, 2015 and 2014

Consolidated Statements of Comprehensive Income (Unaudited) for the

Three Months Ended March 31, 2015 and 2014

Consolidated Statements of Changes in Equity (Unaudited) for the

Three Months Ended March 31, 2015 and 2014

Consolidated Statements of Cash Flows (Unaudited) for the

Three Months Ended March 31, 2015 and 2014

Notes to Consolidated Financial Statements (Unaudited)

Report of Independent Registered Public Accounting Firm

15 

Item 2.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

16 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

23 

Item 4.

Controls and Procedures

23 

PART II.

Other Information

Item 1.

Legal Proceedings

24 

Item 1A.

Risk Factors

24 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24 

Item 3.

Defaults Upon Senior Securities

24 

Item 4.

Mine Safety Disclosures

24 

Item 5.

Other Information

24 

Item 6.

Exhibits

24 

Signatures

25 

Exhibit Index

26 

2

 


 
 

 

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)

March 31,

December 31,

ASSETS

2015 

2014 

Real estate, at cost:

Land

$

44,971 

$

44,971 

Buildings and leasehold improvements

874,808 

873,667 

Development and construction in progress

89,244 

75,289 

Total

1,009,023 

993,927 

Accumulated depreciation and amortization

(216,265)

(210,025)

Real estate, net

792,758 

783,902 

Cash and cash equivalents

239,312 

227,815 

Short-term investments

24,998 

24,998 

Restricted cash

84,615 

84,602 

Marketable securities

45,139 

44,646 

Tenant and other receivables, net of allowance for doubtful accounts of $1,359 and $1,544,  

    respectively                                                                                                                                                

3,425 

2,213 

Receivable arising from the straight-lining of rents

180,490 

179,939 

Deferred lease and other property costs, net, including unamortized leasing fees to Vornado of

$33,483 and $33,974, respectively

45,822 

46,561 

Deferred debt issuance costs, net of accumulated amortization of $11,895 and $11,295, respectively

4,150 

4,824 

Other assets

12,163 

23,716 

$

1,432,872 

$

1,423,216 

LIABILITIES AND EQUITY

Mortgages payable

$

1,032,004 

$

1,032,780 

Amounts due to Vornado

4,658 

3,922 

Accounts payable and accrued expenses

44,411 

35,127 

Other liabilities

2,981 

2,988 

Total liabilities

1,084,054 

1,074,817 

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, 5,106,196 shares

5,173 

5,173 

Additional capital

30,139 

30,139 

Retained earnings

298,936 

299,004 

Accumulated other comprehensive income

14,944 

14,457 

349,192 

348,773 

Treasury stock: 67,254 shares, at cost

(374)

(374)

Total equity

348,818 

348,399 

$

1,432,872 

$

1,423,216 

See notes to consolidated financial statements (unaudited).

3

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

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

Three Months Ended

March 31,

2015 

2014 

REVENUES

Property rentals

$

34,501 

$

34,136 

Expense reimbursements

17,535 

15,332 

Total revenues

52,036 

49,468 

EXPENSES

Operating, including fees to Vornado of $1,146 and $1,089, respectively

19,046 

16,490 

Depreciation and amortization

7,350 

7,261 

General and administrative, including management fees to Vornado of

$595 in each period

1,270 

1,187 

Total expenses

27,666 

24,938 

OPERATING INCOME

24,370 

24,530 

Interest and other income, net

400 

401 

Interest and debt expense

(6,945)

(9,684)

Income before income taxes

17,825 

15,247 

Income tax expense

(3)

(3)

Net income

$

17,822 

$

15,244 

Net income per common share – basic and diluted

$

3.49 

$

2.98 

Weighted average shares outstanding – basic and diluted

5,111,201 

5,109,717 

Dividends per common share

$

3.50 

$

3.25 

See notes to consolidated financial statements (unaudited).

4

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands)

Three Months Ended

March 31,

2015 

2014 

 

Net income

$

17,822 

$

15,244 

Other comprehensive income:

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

493 

1,841 

Change in value of interest rate cap

(6)

42 

Comprehensive income

$

18,309 

$

17,127 

See notes to consolidated financial statements (unaudited).

