Company Quick10K Filing
Alexanders
Price341.71 EPS11
Shares5 P/E31
MCap1,749 P/FCF34
Net Debt-314 EBIT56
TEV1,435 TEV/EBIT26
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-03
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-18
10-Q 2019-09-30 Filed 2019-10-28
10-Q 2019-06-30 Filed 2019-07-29
10-Q 2019-03-31 Filed 2019-04-29
10-K 2018-12-31 Filed 2019-02-11
10-Q 2018-09-30 Filed 2018-10-29
10-Q 2018-06-30 Filed 2018-07-30
10-Q 2018-03-31 Filed 2018-04-30
10-K 2017-12-31 Filed 2018-02-12
10-Q 2017-09-30 Filed 2017-10-30
10-Q 2017-06-30 Filed 2017-07-31
10-Q 2017-03-31 Filed 2017-05-01
10-K 2016-12-31 Filed 2017-02-13
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-01
10-Q 2016-03-31 Filed 2016-05-02
10-K 2015-12-31 Filed 2016-02-16
10-Q 2015-09-30 Filed 2015-11-02
10-Q 2015-06-30 Filed 2015-08-03
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-17
10-Q 2014-09-30 Filed 2014-11-03
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-05-05
10-K 2013-12-31 Filed 2014-02-24
10-Q 2013-09-30 Filed 2013-11-04
10-Q 2013-06-30 Filed 2013-08-05
10-Q 2013-03-31 Filed 2013-05-06
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-08-06
10-Q 2012-03-31 Filed 2012-05-07
10-K 2011-12-31 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-11-03
10-Q 2011-06-30 Filed 2011-08-01
10-Q 2011-03-31 Filed 2011-05-02
10-K 2010-12-31 Filed 2011-02-22
10-Q 2010-09-30 Filed 2010-11-01
10-Q 2010-06-30 Filed 2010-08-02
10-Q 2010-03-31 Filed 2010-05-03
10-K 2009-12-31 Filed 2010-02-22
8-K 2020-08-19 Enter Agreement, Off-BS Arrangement, Other Events
8-K 2020-05-14
8-K 2020-03-25
8-K 2019-05-16
8-K 2018-12-12
8-K 2018-05-17
8-K 2018-03-02

ALX 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-15.1 exhibit152.htm
EX-31.1 exhibit311.htm
EX-31.2 exhibit312.htm
EX-32.1 exhibit321.htm
EX-32.2 exhibit322.htm

Alexanders Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
1.71.41.00.70.30.02012201420172020
Assets, Equity
0.10.10.10.00.00.02018201820192020
Rev, G Profit, Net Income
0.80.40.1-0.3-0.6-1.02012201420172020
Ops, Inv, Fin

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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:    June 30, 2020                                                
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)
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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $1 par value per share
 
ALX
 
New 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 every Interactive Data File required to be submitted 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 such files).  Yes ☐ No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer 
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 Rule 12b-2 of the Exchange Act). Yes  No
As of July 31, 2020, there were 5,107,290 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 June 30, 2020 and December 31, 2019
 
 
 
 
Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Changes in Equity (Unaudited) for the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2020 and 2019
 
 
 
 
Notes to Consolidated Financial Statements (Unaudited)
 
 
 
 
Report of Independent Registered Public Accounting Firm
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II.
Other Information
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
Exhibit Index
 
 
 
 
Signatures
 

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
 
June 30, 2020
 
December 31, 2019
Real estate, at cost:
 
 
 
 
Land
 
$
44,971

 
$
44,971

Buildings and leasehold improvements
 
986,398

 
984,053

Development and construction in progress
 
22,724

 
12,318

Total
 
1,054,093


1,041,342

Accumulated depreciation and amortization
 
(337,534
)
 
(324,499
)
Real estate, net
 
716,559


716,843

Cash and cash equivalents
 
441,905

 
298,063

Restricted cash
 
11,360

 
15,914

Marketable securities
 
5,065

 
14,409

Tenant and other receivables
 
7,716

 
6,092

Receivable arising from the straight-lining of rents
 
157,556

 
166,376

Deferred leasing costs, net, including unamortized leasing fees to Vornado
of $30,771 and $32,374, respectively
 
39,035

 
41,123

Other assets
 
4,966

 
6,691

 
 
$
1,384,162


$
1,265,511

LIABILITIES AND EQUITY
 
 
 
