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Item 1A. Risk Factors

2024-02-12 compared with 2023-02-13 · 109 added, 119 removed, 279 unchanged (45% of the section changed)

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See “Forward-Looking Statements” contained herein on page 4.

RISKS RELATED TO OUR PROPERTIES AND INDUSTRY

RISKS RELATED TO OUR BUSINESS AND OPERATIONS

We may be adversely affected by trends in office real estate, including work from home trends.

In 2022, approximately 56% of our rental revenue was from Bloomberg, the office tenant at our 731 Lexington Avenue office property.

Work from home, flexible or hybrid work schedules, open workplaces, videoconferencing, and teleconferencing are becoming more common, particularly as a result of the COVID-19 pandemic.

Changes in tenant space utilization, including increased acceptance of work from home and flexible work arrangement policies, may cause office tenants to reassess their long-term physical space needs, which could have an adverse effect on our business.

All of our properties are in New York City and are affected by the economic cycles and risks inherent in that area.

In 2023, approximate ly 54% of our rental revenue was from Bloomberg, the office tenant at our 731 Lexington Avenue office property.

Work from home, flexible or hybrid work schedules, open workplaces, videoconferencing, and teleconferencing remain prevalent in certain situations, following the COVID-19 pandemic.

Changes in tenant space utilization, including from the continuation of work from home and flexible work arrangement policies, may cause office tenants to reassess their long-term physical space needs, which could have an adverse effect on our business.

All of our properties are in New York City and are affected by the economic cycles and risks inherent to this area.

All of our revenues come from properties located in New York City.

Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact this market in either the short or long term.

Declines in the economy or declines in the real estate markets in New York City, including the effects of the COVID-19 pandemic, have hurt and could continue to hurt our financial performance and the value of our properties.

Real estate markets are affected by economic downturns and we cannot predict how economic conditions will impact this market in either the short or long term.

Declines in the economy and declines in the real estate markets in New York City have affected and could affect our financial performance and the value of our properties.

In addition to the factors affecting the national economic condition generally, the factors affecting economic conditions in this area include:

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• the effects of inflation;

• rising interest rates;

• relocations of businesses;

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• increased work from home and use of alternative work places;

• changes in the number of domestic and international tourists to our markets (including as a result of changes in the relative strengths of world currencies and the COVID-19 pandemic);

• the fiscal health of New York State and New York City governments and local transit authorities, particularly as a result of the impact of the COVID-19 pandemic;

• changes in the number of domestic and international tourists to our markets (including as a result of changes in the relative strengths of world currencies);

• the fiscal health of New York State and New York City governments and local transit authorities;

• quality of life conditions;

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• changes in rates or the treatment of the deductibility of state and local taxes.

It is impossible for us to predict the future or the effect of trends in the economic and investment climates of the New York City metropolitan region, and more generally of the United States, on the real estate market in this area.

Local, national or global economic downturns could negatively affect the value of properties, our business and profitability.

It is impossible for us to predict the future effects of trends in the economic and investment climates of the New York City metropolitan region, and more generally of the United States, on the real estate market in this area.

Local, national or global economic downturns could negatively affect the value of our properties, our business and profitability.

We are subject to risks that affect the general and New York City retail environments.

Certain of our properties are New York City retail properties and thus are affected by the general and New York City retail environments, including office and residential occupancy rates, the level of consumer spending and consumer confidence, New York City tourism, employer remote-working policies, the threat of terrorism or other criminal acts, increasing competition from on-line retailers and other retail centers, and the impact of technological change upon the retail environment generally.

Furthermore, New York City tourism h as not yet fully reco vered from the effects of the COVID-19 pandemic.

Certain of our properties are New York City retail properties and thus are affected by the general and New York City retail environments, including the level of consumer spending and consumer confidence, New York City tourism, office and residential occupancy rates, employer remote-working policies, the threat of terrorism or other criminal acts, increasing competition from online retailers and other retail centers, and the impact of technological change upon the retail environment generally.

These factors could adversely affect the financial condition of our retail tenants, or result in the bankruptcy of such tenants, and the willingness of retailers to lease space in our retail locations, which could have an adverse effect on the value of our properties, our business and profitability.