5

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

(Amounts in thousands)

Accumulated

Other

Common Stock

Additional

Retained

Comprehensive

Treasury

Total

Shares

Amount

Capital

Earnings

Income

Stock

Equity

Balance, December 31, 2013

5,173 

$

5,173 

$

29,745 

$

297,515 

$

1,522 

$

(374)

$

333,581 

Net income

-   

-   

-   

15,244 

-   

-   

15,244 

Dividends paid

-   

-   

-   

(16,607)

-   

-   

(16,607)

Change in unrealized net gain on

available-for-sale securities

-   

-   

-   

-   

1,841 

-   

1,841 

Change in value of interest rate cap

-   

-   

-   

-   

42 

-   

42 

Balance, March 31, 2014

5,173 

$

5,173 

$

29,745 

$

296,152 

$

3,405 

$

(374)

$

334,101 

Balance, December 31, 2014

5,173 

$

5,173 

$

30,139 

$

299,004 

$

14,457 

$

(374)

$

348,399 

Net income

-   

-   

-   

17,822 

-   

-   

17,822 

Dividends paid

-   

-   

-   

(17,890)

-   

-   

(17,890)

Change in unrealized net gain on

available-for-sale securities

-   

-   

-   

-   

493 

-   

493 

Change in value of interest rate cap

-   

-   

-   

-   

(6)

-   

(6)

Balance, March 31, 2015

5,173 

$

5,173 

$

30,139 

$

298,936 

$

14,944 

$

(374)

$

348,818 

See notes to consolidated financial statements (unaudited).

6

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)

Three Months Ended

March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

2015 

2014 

Net income

$

17,822 

$

15,244 

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

Depreciation and amortization, including amortization of debt issuance costs

8,044 

7,898 

Straight-lining of rental income

(551)

(641)

Change in operating assets and liabilities:

Tenant and other receivables, net

(1,212)

193 

Other assets

11,165 

9,547 

Amounts due to Vornado

(29)

(815)

Accounts payable and accrued expenses

9,861 

8,888 

Other liabilities

(7)

(3)

Net cash provided by operating activities

45,093 

40,311 

CASH FLOWS FROM INVESTING ACTIVITIES

Construction in progress and real estate additions

(14,908)

(1,444)

Change in restricted cash

(13)

4,510 

Net cash (used in) provided by investing activities

(14,921)

3,066 

CASH FLOWS FROM FINANCING ACTIVITIES

Debt repayments

(776)

(314,937)

Proceeds from borrowing

-   

300,000 

Dividends paid

(17,890)

(16,607)

Debt issuance costs

(9)

(4,223)

Net cash used in financing activities

(18,675)

(35,767)

Net increase in cash and cash equivalents

11,497 

7,610 

Cash and cash equivalents at beginning of period

227,815 

347,718 

Cash and cash equivalents at end of period

$

239,312 

$

355,328 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest, excluding capitalized interest of $459 and $30, respectively

$

6,220 

$

10,291 

NON-CASH TRANSACTIONS

Liability for real estate additions (including $4,159 due to Vornado in 2015)

$

13,717 

$

1,750 

Write-off of fully amortized and/or depreciated assets

83 

10,569 

See notes to consolidated financial statements (unaudited).

7

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

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).

 

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, 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 Form 10-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 Form 10-K for the year ended December 31, 2014, 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 months ended March 31, 2015 are not necessarily indicative of the operating results for the full year.

 

We currently operate in one business segment.

 

3.             Recently Issued Accounting Literature

In April 2014, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2014-08”) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity to Accounting Standards Codification (“ASC”) Topic 205, Presentation of Financial Statements and ASC Topic 360, Property Plant and Equipment.  Under ASU 2014-08, only disposals that represent a strategic shift that has (or will have) a major effect on the entity’s results and operations would qualify as discontinued operations.  In addition, ASU 2014-08 expands the disclosure requirements for disposals that meet the definition of a discontinued operation and requires entities to disclose information about disposals of individually significant components that do not meet the definition of discontinued operations.  ASU 2014-08 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2014.  The adoption of this update on January 1, 2015 did not have any impact on our consolidated financial statements.

 

In May 2014, the FASB issued an update (“ASU 2014-09”) establishing ASC Topic 606 Revenue from Contracts with Customers.  ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers 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 certain additional disclosures.  ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016.  We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

 

In April 2015, the FASB issued an update (“ASU 2015-03”) Simplifying the Presentation of Debt Issuance Costs to ASC Topic 835, Interest.  ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability to which they relate, consistent with debt discounts, as opposed to being presented as assets.  ASU 2015-03 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  The adoption of this update on January 1, 2016 will not have a material impact on our consolidated financial statements.

8

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

 

4.             Relationship with Vornado

At March 31, 2015, 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) $280,000, 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 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.  Prior to December 22, 2014, the total of these amounts was payable in annual installments in an amount not to exceed $4,000,000, with interest on the unpaid balance at one-year LIBOR plus 1.0%.  On December 22, 2014, the leasing agreements with Vornado were amended to eliminate the annual installment cap of $4,000,000 and we paid the accrued balance of leasing commissions of $40,353,000 to Vornado. 

 

Other Agreements

We also have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise (i) cleaning, engineering and security services at our Lexington Avenue property and (ii) security services at our Rego Park I and Rego Park II properties, for an annual fee equal to the cost of such services plus 6%. 

 

The following is a summary of fees to Vornado under the various agreements discussed above.

 

Three Months Ended

March 31,

(Amounts in thousands)

2015 

2014 

Company management fees

$

700 

$

700 

Development fees

764 

-   

Leasing fees

382 

178 

Property management fees and payments for cleaning, engineering

and security services

930 

870 

$

2,776 

$

1,748 

 

At March 31, 2015, there was due to Vornado $4,159,000 for development fees, $463,000 for management, property management, cleaning and security fees and $36,000 for leasing fees.

 

9

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

 

5.             Rego Park II Apartment Tower

We are in the process of constructing an apartment tower above our Rego II shopping center, containing 312 units aggregating 255,000 square feet, which is expected to be completed in 2015.  The estimated cost of this project is approximately $125,000,000, of which $87,087,000 has been incurred as of March 31, 2015.  There can be no assurance that the project will be completed on schedule or within budget.

 

 

6.             Marketable Securities

As of March 31, 2015 and December 31, 2014, we owned 535,265 common shares of The Macerich Company (“Macerich”) (NYSE: MAC), which were received in connection with the sale of the Kings Plaza Regional Shopping Center to Macerich in November 2012.  These shares have an economic cost of $56.05 per share, or $30,000,000 in the aggregate.  As of March 31, 2015 and December 31, 2014, the fair value of these shares was $45,139,000 and $44,646,000, respectively, based on Macerich’s closing share price of $84.33 per share and $83.41 per share, respectively.  These shares are included in “marketable securities” on our consolidated balance sheets and are classified as available-for-sale.  Available-for-sale securities are presented at fair value and unrealized gains and losses resulting from the mark-to-market of these securities are included in “other comprehensive income.”

 

 

7.             Significant Tenants

Bloomberg L.P. (“Bloomberg”) accounted for $23,402,000 and $22,017,000, representing 45% of our total revenues in each of the three-month periods ended March 31, 2015 and 2014, 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 assessments of Bloomberg’s creditworthiness, we receive and evaluate certain confidential financial information and metrics provided by Bloomberg on a semi-annual basis.  In addition, we access and evaluate financial information regarding Bloomberg from private sources, as well as publicly available data.

 

In October 2014, Bloomberg exercised its option to extend leases that were scheduled to expire in December 2015 covering 188,608 square feet of office space at our 731 Lexington Avenue property for a term of 5 years.  We are currently in negotiations with Bloomberg to determine the rental rate for the extension period.

10

 


 
  

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

 

8.             Mortgages Payable

The following is a summary of our outstanding mortgages payable as of March 31, 2015 and December 31, 2014.

 

Balance at

Interest Rate at

March 31,

December 31,

(Amounts in thousands)

Maturity(1)

March 31, 2015

2015 

2014 

First mortgages secured by:

731 Lexington Avenue, retail space(2)

Aug. 2015

4.93 

%

$

320,000 

$

320,000 

Rego Park I shopping center (100% cash

collateralized)(3)

Mar. 2016

0.40 

%

78,246 

78,246 

Paramus

Oct. 2018

2.90 

%

68,000 

68,000 

Rego Park II shopping center(4)

Nov. 2018

2.03 

%

265,758 

266,534 

731 Lexington Avenue, office space(5)

Mar. 2021

1.13 

%

300,000 

300,000 

$

1,032,004 

$

1,032,780 

(1)

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

(2)

This loan is non-recourse to us, except for $75,000 in the event of a substantial casualty, as defined. We intend to refinance this loan prior to maturity in August 2015.

(3)

Extended for one year from March 10, 2015.