 
Mortgages payable, net of deferred debt issuance costs
 
$
1,118,813

 
$
970,961

Amounts due to Vornado
 
996

 
1,426

Accounts payable and accrued expenses
 
31,844

 
31,756

Other liabilities
 
7,538

 
7,853

Total liabilities
 
1,159,191


1,011,996

 
 
 
 
 
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 shares
 
5,173

 
5,173

Additional capital
 
32,965

 
32,365

Retained earnings
 
187,229

 
216,394

Accumulated other comprehensive loss
 
(28
)
 
(49
)
 
 
225,339


253,883

Treasury stock: 66,160 shares, at cost
 
(368
)
 
(368
)
Total equity
 
224,971


253,515

 
 
$
1,384,162


$
1,265,511


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 June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
REVENUES
 
 
 
 
 
 
 
 
Rental revenues
 
$
45,478

 
$
55,932

 
$
99,588

 
$
112,710

EXPENSES
 
 
 
 
 
 
 
 
Operating, including fees to Vornado of $1,235, $1,371, $2,618 and $2,620 respectively
 
(19,778
)
 
(21,667
)
 
(41,531
)
 
(43,516
)
Depreciation and amortization
 
(7,633
)
 
(7,869
)
 
(15,542
)
 
(15,697
)
General and administrative, including management fees to Vornado of $595 and $1,190 in each three and six month period, respectively
 
(2,111
)
 
(1,893
)
 
(3,562
)
 
(3,138
)
Total expenses
 
(29,522
)
 
(31,429
)

(60,635
)

(62,351
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income, net
 
710

 
2,223

 
2,253

 
4,353

Interest and debt expense
 
(6,172
)
 
(10,165
)
 
(14,745
)
 
(20,324
)
Change in fair value of marketable securities
 
1,837

 
(5,278
)
 
(9,558
)
 
(5,240
)
Net income
 
$
12,331

 
$
11,283

 
$
16,903

 
$
29,148

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share - basic and diluted
 
$
2.41

 
$
2.20

 
$
3.30

 
$
5.70

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding 
 
5,120,548

 
5,118,030

 
5,119,623

 
5,117,690

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 June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net income
 
$
12,331

 
$
11,283

 
$
16,903

 
$
29,148

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Change in fair value of interest rate cap
 
(4
)
 
19

 
21

 
32

Comprehensive income
 
$
12,327


$
11,302


$
16,924


$
29,180

See notes to consolidated financial statements (unaudited).

6


ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
(Amounts in thousands, except per share amounts)

 
 
 
 
Additional  
Capital
 
Retained  
Earnings  
 
Accumulated    
Other
Comprehensive Loss
 
Treasury  
Stock
 
Total Equity
 
 
Common Stock
 
 
 
Shares  
 
Amount  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, March 31, 2020
 
5,173

 
$
5,173

 
$
32,365

 
$
197,932

 
$
(24
)
 
$
(368
)
 
$
235,078

Net income
 

 

 

 
12,331

 

 

 
12,331

Dividends paid ($4.50 per common share)
 

 

 

 
(23,034
)
 

 

 
(23,034
)
Change in fair value of interest rate cap
 

 

 

 

 
(4
)
 

 
(4
)
Deferred stock unit grants
 

 

 
600

 

 

 

 
600

Balance, June 30, 2020
 
5,173

 
$
5,173

 
$
32,965

 
$
187,229

 
$
(28
)
 
$
(368
)
 
$
224,971

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, March 31, 2019
 
5,173

 
$
5,173

 
$
31,971

 
$
243,280

 
$
(114
)
 
$
(368
)
 
$
279,942

Net income
 

 

 

 
11,283

 

 

 
11,283

Dividends paid ($4.50 per common share)
 

 

 

 
(23,028
)
 

 

 
(23,028
)
Change in fair value of interest rate cap
 

 

 

 

 
19

 

 
19

Deferred stock unit grants
 

 

 
394

 

 

 

 
394

Balance, June 30, 2019
 
5,173

 
$
5,173

 
$
32,365

 
$
231,535

 
$
(95
)
 
$
(368
)
 
$
268,610


 
 
 
 
Additional  
Capital
 
Retained  
Earnings  
 
Accumulated    
Other
Comprehensive Loss
 
Treasury  
Stock
 
Total Equity
 
 
Common Stock
 
 
 
Shares  
 
Amount  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2019
 
5,173

 
$
5,173

 
$
32,365

 
$
216,394

 
$
(49
)
 
