ALEXANDERS INC 10-Q

Item 1. Financial Statements ALEXANDER’S, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Amounts in thousands, except share and per share amounts) ASSETS March 31, 2021 December 31, 2020 Real estate, at cost: Land $ 44,971 $ 44,971 Buildings and leasehold improvements 1,009,761 1,014,311 Development and construction in progress 12,405 11,761 Total 1,067,137 1,071,043 Accumulated depreciation and amortization ( 351,752 ) ( 350,122 ) Real estate, net 715,385 720,921 Cash and cash equivalents 459,384 428,710 Restricted cash 21,132 21,167 Marketable securities 6,606 6,024 Tenant and other receivables 6,830 8,116 Receivable arising from the straight-lining of rents 142,637 145,274 Deferred leasing costs, net, including unamortized leasing fees to Vornado of $ 27,221 and $ 27,851 , respectively 35,617 36,524 Other assets 23,644 37,402 $ 1,411,235 $ 1,404,138 LIABILITIES AND EQUITY Mortgages payable, net of deferred debt issuance costs $ 1,156,517 $ 1,156,170 Amounts due to Vornado 1,412 1,516 Accounts payable and accrued expenses 42,996 35,342 Other liabilities 7,052 7,882 Total liabilities 1,207,977 1,200,910 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 32,965 Retained earnings 160,997 166,165 Accumulated other comprehensive income (loss) 4,491 ( 707 ) 203,626 203,596 Treasury stock: 66,160 shares, at cost ( 368 ) ( 368 ) Total equity 203,258 203,228 $ 1,411,235 $ 1,404,138 See notes to consolidated financial statements (unaudited). 4 ALEXANDER’S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Amounts in thousands, except share and per share amounts) Three Months Ended March 31, 2021 2020 REVENUES Rental revenues $ 56,153 $ 54,110 EXPENSES Operating, including fees to Vornado of $ 1,560 and $ 1,383 , respectively ( 23,800 ) ( 21,753 ) Depreciation and amortization ( 8,542 ) ( 7,909 ) General and administrative, including management fees to Vornado of $ 595 in each period ( 1,543 ) ( 1,451 ) Total expenses ( 33,885 ) ( 31,113 ) Interest and other income, net 172 1,543 Interest and debt expense ( 5,140 ) ( 8,573 ) Change in fair value of marketable securities 582 ( 11,395 ) Net income $ 17,882 $ 4,572 Net income per common share - basic and diluted $ 3.49 $ 0.89 Weighted average shares outstanding 5,122,206 5,118,698 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 March 31, 2021 2020 Net income $ 17,882 $ 4,572 Other comprehensive income: Change in fair value of interest rate derivatives 5,198 25 Comprehensive income $ 23,080 $ 4,597 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) Income Treasury Stock Total Equity Common Stock Shares Amount Three Months Ended March 31, 2021 Balance, December 31, 2020 5,173 $ 5,173 $ 32,965 $ 166,165 $ ( 707 ) $ ( 368 ) $ 203,228 Net income — — — 17,882 — — 17,882 Dividends paid ($ 4.50 per common share) — — — ( 23,050 ) — — ( 23,050 ) Change in fair value of interest rate derivatives — — — — 5,198 — 5,198 Balance, March 31, 2021 5,173 $ 5,173 $ 32,965 $ 160,997 $ 4,491 $ ( 368 ) $ 203,258 Three Months Ended March 31, 2020 Balance, December 31, 2019 5,173 $ 5,173 $ 32,365 $ 216,394 $ ( 49 ) $ ( 368 ) $ 253,515 Net income — — — 4,572 — — 4,572 Dividends paid ($ 4.50 per common share) — — — ( 23,034 ) — — ( 23,034 ) Change in fair value of interest rate derivatives — — — — 25 — 25 Balance, March 31, 2020 5,173 $ 5,173 $ 32,365 $ 197,932 $ ( 24 ) $ ( 368 ) $ 235,078 See notes to consolidated financial statements (unaudited). 7 ALEXANDER’S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Amounts in thousands) Three Months Ended March 31, CASH FLOWS FROM OPERATING ACTIVITIES 2021 2020 Net income $ 17,882 $ 4,572 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including amortization of debt issuance costs 8,958 9,202 Straight-lining of rental income 2,637 1,935 Change in fair value of marketable securities ( 582 ) 11,395 Changes in operating assets and liabilities: Tenant and other receivables 1,286 1,225 Other assets 14,278 ( 12,707 ) Amounts due to Vornado 430 ( 597 ) Accounts payable and accrued expenses 9,240 10,166 Other liabilities ( 163 ) ( 156 ) Net cash provided by operating activities 53,966 25,035 CASH FLOWS FROM INVESTING ACTIVITIES Construction in progress and real estate additions ( 3,842 ) ( 6,961 ) Return of short-term investment 3,600 — Net cash used in investing activities ( 242 ) ( 6,961 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid ( 23,050 ) ( 23,034 ) Debt issuance costs ( 35 ) ( 79 ) Proceeds from borrowing — 145,708 Net cash (used in) provided by financing activities ( 23,085 ) 122,595 Net increase in cash and cash equivalents and restricted cash 30,639 140,669 Cash and cash equivalents and restricted cash at beginning of period 449,877 313,977 Cash and cash equivalents and restricted cash at end of period $ 480,516 $ 454,646 RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of period $ 428,710 $ 298,063 Restricted cash at beginning of period 21,167 15,914 Cash and cash equivalents and restricted cash at beginning of period $ 449,877 $ 313,977 Cash and cash equivalents at end of period $ 459,384 $ 438,342 Restricted cash at end of period 21,132 16,304 Cash and cash equivalents and restricted cash at end of period $ 480,516 $ 454,646 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash payments for interest $ 4,565 $ 7,805 NON-CASH TRANSACTIONS Liability for real estate additions, including $ 33 and $ 146 for development fees due to Vornado in 2021 and 2020, respectively $ 2,913 $ 3,209 Write-off of fully depreciated assets 5,628 367 See notes to consolidated financial statements (unaudited). 8 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). We have seven properties in the greater New York City metropolitan area. 2. COVID-19 Pandemic Our business has been adversely affected by the ongoing COVID-19 pandemic. Although substantially all our retail tenants are currently open and operating, there are limitations on occupancy and other restrictions that affect their ability to resume full operations and impact their financial health. 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 for qualifying deferrals and abatements. Overall, we have collected approximately 95 % of the rent due from our tenants for the quarter ended March 31, 2021, including 100 % from our office tenant, approximately 87 % from our retail tenants, and approximately 99 % from our residential tenants. 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 and all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These 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, 2020, as filed with the SEC. We have made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 2021 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. 9 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 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 Topic 842, Leases (“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. Under ASC 842, we must assess on an individual lease basis whether it is probable that we will collect substantially all of the future lease payments. We consider the tenant’s payment history and current credit status when assessing collectability. When collectability is not deemed probable, we write-off the tenant’s receivables, including straight-line rent receivable, and limit lease income to cash received. We recognize changes in the collectability assessment of our operating leases as adjustments to rental revenues. The following is a summary of revenue sources for the three months ended March 31, 2021 and 2020. Three Months Ended March 31, (Amounts in thousands) 2021 2020 Lease revenues $ 54,411 $ 51,986 Parking revenue 796 1,304 Tenant services 946 820 Rental revenues $ 56,153 $ 54,110 The components of lease revenues for the three months ended March 31, 2021 and 2020 are as follows: Three Months Ended March 31, (Amounts in thousands) 2021 2020 Fixed lease revenues $ 33,810 $ 34,149 Variable lease revenues 20,601 17,837 Lease revenues $ 54,411 $ 51,986 Bloomberg accounted for revenue of $ 28,757,000 and $ 27,115,000 for the three months ended March 31, 2021 and 2020, respectively, representing approximately 51 % and 50 % of our total revenues in each period, respectively. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data. 10 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 6. Related Party Transactions Vornado As of March 31, 2021, Vornado owned 32.4 % of our outstanding common stock. We are managed by, and our properties are leased and developed by, Vornado, pursuant to the agreements described below, which expire in March of each year and are automatically renewable. Management and Development Agreements We pay Vornado an annual management fee equal to the sum of (i) $ 2,800,000 , (ii) 2 % of gross revenue from the Rego Park II shopping center, (iii) $ 0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) $ 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. The following is a summary of fees to Vornado under the various agreements discussed above. Three Months Ended March 31, (Amounts in thousands) 2021 2020 Company management fees $ 700 $ 700 Development fees 33 146 Leasing fees 411 50 Property management, cleaning, engineering and security fees 1,432 1,306 $ 2,576 $ 2,202 As of March 31, 2021, the amounts due to Vornado were $ 951,000 for management, property management, cleaning, engineering and security fees; $ 428,000 for leasing fees; and $ 33,000 for development fees. As of December 31, 2020, the amounts due to Vornado were $ 845,000 for management, property management, cleaning, engineering and security fees; $ 557,000 for development fee; and $ 114,000 for leasing fees. 7. Marketable Securities As of March 31, 2021 and December 31, 2020, we owned 564,612 common shares of The Macerich Company (“Macerich”) (NYSE: MAC). As of March 31, 2021 and December 31, 2020, the fair value of these shares was $ 6,606,000 and $ 6,024,000 , respectively, based on Macerich’s closing share price of $ 11.70 per share and $ 10.67 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. 