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Item 7. Management’s Discussion and Analysis

2026-02-09 compared with 2025-02-10 · 40 added, 34 removed, 129 unchanged (36% of the section changed)

1 unchanged sentence

The following discussion should be read in conjunction with the consolidated financial statements and related notes included under Part II, Item 8 of this Annual Report on Form 10-K.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) within this section is focused on the years ended December 31, 2024 and 2023 , including year-to-year comparisons between these years.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is focused on the years ended December 31, 2025 and 2024, including year-to-year comparisons between these years.

Our MD&A for the year ended December 31, 2023 , including year-to-year comparisons between 2024 and 2023, can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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Net income for the year ended December 31, 2025 wa s $28,224,000 or $5.50 per diluted share, compared to $43,444,000 or $8.46 per diluted share for the year ended December 31, 2024 .

Net income for the year ended December 31, 2023 included $53,952,000 , or $10.52 per diluted share, of income as a result of a net gain on the sale of real estate.

Funds from operations (“FFO”) (non-GAAP) for the year ended December 31, 2025 wa s $62,995,000, or $12.27 p er diluted share, compared to $77,968,000, or $15.19 per diluted share for the year ended December 31, 2024.

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The commercial occupancy rate was 94.6% and the residential occupancy rate was 97.7% .

In May 2024, Alexander’s and Bloomberg entered into an agreement to extend the leases covering approximately 947,000 square feet at our 731 Lexington Avenue property that were scheduled to expire in February 2029 for a term of eleven years to February 2040.

On January 31, 2025, Home Depot’s 83,000 square foot lease at the retail portion of our 731 Lexington Avenue property expired.

Annual rental revenues from Home Depot were approximately $15,000,000.

In the fourth quarter of 2024, we entered into ten-year leases with Burlington and Marshalls to relocate them to our Rego Park II property in 2025 from our Rego Park I property which is now vacant.

We are currently exploring sale opportunities for our Rego Park I property and are in advanced negotiations with a potential buyer.

Significant Tenant

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In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data.

On September 30, 2024, we entered into a new $400,000,000 mortgage loan on the office condominium portion of 731 Lexington Avenue.

The interest-only loan has a fixed rate of 5.04% and matures in October 2028.

The loan is prepayable, at the Company’s option, with no penalty, beginning in October 2026.

The new loan replaces the previous $490,000,000 loan that bore interest at the Prime Rate and was scheduled to mature in October 2024.

On December 5, 2025, we completed a $175,000,000 refinancing of the mortgage loan on our Rego Park II shopping center.

The interest-only loan is at SOFR plus 2.00% (5.72% as of December 31, 2025) and matures on December 5, 2030.

We paid down by $23,544,000 the previous $198,544,000 loan that bore interest at SOFR plus 1.45% and was scheduled to mature on December 12, 2025.

On December 23, 2025, we entered into an agreement to restructure the $300,000,000 mortgage loan on the retail condominium portion of 731 Lexington Avenue, which previously bore interest at SOFR plus 1.51%.

The restructured loan was split into (i) a $132,500,000 senior A-Note that was purchased by a wholly owned subsidiary of Alexander’s, which bears interest at a fixed rate of 7.00% and (ii) a $167,500,000 junior C-Note held by the lenders of the original loan, which accrues PIK interest at 4.55%.

In addition, Alexander’s has the right to fund operating shortfalls, interest on the A-Note and capital for re-leasing at the property through a B-Note, which will be junior to the A-Note and senior to the C-Note.

The B-Note bears interest at a fixed rate of 13.50%, except for loan amounts above $65,000,000 used to pay interest on the A-Note, which will bear interest at a fixed rate of 7.00%.

The restructured loan matures in December 2035.

All future net sales or refinancing proceeds will be distributed through the payment waterfall per the terms of the restructured loan agreement.

If such proceeds (or appraised value in such refinancing) are insufficient to cover the C-Note loan balance, any outstanding C-Note indebtedness that remains unpaid shall be forgiven.

Since the debt balances related to the A-Note and B-Note are eliminated in consolidation, the balance presented as mortgages payable for this loan on our consolidated balance sheet as of December 31, 2025 is $167,691,000, which is comprised of the principal balance of the C-Note and the PIK interest due upon maturity.

Critical Accounting Estimate

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Rental Revenues

Rental revenues were $226,374,000 in the year ended December 31, 2024, compared to $224,962,000 in the prior year, an increase of $1,412,000.

This was primarily due to (i) $4,583,000 of higher rental revenue from Bloomberg’s lease extension, and (ii) $2,322,000 of higher real estate tax reimbursements due to higher real estate tax expense, partially offset by (iii) $3,785,000 of lower rental revenue from IKEA’s lease expiration at Rego Park I, (iv) $875,000 of lower rental revenue from Bed Bath & Beyond’s lease rejection at Rego Park I, and (v) $781,000 of lower rental revenue from Old Navy’s lease termination at Rego Park I.

