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) As of ASSETS March 31, 2023 December 31, 2022 Real estate, at cost: Land $ 32,271 $ 33,050 Buildings and leasehold improvements 1,025,226 1,029,504 Development and construction in progress 10,144 22,044 Total 1,067,641 1,084,598 Accumulated depreciation and amortization ( 398,242 ) ( 396,268 ) Real estate, net 669,399 688,330 Cash and cash equivalents 356,507 194,933 Restricted cash 20,369 19,545 Investments in U.S. Treasury bills 99,780 266,963 Tenant and other receivables 5,664 4,705 Receivable arising from the straight-lining of rents 125,430 127,497 Deferred leasing costs, net, including unamortized leasing fees to Vornado of $ 21,388 and $ 22,174 , respectively 27,441 28,490 Asset held for sale 13,794 — Other assets 59,375 67,313 $ 1,377,759 $ 1,397,776 LIABILITIES AND EQUITY Mortgages payable, net of deferred debt issuance costs $ 1,091,438 $ 1,091,051 Amounts due to Vornado 675 801 Accounts payable and accrued expenses 43,908 48,785 Other liabilities 20,729 20,640 Total liabilities 1,156,750 1,161,277 Commitments and contingencies Preferred stock: $ 1.00 par value per share; authorized, 3,000,000 shares; issued and outstanding, no ne — — 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 33,865 33,865 Retained earnings 160,397 172,243 Accumulated other comprehensive income 21,942 25,586 221,377 236,867 Treasury stock: 66,160 shares, at cost ( 368 ) ( 368 ) Total equity 221,009 236,499 $ 1,377,759 $ 1,397,776 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) For the Three Months Ended March 31, 2023 2022 REVENUES Rental revenues $ 52,941 $ 49,215 EXPENSES Operating, including fees to Vornado of $ 1,539 and $ 1,378 , respectively ( 24,944 ) ( 21,542 ) Depreciation and amortization ( 7,478 ) ( 7,351 ) General and administrative, including management fees to Vornado of $ 610 in each period ( 1,359 ) ( 1,469 ) Total expenses ( 33,781 ) ( 30,362 ) Interest and other income 4,319 94 Interest and debt expense ( 12,253 ) ( 4,415 ) Net income $ 11,226 $ 14,532 Net income per common share - basic and diluted $ 2.19 $ 2.84 Weighted average shares outstanding - basic and diluted 5,127,086 5,124,478 See notes to consolidated financial statements (unaudited). 5 ALEXANDER’S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Amounts in thousands) For the Three Months Ended March 31, 2023 2022 Net income $ 11,226 $ 14,532 Other comprehensive (loss) income: Change in fair value of interest rate derivatives and other ( 3,644 ) 11,727 Comprehensive income $ 7,582 $ 26,259 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 Income Treasury Stock Total Equity Common Stock Shares Amount For the Three Months Ended March 31, 2023 Balance, December 31, 2022 5,173 $ 5,173 $ 33,865 $ 172,243 $ 25,586 $ ( 368 ) $ 236,499 Net income — — — 11,226 — — 11,226 Dividends paid ($ 4.50 per common share) — — — ( 23,072 ) — — ( 23,072 ) Change in fair value of interest rate derivatives and other — — — — ( 3,644 ) — ( 3,644 ) Balance, March 31, 2023 5,173 $ 5,173 $ 33,865 $ 160,397 $ 21,942 $ ( 368 ) $ 221,009 For the Three Months Ended March 31, 2022 Balance, December 31, 2021 5,173 $ 5,173 $ 33,415 $ 206,875 $ 7,494 $ ( 368 ) $ 252,589 Net income — — — 14,532 — — 14,532 Dividends paid ($ 4.50 per common share) — — — ( 23,060 ) — — ( 23,060 ) Change in fair value of interest rate derivatives — — — — 11,727 — 11,727 Balance, March 31, 2022 5,173 $ 5,173 $ 33,415 $ 198,347 $ 19,221 $ ( 368 ) $ 255,788 See notes to consolidated financial statements (unaudited). 7 ALEXANDER’S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Amounts in thousands) For the Three Months Ended March 31, CASH FLOWS FROM OPERATING ACTIVITIES 2023 2022 Net income $ 11,226 $ 14,532 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including amortization of debt issuance costs 7,899 7,762 Straight-lining of rents 2,067 2,139 Other non-cash adjustments 1,741 — Change in operating assets and liabilities: Tenant and other receivables ( 959 ) 610 Other assets 2,959 11,445 Amounts due to Vornado ( 128 ) 1,195 Accounts payable and accrued expenses ( 4,063 ) ( 5,522 ) Other liabilities ( 6 ) 24 Net cash provided by operating activities 20,736 32,185 CASH FLOWS FROM INVESTING ACTIVITIES Construction in progress and real estate additions ( 2,060 ) ( 1,158 ) Proceeds from maturities of U.S. Treasury bills 166,832 — Net cash provided by (used in) investing activities 164,772 ( 1,158 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid ( 23,072 ) ( 23,060 ) Debt issuance costs ( 38 ) — Net cash used in financing activities ( 23,110 ) ( 23,060 ) Net increase in cash and cash equivalents and restricted cash 162,398 7,967 Cash and cash equivalents and restricted cash at beginning of period 214,478 483,505 