What changed in this filing

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Item 1. Financial Statements

2020-08-03 compared with 2020-05-04 · 125 added, 81 removed, 290 unchanged (42% of the section changed)

4 unchanged sentences

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

March 31, 2020

June 30, 2020

December 31, 2019

37 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Rental revenues

1 unchanged sentence

Depreciation and amortization

General and administrative, including management fees to Vornado of $595 in each period

General and administrative, including management fees to Vornado of $595 and $1,190 in each three and six month period, respectively

Total expenses

9 unchanged sentences

(Amounts in thousands)

Three Months Ended March 31,

Other comprehensive income:

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive (loss) income:

Change in fair value of interest rate cap

6 unchanged sentences

Comprehensive Loss

Three Months Ended March 31, 2020

Balance, December 31, 2019

Three Months Ended June 30, 2020

Balance, March 31, 2020

Dividends paid ($4.50 per common share)

Change in fair value of interest rate cap

Deferred stock unit grants

Balance, June 30, 2020

Three Months Ended June 30, 2019

Balance, March 31, 2019

Three Months Ended March 31.

Dividends paid ($4.50 per common share)

Change in fair value of interest rate cap

Deferred stock unit grants

Balance, June 30, 2019

Comprehensive Loss

Six Months Ended June 30, 2020

Balance, December 31, 2019

1 unchanged sentence

Change in fair value of interest rate cap

Balance, March 31, 2019

Deferred stock unit grants

Balance, June 30, 2020

Six Months Ended June 30, 2019

Balance, December 31, 2018

Dividends paid ($9.00 per common share)

Change in fair value of interest rate cap

Deferred stock unit grants

Balance, June 30, 2019

See notes to consolidated financial statements (unaudited).

3 unchanged sentences

(Amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

2 unchanged sentences

Straight-lining of rental income

Write-off of tenant receivables

Stock-based compensation

Change in fair value of marketable securities

Dividends received in stock

Changes in operating assets and liabilities:

Tenant and other receivables, net

Tenant and other receivables

Amounts due to Vornado

10 unchanged sentences

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents and restricted cash

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

Cash and cash equivalents and restricted cash at beginning of period

16 unchanged sentences

Alexander’s, Inc.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Alexander’s, Inc.

ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties.

5 unchanged sentences

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, have implemented stay-at-home orders for all “non-essential” business and activity in an aggressive effort to curb the spread of the virus.

Consequently, the U.S.

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.

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.

Based on their percentage of the Company’s monthly revenue, approximately 21 % of our retail tenants have closed their stores and approximately 12 % have not paid their April 2020 rent.

While we believe our tenants are required to pay rent under their leases, we are considering temporary rent relief on a case-by-case basis.

The office space at our 731 Lexington Avenue property remains open and our tenant, Bloomberg L.P.

(“Bloomberg”) continues to pay rent.

Rent collections at our residential property, The Alexander apartment tower, have not been significantly impacted to date.

Because certain of our redevelopment projects are deemed “non-essential,” they have been temporarily paused due to New York State executive orders.

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.

Basis of Presentation

4 unchanged sentences

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.

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, 2020 are not necessarily indicative of the operating results for the full year.

We operate in one reportable segment.

ALEXANDER’S, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Basis of Presentation - continued

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.

Recently Issued Accounting Literature

In March 2020, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2020-04”) establishing Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform.

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.

2 unchanged sentences

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.

Rent abatements would be recognized as reductions to revenue during the period in which they were granted.

Rent deferrals would result in an increase to accounts receivable during the deferral period with no impact on rental revenue recognition.

We are currently evaluating our options related to this policy election.

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.

Revenue Recognition

11 unchanged sentences

This revenue is recognized as the services are transferred in accordance with ASC 606.

The following is a summary of revenue sources for the three months ended March 31, 2020 and 2019.

Three Months Ended March 31,

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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)

3 unchanged sentences

Rental revenues

The components of lease revenues for the three months ended March 31, 2020 and 2019 are as follows:

Three Months Ended March 31,

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)

2 unchanged sentences

Lease revenues

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Revenue Recognition - continued

Bloomberg accounted for revenue of $ 27,115,000 and $ 27,004,000 for the three months ended March 31, 2020 and 2019, respectively, representing approximately 50 % and 48 % of our total revenues in each period, respectively.