$
(368
)
 
$
253,515

Net income
 

 

 

 
16,903

 

 

 
16,903

Dividends paid ($9.00 per common share)
 

 

 

 
(46,068
)
 

 

 
(46,068
)
Change in fair value of interest rate cap
 

 

 

 

 
21

 

 
21

Deferred stock unit grants
 

 

 
600

 

 

 

 
600

Balance, June 30, 2020
 
5,173


$
5,173


$
32,965


$
187,229


$
(28
)

$
(368
)

$
224,971

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
 
5,173

 
$
5,173

 
$
31,971

 
$
248,443

 
$
(127
)
 
$
(368
)
 
$
285,092

Net income
 

 

 

 
29,148

 

 

 
29,148

Dividends paid ($9.00 per common share)
 

 

 

 
(46,056
)
 

 

 
(46,056
)
Change in fair value of interest rate cap
 

 

 

 

 
32

 

 
32

Deferred stock unit grants
 

 

 
394

 

 

 

 
394

Balance, June 30, 2019
 
5,173


$
5,173


$
32,365


$
231,535


$
(95
)

$
(368
)

$
268,610

See notes to consolidated financial statements (unaudited).

7


ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)
 
Six Months Ended June 30,
CASH FLOWS FROM OPERATING ACTIVITIES
2020
 
2019
Net income
$
16,903

 
$
29,148

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization, including amortization of debt issuance costs
17,792

 
18,278

Straight-lining of rental income
8,820

 
1,313

Write-off of tenant receivables
1,022

 

Stock-based compensation
600

 
394

Change in fair value of marketable securities
9,558

 
5,240

Dividends received in stock
(214
)
 

Changes in operating assets and liabilities:
 
 
 
Tenant and other receivables
(2,646
)
 
(652
)
Other assets
1,687

 
(2,054
)
Amounts due to Vornado
(692
)
 
2,679

Accounts payable and accrued expenses
241

 
(3,246
)
Other liabilities
(315
)
 
(302
)
Net cash provided by operating activities
52,756


50,798

 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Construction in progress and real estate additions
(13,009
)
 
(4,901
)
Net cash used in investing activities
(13,009
)

(4,901
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Dividends paid
(46,068
)
 
(46,056
)
Debt issuance costs
(99
)
 
(14
)
Proceeds from borrowing
145,708

 

Net cash provided by (used in) financing activities
99,541


(46,070
)
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
139,288

 
(173
)
Cash and cash equivalents and restricted cash at beginning of period
313,977

 
289,495

Cash and cash equivalents and restricted cash at end of period
$
453,265


$
289,322

 
 
 
 
 
 
 
 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
 
 
 
Cash and cash equivalents at beginning of period
$
298,063

 
$
283,056

Restricted cash at beginning of period
15,914

 
6,439

Cash and cash equivalents and restricted cash at beginning of period
$
313,977


$
289,495

 
 
 
 
 
 
 
 
Cash and cash equivalents at end of period
$
441,905

 
$
283,948

Restricted cash at end of period
11,360

 
5,374

Cash and cash equivalents and restricted cash at end of period
$
453,265


$
289,322

 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
 
 
Cash payments for interest
$
13,510

 
$
18,107

 
 
 
 
 
 
 
 
NON-CASH TRANSACTIONS
 
 
 
Liability for real estate additions, including $269 and $29 for development fees due to Vornado in 2020 and 2019, respectively
$
3,289

 
$
791

Write-off of fully amortized and/or depreciated assets
367

 

Lease liability arising from the recognition of right-of-use asset

 
5,428

Reclassification of prepaid real estate taxes to construction in progress for property in redevelopment

 
1,466


8


See 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). We have seven properties in the greater New York City metropolitan area.