(4)

Interest at LIBOR plus 1.85%.

(5)

Interest at LIBOR plus 0.95%.

 

9.             Fair Value Measurements

ASC 820, Fair Value Measurement and Disclosures 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 sheets at March 31, 2015 and December 31, 2014, consist of marketable securities, short-term investments (treasury bills classified as available-for-sale) and an interest rate cap, which are presented in the table below, based on their level in the fair value hierarchy.  There were no financial liabilities measured at fair value at March 31, 2015 and December 31, 2014.

 

As of March 31, 2015

(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Marketable securities

$

45,139 

$

45,139 

$

-   

$

-   

Short-term investments

24,998 

24,998 

-   

-   

Interest rate cap (included in other assets)

-   

-   

Total assets

$

70,143 

$

70,137 

$

$

-   

As of December 31, 2014

(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Marketable securities

$

44,646 

$

44,646 

$

-   

$

-   

Short-term investments

24,998 

24,998 

-   

-   

Interest rate cap (included in other assets)

11 

-   

11 

-   

Total assets

$

69,655 

$

69,644 

$

11 

$

-   

11

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

 

9.             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 cash equivalents, mortgages payable and leasing commissions due to Vornado.  Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities.  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.  The leasing commissions due to Vornado are carried at cost plus interest at variable rates, which approximate fair value.  The fair value of cash equivalents is classified as Level 1 and the fair value of mortgages payable and leasing commissions due to Vornado is classified as Level 2.  The table below summarizes the carrying amounts and fair value of these financial instruments as of March 31, 2015 and December 31, 2014.

 

As of March 31, 2015

As of December 31, 2014

Carrying

Fair

Carrying

Fair

(Amounts in thousands)

Amount

Value

Amount

Value

Assets:

 

Cash equivalents

$

224,595 

$

224,595 

$

111,590 

$

111,590 

Liabilities:

Mortgages payable

$

1,032,004 

$

1,022,000 

$

1,032,780 

$

1,025,000 

Leasing commissions (included in amounts due to Vornado)

36 

36 

-   

-   

$

1,032,040 

$

1,022,036 

$

1,032,780 

$

1,025,000 

 

 

10.          Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and all-risk property and rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, with sub-limits for certain perils such as floods and earthquakes on each of our properties.

 

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, which expires in December 2020.  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 with no exposure to FNSIC.  For NBCR acts, FNSIC is responsible for a $275,000 deductible and 15% of the balance (16% effective January 1, 2016) of a covered loss, and the Federal government is responsible for the remaining 85% (84% effective January 1, 2016) 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.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.  We are responsible for deductibles and losses in excess of our insurance coverage, which could be material.

 

Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on the retail portion of our 731 Lexington Avenue property, in the event of a substantial casualty, as defined.  Our mortgage loans 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 our properties.

 

12

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

 

 

10.          Commitments and Contingencies – continued

Litigation

Rego Park I

On June 24, 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 space that Sears leases at our Rego Park I property.  Sears alleges that the defendants are liable for harm 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 asserts various causes of actions for damages and seeks 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 seeks, among other things, damages of not less than $4 million and future damages it estimates will not be less than $25 million.  We intend to defend the claims vigorously; the amount or range of reasonably possible losses, if any, cannot be estimated.

Rego Park II Apartment Tower

We are in the process of constructing an apartment tower above our Rego II shopping center, containing 312 units aggregating 255,000 square feet, which is expected to be completed in 2015.  The estimated cost of this project is approximately $125,000,000, of which $87,087,000 has been incurred as of March 31, 2015.  There can be no assurance that the project will be completed on schedule or within budget.

Paramus

In 2001, we leased 30.3 acres 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 in October 2018.  The annual triple-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, the triple-net rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.

Letters of Credit

Approximately $2,074,000 of standby letters of credit were outstanding as of March 31, 2015.

Other

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 condition, results of operations or cash flows.

13

 


 
 

 

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

 

 

11.          Earnings Per Share

The following table sets forth the computation of basic and diluted income per share, including a reconciliation of net income and the number of shares used in computing 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 months ended March 31, 2015 and 2014.

 

Three Months Ended

March 31,

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

2015 

2014 

Net income

$

17,822 

$

15,244 

Weighted average shares outstanding – basic and diluted

5,111,201 

5,109,717 

Net income per common share – basic and diluted

$

3.49 

$

2.98 

 

14

 


 
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

Alexander’s, Inc.