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The factors that affect the value of our real estate include, among other things:

• global, national, regional and local economic conditions;

• competition from other available space, including co-working space and sub-leases;

• global, national, regional and local economic conditions and geopolitical events;

• competition from other available space, including co-working space and subleases;

• local conditions such as an oversupply of space or a reduction in demand for real estate in the area;

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• our ability to obtain adequate insurance;

• changes in zoning laws and taxation;

• government regulation;

• potential liability under environmental or other laws or regulations;

• government regulation, including changes in fiscal policies, taxation, and zoning laws;

• potential liability and compliance costs associated with environmental or other laws or regulations;

• natural disasters;

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• climate change;

• the impact of the COVID-19 pandemic or outbreaks of other highly infectious diseases.

• the impact of pandemics or outbreaks of other infectious diseases.

The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors.

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Real estate is a competitive business and that competition may adversely affect us.

We compete with a large number of real estate investors, property owners and developers, some of which may be willing to accept lower returns on their investments.

Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided.

We compete with a large number of real estate investors, property owners and developers, some of whom may be willing to accept lower returns on their investments.

Principal factors of competition are rents charged, tenant concessions offered, attractiveness of location, the quality of the property and the breadth and the quality of services provided.

Substantially all of our properties face competition from similar properties in the same market, which may adversely affect the rents we can charge at those properties and our results of operations.

We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.

Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms.

In addition, because a majority of our income is derived from renting real property, our income, and funds available to pay indebtedness and for distributions to stockholders will decrease if certain of our tenants cannot pay their rent or if we are not able to maintain our occupancy levels on favorable terms.

If a tenant does not pay its rent, we might not be able to enforce our rights as landlord without delays and may incur substantial legal and other costs.

Even if we are able to enforce our rights, a tenant may not have recoverable assets.

We may be unable to renew leases or relet space as leases expire.

We may be unable to renew leases, lease vacant space or relet space as leases expire on favorable terms.

When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space.

Even if tenants do renew or we can relet the space, the terms of renewal or reletting, considering among other things, rent and other concessions, the cost of improvements to the property and leasing commissions, may be less favorable than the terms in the expired leases.

Even if tenants do renew or we can relet the space, the terms of renewal or reletting, considering among other things, rent and concessions, the cost of improvements to the property and leasing commissions, may be on less economically favorable terms.

In addition, changes in space utilization by our tenants may impact our ability to renew or relet space without the need to incur substantial costs in renovating or redesigning the internal configuration of the relevant property and/or space.

If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and pay dividends and distributions to stockholders could be adversely affected.

731 Lexington Avenue accounts for a substantial portion of our revenues.

If we are unable to promptly renew the leases or relet the space at similar rates, lease vacant space, or if we are otherwise not able to maintain occupancy on favorable terms, our cash flow and ability to service debt obligations and pay dividends and distributions to stockholders could be adversely affected.

731 Lexington Avenue accounts for a majority of our revenues.

Loss of or damage to the building would adversely affect our financial condition and results of operations.

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Loss of or damage to the building in excess of our insurance coverage, including as a result of a terrorist attack, would adversely affect our results of operations and financial condition.

Bloomberg represents a significant portion of our revenues.

Bloomberg represents a majority of our revenues.

Loss of Bloomberg as a tenant or deterioration in Bloomberg’s credit quality could adversely affect our financial condition and results of operations.

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The value of these properties would be adversely affected if our anchor tenants failed to meet their contractual obligations, sought concessions in order to continue operations or ceased their operations, including as a result of bankruptcy.

If the level of sales of stores operating in our properties were to decline significantly due to economic conditions, increased competition from on-line shopping, closing of anchors or for other reasons, tenants may be unable to pay their minimum rents or expense recovery charges.

If the level of sales at stores operating in our properties were to decline significantly due to economic conditions, increased competition from online shopping, closing of anchors or for other reasons, tenants may be unable to pay their minimum rents or expense recovery charges.

In the event of a default by a tenant or anchor, we may experience delays and costs in enforcing our rights as landlord.

