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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended: DECEMBER 31, 2004

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2005

o 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            ___________________ to            _________________________

Commission file number:001-6064
ALEXANDER'S, INC.
- --------------------------------------------------------------------------------
             (Exact
(Exact name of registrant as specified in its charter)

                 DELAWARE                                   51-0100517
- ------------------------------------------          ----------------------------
     (State or other jurisdiction of                       (IRS Employer
      incorporation or organization)                    Identification No.)

  210 ROUTE 4 EAST, PARAMUS, NEW JERSEY                        07652
- ------------------------------------------          ----------------------------
 (Address of principal executive offices)                    (Zip Code)

Delaware
(State or other jurisdiction of incorporation or organization) 51-0100517
(IRS Employer Identification No.)

210 Route 4 East, Paramus, New Jersey
(Address of principal executive offices) 

07652
(Zip Code)
Registrant's telephone number, including area code(201) 587-8541
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
         -------------------              -----------------------------------------
Common Stock, $1 par value per share New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: NONE

        Securities registered pursuant to Section 12(g) of the Act:NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act.    YES o        NO ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.    YES o        NO ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES [X]ý        NO [ ]

o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[X]

ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).    Large accelerated filer o    Accelerated filer ý     Non-accelerated filer o
Indicate by check mark if whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES [X]o        NO [ ]

ý
The aggregate market value of the voting and non-voting common shares held by non-affiliates of the registrant, (i.e., by persons other than officers and directors of Alexander's, Inc.) as of June 30, 20042005 was $331,406,000.

$495,974,000.
As of February 4, 2005,1, 2006 there were 5,013,8505,024,000 shares of the registrant's common stock, par value $1 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE

PART
Part III: Portions of the Proxy Statement for Annual Meeting of Stockholders to be held on May 18, 2004

2006
TABLE OF CONTENTS PAGE ---- 4 13 17 17 18 19 20 21 29 29 46 46 48 48 49 49 49 50 51
 
  Item    
  Page
PART I.   1.   Business   4
    1A.   Risk Factors   7
    1B.   Unresolved Staff Comments   14
    2.   Properties   15
    3.   Legal Proceedings   19
    4.   Submission of Matters to a Vote of Security Holders   19
        Executive Officers of the Registrant   20

PART II. 
  
5. 
  
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
    Purchases of Equity Securities 
  
21
    6.   Selected Financial Data   22
    7.   Management's Discussion and Analysis of Financial Condition and
    Results of Operations   
23
    7A.   Quantitative and Qualitative Disclosures About Market Risk   32
    8.   Financial Statements and Supplementary Data   33
    9.   Changes in and Disagreements with Accountants on Accounting and Financial
    Disclosure   52
    9A.   Controls and Procedures   52
    9B.   Other Information   52

PART III. 
  
10. 
  
Directors and Executive Officers of the Registrant(1) 
  
54
    11.   Executive Compensation(1)   54
    12.   Security Ownership of Certain Beneficial Owners and Management and Related
    Stockholder Matters(1)   54
    13.   Certain Relationships and Related Transactions(1)   54
    14.   Principal Accountant Fees and Services(1)   54

PART IV. 
  
15. 
  
Exhibits and Financial Statement Schedules 
  
55

SIGNATURES 
  
56
(1)
These items are omitted in part or in whole because the registrant will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 for the election of directors with the Securities and Exchange Commission not later than 120 days after December 31, 2004,2005, portions of which isare incorporated by reference herein. See "Executive Officers of the Registrant" on page 20 of this Annual Report on Form 10-K for information relating to executive officers.

                                      -2-


FORWARD-LOOKING STATEMENTS
        Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. The
Company'sOur future results, financial condition, results of operations and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans" "would," "may," "will" or other similar expressions in this Annual Report on Form 10-K. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors
that will determine these items are beyond our ability to control or predict.
Factors that might cause such a material difference include, but are not limited
to: (a) national, regional and local economic conditions; (b) the consequences
of any armed conflict involving, or terrorist attack against, the United States;
(c) our ability to secure adequate insurance; (d) local conditions, such as an
oversupply of space or a reductionSee "Item 1A—Risk Factors" in demand for real estate in the area; (e)
competition from other available space; (f) whether tenants consider a property
attractive; (g) the financial condition of our tenants, including the extent of
tenant bankruptcies or defaults; (h) whether we are able to pass some or all of
any increased operating costs we incur through to our tenants; (i) how well we
manage our properties; (j) any increase in interest rates; (k) any decreases in
market rental rates; (l) the timing and costs associated with property
development, improvements and rentals; (m) changes in taxation or zoning laws;
(n) government regulations; (o) our failure to continue to qualify as a real
estate investment trust; (p) availability of financingthis Annual Report on acceptable terms or at
all; (q) potential liability under environmental or other laws or regulations;
(r) general competitive factors; (s) dependence upon Vornado Realty Trust; and
(t) possible conflicts of interest with Vornado Realty Trust. See "Risk Factors"Form 10-K, for more information about important factors that would cause actual results to differ materially from the results anticipated by these forward lookingforward-looking statements.