Paramus, New Jersey

 

We have reviewed the accompanying consolidated balance sheet of Alexander’s, Inc. and subsidiaries (the “Company”) as of March 31, 2015, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2015 and 2014.  These interim financial statements are the responsibility of the Company’s management.

 

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 standards of the Public Company Accounting Oversight Board (United States), 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, 2014, 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 17, 2015, 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, 2014 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
May 4, 2015

15

 


 
 

 

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 Form 10‑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.  For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A - Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2014.  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 Form 10-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 Form 10-Q.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our consolidated financial statements for the three months ended March 31, 2015 and 2014. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 months ended March 31, 2015 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 Form 10-K for the year ended December 31, 2014 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 2 – Summary of Significant Accounting Policies” to the consolidated financial statements included therein.  There have been no significant changes to these policies during 2015.

 

 

16

 


 
 

 

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,” 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 six properties in the greater New York City metropolitan area.

 

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.

 

Quarter Ended March 31, 2015 Financial Results Summary

 

Net income for the quarter ended March 31, 2015 was $17,822,000, or $3.49 per diluted share, compared to $15,244,000, or $2.98 per diluted share for the quarter ended March 31, 2014.  Funds from operations (“FFO”) for the quarter ended March 31, 2015 was $25,136,000, or $4.92 per diluted share, compared to $22,474,000, or $4.40  per diluted share for the quarter ended March 31, 2014.

 

Square Footage, Occupancy and Leasing Activity

As of March 31, 2015 and December 31, 2014, our portfolio was comprised of six properties aggregating 2,178,000 square feet that had an occupancy rate of 99.7%. 

 

Financing

On March 10, 2015, we completed a one-year extension of the 100% cash-collateralized loan on Rego Park I.  The interest-only loan has a fixed rate of 0.40% and matures in March 2016.

 

Significant Tenants

 

Bloomberg, L.P. (“Bloomberg”) accounted for $23,402,000 and $22,017,000, representing 45% of our total revenues in each of the three-month periods ended March 31, 2015 and 2014, 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 assessments of Bloomberg’s creditworthiness, we receive and evaluate certain confidential financial information and metrics provided by Bloomberg on a semi-annual basis.  In addition, we access and evaluate financial information regarding Bloomberg from private sources, as well as publicly available data.

 

In October 2014, Bloomberg exercised its option to extend leases that were scheduled to expire in December 2015 covering 188,608 square feet of office space at our 731 Lexington Avenue property for a term of 5 years.  We are currently in negotiations with Bloomberg to determine the rental rate for the extension period.

 

17

 


 
 

 

Results of Operations – Three Months Ended March 31, 2015, compared to March 31, 2014

 

Property Rentals

Property rentals were $34,501,000 in the quarter ended March 31, 2015, compared to $34,136,000 in the prior year’s quarter, an increase of $365,000. 

 

Expense Reimbursements

Tenant expense reimbursements were $17,535,000 in the quarter ended March 31, 2015, compared to $15,332,000 in the prior year’s quarter, an increase of $2,203,000.  This increase was primarily due to higher real estate taxes and higher reimbursable operating expenses.

 

Operating Expenses

Operating expenses were $19,046,000 in the quarter ended March 31, 2015, compared to $16,490,000 in the prior year’s quarter, an increase of $2,556,000.  This increase was primarily comprised of higher reimbursable real estate taxes of $1,098,000 and higher reimbursable operating expenses of $1,038,000.

 

Depreciation and Amortization

Depreciation and amortization was $7,350,000 in the quarter ended March 31, 2015, compared to $7,261,000 in the prior year’s quarter, an increase of $89,000. 

 

General and Administrative Expenses

General and administrative expenses were $1,270,000 in the quarter ended March 31, 2015, compared to $1,187,000 in the prior year’s quarter, an increase of $83,000.  This increase was primarily due to higher professional fees.

 

Interest and Other Income, net

Interest and other income, net was $400,000 in the quarter ended March 31, 2015, compared to $401,000 in the prior year’s quarter, a decrease of $1,000. 

 

Interest and Debt Expense

Interest and debt expense was $6,945,000 in the quarter ended March 31, 2015, compared to $9,684,000 in the prior year’s quarter, a decrease of $2,739,000.  This decrease was primarily due to savings resulting from the refinancing of the office portion of 731 Lexington Avenue on February 28, 2014 at LIBOR plus 0.95% (1.13% at March 31, 2015).  The prior loan had a fixed rate of 5.33%.  We intend to refinance the $320,000,000 4.93% fixed rate loan on the retail portion of 731 Lexington Avenue prior to its maturity in August 2015.