Additionally, closure of an anchor or major tenant could result in lease terminations by, or reductions of rent from other tenants if the other tenants’ leases have co-tenancy clauses.

On December 3, 2022, IKEA closed its 112,000 square foot anchor store at Rego Park I.

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.

Bankruptcy or insolvency of tenants may decrease our revenues, net income and available cash.

From time-to-time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent in the future.

The bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property.

As a result, the bankruptcy or insolvency of a major tenant or multiple tenants could result in decreased revenues, net income and funds available to pay our indebtedness or make distributions to stockholders.

Our business, financial condition, results of operations and cash flows have been and may continue to be adversely affected by the COVID-19 pandemic, or future outbreaks of other highly infectious diseases, and the impact could be material to us.

Our business has been, and may continue to be, adversely affected by the economic and industry challenges created by the COVID-19 pandemic and preventive measures taken to curb the spread of the virus.

While substantially all of the limitations and restrictions imposed during the onset of the pandemic have been lifted and/or eased and people have largely resumed pre-pandemic activities, economic conditions continue to negatively impact the financial health of our retail tenants.

The impact of such conditions could cause retailers to reduce the number and size of their physical locations and further increase reliance on e-commerce.

Additionally, our office tenant may see further delay in employee return-to-work plans as a result of the continued risks of the pandemic and further dependence on work from home and flexible work arrangements may lead our office tenant to reassess its long-term physical space needs.

Additionally, if the COVID-19 virus or another more contagious variant were to spread, governmental agencies and other authorities may reorder closures or reimpose restrictions on businesses, which could further negatively impact the financial condition of our tenants.

From time-to-time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy, become insolvent or experience a material business downturn adversely affecting their ability to make timely rental payments in the future.

If a tenant does not pay its rent, we may face delays enforcing our rights as landlord and may incur substantial legal and other costs.

Even if we are able to enforce our rights, a tenant may not have recoverable assets.

The bankruptcy or insolvency of a major tenant may delay our efforts to collect past due balances under the relevant leases and could ultimately preclude collection of these amounts altogether.

As a result, the bankruptcy or insolvency of, or nonpayment by, a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property, which could in turn result in decreased net income and funds available to pay our indebtedness and make distributions to stockholders.

Our business, financial condition, results of operations and cash flows have been and may continue to be adversely affected by outbreaks of highly infectious or contagious diseases.

Our business has been, and may continue to be, adversely affected by the economic and industry challenges created by highly infectious or contagious diseases, including the COVID-19 pandemic.

The impact of the COVID-19 pandemic caused retailers to reduce the number and size of their physical locations and further increase reliance on e-commerce, and future infectious or contagious diseases could have a similar impact.

Additionally, our office tenant may adjust its employee work from home arrangements which may lead to a reassessment of its long-term physical space needs.

Any future outbreak of a highly infectious or contagious disease could impact how people live, work and travel in ways that have affected and may in the future affect our properties.

Over time, these factors could decrease the demand for office and retail space and ultimately decrease occupancy and/or rent levels across our portfolio, which may have a negative impact on our financial condition and/or access to capital.

There is no guarantee that the jurisdictions in which we operate will not reimpose restrictions in an effort to mitigate risks to public health.

We may continue to experience material impacts to our business, financial condition, and operating results due to the COVID-19 pandemic or variants or future outbreaks of other highly infectious diseases and those impacts may have the effect of heightening other risks described under this heading “Risk Factors.”

Some of our potential losses may not be covered by insurance.

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We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material and adversely affect our business, results of operations and financial condition.

The principal amounts of our mortgage loans are non-recourse to us and the loans contain customary covenants requiring us to maintain insurance.

Our 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.

Actual or threatened terrorist attacks may adversely affect the value of our properties and our ability to generate cash flow.

Actual or threatened terrorist attacks or other criminal acts may adversely affect the value of our properties and our ability to generate cash flow.

All of our properties are located in New York City, and our most significant property, 731 Lexington Avenue, is located on Lexington Avenue and 59th Street in Manhattan.

In response to a terrorist attack, the perceived threat of terrorism or other criminal acts, tenants in this area may choose to relocate their businesses to less populated, lower-profile areas of the United States that may be perceived to be less likely targets of future terrorist activity or have lower rates of crime and fewer customers may choose to patronize businesses in this area.

This, in turn, could trigger a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease our properties on less favorable terms .

This, in turn, could trigger a decrease in the demand for space in this area, which could increase vacancies in our properties and force us to lease space at our properties on less favorable terms .

Furthermore, we may experience increased costs for security, equipment and personnel.

As a result, the value of our properties and the level of our revenues and cash flows could decline materially.

Natural disasters and the effects of climate change could have a concentrated impact on the area which we operate and could adversely affect our results.

Our investments are in New York City.

Natural disasters, including earthquakes, storms, tornados, floods and hurricanes, could cause significant damage to our properties and the surrounding environment or area.

Potentially adverse consequences of “global warming,” including rising sea levels, could similarly have an impact on our properties and the economies of the metropolitan area in which we operate.

Natural disasters and the effects of climate change could have a concentrated impact on the area where we operate and could adversely affect our results.

Our properties are located in New York City.

Physical climate change and natural disasters, including earthquakes, storms, storm surges, tornados, floods and hurricanes, could cause significant damage to our properties and the surrounding environment or area.

Potentially adverse consequences of climate change, including rising sea levels and increased temperature fluctuations, could similarly have an impact on our properties and the economies of the metropolitan area in which we operate.

Government efforts to combat climate change may impact the cost of operating our properties.

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The incurrence of these losses, costs or business interruptions may adversely affect our operating and financial results.

Our properties are located in urban areas, which means the vitality of our properties is reliant on sound transportation and utility infrastructure.

Our properties are located in an urban area, which means the vitality of our properties is reliant on sound transportation and utility infrastructure.

If that infrastructure is compromised in any way by an extreme weather event, such a compromise could have an adverse effect on our local economies and populations, as well as on our tenants’ ability to do business in our buildings.

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Retrofitting our building systems to consume less energy could lead to increased capital costs.

Buildings which consume fossil fuels onsite may be subject to penalties.

Buildings which consume fossil fuels onsite may be subject to penalties in the future.

In addition, the full transition of grid-supplied energy to renewable sources (as has been mandated by the Climate Leadership and Community Protection Act in New York State) could lead to increased energy costs and operating expenses for our buildings.

We may also become subject to costs, taxes or penalties, or increases therein, associated with natural resource or energy usage, such as a “carbon tax” and by local legislation such as New York City’s Local Law 97, which sets limits on carbon emissions in our buildings and imposes penalties if we exceed those limits, and New York City’s Intro 2317, or the “gas ban” bill, which limits any onsite fossil fuel combustion in new construction and major renovations.

These costs, taxes or penalties could increase our operating costs and decrease the cash available to pay our indebtedness or make distributions to our stockholders.

Although these laws and regulations have not had any material adverse effects on our business to date, they could result in substantial costs, including compliance costs, increased energy costs, retrofit costs and construction costs.

We cannot predict how future laws and regulations, or future interpretations of current laws and regulations, related to climate change will affect our business, results of operations and financial condition.

We may become subject to costs, taxes or penalties, or increases therein, associated with natural resource or energy usage, such as a “carbon tax” and by local legislation such as New York City’s Local Law 97, which sets limits on carbon emissions in our buildings and imposes penalties if we exceed those limits, and New York City’s Intro 2317, or the “gas ban” bill, which limits any onsite fossil fuel combustion in new construction and major renovations.

These costs, taxes or penalties could increase our operating costs and decrease the cash available to pay our indebtedness and make distributions to our stockholders.

Changes to tax laws could affect REITs generally, the trading of our shares and our results of operations, both positively and negatively, in ways that are difficult to anticipate.

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If such changes occur, we may be required to pay additional taxes on our assets or income and/or be subject to additional restrictions.

These increased tax costs could, among other things, adversely affect the trading price for our common shares, our financial condition, our results of operations and the amount of cash available for the payment of dividends.