      The Company claims
        We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for these forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or the date of the applicable document incorporated by reference. All subsequent written and oral forward-looking statements attributable to the Companyus or any person acting on itsour behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. The Company undertakesWe undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                                      -3-


PART I
ITEM 1.    BUSINESS
GENERAL
        Alexander's, Inc. (the "Company" or "Alexander's") 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 wholly owned subsidiaries. Alexander's activities are conducted through its manager, Vornado Realty Trust ("Vornado").
        Alexander's has six properties in the greater New York City metropolitan area consisting of:
Operating properties
(i)
the 731 Lexington Avenue property, a 1,300,0001.1 million square foot multi-use building which comprises the entire square block bounded bylocated on Lexington Avenue East 59th Street, Third Avenue and East 58th59^th Street in Manhattan, New York;

      York. 731 Lexington Avenue contains 885,000 net rentable square feet of office space and 174,000 net rentable square feet of retail space. 731 Lexington Avenue also contains approximately 248,000 net saleable square feet (which is not included in the 1.1 million square feet above) of residential space consisting of 105 condominium units (though a taxable REIT subsidiary ("TRS")).


The Company has leased all of the office space of which 697,000 square feet is leased to Bloomberg L.P., and 176,000 square feet is leased to Citibank N.A. In addition, the Company has leased 169,000 square feet of retail space to, among others, The Home Depot, Hennes & Mauritz, The Container Store, Wachovia Bank and Bank of America. As of December 31, 2005, 100 of the 105 residential condominium units were sold and closed;

(ii)
the Kings Plaza Regional Shopping Center, located on Flatbush Avenue in Brooklyn, New York, which contains 1,098,000 square feet and is comprised of a two-level mall containing 470,000 square feet, a 289,000 square foot department store leased to Sears and another anchor department store owned and operated as a Macy's by Federated Department Stores, Inc.;

(iii)
the Rego Park I property, located on Queens Boulevard and 63rd63^rd Road in Queens, New York, which contains a 351,000 square foot building that is 100% leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy;

(iv)
the Paramus property, which consists of 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey, which is leased to IKEA Property, Inc;

(v)
the Flushing property, located at Roosevelt Avenue and Main Street in Queens, New York, which contains a 177,000 square foot building that is currently vacant; and
Property to be developed
(vi)
the Rego Park II property, which comprises one and one-half square blocks of vacant land adjacent to the Rego Park I property.

731 Lexington Avenue

      731 Lexington Avenue contains approximately 885,000 net rentable square
feet of office space, approximately 174,000 net rentable square feet of retail
space (excluding 14,800 square feet of mezzanine space) and approximately
248,000 net saleable square feet of residential space consisting of 105
condominium units (through a taxable REIT subsidiary ("TRS")). Of the
construction budget of $630,000,000 (which excludes $29,000,000 for development
and guarantee fees to Vornado), $489,400,000 has been expended through December
31, 2004 and an additional $23,500,000 has been committed to at December 31,
2004. The remaining construction is expected to be completed by the end of 2005.

      On February 13, 2004, the Company closed a $400,000,000 mortgage financing
on the office space. The loan bears interest at 5.33%, matures in February 2014
and beginning in the third year, provides for principal payments based on a
25-year amortization schedule such that over the remaining eight years of the
loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000
was used to repay the entire amount outstanding under the previously existing
construction loan.

      While the project is nearing completion, there can be no assurance that
the remainder of the project will be completed on time or completed for the
budgeted amount. Any failure to complete the 731 Lexington Avenue project on
time or within budget may adversely affect future cash flows, funds from
operations and financial condition.

                                      -4-

Significant Tenants
        Bloomberg L.P. and Sears accounted for 36%34%, and 11%36% of the Company's consolidated revenues for the yearyears ended December 31, 2005 and 2004, andrespectively. Sears accounted for 11% and 18% of the Company's consolidated revenues in 2004 and 19% in 2003, and 2002, respectively. No other tenant accounted for more than 10% of revenues.