Cash and cash equivalents and restricted cash at end of period $ 376,876 $ 491,472 RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of period $ 194,933 $ 463,539 Restricted cash at beginning of period 19,545 19,966 Cash and cash equivalents and restricted cash at beginning of period $ 214,478 $ 483,505 Cash and cash equivalents at end of period $ 356,507 $ 472,484 Restricted cash at end of period 20,369 18,988 Cash and cash equivalents and restricted cash at end of period $ 376,876 $ 491,472 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash payments for interest, net of amounts capitalized in 2022 $ 11,476 $ 3,728 NON-CASH TRANSACTIONS Liability for real estate additions, including $ 3 for development fees due to Vornado in 2022 $ 1,481 $ 1,232 Write-off of fully depreciated assets 4,044 — Reclassification of asset held for sale 13,794 — 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 six properties in New York City. 2. Basis of Presentation The accompanying consolidated financial statements are unaudited and include the accounts of Alexander’s and its consolidated subsidiaries. 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, 2022, 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, 2023 are not necessarily indicative of the operating results for the full year. We operate in one reportable segment. 3. 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. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. 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. 9 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 4. Revenue Recognition The following is a summary of revenue sources for the three months ended March 31, 2023 and 2022. For the Three Months Ended March 31, (Amounts in thousands) 2023 2022 Lease revenues $ 51,036 $ 46,808 Parking revenue 1,096 1,228 Tenant services 809 1,179 Rental revenues $ 52,941 $ 49,215 The components of lease revenues for the three months ended March 31, 2023 and 2022 are as follows: For the Three Months Ended March 31, (Amounts in thousands) 2023 2022 Fixed lease revenues $ 34,724 $ 32,203 Variable lease revenues 16,312 14,605 Lease revenues $ 51,036 $ 46,808 Bloomberg L.P. (“Bloomberg”) accounted for revenue of $ 29,516,000 and $ 27,518,000 for the three months ended March 31, 2023 and 2022, respectively, representing approximately 56 % of our rental revenues in each period. No other tenant accounted for more than 10% of our 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. 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. 5. Asset Held For Sale On March 8, 2023, we entered into an agreement to sell the Rego Park III land parcel in Queens, New York, for $ 71,060,000 inclusive of consideration for Brownfield tax benefits and reimbursement of costs for plans, specifications and improvements to date. The sale, which is subject to customary closing conditions, is expected to be completed in the second quarter of 2023. The financial statement gain will be approximately $ 54,000,000 . As of March 31, 2023, the $ 13,794,000 carrying value of the property was classified as "Asset held for sale" on our consolidated balance sheets. 10 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 6. Related Party Transactions Vornado As of March 31, 2023, 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) $ 354,000 , 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 incurred to Vornado under the various agreements discussed above. For the Three Months Ended March 31, (Amounts in thousands) 2023 2022 Company management fees $ 700 $ 700 Development fees — 3 Leasing fees 41 1,318 Property management, cleaning, engineering and security fees 1,409 1,269 $ 2,150 $ 3,290 As of March 31, 2023, the amounts due to Vornado were $ 675,000 for management, property management, cleaning, engineering and security 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. 11 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 7. Mortgages Payable The following is a summary of our outstanding mortgages payable as of March 31, 2023 and December 31, 2022. We may refinance our maturing debt as it comes due or choose to pay it down. Interest Rate at March 31, 2023 Balance at (Amounts in thousands) Maturity March 31, 2023 December 31, 2022 First mortgages secured by: 731 Lexington Avenue, office condominium (1)(2) Jun. 11, 2024 5.58 % $ 500,000 $ 500,000 731 Lexington Avenue, retail condominium (1)(3) Aug. 05, 2025 1.76 % 300,000 300,000 Rego Park II shopping center (1)(4) Dec. 12, 2025 5.60 % 202,544 202,544 The Alexander apartment tower Nov. 01, 2027 2.63 % 94,000 94,000 Total 1,096,544 1,096,544 Deferred debt issuance costs, net of accumulated amortization of $ 16,458 and $ 16,071 , respectively ( 5,106 ) ( 5,493 ) $ 1,091,438 $ 1,091,051 (1) Interest rate listed represents the rate in effect as of March 31, 2023 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 r ate of 6.00 % thr ough June 2023). Maturity represents the extended maturity based on our one-year as-of right extension option. The interest rate of the loan will be equal to the Prime rate ( 8.00 % as of March 31, 2023) during the one-year extension period beginning June 2023. (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 % thr ough November 2024). 