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.

3 unchanged sentences

Related Party Transactions

As of March 31, 2020 , Vornado owned 32.4 % of our outstanding common stock.

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.

6 unchanged sentences

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, 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.

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.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related Party Transactions - continued

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Amounts in thousands)

2 unchanged sentences

Property management, cleaning, engineering and security fees

As of March 31, 2020 , the amounts due to Vornado were $ 705,000 for management, property management, cleaning, engineering and security fees;

$ 215,000 for development fees;

and $ 50,000 for leasing fees.

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;

1 unchanged sentence

and $ 68,000 for development fees.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Marketable Securities

As of March 31, 2020 and December 31, 2019, we owned 535,265 common shares of The Macerich Company (“Macerich”) (NYSE:

These shares have an economic cost of $ 56.05 per share, or $ 30,000,000 in the aggregate.

As of March 31, 2020 and December 31, 2019, the fair value of these shares was $ 3,014,000 and $ 14,409,000 , respectively, based on Macerich’s closing share price of $ 5.63 per share and $ 26.92 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 on our consolidated balance sheets and gains and losses resulting from the mark-to-market of these securities are recognized in current period earnings.

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:

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.

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 % ( 2.29 % as of March 31, 2020) and matures in December 2025.

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 March 31, 2020 and December 31, 2019, respectively.

The following is a summary of our outstanding mortgages payable as of March 31, 2020 and December 31, 2019.

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.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

(Amounts in thousands)

Interest Rate at March 31, 2020

March 31, 2020

Interest Rate at June 30, 2020

June 30, 2020

December 31, 2019

5 unchanged sentences

Interest at LIBOR plus 1.40 % .

Maturity is August 2020 plus two one-year renewal options subject to financial covenants which we will not satisfy.

This loan matures on August 5, 2020;

we are in discussions with the lender.

Interest at LIBOR plus 0.90 % .

1 unchanged sentence

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 March 31, 2020 and December 31, 2019, respectively.

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.

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.

Fair Value Measurements

ASC 820 defines fair value and establishes a framework for measuring fair value.

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:

9 unchanged sentences

Financial Assets and Liabilities Measured at Fair Value

Financial assets measured at fair value on our consolidated balance sheets as of March 31, 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 March 31, 2020 and December 31, 2019.

There were no financial liabilities measured at fair value as of March 31, 2020 and December 31, 2019.

As of March 31, 2020

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)

7 unchanged sentences

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 March 31, 2020 and December 31, 2019.

As of March 31, 2020

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

3 unchanged sentences

Mortgages payable (excluding deferred debt issuance costs, net)

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Commitments and Contingencies

We maintain general liability insurance with limits of $ 300,000,000 per occurrence and per property, 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.

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.

6 unchanged sentences

We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Commitments and Contingencies - continued

Our mortgage loans are non-recourse to us and contain customary covenants requiring us to maintain insurance.

16 unchanged sentences

On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief resulting in an automatic stay of this case.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Commitments and Contingencies - continued

Kings Plaza Transfer Tax

11 unchanged sentences

Letters of Credit

Approximately $ 1,030,000 of standby letters of credit were issued and outstanding as of March 31, 2020 .

Approximately $ 1,030,000 of standby letters of credit were issued and outstanding as of June 30, 2020 .

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.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Earnings Per Share

2 unchanged sentences

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, 2020 and 2019.

Three Months Ended March 31,

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)

5 unchanged sentences

We have reviewed the accompanying consolidated balance sheet of Alexander’s, Inc.

and subsidiaries (the “Company”) as of March 31, 2020, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for the three-month periods ended March 31, 2020 and 2019, and the related notes (collectively referred to as the “interim financial information”).

and subsidiaries (the “Company”) as of June 30, 2020, the related consolidated statements of income, comprehensive income and changes in equity, for the three-month and six-month periods ended June 30, 2020 and 2019, and of cash flows for the six-month periods ended June 30, 2020 and 2019, and the related notes (collectively referred to as the “interim financial information”).

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

12 unchanged sentences

New York, New York

August 3, 2020

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements