What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-13 compared with 2022-02-14 · 120 added, 90 removed, 476 unchanged (31% of the section changed)

18 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 14, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in I nternal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 13, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

17 unchanged sentences

The Company’s undiscounted future cash flow analyses require management to make significant estimates, including estimated terminal values determined using appropriate capitalization rates.

future cash flow analyses required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

Given the Company’s estimated capitalization rates used in the evaluation of impairment of real estate assets is a significant assumption made by management, performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flow analyses required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

23 unchanged sentences

Restricted cash 19,545 19,966

Marketable securities — 6,024

Investments in U.S.

Treasury bills 266,963 —

Tenant and other receivables 4,705 6,385

23 unchanged sentences

Retained earnings 172,243 206,875

Accumulated other comprehensive income (loss) 7,494 ( 707 )

Accumulated other comprehensive income 25,586 7,494

236,867 252,957

15 unchanged sentences

Depreciation and amortization ( 29,797 ) ( 32,938 ) ( 32,357 )

General and administrative, including management fees to Vornado of $ 2,380

in each year ( 5,924 ) ( 6,307 ) ( 5,772 )

General and administrative, including management fees to Vornado of $ 2,440 , $ 2,380 and $ 2,380 , respectively

( 6,106 ) ( 5,924 ) ( 6,307 )

Total expenses ( 126,349 ) ( 129,951 ) ( 127,067 )

20 unchanged sentences

Other comprehensive income (loss):

Change in fair value of interest rate derivatives 8,201 ( 658 ) 78

Change in fair value of interest rate derivatives and other 18,092 8,201 ( 658 )

Comprehensive income $ 75,724 $ 141,131 $ 41,281

27 unchanged sentences

Change in fair value of interest rate derivatives

and other — — — — 18,092 — 18,092

Deferred stock unit grants — — 450 — — — 450

14 unchanged sentences

Stock-based compensation expense 450 450 600

Net gains on sale of real estate (including $ 2,348 from discontinued operations)

Net gains on sale of real estate (2021 includes $ 2,348 from discontinued operations)

— ( 72,298 ) —

1 unchanged sentence

Dividends received in stock — — ( 214 )

Other non-cash adjustments ( 2,928 ) — —

Change in operating assets and liabilities:

7 unchanged sentences

Construction in progress and real estate additions ( 14,386 ) ( 19,520 ) ( 32,460 )

Purchase of U.S.

Treasury bills ( 364,238 ) — —

Proceeds from maturities of U.S.

Treasury bills 99,358 — —

Proceeds from sales of real estate — 81,871 —

1 unchanged sentence

Proceeds from sale of marketable securities — 9,506 —

Net cash provided by (used in) investing activities 75,457 ( 32,460 ) ( 9,449 )

Net cash (used in) provided by investing activities ( 279,266 ) 75,457 ( 32,460 )

CASH FLOWS FROM FINANCING ACTIVITIES

4 unchanged sentences

Net cash (used in) provided by financing activities ( 92,310 ) ( 160,294 ) 90,294

Net increase in cash and cash equivalents and restricted cash 33,628 135,900 24,482

Net (decrease) increase in cash and cash equivalents and restricted cash ( 269,027 ) 33,628 135,900

Cash and cash equivalents and restricted cash at beginning of year 483,505 449,877 313,977

7 unchanged sentences

Cash and cash equivalents and restricted cash at end of year $ 214,478 $ 483,505 $ 449,877

See notes to consolidated financial statements.

ALEXANDER’S, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Amounts in thousands)

Year Ended December 31,

2022 2021 2020

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest $ 18,568 $ 22,476 $ 34,669

Cash payments for interest, net of amounts capitalized $ 25,934 $ 18,568 $ 22,476

NON-CASH TRANSACTIONS

Additional estimated lease liability arising from the recognition of right-of-use asset $ 16,099 $ — $ —

Liability for real estate additions, including $ 141 and $ 489 for development fees due to

1 unchanged sentence

Write-off of fully amortized and/or depreciated assets 23 5,628 876

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

redevelopment — — 1,466

Lease liability arising from the recognition of right-of-use asset — — 5,428

See notes to consolidated financial statements.

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.

2 unchanged sentences

We are managed by, and our properties are leased and developed by, Vornado Realty Trust (“Vornado”) (NYSE:

We have six properties in the New York City metropolitan area consisting of:

We have six properties in New York City consisting of:

Operating properties

4 unchanged sentences

The Home Depot ( 83,000 square feet) is the principal retail tenant;

• Rego Park I, a 338,000 square foot shopping center, located on Queens Boulevard and 63 rd Road in Queens.

• Rego Park I, a 338,000 square foot shopping center, is located on Queens Boulevard and 63 rd Road in Queens.

The center is anchored by a 112,000 square foot IKEA, a 50,000 square foot Burlington, a 46,000 square foot Bed Bath & Beyond and a 36,000 square foot Marshalls.

• Rego Park II, a 615,000 square foot shopping center, adjacent to the Rego Park I shopping center in Queens.

On December 3, 2022, IKEA closed its store at the property.

IKEA remains obligated under its lease which expires in December 2030.

The lease includes a right to terminate effective no earlier than March 2026, subject to payment of rent through the termination date and an additional termination payment equal to the lesser of $ 10,000,000 or the amount of rent due under the remaining term;

• Rego Park II, a 615,000 square foot shopping center, is located adjacent to the Rego Park I shopping center in Queens.

The center is anchored by a 145,000 square foot Costco and a 133,000 square foot Kohl’s, which has been subleased;

1 unchanged sentence

• Flushing, a 167,000 square foot building, located on Roosevelt Avenue and Main Street in Queens, that is sub-leased to New World Mall LLC.

The property is ground leased through January 2027 with one 10 -year extension option.

Property to be developed

• Rego Park III, a 140,000 square foot land parcel adjacent to the Rego Park II shopping center in Queens, at the intersection of Junction Boulevard and the Horace Harding Service Road.

We have determined that our properties have similar economic characteristics and meet the criteria that permit the properties to be aggregated into one reportable segment (the leasing, management, development and redeveloping of properties in the New York City metropolitan area).

Our chief operating decision-maker assesses and measures segment operating results based on a performance measure referred to as net operating income at the individual operating segment.

9 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

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 .

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 (“ASC 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

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

In December 2022 the FASB issued accounting standard update 2022-06 that defers the sunset of ASC 848 from December 31, 2022 to December 31, 2024.

We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

3 unchanged sentences

ASU 2021-05 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted.

We adopted this update on January 1, 2022 and it did not have a material impact on our consolidated financial statements.

We adopted this update effective January 1, 2022 which did not have an impact on our consolidated financial statements.

Real Estate – Real estate is carried at cost, net of accumulated depreciation and amortization.

33 unchanged sentences

We recognize changes in the collectability assessment of our operating leases as adjustments to rental revenues.

Cash and Cash Equivalents – Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value, due to their short-term maturities.

The majority of our cash and cash equivalents consist of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit, (ii) United States Treasury Bills, (iii) money market funds, which invest in United States Treasury Bills and (iv) certificates of deposit placed through an account registry service (“CDARS”).

Cash and Cash Equivalents – Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less when purchased and are carried at cost, which approximates fair value, due to their short-term maturities.

The majority of our cash and cash equivalents consist of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit, (ii) money market funds, which invest in U.S.

Treasury bills and (iii) certificates of deposit placed through an account registry service (“CDARS”).

To date we have not experienced any losses on our invested cash.

Restricted Cash – Restricted cash primarily consists of security deposits and other cash escrowed under loan agreements, including for debt service, real estate taxes, property insurance and capital improvements.

Restricted Cash – Restricted cash primarily consists of security deposits and other cash escrowed under loan and interest rate derivative agreements, including for debt service, real estate taxes, property insurance and capital improvements.

Investments in U.S.

Treasury Bills – Treasury bills are short-term debt obligations with maturities of one year or less backed by the U.S.

Treasury Department.

Treasury bills yield no interest, but are issued at a discount on their redemption prices.

We classify our investments in U.S.

Treasury bills as available-for-sale debt investments, recorded at fair value with any changes in fair value during the period recorded in other comprehensive income.

These investments are considered Level 1 within the fair value hierarchy as they are highly liquid and are traded in an active secondary market.

We use quoted market prices to determine the fair value of our investments in U.S.

Treasury bills.

Deferred Charges – Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest and debt expense.

Direct costs related to leasing activities are capitalized and amortized on a straight-line basis over the lives of the related leases.

Direct and incremental costs related to successful leasing activities are capitalized and amortized on a straight-line basis over the lives of the related leases.

All other deferred charges are amortized on a straight-line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.

2 unchanged sentences

We distribute to our stockholders 100 % of our taxable income and therefore, no provision for Federal income taxes is required.

Dividends distributed for the year ended December 31, 2021 were characterized, for federal income tax purposes, as 58.3 % ordinary income and 41.7 % long-term capital gain income.

Dividends distributed for the year ended December 31, 2022 were characterized, for federal income tax purpos es, as 100.0 % ordi nary income.

Dividends distributed for the year ended December 31, 2021 were characterized, for federal income tax purposes, as 58.3 % ordinary income and 41.7 % of long-term capital gain income.

Dividends distributed for the year ended December 31, 2020 were characterized, for federal income tax purposes, as 100.0 % ordinary income.

Dividends distributed for the year ended December 31, 2019 were categorized, for federal income tax purposes, as 99.6 % ordinary income and 0.4 % long-term capital gain income.

ALEXANDER’S, INC.

22 unchanged sentences

Net proceeds from the sale were $ 9,291,000 after closing costs and the financial statement gain was $ 9,124,000 .

On October 4, 2021, we sold 30.3 acres of land located in Paramus, New Jersey (“Paramus Property”) to IKEA Property, Inc.

(“IKEA”), the tenant at the property, for $ 75,000,000 , pursuant to IKEA’s purchase option contained in the lease.

On October 4, 2021, we sold 30.3 acres of land located in Paramus, New Jersey (“Paramus Property”) to IKEA Property, Inc., the tenant at the property, for $ 75,000,000 , pursuant to the tenant’s purchase option contained in the lease.

Net proceeds from the sale were $ 4,580,000 after closing costs and the repayment of the $ 68,000,000 mortgage loan.

The financial statement gain was $ 60,826,000 , which was recognized in the fourth quarter of 2021.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

RELATED PARTY TRANSACTIONS

As of December 31, 2021, Vornado owne d 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.

As of December 31, 2022, 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 ren ewable.

Steven Roth is the Chairman of our Board of Directors and Chief Executive Officer, the Managing General Partner of Interstate Properties (“Interstate”), a New Jersey general partnership, and the Chairman of the Board of Trustees and Chief Executive Officer of Vornado.

2 unchanged sentences

(who are also directors of the Company and trustees of Vornado) owned, in the aggregate, 26.0 % of our outstanding common stock, in addition to the 2.3 % th ey indirectly own through Vornado.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

RELATED PARTY TRANSACTIONS - continued

Management and Development Agreements

18 unchanged sentences

$ 10,093 $ 11,331 $ 8,616

As of December 31, 2021, the amounts due to Vornado were $ 669,000 for management, property management, cleaning, engineering and security fees;

$ 141,000 for development fees;

and $ 69,000 for leasing fees.

As of December 31, 2022, the amounts due to Vornado were $ 742,000 for management, property management, cleaning, engineering and security fees and $ 59,000 for leasing fees.

As of December 31, 2021, the amounts due to Vornado were $ 669,000 for management, property management, cleaning, engineering and security fees;

1 unchanged sentence

and $ 69,000 for leasing fees.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MARKETABLE SECURITIES

1 unchanged sentence

These shares were received in connection with the sale of Kings Plaza Regional Shopping Center (“Kings Plaza”) to Macerich in 2012.

The fair value of the shares as of December 31, 2020 was $ 6,024,000 based on Macerich’s closing share price of $ 10.67 per share.

These shares were presented at fair value as “marketable securities” on our consolidated balance sheet as of December 31, 2020 and the gains and losses resulting from the mark-to-market of these securities were recognized in current period earnings.

The gains and losses resulting from the mark-to-market of these securities during 2021 and 2020 were presented as “change in fair value of marketable securities” on our consolidated statements of income.

DISCONTINUED OPERATIONS

2 unchanged sentences

As the results related to Kings Plaza were previously classified as discontinued operations, we have classified the gain as “income from discontinued operations” on our consolidated statement of income for the year ended December 31, 2021 in accordance with the provisions of ASC Topic 360, Property, Plant and Equipment .

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MORTGAGES PAYABLE

13 unchanged sentences

Total 1,096,544 1,096,544

Deferred debt issuance costs, net of accumulated

amortization of $ 14,551 and $ 13,034 , respectively

Deferred debt issuance costs, net of accumulated amortization of $ 16,071 and $ 14,551 , respectively

( 5,493 ) ( 6,931 )

$ 1,091,051 $ 1,089,613

(1) Interest at LIBOR plus 0.90 %.

Maturity date represents the extended maturity based on our unilateral right to extend.

(2) Interest at LIBOR plus 1.40 % which was swapped to a fixed rate of 1.72 %.

(3) Interest at LIBOR plus 1.35 %.

The loan balance of $ 252,544 as of December 31, 2020 is presented net of our participation of $ 50,000 .

On April 7, 2021, we used our participation in this loan to reduce the loan balance to $ 202,544 .

(4) On October 4, 2021, the mortgage loan was repaid in connection with the sale of the property.

See Note 4 - Real Estate Sales for further details.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MORTGAGES PAYABLE - continued

(1) Interest rate listed represents the rate in effect as of December 31, 2022 based on LIBOR or SOFR as of contractual reset date plus contractual spread, adjusted for hedging instruments as applicable.

(2) Interest at LIBOR plus 0.90 % (LIBOR capped at a rate of 6.00 % through June 2023).

Maturity date represents the extended maturity based on our as-of right to extend.

(3) Interest at SOFR plus 1.51 % which was swapped to a fixed rate of 1.76 % through May 2025.

(4) Interest at SOFR plus 1.45 % (SOFR is capped at a rate of 4.15 % through November 2024).

All of our debt is secured by mortgages and/or pledges of the stock of the subsidiaries holding the properties.

The net carrying value of real estate collateralizing the debt amounted to $ 629,134,000 as of December 31, 2021.

The net carrying value of real estate collateralizing the debt amounted t o $ 614,245,000 a s of December 31, 2022.

Our existing financing documents contain covenants that limit our ability to incur additional indebtedness on these properties, and in certain circumstances, provide for lender approval of tenants’ leases and yield maintenance to prepay them.

2 unchanged sentences

Year Ending December 31, Amount

Thereafter 94,000

FAIR VALUE MEASUREMENTS

1 unchanged sentence

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 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities as well as certain U.S.

Treasury securities that are highly liquid and are actively traded in secondary markets;

Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data;

2 unchanged sentences

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.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 December 31, 2021 consist of an interest rate swap which is presented in the table below based on its level in the fair value hierarchy, and an interest rate cap, the fair value of which was insignificant as of December 31, 2021.

Financial assets measured at fair value on our consolidated balance sheets as of December 31, 2022 consist of U.S.

Treasury bills (classified as available for-sale) and interest rate derivatives which are presented in the table below based on their level in the fair value hierarchy.

There were no financial liabilities measured at fair value as of December 31, 2022.

1 unchanged sentence

(Amounts in thousands) Total Level 1 Level 2 Level 3

Interest rate swap (included in other assets) $ 7,545 $ — $ 7,545 $ —

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.

Investments in U.S.

Treasury bills (1)

$ 266,963 $ 266,963 $ — $ —

Interest rate derivatives (included in other assets) 29,351 — 29,351 —

$ 296,314 $ 266,963 $ 29,351 $ —

(1) During the year ended December 31, 2022, we purchased $ 364,238 in U.S.

Treasury bills with an aggregate par value of $ 370,000 and realized proceeds of $ 100,000 from maturing U.S.

Treasury bills.

As of December 31, 2022 our investments in U.S.

Treasury bills have an aggregate accreted value of $ 267,809 prior to being marked to fair value and have remaining maturities of less than one year.

Financial assets measured at fair value on our consolidated balance sheet as of December 31, 2021 consist of interest rate derivatives which are presented in the table below based on their level in the fair value hierarchy.

There were no financial liabilities measured at fair value as of December 31, 2021.

As of December 31, 2021

(Amounts in thousands) Total Level 1 Level 2 Level 3

Marketable securities $ 6,024 $ 6,024 $ — $ —

Interest rate swap (included in other liabilities) $ 667 $ — $ 667 $ —

Interest rate derivatives (included in other assets) $ 7,545 $ — $ 7,545 $ —

Interest Rate Derivatives

We recognize the fair value of all interest rate derivatives in “other assets” or “other liabilities” on our consolidated balance sheets and since all of our interest rate derivatives have been designated as cash flow hedges, changes in the fair value are recognized in other comprehensive income.