2.
COVID-19 Pandemic
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Wuhan, China and by March 11, 2020, the World Health Organization had declared it a global pandemic. Many states in the U.S., including New York and New Jersey, implemented stay-at-home orders for all “non-essential” business and activity in an aggressive effort to curb the spread of the virus. In June 2020, the New York City metropolitan area began a phased re-opening of the businesses that were previously ordered to close, with limitations on occupancy and certain other restrictions. It is uncertain as to how long these restrictions will continue or if additional restrictions or closures will be imposed. As a result of the COVID-19 pandemic, the U.S. economy has suffered and there has been significant volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have filed for unemployment.
Our properties, which are all located in the greater New York City metropolitan area, have been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to help curb the spread of the virus. Other than grocery stores and other “essential” businesses, all of our retail tenants closed their stores in March 2020 and although substantially all have re-opened in the latter part of June 2020, when the phased re-opening began, there are limitations on occupancy and other restrictions that limit their ability to resume full operations. Because certain of our redevelopment projects are deemed “non-essential,” they were temporarily paused in March 2020 due to New York State executive orders and resumed under updated safety guidelines once the orders were lifted in June 2020.
In limited circumstances, we have agreed to and may continue to agree to rent deferrals and abatements for certain of our tenants. We have made the policy election available to us based on the Financial Accounting Standards Board’s (“FASB”) guidance for leases during the COVID-19 pandemic, which allows us to continue recognizing rental revenue for rent deferral agreements and to recognize rent abatements as a reduction to rental revenue in the period granted. See Note 4 - Recently Issued Accounting Literature for additional information.
Overall, we have collected approximately 89% of rent billed for the quarter ended June 30, 2020 (92% including rent deferrals under agreements which generally require repayment in monthly installments over a period of time not to exceed twelve months), including 100% for our office tenant, approximately 76% for our retail tenants (83% including rent deferrals) and approximately 96% for our residential tenants.
Based on our assessment of the probability of collecting the rent for certain tenants, we have written off as uncollectible $1,022,000 resulting in a reduction of rental revenues during the three and six months ended June 30, 2020. In addition, we have written off receivables arising from the straight-lining of rents of $4,247,000 related to these tenants resulting in a reduction of rental revenues during the three and six months ended June 30, 2020. Prospectively, revenue recognition for these tenants will be based on actual amounts received.

3.
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, 2019, as filed with the SEC.

9

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


3.
Basis of Presentation - continued
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 six months ended June 30, 2020 are not necessarily indicative of the operating results for the full year.
We operate in one reportable segment. 
4.
Recently Issued Accounting Literature

In March 2020, the FASB issued an update (“ASU 2020-04”) establishing Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform. ASU 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 reference rate reform activities occur. We are currently evaluating the impact of the guidance and our options related to the practical expedients.

In April 2020, the FASB issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC Topic 842, Leases (“ASC 842”). The Q&A states that it would be acceptable to make a policy election regarding rent concessions resulting from COVID-19, which would not require entities to account for these rent concessions as lease modifications when total cash flows resulting from the modified contract are “substantially the same or less” than the cash flows in the original contract. Entities making the election will continue to recognize rental revenue on a straight-line basis for qualifying concessions. During the three months ended June 30, 2020, in limited circumstances, we granted temporary rent deferrals and rent abatements to certain tenants. We have made a policy election in accordance with the Staff Q&A allowing us to not account for these rent concessions as lease modifications. Accordingly, rent abatements are recognized as reductions to “rental revenues” during the period in which they were granted. Rent deferrals result in an increase to “tenant and other receivables” during the deferral period with no impact on rental revenue recognition. For any concessions that do not meet the guidance contained in the Q&A, the modification guidance in accordance with ASC 842 will be applied. See Note 2 - COVID-19 Pandemic for further details.

5.
Revenue Recognition
Our rental revenues include revenues from the leasing of space to tenants at our properties and revenues from parking and tenant services. We have the following revenue recognition policies:  

Lease revenues from the leasing of space to tenants at our properties. Revenues derived from base rent are recognized over the non-cancelable term of the related leases 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 use by the lessee. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease. Revenues derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses are generally recognized in the same period as the related expenses are incurred. As lessor, we have elected to combine the lease components (base and variable rent), non-lease components (reimbursements of common area maintenance expenses) and reimbursement of real estate taxes and insurance expenses from our operating lease agreements and account for the components as a single lease component in accordance with ASC 842.

Parking revenue arising from the rental of parking spaces at our properties.  This income is recognized as the 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.