RISKS RELATED TO OUR OPERATIONS AND STRATEGIES

Significant inflation and continuing increases in the inflation rate could adversely affect our business and financial results.

Recent substantial increases in the rate of inflation and potential future elevated rates of inflation, both real and anticipated, may impact our investments and results of operations.

Recent substantial increases in the rate of inflation and potential future elevated rates of inflation, both real and anticipated, may impact our business and results of operations.

In a highly inflationary environment, we may be unable to raise rental rates at or above the rate of inflation, which could reduce our profit margins.

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While increases in most operating expenses at our properties can be passed on to our office and retail tenants, some tenants have fixed reimbursement charges, and expenses at our residential property may not be able to be passed on to residential tenants.

Unreimbursed increased operating expenses may reduce cash flow available to pay our indebtedness or make distributions to our stockholders.

Unreimbursed increased operating expenses may reduce cash flow available to pay our indebtedness and make distributions to our stockholders.

We may acquire, develop, or redevelop properties and this may create risks.

Although our stated business strategy is not to engage in acquisitions, we may acquire, develop or redevelop properties when we believe that an acquisition, development or redevelopment project is otherwise consistent with our business strategy.

We may not succeed in (i) developing, redeveloping or acquiring properties;

Although our current business strategy is not to engage in acquisitions, we may acquire, develop or redevelop properties when we believe that an acquisition, development or redevelopment project is otherwise consistent with our business strategy.

We may not succeed in (i) acquiring, developing, or redeveloping properties;

(ii) completing these activities on time or within budget;

and (iii) leasing or selling developed, redeveloped or acquired properties at amounts sufficient to cover our costs.

and (iii) leasing or selling acquired, developed, or redeveloped properties at amounts sufficient to cover our costs.

Competition in these activities could also significantly increase our costs.

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(ii) the availability and timely receipt of zoning and other regulatory approvals;

(iii) increased costs of construction and any cost overruns, especially in an inflationary environment, and untimely completion of construction (including risks beyond our control, such as weather or labor conditions, material shortages or supply chain delays);

(iii) cost overruns, especially in an inflationary environment, and untimely completion of construction (including risks beyond our control, such as weather or labor conditions, material shortages or supply chain delays);

(iv) the potential for the fluctuation of occupancy rates and rents at redeveloped properties, which may result in our investment not being profitable;

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(vi) the potential that we may fail to recover expenses already incurred if we abandon development or redevelopment opportunities after we begin to explore them;

(vii) the potential that we may expend funds on and devote management time to projects which we do not complete;

(vii) the potential that we may expend funds on and devote management’s time to projects which we do not complete;

(viii) the inability to complete leasing of a property on schedule or at all, resulting in an increase in carrying or redevelopment costs;

(ix) the possibility that properties will be leased at below expected rental rates and (x) to the extent the redevelopment activities are conducted in partnership with third parties, the possibility of disputes with our joint venture development partners and the potential that we miss certain project milestone deadlines.

These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the completion of redevelopment activities or the ultimate rents achieved on new developments, any of which could have an adverse effect on our financial condition, results of operations, cash flow, the market value of our common shares and ability to pay our indebtedness and to make distributions to our stockholders.

(ix) the possibility that properties will be leased at below expected rental rates.

These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the completion of redevelopment activities or reduce the ultimate rents achieved on new developments.

These outcomes could have an adverse effect on our financial condition, results of operations, cash flow, the market value of our common shares and ability to pay our indebtedness and make distributions to our stockholders.

It may be difficult to sell real estate on a timely basis, which may limit our flexibility.

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RISKS RELATED TO OUR INDEBTEDNESS AND ACCESS TO CAPITAL

Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations as well as the value of an investment in our common stock.

There are many factors that can affect the value of our equity securities and any debt securities we may issue in the future, including the state of the capital markets and economy.

Significantly tighter capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations as well as the value of an investment in our common stock.

There are many factors that can affect the value of our equity securities and any debt securities we may issue in the future, including the state of the capital markets and the economy.

Demand for office and retail space typically declines nationwide due to an economic downturn, bankruptcies, downsizing, layoffs and cost cutting.

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The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, and the liquidity and financial condition of our tenants.

Recently, domestic and international financial markets have experienced unusual volatility, significant interest rate increases and continuing uncertainty.

Liquidity has significantly tightened in overall financial markets.

Consequently, there is greater uncertainty regarding our ability to access the credit markets in order to obtain financing on reasonable terms.

Additionally, the recent inflation environment has led to an increase in interest rates, which has had a direct and material increase on the interest expense of our borrowings.

Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our common stock.

We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on acceptable terms.

As of December 31, 2022, total debt outstanding was $1,096,544,000 , excluding deferred financing costs, and our ratio of total debt to total enterprise value was 54%.

We have outstanding debt, and the amount of debt and its cost may continue to increase and refinancing may not be available on acceptable terms, which could affect our future operations.

As of December 31, 2023, total mortgages payable, excluding deferred debt issuance costs, was $1,096,544,000, and our rate of total debt to total enterprise value was 66%.

“Enterprise value” means the market equity value of our common stock, plus debt, less cash and cash equivalents at such date.

In addition, we have significant debt service obligations.

For the year ended December 31, 2022, our total cash payments for principal and interest was $25,934,000.

In the future, we may incur additional debt, and thus increase the ratio of total debt to total enterprise value.

If our level of indebtedness increases, there may be an increased risk of default which could adversely affect our financial condition and results of operations.

In addition, in a rising interest rate environment, the cost of refinancing our existing debt and any new debt or market rate security or instrument may increase.

Continued uncertainty in the equity and credit markets may negatively impact our ability to obtain financing on reasonable terms or at all, which may negatively affect our ability to refinance our debt.

We have a substantial amount of indebtedness that could affect our future operations.

As of December 31, 2022, total debt outstanding was $1,096,544,000, excluding deferred financing costs.

We are subject to the risks normally associated with debt financing, including the risk that our cash flow from operations will be insufficient to meet required debt service.

Our debt service costs generally will not be reduced if developments in the market or at our properties, such as the entry of new competitors or the loss of major tenants, cause a reduction in the income from our properties.

We are subject to the risks normally associated with debt financing, including the risk that our cash flow from operations will be insufficient to meet our required debt service.

Our debt service costs generally will not be reduced if conditions in the market or at our properties, such as the entry of new competitors or the loss of major tenants, cause a reduction in the income from our properties.

Should such events occur, our operations may be adversely affected.

If a property is mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value.

Substantially all of our assets are owned by subsidiaries.

We depend on dividends and distributions from these subsidiaries.

The creditors of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to us.

Substantially all of our properties and assets are held through our subsidiaries.

We depend on cash distributions and dividends from our subsidiaries for substantially all of our cash flow.

The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them when due and payable before that subsidiary may make distributions or dividends to us.

Thus, our ability to pay dividends, if any, to our security holders depends on our subsidiaries’ ability to first satisfy their obligations to their creditors and our ability to satisfy our obligations, if any, to our creditors.

In addition, our participation in any distribution of the assets of any of our direct or indirect subsidiaries upon the liquidation, reorganization or insolvency of the subsidiary, is only after the claims of the creditors, including trade creditors, and preferred security holders, if any, of the applicable direct or indirect subsidiaries are satisfied.

If we are unable to obtain additional debt financing or refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected.

In addition, the current rising interest rate environment has led to an increase in interest rates on our variable rate debt and an increase in the cost of refinancing our existing debt, entering into new debt and for interest rate hedge instruments, reducing our operating cash flows.

While certain of our debt is fixed by an interest rate swap arrangement, the arrangement expires earlier than the mortgage loan maturity, resulting in future exposure to rising interest rates, which could further reduce our available cash.

If the cost or amount of our indebtedness continues to increase or we cannot refinance our debt in sufficient amounts or on acceptable terms, we are at risk of default on our obligations that could adversely affect our financial condition and results of operations.

Our existing financing documents contain covenants and restrictions that may restrict our operational and financial flexibility.

As of December 31, 2022, we had outstanding mortgage indebtedness of $1,096,544,000, secured by three of our properties.