Rental revenues were $213,183,000 in the year ended December 31, 2025 , compared to $226,374,000 in the prior year, a decrease of $13,191,000.

This was primarily due to (i) $13,831,000 of lower rental revenue from Home Depot’s lease expiration at 731 Lexington Avenue and (ii) $9,001,000 of lower rental revenue from IKEA’s lease expiration at Rego Park I, partially offset by (iii) $4,399,000 of higher rental revenue from new leases at Rego Park II, (iv) $3,403,000 of higher recoveries of operating expenses and capital expenditures and (v) $2,325,000 of higher rental revenue from Bloomberg’s lease extension at 731 Lexington Avenue.

Operating Expenses

Operating expenses were $ 106,376,000 in the year ended December 31, 2025 , compared to $103,240,000 in the prior year, an increase of $3,136,000.

This was primarily due to higher real estate tax expense and non reimbursable operating expenses, partially offset by higher capitalized expenses during the current year.

This was primarily due to (i) $2,388,000 of higher operating expenses subject to recovery, including real estate taxes and common area maintenance and (ii) $1,179,000 of higher operating expenses not subject to recovery, partially offset by (iii) higher capitalized expenses of $431,000.

Depreciation and Amortization

Depreciation and amortization was $35,061,000 in the year ended December 31, 2025 , compared to $34,782,000 in the prior year, an increase of $279,000.

This was primarily due to higher depreciation expense on capital projects placed into service.

This was primarily due to higher depreciation and amortization expense on capital costs for new leases at Rego Park II, partially offset by the accelerated depreciation and amortization related to IKEA’s lease expiration at Rego Park I in the prior year.

General and Administrative Expenses

General and administrative expenses were $6,555,000 in the year ended December 31, 2025 , compared to $6,519,000 in the prior year, an increase of $36,000.

This was primarily due to higher professional fees.

Interest and Other Income

Interest and other income was $24,429,000 in the year ended December 31, 2024, compared to $22,245,000 in the prior year, an increase of $2,184,000.

This was primarily due to an increase in average interest rates.

Interest and other income was $14,657,000 in the year ended December 31, 2025 , compared to $24,429,000 in the prior year, a decrease of $9,772,000.

This was primarily due to a decrease in average interest rates and investment balances.

Interest and Debt Expense

Interest and debt expense was $62,818,000 in the year ended December 31, 2024, compared to $58,297,000 in the prior year, an increase of $4,521,000.

This was primarily due to higher interest rates, additional costs associated with the refinancing of our office condominium at 731 Lexington Avenue, and higher deferred debt issuance cost amortization, partially offset by lower interest rate cap premium amortization.

Net Gain on Sale of Real Estate

Net gain on the sale of real estate was $53,952,000 in the year ended December 31, 2023, resulting from the sale of the Rego Park III land parcel in Queens, New York in May 2023.

Interest and debt expense was $51,624,000 in the year ended December 31, 2025 , compared to $62,818,000 in the prior year, a decrease of $11,194,000.

This was primarily due to (i) $8,439,000 from lower rates, (ii) $6,833,000 from the refinancing and downsize of the 731 Lexington Office loan in September 2024 and (iii) $5,883,000 of lower interest rate cap premium amortization, partially offset by (iv) $9,665,000 from the expiration of the 731 Lexington Retail swap in May 2025.

Related Party Transactions

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Liquidity and Capital Resources

Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing commissions, dividends to stockholders as well as development costs.

Our cash requirements include property operating expenses, capital improvements, tenant improvements, debt service, leasing commissions, dividends to stockholders and development costs.

The sources of liquidity to fund these cash requirements include rental revenue, which is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties, as well as our existing cash, proceeds from financings, including mortgage or construction loans secured by our properties and proceeds from asset sales.

As of December 31, 2025 , we had $192,225,000 of liquidity comprised of cash and cash equivalents and restricted cash.

Recent increases in interest rates and inflation could adversely affect our cash flow from continuing operations but we anticipate that cash flow from continuing operations over the next twelve months, together with existing cash balances, will be adequate to fund our business operations, cash dividends to stockholders, debt service and capital expenditures.

The ongoing fluctuations in interest rates and the effects of inflation could adversely affect our cash flow from continuing operations but we anticipate that cash flow from continuing operations over the next twelve months, together with existing cash balances, will be adequate to fund our business operations, cash dividends to stockholders, debt service and capital expenditures.

We may refinance our maturing debt as it comes due or choose to pay it down.

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Net cash used in financing activities of $254,268,000 was comprised of (i) debt repayments of $335,044,000, (ii) dividends paid of $92,425,000 and (iii) debt issuance costs of $1,799,000, partially offset by (iv) proceeds from borrowings of $175,000,000.

Net cash used in investing activities of $13,222,000 was comprised of construction in progress and real estate additions of $19,785,000, partially offset by proceeds from an interest rate cap of $6,563,000.

Net cash used in investing activities of $20,787,000 was comprised of construction in progress and real estate additions.