10

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


5.
Revenue Recognition - continued

The following is a summary of revenue sources for the three and six months ended June 30, 2020 and 2019.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands)
 
2020
 
2019
 
2020
 
2019
Lease revenues
 
$
44,099

 
$
53,834

 
$
96,085

 
$
108,330

Parking revenue
 
636

 
1,361

 
1,940

 
2,856

Tenant services
 
743

 
737

 
1,563

 
1,524

Rental revenues
 
$
45,478

 
$
55,932

 
$
99,588

 
$
112,710



The components of lease revenues for the three and six months ended June 30, 2020 and 2019 are as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands)
 
2020
 
2019
 
2020
 
2019
Fixed lease revenues
 
$
33,590

 
$
35,903

 
$
67,739

 
$
71,632

Variable lease revenues
 
10,509

 
17,931

 
28,346

 
36,698

Lease revenues
 
$
44,099

 
$
53,834

 
$
96,085

 
$
108,330



Bloomberg accounted for revenue of $53,180,000 and $53,676,000 for the six months ended June 30, 2020 and 2019, respectively, representing approximately 53% and 48% 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.
6.
Related Party Transactions
Vornado
As of June 30, 2020, 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) $334,000, 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.
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)


6.
Related Party Transactions - continued
The following is a summary of fees to Vornado under the various agreements discussed above.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands)
 
2020
 
2019
 
2020
 
2019
Company management fees
 
$
700

 
$
700

 
$
1,400

 
$
1,400

Development fees
 
122

 
5

 
268

 
29

Leasing fees
 
9

 
2,017

 
59

 
2,746

Property management, cleaning, engineering and security fees
 
1,139

 
1,297

 
2,445

 
2,444

 
 
$
1,970


$
4,019


$
4,172


$
6,619


As of June 30, 2020, the amounts due to Vornado were $659,000 for management, property management, cleaning, engineering and security fees and $337,000 for development fees. As of December 31, 2019, the amounts due to Vornado were $795,000 for management, property management, cleaning, engineering and security fees; $563,000 for leasing fees; and $68,000 for development fees.
 
7.
Marketable Securities
As of June 30, 2020 and December 31, 2019, we owned 564,612 and 535,265 common shares, respectively, of The Macerich Company (“Macerich”) (NYSE: MAC). The increase in shares owned was due to a dividend received in stock from Macerich during the three months ended June 30, 2020. As of June 30, 2020 and December 31, 2019, the fair value of these shares was $5,065,000 and $14,409,000, respectively, based on Macerich’s closing share price of $8.97 per share and $26.92 per share, respectively. These shares are presented at fair value as “marketable securities” on our consolidated balance sheets and the gains and losses resulting from the mark-to-market of these securities are recognized in current period earnings.

8.
Mortgages Payable

On December 12, 2018, we completed a refinancing of our Rego Park II shopping center in the amount of $252,544,000. The loan is at LIBOR plus 1.35% (1.53% as of June 30, 2020) and matures in December 2025. As of December 31, 2019, we had a participation in the mortgage in the amount of $195,708,000 which for GAAP purposes was netted against the mortgage balance. On February 14, 2020, we reduced our participation in the mortgage loan to $50,000,000 and received cash proceeds of approximately $145,000,000. Therefore, the balance sheet amount of the mortgage loan was $202,544,000 and $56,836,000 as of June 30, 2020 and December 31, 2019, respectively.

12

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


8.
Mortgages Payable - continued
The following is a summary of our outstanding mortgages payable as of June 30, 2020 and December 31, 2019. We may refinance our maturing debt as it comes due or choose to pay it down.
 
 
 
 
 
 
Balance at
(Amounts in thousands)
 
Maturity
 
Interest Rate at June 30, 2020
 
June 30, 2020
 
December 31, 2019
First mortgages secured by:
 
 
 
 
 
 
 
 
731 Lexington Avenue, retail condominium(1)
 
Aug. 05, 2020
 
1.57%
 
$
350,000

 
$
350,000

Paramus
 
Oct. 04, 2021
 
4.72%
 
68,000

 
68,000

731 Lexington Avenue, office condominium(2)
 
Jun. 11, 2024
 
1.09%
 
500,000

 
500,000

Rego Park II shopping center(3)
 
Dec. 12, 2025
 
1.53%
 
202,544

 
56,836

Total
 
1,120,544


974,836

Deferred debt issuance costs, net of accumulated amortization of $16,605 and $14,362, respectively
 
 
 
 
 
(1,731
)
 
(3,875
)
 
 
 
 
 
 
$
1,118,813


$
970,961

                                                                               
(1)
Interest at LIBOR plus 1.40%. This loan matures on August 5, 2020; we are in discussions with the lender.
(2)
Interest at LIBOR plus 0.90%. Maturity represents the extended maturity based on our unilateral right to extend.
(3)
Interest at LIBOR plus 1.35%. The amount of this loan is net of our loan participation of $50,000 and $195,708 as of June 30, 2020 and December 31, 2019, respectively.