revenues in any of the last three years.
Relationship with Vornado Realty Trust
        Vornado owned 33.0% of the outstanding common stock of Alexander's Inc. as of December 31, 2004.2005. Steven Roth is the Chairman of the Board and Chief Executive Officer of the Company, the Managing General Partner of Interstate Properties ("Interstate"), a New Jersey general partnership, and the Chairman of the Board and Chief Executive Officer of Vornado. At December 31, 2004,2005, Mr. Roth, Interstate and its other two general partners, David Mandelbaum and Russell B. Wight, Jr. (who are also directors of the Company and trustees of Vornado) owned, in the aggregate, 27.4%27.7% of the outstanding common stock of Alexander's, Inc., and 10.8%9.2% of the outstanding common shares of beneficial interest of Vornado.
        The Company is managed and its properties are leased and developed by Vornado pursuant to management, leasing and development agreements.agreements with one-year terms, expiring in March of each year, which are automatically renewable. Vornado is a fully-integrated REIT with significant experience in managing, leasing, developing, and operating retail and office properties. Further, in conjunction with the Company's 731
Lexington Avenue development project, Vornado has agreed to guarantee to the
construction lender, the lien free, timely completion of the construction of the
project and funding of project costs in excess of a stated budget, if not funded
by the Company (the "Completion Guarantee"). These agreements are more fully
described in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources -
Relationship with Vornado Realty Trust."
        At December 31, 2004,2005, the Company owed Vornado (i) $18,635,000 for
development fees, (ii) $23,748,000$32,804,000 for leasing fees (iii) $4,894,000and $1,520,000 for the
guarantee fee, (iv) $537,000 for interest, and (v) $1,411,000 for management,
fees and property management and cleaning fees.

      At December 31, 2004, the Company was indebted to Vornado in the amount of
$124,000,000, comprised of (i) a $95,000,000 note and (ii) $29,000,000 under a
$50,000,000 line of credit (which carries a 1% unused commitment fee). The
current interest rate on the loan and line of credit is 9.00% and resets
quarterly using a 6.00% spread to one-year treasury with a 3.00% floor for
treasuries. The Vornado debt matures on the earlier of January 3, 2006 or the
date the Construction Loan is finally repaid. The Construction Loan matures on
January 3, 2006 subject to two one-year extensions. In addition, any amounts
which may be due under the Completion Guarantee are due at the same time.

ENVIRONMENTAL MATTERS
Environmental Matters
        In June 1997, the Kings Plaza Regional Shopping Center commissioned an Environmental Study and Contamination Assessment Site Investigation (the "Phase II Study") to evaluate and delineate environmental conditions disclosed in a Phase I study. The results of the Phase II Study indicated the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and groundwater. The Company has delineated the contamination and has developed a remediation approach, which is ongoing. The New York State Department of Environmental Conservation ("NYDEC"NYSDEC") has approved a portion of the remediation approach. The Company accrued $2,675,000 in previous years, of which $2,550,000$2,612,000 has been paid as of December 31, 2004,2005, for its estimated obligation with respect to the cleanup of the site, and which includes costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial action and (v) professional fees. If NYDECNYSDEC insists on a more extensive remediation approach, the Company could incur additional obligations.
        The Company has concluded that the large majoritymost of the contamination at the site is historic and the result of past activities of third parties. AlthoughIn connection with the pursuit of claims against third parties, on January 31, 2005 and November 14, 2005, the Company is pursuing claims against potentially responsible third
parties, and negotiations are ongoing with a former owner of the property, there
can be no assurance as to the extent that the Company will be successful in
obtaining recoveryreceived settlements from such parties of the remediation costs incurred. In
addition, the costs associated with further pursuit of responsible parties may
be prohibitive. The Company has not recorded an asset as of December 31, 2004
for possible recoveries of environmental remediation costs from potentially
responsible third parties. On January 31, 2005, the Company received a
settlement of $337,500 from one of the responsible parties.

                                      -5-


COMPETITION

      The Company conducts its real estate operations in the greater New York
metropolitan area, a highly competitive market. The Company's success depends
upon, among other factors, trends of national and local economies, the financial
condition and operating results of current and prospective tenants, the
availability and cost of capital, interest rates, construction and renovation
costs, taxes, governmental regulations and legislation, population trends,
zoning laws, and the ability of the Company to lease, sublease or sell its
properties, including the condominium units at 731 Lexington Avenue, at
profitable levels. The Company competes with a large number of real estate
property owners and developers. The Company's success is also subject to its
ability to refinance existing debts as they come due and on acceptable terms.

EMPLOYEES

      The Company currently has one salaried corporate employee and 77 property
level employees.

AVAILABLE INFORMATION

      Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, as well
as Reports on Forms 3, 4 and 5 regarding officers, directors, and 10% beneficial
owners of the Company, filed or furnished pursuant to Section 13(a), 15(d) or
16(a) of the Securities Exchange Act of 1934, are available free of charge
through the Company's website (www.alx-inc.com) as soon as reasonably
practicable after they are electronically filed with, or furnished to, the
Securities and Exchange Commission ("SEC"). The Company also has made available,
on the website, copies of the Company's (i) Audit Committee charter, (ii)
Compensation Committee charter, (iii) code of business conduct and ethics and
(iv) corporate governance guidelines. In the event of any changes to these
items, changed copies will be made available on the website.