As of December 31, 2023, we had outstanding mortgage indebtedness of $1,096,544,000, secu red by three of our properties.

These mortgages contain covenants that limit our ability to incur additional indebtedness on these properties, provide for lender approval of tenants’ leases in certain circumstances, and in certain cases provide for yield maintenance or defeasance premiums to prepay them.

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If our hedges do not qualify as “highly effective,” the changes in the fair value of these instruments would be reflected in our results of operations and could adversely affect our earnings.

We may be adversely affected by the discontinuation of London Interbank Offered Rate (“LIBOR”).

On March 5, 2021, the Financial Conduct Authority (“FCA”) announced that USD LIBOR will no longer be published after June 30, 2023.

The Secured Overnight Financing Rate (“SOFR”) has been identified by market participants as the preferred alternative to USD LIBOR in derivatives and other financial contracts.

Our new floating rate loans entered into after December 31, 2021 will no longer reference LIBOR and will reference SOFR or another floating rate.

As of December 31, 2022, we had variable debt indexed to LIBOR of $500,000,000, subject to an interest rate cap arrangement that caps LIBOR at a rate of 6.00% through June 2023.

The transition of our LIBOR-based obligations to SOFR could affect all-in interest rates on our debt and interest rate swap and cap arrangements and could result in interest payable that does not correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR was available in its current form.

RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE

Alexander’s charter documents and applicable law may hinder any attempt to acquire us.

Substantially all of our assets are owned by subsidiaries.

We depend on dividends and distributions from these subsidiaries.

The creditors of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or make distributions to us.

Substantially all of our properties and assets are held through our subsidiaries.

We depend on cash distributions and dividends from our subsidiaries for substantially all of our cash flow.

The creditors of each of our subsidiaries are entitled to payment of that subsidiary’s obligations to them when due and payable before that subsidiary may pay dividends or make distributions to us.

In addition, our participation in any distribution of the assets of any of our subsidiaries upon the liquidation, reorganization or insolvency of the subsidiary, is only after the claims of the creditors, including trade creditors, and preferred security holders, if any, of the applicable subsidiary, are satisfied.

Alexander’s charter documents and applicable laws may hinder any attempt to acquire us.

Provisions in Alexander’s certificate of incorporation and by laws, as well as provisions of the Code and Delaware corporate law, may delay or prevent a change in control of the Company or a tender offer, even if such action might be beneficial to stockholders, and limit the stockholders’ opportunity to receive a potential premium for their shares of common stock over then prevailing market prices.

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For a description of our related party transactions with Vornado, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Party Transactions.”

The occurrence of cyber incidents, or a deficiency in our cyber security, as well as other disruptions of our IT networks and related systems, could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships or reputation, all of which could adversely affect our financial results.

We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, ransomware, computer viruses, attachments to e-mails, persons who access our systems from inside or outside our organization, and other significant disruptions of our IT networks and related systems.

The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

Although we have not experienced cyber incidents that are individually, or in the aggregate, material, we have experienced cyber attacks in the past, which have thus far been mitigated by preventative, detective, and responsive measures that we have put in place.

RISKS RELATED TO TECHNOLOGY, CYBERSECURITY AND DATA PROTECTION

The occurrence of cyber incidents, or a deficiency in our cybersecurity, as well as other disruptions to our IT networks and related systems, could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships or reputation, all of which could adversely affect our financial results.

Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants.

We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, ransomware, computer viruses, phishing, attachments to e-mails, persons who access our systems from inside or outside our organization, and other significant disruptions of our IT networks and related systems.

The risk of a security breach or disruption, particularly through a cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, including through the use of artificial intelligence.

Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.

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Any compromise of our information security systems could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which could harm our business.

For additional information on our cybersecurity risk management process, see “Item 1C.

Cybersecurity” in this Annual Report on Form 10-K.

RISKS RELATED TO OUR COMMON STOCK

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The trading price of our common stock has been volatile and may continue to fluctuate widely as a result of several factors, many of which are outside of our control.

In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies.

These broad market fluctuations have in the past and may in the future adversely affect the market price of our common stock.

In particular, the market price of our common shares has been further adversely impacted since March 2020 due to the COVID-19 pandemic.