9.
Stock-Based Compensation
We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Our 2016 Omnibus Stock Plan (the “Plan”) provides for grants of incentive and non-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.
In May 2020, we granted each of the members of our Board of Directors 329 DSUs with a market value of $75,000 per grant. The grant date fair value of these awards was $56,250 per grant, or $450,000 in the aggregate, in accordance with ASC 718. In addition, 876 DSUs, constituting an initial award with a market value of $200,000, were granted to a newly appointed Director. The grant date fair value of this award was $150,000 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 June 30, 2020, there were 14,916 DSUs outstanding and 490,871 shares were available for future grant under the Plan.

10.
Fair Value Measurements

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.

13

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


10.
Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value
Financial assets measured at fair value on our consolidated balance sheets as of June 30, 2020 and December 31, 2019, 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 June 30, 2020 and December 31, 2019. There were no financial liabilities measured at fair value as of June 30, 2020 and December 31, 2019.
 
 
As of June 30, 2020
(Amounts in thousands)
 
Total      
 
Level 1      
 
Level 2      
 
Level 3      
Marketable securities
 
$
5,065

 
$
5,065

 
$

 
$

 
 
As of December 31, 2019
(Amounts in thousands)
 
Total
 
Level 1
 
Level 2
 
Level 3
Marketable securities
 
$
14,409

 
$
14,409

 
$

 
$


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 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 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, and is classified as Level 2. The table below summarizes the carrying amounts and fair values of these financial instruments as of June 30, 2020 and December 31, 2019.
 
 
As of June 30, 2020
 
As of December 31, 2019
(Amounts in thousands)
 
Carrying  Amount
 
Fair    
Value
 
Carrying    
Amount
 
Fair    
Value
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Cash equivalents
 
$
406,109

 
$
406,109

 
$
263,688

 
$
263,688

Liabilities:
 
 
 
 
 
 
 
 
Mortgages payable (excluding deferred debt  issuance costs, net)
 
$
1,120,544

 
$
1,098,000

 
$
974,836

 
$
974,000

 

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 $1,000,000 includes communicable disease coverage, 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 Act of 2002, as amended to date and which has been extended through December 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 $268,000 deductible and 20% of the balance of a covered loss, and the Federal government is responsible for the remaining 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 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.

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


11.
Commitments and Contingencies - continued
Our mortgage loans are non-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.
Paramus
In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease contains a purchase option in October 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 4.72%, which matures in October 2021. The annual triple-net rent is the sum of $700,000 plus the amount of interest 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.
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 the 195,000 square foot store that Sears leased 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 $4,000,000 and future damages it estimated would not be less than $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. On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief resulting in an automatic stay of this case.
Kings Plaza Transfer Tax
In 2012, we sold the Kings Plaza Regional Shopping Center (“Kings Plaza”) and paid real property transfer taxes to New York City in connection with the sale. In 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of Determination to us assessing an additional New York City real property transfer tax amount, including interest.
In 2014, in a case with similar facts, the NYC DOF issued a Notice of Determination to a Vornado joint venture assessing an additional New York City real property transfer tax amount, including interest. In January 2017, a New York City administrative law judge made a determination upholding the Vornado joint venture’s position that such additional real property transfer taxes were not due. On February 16, 2018, the New York City Tax Appeals Tribunal (the “Tribunal”) overturned the January 2017 determination. The Vornado joint venture appealed the Tribunal’s decision to the Appellate Division of the Supreme Court of the
State of New York and on April 25, 2019, the Tribunal’s decision was unanimously upheld. The Vornado joint venture filed a motion to reargue the Appellate Division’s decision or for leave to appeal to the New York State Court of Appeals. On December 12, 2019, that motion was denied and the case can no longer be appealed. Based on the precedent of the Tribunal’s decision, we paid the potential additional real property transfer taxes of $23,797,000 ($15,874,000 of real property transfer tax and $7,923,000 of interest) on April 5, 2018. We are currently evaluating our options relating to this matter.
Letters of Credit
Approximately $1,030,000 of standby letters of credit were issued and outstanding as of June 30, 2020.
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 position, results of operations or cash flows. 

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



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 six months ended June 30, 2020 and 2019.    
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands, except share and per share amounts)
 
2020
 
2019
 
2020
 
2019
Net income
 
$
12,331

 
$
11,283

 
$
16,903

 
$
29,148

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding – basic and diluted
 
5,120,548

 
5,118,030

 
5,119,623