Net cash provided by operating activities of $73,444,000 was comprised of (i) net income of $28,224,000 and (ii) adjustments for non-cash items of $50,727,000, partially offset by (iii) the net change in operating assets and liabilities of $5,507,000.

The adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $37,897,000, (ii) straight-lining of rents of $13,116,000, (iii) interest rate cap premium amortization of $6,483,000, (iv) other non-cash adjustments of $494,000 and (v) stock-based compensation expense of $450,000.

The adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $38,145,000, (ii) amortization of deferred lease incentives of $7,364,000, (iii) straight-lining of rents of $2,672,000, (iv) other non-cash adjustments of $1,552,000, (v) interest rate cap premium amortization of $600,000 and (vi) stock-based compensation expense of $394,000.

Liquidity and Capital Resources - continued

Cash Flows for the Year Ended December 31, 2024

Cash and cash equivalents and restricted cash were $552,977,000 at December 31, 2023, compared to $214,478,000 at December 31, 2022, an increase of $338,499,000.

This resulted from (i) $321,812,000 of net cash provided by investing activities and (ii) $109,111,000 of net cash provided by operating activities, partially offset by (iii) $92,424,000 of net cash used in financing activities.

Net cash provided by investing activities of $321,812,000 was comprised of (i) proceeds from maturities of U.S.

Treasury bills of $264,881,000, (ii) proceeds from sale of real estate of $67,821,000 and (iii) proceeds from an interest rate cap of $5,049,000, partially offset by (iv) the purchase of an interest rate cap of $11,258,000 and (v) construction in progress and real estate additions of $4,681,000.

Net cash provided by operating activities of $109,111,000 was comprised of (i) net income of $102,413,000 and (ii) the net change in operating assets and liabilities of $16,753,000, partially offset by (iii) adjustments for non-cash items of $10,055,000.

The adjustments for non-cash items were comprised of (i) net gain on sale of real estate of $53,952,000 and (ii) other non-cash adjustments of $1,559,000, partially offset by (iii) depreciation and amortization (including amortization of debt issuance costs) of $34,605,000, (iv) interest rate cap premium amortization of $7,770,000, (v) straight-lining of rents of $2,631,000 and (vi) stock-based compensation expense of $450,000.

Net cash used in financing activities of $92,424,000 was comprised of dividends paid of $92,320,000 and debt issuance costs of $104,000.

Cash and cash equivalents and restricted cash were $393,836,000 at December 31, 2024 , compared to $552,977,000 at December 31, 2023 , a decrease of $159,141,000.

This resulted from (i) $200,025,000 of net cash used in financing activities and (ii) $13,222,000 of net cash used in investing activities, partially offset by (iii) $54,106,000 of net cash provided by operating activities.

Net cash used in financing activities of $200,025,000 was comprised of (i) debt repayments of $500,000,000, (ii) dividends paid of $92,378,000 and (iii) debt issuance costs of $7,647,000, partially offset by (iv) proceeds from borrowings of $400,000,000.

Net cash provided by operating activities of $54,106,000 was comprised of (i) net income of $43,444,000 and (ii) adjustments for non-cash items of $58,440,000, partially offset by (iii) the net change in operating assets and liabilities of $47,778,000.

The adjustments for non-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of $37,897,000, (ii) straight-lining of rents of $13,116,000, (iii) interest rate cap premium amortization of $6,483,000, (iv) amortization of deferred lease incentives of $4,897,000 and (v) stock-based compensation expense of $450,000, partially offset by (vi) $4,403,000 other non-cash adjustments.

On February 4, 2026, our Board of Directors declared a regular quarterly dividend of $4.50 per share (an indicated annual rate of $18.00 per share).

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731 Lexington Avenue, office condominium $ 400,000 5.04 % Oct.

731 Lexington Avenue, retail condominium (1)(2)

300,000 1.76 % Aug.

Rego Park II shopping center (1)(2)

175,000 5.72 % Dec.

731 Lexington Avenue, retail condominium (3)

167,691 4.55 % Dec.

The Alexander apartment tower 94,000 2.63 % Nov.

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(1) Interest rate listed represents the rate in effect as of December 31, 2025 based on SOFR as of contractual reset date plus contractual spread, adjusted for hedging instruments as applicable.

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

(2) Interest at SOFR plus 2.00% (SOFR is capped at a rate of 4.50% through December 2026).

(3) Represents the $167,500 principal balance of the C-Note plus PIK interest of $191.

The debt balances related to the A-Note and the B-Note are eliminated in consolidation.

Refer to page 27 herein for further discussion.

Below is a summary of our principal and interest repayments scheduled as of December 31, 2025.

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Commitments and Contingencies

W e 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.

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

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Depreciation and amortization of real property 34,771 34,524

Net gain on sale of real estate — (53,952)

FFO (non-GAAP) $ 62,995 $ 77,968

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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 7. Management’s Discussion and Analysis