      Vornado and Interstate filed, on April 11, 2000, the 26th amendment to, a
Form 13D with the SEC indicating that they, as a group own in excess of 51% of
the common stock of the Company. This ownership level makes the Company a
"controlled" company for the purposes of the New York Stock Exchange, Inc.'s
corporate governance Standards (the "NYSE Rules"). This means that the Company
is not required by the NYSE Rules, among other things, to have a majority of the
members of its Board of Directors be independent under the NYSE Rules, to have
all of its members of its Compensation Committee be independent under the NYSE
Rules or to have a Nominating Committee. While the Company has voluntarily
complied with the majority independence requirements, it is under no obligation
to do so and this situation may change at anytime.

EXECUTIVE OFFICE

      The Company is a Delaware corporation. Its principal executive office is
210 Route 4 East, Paramus, New Jersey 07652 and its telephone number is (201)
587-8541.

RISK FACTORS

      Certain risks and other factors may adversely affect the Company's
business and operations including, but not limited to those detailed below. This
section contains forward-looking statements. Please see to the qualifications
and limitations on forward-looking statements on page 3.

REAL ESTATE INVESTMENTS' VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.

THE VALUE OF REAL ESTATE FLUCTUATES DEPENDING ON CONDITIONS IN THE GENERAL
ECONOMY AND THE REAL ESTATE INDUSTRY. THESE CONDITIONS MAY ALSO LIMIT THE
COMPANY'S REVENUES AND AVAILABLE CASH.

      The factors that affect the value of the Company's real estate include:
national, regional and local economic conditions, the consequences of any armed
conflict involving, or terrorist attack against, the United States, the
Company's ability to secure adequate insurance, local conditions, such as an
oversupply of space or a reduction in demand for real estate in the area,
competition from other available space, whether tenants consider a property
attractive, the financial condition of the Company's tenants, including the
extent of tenant bankruptcies or defaults, whether the Company is able to pass
some or all of any increased operating costs it incurs through to tenants, how
well the Company manages its properties, any increases in (i) interest rates,
(ii) real estate taxes and (iii) other expenses, any decreases in market rental
rates, the timing and costs associated with property development, improvements
and rentals, changes in taxation or zoning laws, government regulations, the
Company's failure to continue to qualify as a REIT, availability of financing on
acceptable terms or at all, potential liability under environmental or other
laws or regulations, and general competitive factors.

                                      -6-


      The rents the Company receives and the occupancy levels at its properties
may decline as a result of adverse changes in any of these factors. Some of the
Company's major expenses and payments, including mortgage payments, real estate
taxes and maintenance costs, generally do not decline when the related rents
decline. If rents decline while costs remain constant, the Company's income and
funds available for the payment of its indebtedness and for distribution to its
security holders will decline.

THE COMPANY DEPENDS ON LEASING SPACE TO TENANTS ON ECONOMICALLY FAVORABLE TERMS
AND COLLECTING RENT FROM ITS TENANTS, SOME OF WHICH MAY NOT BE ABLE TO PAY.

      The Company's financial results depend on leasing space in its properties
to tenants on economically favorable terms. In addition, because substantially
all of its income comes from rentals of real property, the Company's income and
funds available for the payment of its indebtedness and for distribution to
security holders will decrease if a significant number of tenants cannot pay
their rents. If a tenant does not pay its rent, the Company might not be able to
enforce its rights as landlord without delays and might incur substantial legal
costs. For information regarding risks associated with bankruptcy of our
tenants, see " -- Bankruptcy of tenants may decrease the Company's revenues and
available cash." below.

SOME OF THE COMPANY'S TENANTS REPRESENT A SIGNIFICANT PORTION OF ITS REVENUES.
LOSS OF THESE TENANT RELATIONSHIPS OR DETERIORATION IN THE TENANTS' CREDIT
QUALITY COULD ADVERSELY AFFECT RESULTS.

      Bloomberg L.P. and Sears accounted for 36%, and 11% of the Company's
consolidated revenues for the year ended December 31, 2004, and Sears accounted
for 18% and 19% in 2003 and 2002,$1,750,000, respectively. If the Company fails to maintain
a relationship with any of its significant tenants or fails to perform its
obligations under agreements with these tenants, or if any of these tenants
fails or becomes unable to perform its obligations under the agreements, the
Company expects that any one or more of these events would adversely affect the
Company's results of operations and financial condition.

BANKRUPTCY OF TENANTS MAY DECREASE THE COMPANY'S REVENUES AND AVAILABLE CASH.

      A number of companies, including some of the Company's tenants, have
declared bankruptcy in recent years, and other tenants may declare bankruptcy or
become insolvent in the future. If a major tenant declares bankruptcy or becomes
insolvent, the property at which it leases space may have lower revenues and
operational difficulties, and, in the case of its shopping centers, the Company
may have difficulty leasing the remainder of the affected property. The
Company's leases generally do not contain restrictions designed to ensure the
creditworthiness of tenants. As a result, the bankruptcy or insolvency of a
major tenant could result in a lower level of funds available for the payment of
its indebtedness and for distribution to security holders.

SOME OF THE COMPANY'S POTENTIAL LOSSES MAY NOT BE COVERED BY INSURANCE.

      The Company carries comprehensive liability and all-risk property
insurance (fire, flood, extended coverage and rental loss insurance) with
respect to its assets but is at risk for financial loss in excess of the
policies' limits. Such a loss could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.

      The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), contain
customary covenants requiring the Company to maintain insurance. There can be no
assurance that the lenders under these instruments will not take the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks and the Company is unable to obtain
coverage if the Terrorism Risk Insurance Act of 2002 is not extended, it may
adversely affect the Company's ability to finance and/or refinance its
properties and businesses.

                                      -7-


THE COMPANY HAS MADE A SIGNIFICANT INVESTMENT IN ITS 731 LEXINGTON AVENUE
PROPERTY. THE FAILURE TO COMPLETE CONSTRUCTION ON TIME AND WITHIN BUDGET WOULD
ADVERSELY AFFECT THE COMPANY'S RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

      731 Lexington Avenue is a 1.3 million square foot multi-use building. The
building contains approximately 885,000 net rentable square feet of office
space, approximately 174,000 net rentable square feet of retail space, and
approximately 248,000 net saleable square feet of residential space consisting
of condominium units (through a taxable REIT subsidiary ("TRS")). While the
project in nearing completion, there can be no assurance that the remainder of
the project will be completed on time or completed for the budgeted amount. Any
failure to complete the 731 Lexington Avenue property on time or within budget
may adversely affect future cash flows, funds from operations, and financial
condition.

THE COMPANY MAY ACQUIRE OR DEVELOP NEW PROPERTIES, AND THIS MAY CREATE RISKS.

      In addition to the 731 Lexington Avenue property, the Company may acquire
or develop other properties or acquire other real estate companies when it
believes that an acquisition or development is consistent with its business
strategies. It may not, however, succeed in consummating desired acquisitions or
in completing developments, including the 731 Lexington Avenue property, on time
or within budget. The Company also might not succeed in leasing newly developed
or acquired properties, at rents sufficient to cover their costs of acquisition
or development and operations.

THE COMPANY MAY NOT BE PERMITTED TO DISPOSE OF CERTAIN PROPERTIES OR PAY DOWN
THE DEBT ASSOCIATED WITH THOSE PROPERTIES WHEN IT MIGHT OTHERWISE DESIRE TO DO
SO WITHOUT INCURRING ADDITIONAL COSTS.

      As part of an acquisition of a property, the Company may agree with the
seller that it will not dispose of the acquired property or reduce the mortgage
indebtedness on the property for significant periods of time unless it pays
certain of the resulting tax costs of the seller. These agreements could result
in the Company holding on to properties that it would otherwise sell and not
paying down or refinancing indebtedness that it would otherwise pay down or
refinance.

IT MAY BE DIFFICULT TO BUY AND SELL REAL ESTATE QUICKLY, AND TRANSFER
RESTRICTIONS APPLY TO SOME OF THE COMPANY'S MORTGAGED PROPERTIES.

      Real estate investments are relatively difficult to buy and sell quickly.
Therefore, the Company has limited ability to vary its portfolio promptly in
response to changes in economic or other conditions. Some of the Company's
properties are mortgaged to secure payment of indebtedness. If it was unable to
meet its mortgage payments, lenders could foreclose on properties and the
Company could incur losses. In addition, if it wishes to dispose of one or more
of the mortgaged properties, it may not be able to obtain release of the liens
on the mortgaged properties. If a lender forecloses on a mortgaged property or
if a mortgage lien prevents the Company from selling a property or a portion
thereof, funds available for payment of indebtedness and for distribution to
security holders may decline. For information relating to the mortgages on the
Company's properties, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital Resources
- -- Debt and Contractual Obligations" and the notes to the consolidated financial
statements in this Annual Report on Form 10-K.

ALL OF THE COMPANY'S PROPERTIES ARE IN THE GREATER NEW YORK CITY METROPOLITAN
AREA AND ARE AFFECTED BY THE ECONOMIC CYCLES AND RISKS INHERENT IN THAT REGION.

      During the years ended December 31, 2004, 2003 and 2002, all of the
Company's revenues came from properties located in the greater New York City
metropolitan area. Like other real estate markets, the real estate market in
this area has experienced economic downturns in the past, and the Company cannot
predict how the current economic conditions will impact this market in both the
short and long term. Further declines in the economy or a decline in the real
estate market in this area could hurt the Company's financial performance and
the value of the Company's properties. The factors affecting economic conditions
in this region include: business layoffs or downsizing, industry slowdowns,
relocations of businesses, changing demographics, increased telecommuting and
use of alternative work places, financial performance and productivity of the
publishing, advertising, financial, technology, retail, insurance and real
estate industries, infrastructure quality, and any oversupply of, or reduced
demand for, real estate.

      It is impossible for the Company to assess the future effects of the
current uncertain trends in the economic and investment climates of the greater
New York City metropolitan region, and more generally of the United States, on
the real estate market in this area. If these conditions persist, they may
adversely affect the Company's businesses and future profitability.

                                      -8-


THE COMPANY MAY INCUR COSTS IN COMPLYING WITH ENVIRONMENTAL LAWS.

      The Company's operations and properties are subject to various federal,
state and local laws, ordinances and regulations concerning the protection of
the environment, including air and water quality, hazardous substances and
health and safety. Under certain of these environmental laws, a current or
previous owner or operator of real estate may be required to investigate and
cleanup hazardous or toxic substances released at a property. The owner or
operator may also be held liable to a government entity or to third parties for
property damage or personal injuries and for investigation and cleanup costs
incurred by those parties because of the contamination. These laws often impose
liability without regard to whether the owner or operator knew of the release of
the substances or caused the release. The presence of contamination or the
failure to remediate contamination may impair the Company's ability to sell or
lease real estate or to borrow using the real estate as collateral. Other laws
and regulations govern indoor and outdoor air quality, including those that can
require the abatement or removal of materials containing asbestos in the event
of damages, demolition, renovations or remodeling, and also govern emissions of,
and exposure to, asbestos fibers in the air. The maintenance and removal of lead
paint, certain electrical equipment containing polychlorinated biphenyls and
underground storage tanks are also regulated by federal and state laws. The
Company could incur fines for environmental compliance and be held liable for
the costs of remedial action with respect to the foregoing regulated substances
or tanks or related claims arising out of environmental contamination or
exposure at or from its properties.

      Each of the Company's properties has been subjected to varying degrees of
environmental assessment at various times. The environmental assessments did not
reveal any material environmental condition except as noted in the following
paragraph. However, identification of new compliance concerns or undiscovered
areas of contamination, changes in the extent or known scope of contamination,
discovery of additional sites, human exposure to the contamination or changes in
cleanup or compliance requirements could result in significant costs to the
Company.

      In June 1997, the Kings Plaza Regional Shopping Center commissioned the
Phase II Study to evaluate and delineate environmental conditions disclosed in a
Phase I study. The results of the Phase II study indicated the presence of
petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and
groundwater. The Company has delineated the contamination and has developed a
remediation approach, which is ongoing. NYDEC has approved a portion of the
remediation approach. The Company accrued $2,675,000 in previous years, of which
$2,550,000 has been paid as of December 31, 2004, for its estimated obligation
with respect to the cleanup of the site, and which includes costs of (i)
remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv)
remedial action and (v) professional fees. If NYDEC insists on a more extensive
remediation approach, the Company could incur additional obligations. The
Company can make no assurance that it will not incur additional environmental
costs with respect to this property.

REAL ESTATE IS A COMPETITIVE BUSINESS.
Competition
        The Company operates in a highly competitive environment. All of its properties are located in the greater New York City metropolitan area. The Company competes with a large number of real estate property owners and developers. Principal factors of competition are the amount of rent charged, attractiveness of location and quality and breadth of services provided. The Company's success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and the ability of the Company to lease, sublease or sell its properties, at profitable levels. The Company's success is also subject to its ability to refinance existing debts as they come due and on acceptable terms.

Employees
        The Company currently has 96 employees.
Executive Office
        The Company's principal executive office is located at 210 Route 4 East, Paramus, New Jersey 07652 and its telephone number is (201) 587-8541.
Available Information
        Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, as well as Reports on Forms 3, 4 and 5 regarding officers, directors, and 10% beneficial owners of the Company, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934, are available free of charge through the Company's website (www.alx-inc.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC"). The Company also has made available on its website, copies of the Company's (i) Audit Committee charter, (ii) Compensation Committee Charter, (iii) Code of Business Conduct and Ethics and (iv) Corporate Governance Guidelines. In the event of any changes to these items, revised copies will be made available on the website.
        Vornado and Interstate filed, on April 11, 2000, the 26^th amendment to, a Form 13D with the SEC indicating that they, as a group own in excess of 51% of the common stock of the Company. This ownership level makes the Company a "controlled" company for the purposes of the New York Stock Exchange, Inc.'s Corporate Governance Standards (the "NYSE Rules"). This means that the Company is not required by the NYSE Rules, among other things, to have a majority of the members of its Board of Directors be independent under the NYSE Rules, to have all of its members of its Compensation Committee be independent under the NYSE Rules or to have a Nominating Committee. While the Company has voluntarily complied with the majority independence requirements, it is under no obligation to do so and this situation may change at anytime.