11 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, 2021 and December 31, 2020. 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 March 31, 2021 March 31, 2021 December 31, 2020 First mortgages secured by: Paramus Oct. 04, 2021 4.72 % $ 68,000 $ 68,000 731 Lexington Avenue, office condominium (1) Jun. 11, 2024 1.01 % 500,000 500,000 731 Lexington Avenue, retail condominium (2) Aug. 05, 2025 1.50 % 300,000 300,000 Rego Park II shopping center (3) Dec. 12, 2025 1.46 % 202,544 202,544 The Alexander apartment tower Nov. 01, 2027 2.63 % 94,000 94,000 Total 1,164,544 1,164,544 Deferred debt issuance costs, net of accumulated amortization of $ 13,416 and $ 13,034 , respectively ( 8,027 ) ( 8,374 ) $ 1,156,517 $ 1,156,170 (1) Interest at LIBOR plus 0.90 %. Maturity represents the extended maturity based on our unilateral right to extend. (2) Interest at LIBOR plus 1.40 % which is subject to an interest rate swap with a fixed rate of 1.72 %. (3) Interest at LIBOR plus 1.35 %. The loan balance of $ 252,544 is presented net of our participation of $ 50,000 as of March 31, 2021 and December 31, 2020. On April 7, 2021, we used our participation in this loan to reduce the loan balance to $ 202,544 . 9. 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. Financial Assets and Liabilities Measured at Fair Value Financial assets measured at fair value on our consolidated balance sheet as of March 31, 2021 consist of marketable securities and an interest rate swap, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of March 31, 2021. There were no financial liabilities measured at fair value as of March 31, 2021. As of March 31, 2021 (Amounts in thousands) Total Level 1 Level 2 Level 3 Assets: Marketable securities $ 6,606 $ 6,606 $ — $ — Interest rate swap (included in other assets) 4,516 — 4,516 — $ 11,122 $ 6,606 $ 4,516 $ — 12 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 9. Fair Value Measurements - continued Financial assets measured at fair value on our consolidated balance sheet as of December 31, 2020 consist of marketable securities, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of December 31, 2020. Financial liabilities measured at fair value as of December 31, 2020 consist of an interest rate swap, which is presented in the table below based on its level in the fair value hierarchy. As of December 31, 2020 (Amounts in thousands) Total Level 1 Level 2 Level 3 Assets: Marketable securities $ 6,024 $ 6,024 $ — $ — Liabilities: Interest rate swap (included in other liabilities) $ 667 $ — $ 667 $ — 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 March 31, 2021 and December 31, 2020. As of March 31, 2021 As of December 31, 2020 (Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Assets: Cash equivalents $ 423,078 $ 423,078 $ 393,070 $ 393,070 Liabilities: Mortgages payable (excluding deferred debt issuance costs, net) $ 1,164,544 $ 1,129,000 $ 1,164,544 $ 1,130,000 10. 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 and excluding communicable disease coverage. Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance 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 $ 275,000 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. 13 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 10. 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 on October 4, 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. Letters of Credit Approximately $ 960,000 of standby letters of credit were issued and outstanding as of March 31, 2021. 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. 11. 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 months ended March 31, 2021 and 2020. Three Months Ended March 31, (Amounts in thousands, except share and per share amounts) 2021 2020 Net income $ 17,882 $ 4,572 Weighted average shares outstanding – basic and diluted 5,122,206 5,118,698 Net income per common share – basic and diluted $ 3.49 $ 0.89 14 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Alexander’s, Inc. Results of Review of Interim Financial Information We have reviewed the accompanying consolidated balance sheet of Alexander’s, Inc. and subsidiaries (the “Company”) as of March 31, 2021, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the three-month periods ended March 31, 2021 and 2020, 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. We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 16, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Basis for Review Results This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. /s/ DELOITTE & TOUCHE LLP New York, New York May 3, 2021 15