Among the factors that could affect the price of our common stock are:

These factors include:

• our financial condition and performance;

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• general financial and economic market conditions and, in particular, developments related to market conditions for office REITs and other real estate related companies and the New York City real estate market;

• domestic and international economic factors unrelated to our performance (including the macro-economic impact of the conflict between Russia and Ukraine);

• the impact of inflation;

• local, domestic and international economic factors unrelated to our performance (including the macro-economic impact of geopolitical conflict);

• fiscal policies or inaction at the U.S.

federal government level that may lead to federal government shutdowns or negative impacts on the U.S.

• changes in tax laws and rules;

• all other risk factors addressed elsewhere in this Annual Report on Form 10-K.

In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies.

These broad market fluctuations have in the past and may in the future adversely affect the market price of our common stock.

A significant decline in our stock price could result in substantial losses for stockholders.

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The interest of our current stockholders could be diluted if we issue additional equity securities.

As of December 31, 2022, we had authorized but unissued 4,826,550 shares of common stock, par value of $1.00 per share and 3,000,000 shares of preferred stock, par value $1.00 per share;

of which 19,796 shares of common stock are reserve d for issuance upon redemption of the deferred stock units previously granted to our Board of Directors.

In addition, 485,991 shares are available for future grant under the terms of our 2016 Omnibus Stock Plan.

As of December 31, 2023, we had authorized but unissu ed 4,826,550 shares of common stock, par value of $1.00 per share and 3,000,000 shares of preferred stock, par value $1.00 per share;

of which 23,388 shares of common stock are reserved for issuance upon redemption of the deferred stock units previously granted to our Board of Directors.

In addition, 482,399 s hares are available for future grant under the terms of our 2016 Omnibus Stock Plan.

These awards may be granted in the form of options, restricted stock, stock appreciation rights, deferred stock units, or other equity-based interests, and if granted, would reduce that number of shares available for future grants, provided however that an award that may be settled only in cash, would not reduce the number of shares available under the plan.

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Loss of our key personnel could harm our operations and adversely affect the value of our common stock.

We are dependent on the efforts of Steven Roth, our Chief Executive Officer.

We are dependent on the efforts of Steven Roth, the Chairman of our Board of Directors and our Chief Executive Officer.

Although we believe that we could find a replacement, the loss of his services could harm our operations and adversely affect the value of our common stock.

RISKS RELATED TO REGULATORY COMPLIANCE

We might fail to qualify or remain qualified as a REIT, and may be required to pay federal income taxes at corporate rates.

We might fail to qualify or remain qualified as a REIT, and may be required to pay federal income taxes at corporate rates, which could adversely affect the value of our common stock.

Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we might fail to remain qualified.

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The federal income tax payable would include any applicable alternative minimum tax.

If we had to pay federal income tax, the amount of money available to distribute to stockholders and pay our indebtedness would be reduced for the year or years involved, and we would not be required to make distributions to stockholders in that taxable year and in future years until it was able to qualify as a REIT and did so.

In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions.

We may face possible adverse changes in federal tax laws, which may result in an increase in our tax liability.

Our failure to qualify as a REIT could adversely affect our business and the value of our common stock.

We may face possible adverse federal tax audits and changes in federal tax laws, which may result in an increase in our tax liability.

In the normal course of business, certain entities through which we own real estate either have undergone or may undergo tax audits.

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From time-to-time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability.

A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes.

A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes in laws, regulations and administration of property and transfer taxes.

If such changes occur, we may be required to pay additional taxes on our assets or income.

These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for the payment of our indebtedness and make distributions to our stockholders.

These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available to pay our indebtedness and make distributions to our stockholders.

Compliance or failure to comply with the Americans with Disabilities Act (“ADA”) or other safety regulations and requirements could result in substantial costs.

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However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in clean-up or compliance requirements could result in significant costs to us.

UNRESOLVED STAFF COMMENTS

There are no unresolved comments from the staff of the Securities and Exchange Commission as of the date of this Annual Report on Form 10-K.

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What changed 10-K

Item 1A. Risk Factors