ITEM 1A.    RISK FACTORS
        Set forth below are material factors that may adversely affect our business and operations.
Real Estate Investments' Value and Income Fluctuate Due to Various Factors.
        The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also limit our revenues and available cash.
        The factors that affect the value of our real estate include, among other things:
•
national, regional and local economic conditions;
•
local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
•
competition from other available space;
•
whether tenants and users such as customers and shoppers consider a property attractive;
•
the financial condition of our tenants, including the condominium unitsextent of tenant bankruptcies or defaults;
•
whether we are able to pass some or all of any increased operating costs through to tenants;
•
how well we manage our properties;
•
fluctuations in interest rates;
•
changes in real estate taxes and other expenses;
•
changes in market rental rates;
•
the timing and costs associated with property improvements and rentals;
•
changes in taxation or zoning laws;
•
government regulation;
•
Alexander's failure to continue to qualify as a real estate investment trust;
•
availability of financing on acceptable terms or at all;
•
consequences of any armed conflict involving, or terrorist attacks against, the United States;
•
our ability to secure adequate insurance;
•
potential liability under environmental or other laws or regulations; and
•
general competitive factors.
        The rents we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If our rental revenues decline, we generally would expect to have less cash available to pay our indebtedness and distribute to our stockholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs, generally do not decline when the related rents decline.
We depend on leasing space to tenants on economically favorable terms and collecting rent from our 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 substantial majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to our stockholders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain our level of occupancy 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 might incur substantial legal and other costs.
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. If a major tenant declares bankruptcy or becomes insolvent, the rental property at which it leases space may have lower revenues and operational difficulties. In the case of our shopping centers, the bankruptcy or insolvency of a major tenant could cause us to have difficulty leasing the remainder of the affected property. Our leases generally do not contain restrictions designed to ensure the creditworthiness of our tenants. As a result, the bankruptcy or insolvency of a major tenant could result in a lower level of net income and funds available for the payment of our indebtedness or distribution to our stockholders.

Some of the our tenants represent a significant portion of our revenues. Loss of these tenant relationships or deterioration in the tenants' credit quality could adversely affect results.
        Bloomberg L.P. accounted for 34% and 36% of our consolidated revenues for the years ended December 31, 2005 and 2004, respectively. Sears accounted for 11% of our consolidated revenues for the year ended December 31, 2004. If we fail to maintain a relationship with any of our significant tenants or fail to perform our obligations under agreements with these tenants, or if any of these tenants fails or becomes unable to perform its obligations under the agreements, we expect that any one or more of these events would adversely affect our results of operations and financial condition.
Real estate is a competitive business.
        We operate in a highly competitive environment. All of our properties are located in the greater New York City metropolitan area. We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of location, the quality of the property and breadth and quality of services provided. Our success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.
We may incur costs to comply with environmental laws.
        Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure at or from our properties.
        Each of our properties has been subjected to varying degrees of environmental assessment at various times. Except as referenced below, the environmental assessments did not, as of this date, reveal any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery of additional sites, human exposure to the contamination or changes in cleanup or compliance requirements could result in significant costs to us.
        In June 1997, the Kings Plaza Regional Shopping Center commissioned the Phase II Study to evaluate and delineate environmental conditions disclosed in a Phase I study. The results of the Phase II study indicated the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and groundwater. We have delineated the contamination and have developed a remediation approach, which is ongoing. The New York State Department of Environmental Conservation ("NYSDEC") has approved a portion of the remediation approach. We accrued $2,675,000 in previous years, of which $2,612,000 has been paid as of December 31, 2005, for our estimated obligation with respect to the cleanup of the site, and which includes costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial action and (v) professional fees. If NYSDEC insists on a more extensive remediation approach, we could incur additional obligations. We can make no assurance that we will not incur additional environmental costs with respect to this property.

Some of our potential losses may not be covered by insurance.
        We carry comprehensive liability and all risk property insurance ((i) fire, (ii) flood, (iii) extended coverage, (iv) "acts of terrorism" as defined in the Terrorism Risk Insurance Extension Act of 2005 which expires in 2007, and (v) rental loss insurance) with respect to our assets.
        On June 30, 2005, we renewed our annual all risk policy with limits of (i) $960,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remaining properties. To the extent that we incur losses in excess of our insurance coverage, these losses would be borne by us and could be material.
        Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to Alexander's), contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage under these agreements, we may not be able to obtain an equivalent amount of coverage at profitable levels.