The table below summarizes our interest rate derivatives, all of which hedge the interest rate risk attributable to the variable rate debt noted as of December 31, 2022 and 2021, respectively.

Fair Value Asset as of December 31, As of December 31, 2022

(Amounts in thousands) 2022 2021 Notional Amount Swapped Rate Expiration Date

Interest rate swap related to:

731 Lexington Avenue mortgage loan, retail condominium $ 26,718 $ 7,545 $ 300,000 1.76 % 05/25

Interest rate caps related to:

Rego Park II shopping center mortgage loan 2,622 — 202,544 (1) 11/24

731 Lexington Avenue mortgage loan, office condominium 11 — 500,000 (2) 06/23

Included in other assets $ 29,351 $ 7,545

(1) SOFR cap strike rate of 4.15 %

(2) LIBOR cap strike rate of 6.00 %

ALEXANDER’S, INC.

24 unchanged sentences

Bloomberg accounted for revenue of $ 115,129,000 , $ 113,140,000 , and $ 109,066,000 in the years ended December 31, 2022, 2021 and 2020, respectively, representing approximately 56 %, 55 % and 55 % of our rental revenues in each year, respectively.

No other tenant accounted for more than 10% of our rental revenues.

No other tenant accounted for more than 10% of o ur rental 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.

6 unchanged sentences

We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and has one 10 -year extension option.

As of December 31, 2021, the right-of-use asset of $ 3,394,000 and the lease liability of $ 3,602,000 , are included in “ other assets ” and “ other liabilities ,” respectively, on our consolidated balance sheet.

The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental borrowing rate (“IBR”) for the property of 4.53 %.

We considered the general economic environment and factored in various financing and asset specific adjustments so that the IBR was appropriate to the intended use of the underlying lease.

As we did not elect to apply hindsight, the lease term assumption determined under ASC Topic 840, Leases was carried forward and applied in calculating our lease liability recorded under ASC 842.

Future lease payments under this operating lease, excluding the extension option, are as follows:

In January 2022, New World Mall LLC, the sub-tenant at the property, exercised its one remaining 10 -year extension option through January 2037.

As a result of the sub-tenant exercising its extension option, we were required by GAAP to remeasure our ground lease liability based upon an estimate of lease payments to be made during the 10 -year extension period of our ground lease resulting in an incremental right-of-use asset and lease liability of approximately $ 16,000,000 .

The discount rate applied in the remeasurement of the lease liability was based on the incremental borrowing rate (“IBR”) of 5.86 % at the time of the remeasurement.

We considered the general economic environment and factored in various Company specific adjustments to arrive at the IBR.

As of December 31, 2022, the remaining right-of-use asset of $ 18,497,000 and lease liability of $ 20,066,000 , are included in “ other assets ” and “ other liabilities ,” respectively, on our consolidated balance sheet.

Future lease payments under this operating lease, including our estimated payments during the extension period, are as follows:

(Amounts in thousands) As of December 31, 2022

For the year ending December 31,

Thereafter 26,160

Total undiscounted cash flows 32,067

2 unchanged sentences

We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-line basis.

Rent expense was $ 746,000 in each of the years ended December 31, 2021, 2020 and 2019, respectively.

Rent expense was $ 2,161,000 , $ 746,000 and $ 746,000 in each of the years ended December 31, 2022, 2021 and 2020, respectively.

Cash paid for rent expense was $ 800,000 in each of the years ended December 31, 2022, 2021 and 2020, respectively.

23 unchanged sentences

If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

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 formerly 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.

Both parties have filed motions for summary judgment and in November 2021, the parties stipulated to lift the stay to allow the motions to be decided by the court.

Letters of Credit

Approximat ely $ 900,000 of standby letters of credit were issued and outstanding as of December 31, 2022.

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)

There are various legal actions brought against us from time-to-time in the ordinary course of business.

In our opinion, the outcome of such pending matters in the aggregate will not have a material effect on our financial position, results of operations or cash flows.

MULTIEMPLOYER BENEFIT PLANS

9 unchanged sentences

In the years ended December 31, 2022, 2021 and 2020 our subsidiaries contributed $ 839,000 , $ 748,000 and $ 672,000 , respectively, towards these plans.

ALEXANDER’S, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EARNINGS PER SHARE

14 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data