 

Income Tax Expense

Income tax expense was $3,000 in each of the quarters ended March 31, 2015 and 2014.  

 

18

 


 
 

 

Liquidity and Capital Resources

 

Cash Flows

 

Property rental income 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.  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, recurring capital expenditures and development expenditures related to the Rego Park II apartment tower.

 

During 2015 and 2016, $320,000,000 and $78,246,000 (cash collateralized) of our debt is scheduled to mature, respectively.  We intend to refinance our maturing debt as it comes due.

 

 

Development Project

We are in the process of constructing an apartment tower above our Rego II shopping center, containing 312 units aggregating 255,000 square feet, which is expected to be completed in 2015.  The estimated cost of this project is approximately $125,000,000, of which $87,087,000 has been incurred as of March 31, 2015.  There can be no assurance that the project will be completed on schedule or within budget.

 

 

Three Months Ended March 31, 2015

 Cash and cash equivalents were $239,312,000 at March 31, 2015, compared to $227,815,000 at December 31, 2014, an increase of $11,497,000.  This increase resulted from (i) 45,093,000 of net cash provided by operating activities, partially offset by (ii) $18,675,000 of net cash used in financing activities and (iii) $14,921,000 of net cash used in investing activities.

 

  Net cash provided by operating activities of $45,093,000 was comprised of net income of $17,822,000, adjustments for non-cash items of $7,493,000 and the net change in operating assets and liabilities of $19,778,000.  The adjustments for non-cash items were comprised of depreciation and amortization of $8,044,000, partially offset by straight-lining of rental income of $551,000.

 

 Net cash used in investing activities of $14,921,000 was comprised of construction in progress and real estate additions of $14,908,000 (primarily Rego Park II apartment tower).

 

 Net cash used in financing activities of $18,675,000 was primarily comprised of dividends paid of $17,890,000.

 

19

 


 
 

 

Liquidity and Capital Resources – continued

 

Three Months Ended March 31, 2014

Cash and cash equivalents were $355,328,000 at March 31, 2014, compared to $347,718,000 at December 31, 2013, an increase of $7,610,000.  This increase resulted from $40,311,000 of net cash provided by operating activities and $3,066,000 of net cash provided by investing activities, partially offset by $35,767,000 of net cash used in financing activities.

Net cash provided by operating activities of $40,311,000 was comprised of net income of $15,244,000 and adjustments for non-cash items of $7,257,000 and the net change in operating assets and liabilities of $17,810,000.  The adjustments for non-cash items were comprised of depreciation and amortization of $7,898,000, partially offset by the straight-lining of rental income of $641,000.  

Net cash provided by investing activities of $3,066,000 was comprised of a decrease in restricted cash of $4,510,000, partially offset by construction in progress and real estate additions of $1,444,000 (primarily Rego Park II apartment tower). 

Net cash used in financing activities of $35,767,000 was primarily comprised of debt repayments of $314,937,000 and dividends paid of $16,607,000, partially offset by proceeds from borrowings of $300,000,000.

 

Commitments and Contingencies

 

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and all-risk property and rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, with sub-limits for certain perils such as floods and earthquakes on each of our properties.

 

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, which expires in December 2020.  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 with no exposure to FNSIC.  For NBCR acts, FNSIC is responsible for a $275,000 deductible and 15% of the balance (16% effective January 1, 2016) of a covered loss, and the Federal government is responsible for the remaining 85% (84% effective January 1, 2016) 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.  However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.  We are responsible for deductibles and losses in excess of our insurance coverage, which could be material.

 

Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on the retail portion of our 731 Lexington Avenue property, in the event of a substantial casualty, as defined.  Our mortgage loans 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 our properties.

 

20

 


 
 

 

Liquidity and Capital Resources – continued

 

Litigation

Rego Park I

On June 24, 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 space that Sears leases at our Rego Park I property.  Sears alleges that the defendants are liable for harm 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 asserts various causes of actions for damages and seeks 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 seeks, among other things, damages of not less than $4 million and future damages it estimates will not be less than $25 million.  We intend to defend the claims vigorously; the amount or range of reasonably possible losses, if any, cannot be estimated.