8. 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 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; 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, 2023 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 March 31, 2023. As of March 31, 2023 Total Level 1 Level 2 Level 3 (Amounts in thousands) Investments in U.S. Treasury bills (1) $ 99,780 $ 99,780 $ — $ — Interest rate derivatives (included in other assets) 24,657 — 24,657 — $ 124,437 $ 99,780 $ 24,657 $ — (1) As of March 31, 2023, our investments in U.S. Treasury bills have an aggregate accreted value of $ 99,881 prior to being marked to fair value and have remaining maturities of less than one year. During the three months ended March 31, 2023, we realized proceeds of $ 170,000 from maturing U.S. Treasury bills. 12 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 8. Fair Value Measurements - continued Financial assets measured at fair value on our consolidated balance sheet 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. As of December 31, 2022 (Amounts in thousands) Total Level 1 Level 2 Level 3 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 had an aggregate accreted value of $ 267,809 prior to being marked to fair value and had remaining maturities of less than one year. 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 March 31, 2023 and December 31, 2022, respectively. Fair Value as of As of March 31, 2023 (Amounts in thousands) March 31, 2023 December 31, 2022 Notional Amount Swapped Rate Expiration Date Interest rate swap related to: 731 Lexington Avenue mortgage loan, retail condominium $ 22,453 $ 26,718 $ 300,000 1.76 % 05/25 Interest rate caps related to: Rego Park II shopping center mortgage loan 2,196 2,622 202,544 (1) 11/24 731 Lexington Avenue mortgage loan, office condominium 8 11 500,000 (2) 06/23 Included in other assets $ 24,657 $ 29,351 (1) SOFR cap strike rate of 4.15 % (2) LIBOR cap strike rate of 6.00 % 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 amount and fair value of these financial instruments as of March 31, 2023 and December 31, 2022. As of March 31, 2023 As of December 31, 2022 (Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Assets: Cash equivalents $ 208,596 $ 208,596 $ 47,852 $ 47,852 Liabilities: Mortgages payable (excluding deferred debt issuance costs, net) $ 1,096,544 $ 1,071,540 $ 1,096,544 $ 1,061,221 13 ALEXANDER’S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 9. Commitments and Contingencies Insurance We maintain general liability insurance with limits of $ 300,000,000 per occurrence and per property, of which the first $ 30,000,000 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 $ 298,000 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. The principal amounts of our mortgage loans are non-recourse to us and the loans contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties. Letters of Credit Approximately $ 900,000 of standby letters of credit were issued and outstanding as of March 31, 2023. Other 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. 10. Earnings Per Share The following table sets forth the computation of basic and diluted income per share, including a reconciliation of net income and the number of shares used in computing basic and diluted income per share. Basic income per share is determined using the weighted average shares of common stock (including deferred stock units) outstanding during the period. Diluted income per share is determined using the weighted average shares of common stock (including deferred stock units) 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, 2023 and 2022. For the Three Months Ended March 31, (Amounts in thousands, except share and per share amounts) 2023 2022 Net income $ 11,226 $ 14,532 Weighted average shares outstanding – basic and diluted 5,127,086 5,124,478 Net income per common share – basic and diluted $ 2.19 $ 2.84 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, 2023, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2023 and 2022, 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, 2022, 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 13, 2023, 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, 2022, 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 1, 2023 15