 

Paramus

In 2001, we leased 30.3 acres 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 in October 2018.  The annual triple-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, the triple-net rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.

 

Letters of Credit

Approximately $2,074,000 of standby letters of credit were outstanding as of March 31, 2015. 

 

Other

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 condition, results of operations or cash flows.

 

21

 


 
 

 

Funds from Operations (“FFO”)

 

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 depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-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 for the Three Months Ended March 31, 2015 and 2014

 

FFO for the quarter ended March 31, 2015 was $25,136,000, or $4.92 per diluted share, compared to $22,474,000, or $4.40 per diluted share for the prior year’s quarter.

 

The following table reconciles our net income to FFO:

Three Months Ended

March 31,

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

2015 

2014 

Net income

$

17,822 

$

15,244 

Depreciation and amortization of real property

7,314 

7,230 

FFO

$

25,136 

$

22,474 

FFO per diluted share

$

4.92 

$

4.40 

Weighted average shares used in computing FFO per diluted share

5,111,201 

5,109,717 

22

 


 
 

 

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.

 

2015 

2014 

Weighted

Effect of 1%

Weighted

March 31,

Average

Change in

December 31,

Average

(Amounts in thousands, except per share amounts)

Balance

Interest Rate

Base Rates

Balance

Interest Rate

Variable Rate (including $36 and $0,

    respectively, due to Vornado)

$

565,794 

1.55%

$

5,658 

$

566,534 

1.54%

Fixed Rate

466,246 

3.87%

-   

466,246 

3.87%

$

1,032,040 

$

5,658 

$

1,032,780 

Total effect on diluted earnings per share

$

1.11 

 

As of March 31, 2015 we have an interest rate cap with a notional amount of $300,000,000 that caps LIBOR at a rate of 6.0%.

 

Fair Value of Debt

The fair value of our consolidated debt 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 March 31, 2015 and December 31, 2014, the estimated fair value of our consolidated debt was $1,022,036,000 and $1,025,000,000, respectively.  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

 

(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 Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-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 Form 10-Q relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

23

 


 
 

 

PART II.   OTHER INFORMATION

 

 

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 10 – Commitments and Contingencies.”

 

 

 

Item 1A.  Risk Factors

 

There have been no material changes in our “Risk Factors” as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

 

 

 

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

 

None.

 

 

 

Item 3.     Defaults Upon Senior Securities

 

None.

 

 

 

Item 4.     Mine Safety Disclosures

 

Not applicable.

 

 

 

Item 5.     Other Information

 

None.

 

 

 

Item 6.     Exhibits

 

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

 

 

24

 


 
 

 

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: May 4, 2015

By:

/s/ Joseph Macnow

 

 

Joseph Macnow, Executive Vice President and
Chief Financial Officer (duly authorized officer and
principal financial and accounting officer)

 

 

25

 


 
 

 

 

                                                                       EXHIBIT INDEX

Exhibit

No.

10.1

-

Third Omnibus Loan Modification and Extension Agreement, dated March 10, 2015, by and between

Alexander's Inc., as Borrower and U.S. Bank National Association, as Lender

 

 

10.2

 

-

Third Mortgage Modification Agreement, dated March 10, 2015, by and between Alexander’s Rego Shopping

Center, Inc., as Mortgator and U. S. Bank National Association, as Mortgagee

 

15.1

-

Letter regarding unaudited interim financial information

 

 

 

31.1

-

Rule 13a-14 (a) Certification of the Chief Executive Officer

 

 

 

31.2

-

Rule 13a-14 (a) Certification of the Chief Financial Officer

 

 

 

32.1

-

Section 1350 Certification of the Chief Executive Officer

 

 

 

32.2

-

Section 1350 Certification of the Chief Financial Officer

 

 

101.INS                

 

    -     

   XBRL Instance Document

 

 

 

 

 

101.SCH

    -

   XBRL Taxonomy Extension Schema

 

 

 

 

 

101.CAL

    -

   XBRL Taxonomy Extension Calculation Linkbase

 

 

 

 

 

 

101.DEF

    -

   XBRL Taxonomy Extension Definition Linkbase

 

 

 

 

 

101.LAB

    -

   XBRL Taxonomy Extension Label Linkbase

 

 

 

 

 

101.PRE

    -

   XBRL Taxonomy Extension Presentation Linkbase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                   

 

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