TERRORIST ATTACKS SUCH AS THOSE OF SEPTEMBERreasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain, or if the Terrorism Risk Insurance Extension Act of 2005 is not extended past 2007, it could adversely affect our ability to finance and/or refinance our properties.
Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.
        The Americans with Disabilities Act generally requires that public buildings, including our properties, be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to our stockholders.
        Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.
Our Investments Are Concentrated in the Greater New York City Metropolitan Area. Circumstances Affecting These Areas Generally Could Adversely Affect Our Business.
All of our properties are in the greater New York City metropolitan area and are affected by the economic cycles and risks inherent in that area.
        During the years ended December 31, 2005, 2004 and 2003, all of our revenues came from properties located in the greater New York City metropolitan area. Like other real estate markets, the real estate market in this area has experienced economic downturns in the past, and we cannot predict how economic conditions will impact this market in both the short and long term. Declines in the economy or a decline in the real estate market in this area could hurt the value of our properties and our financial performance. The factors affecting economic conditions in this region include:
•
business layoffs or downsizing;
•
industry slowdowns;
•
relocations of businesses;
•
changing demographics;
•
increased telecommuting and use of alternative work places;
•
financial performance and productivity of the publishing, advertising, financial, technology, retail, insurance and real estate industries;
•
infrastructure quality; and
•
any oversupply of, or reduced demand for, real estate.
        It is impossible for us to assess the future effects of the current uncertain trends in the economic and investment climates of the greater New York City metropolitan region, and more generally of the United States, on the real estate market in this area. If these conditions persist, or if there is any local, national or global economic downturn, our businesses and future profitability may be adversely affected.

We are subject to risks that affect the general retail environment.
        A substantial proportion of our properties are in the retail shopping center real estate market. This means that we are subject to factors that affect the retail environment generally, including the level of consumer spending and consumer confidence, the threat of terrorism and increasing competition from discount retailers, outlet malls, retail websites and catalog companies. These factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our shopping centers.
Terrorist attacks, such as those of September 11, 2001 IN NEW YORK CITY, MAY
ADVERSELY AFFECT THE VALUE OF THE COMPANY'S PROPERTIES AND ABILITY TO GENERATE
CASH FLOW.in New York City, may adversely affect the value of our properties and our ability to generate cash flow.
        All of the Company'sour properties are located in the greater New York City metropolitan area. In the aftermath of any terrorist attacks, tenants in this area may choose to relocate their businesses to less populated, lower-profile areas of the United States that are not as likely to be targets of future terrorist activity.activity and fewer customers may choose to patronize businesses in this area. This would trigger a decrease in the demand for space in these markets, which could increase vacancies in the Company'sour properties and force itus to lease itsour properties on less favorable terms. As a result, the value of the
Company'sour properties and the level of itsour revenues could decline materially.

THE COMPANY'S OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE
TO CONFLICTS OF INTEREST.

STEVEN ROTH, VORNADO REALTY TRUST AND INTERSTATE PROPERTIES MAY EXERCISE
SUBSTANTIAL INFLUENCE OVER THE COMPANY. THEY AND SOME OF THE COMPANY'S OTHER
DIRECTORS AND OFFICERS HAVE INTERESTS OR POSITIONS IN OTHER ENTITIES THAT MAY
COMPETE WITH THE COMPANY.

      At December 31, 2004, Interstate
We May Acquire or Sell Additional Assets or Develop Additional Properties. Our Failure or Inability to Consummate These Transactions or Manage the Results of These Transactions Could Adversely Affect Our Operations and its partners owned approximately
10.8% of the common shares of beneficial interest of Vornado, the Company's
manager,Financial Results.
We may acquire or develop properties and approximately 27.4% of Alexander's, Inc. common stock. Steven Roth,
David Mandelbaum and Russell B. Wight, Jr. are the partners of Interstate. Mr.
Roththis may create risks.
        We may acquire or develop properties when we believe that an acquisition or development is the Chairman of

                                      -9-

the Board of Directors and Chief Executive Officer of the Company, the Chairman
of the Board of Trustees and Chief Executive Officer of Vornado and the Managing
General Partner of Interstate. Mr. Wight and Mr. Mandelbaum are both trustees of
Vornado and members of the Company's Board of Directors.consistent with our business strategies, although currently our stated business strategy is not to engage in acquisitions. We may not, however, succeed in consummating desired acquisitions or in completing developments on time or within budget. In addition, Vornado
manageswe may face competition in pursuing acquisition or development opportunities that could increase our costs. When we do pursue a project or acquisition, we may not succeed in leasing newly developed or acquired properties at rents sufficient to cover their costs of acquisition or development and leases the real estate assets of Interstate.

      As of December 31, 2004, Vornado owned 33.0% of the Company's outstanding
common stock,operations. Difficulties in addition to that owned by Interstateintegrating acquisitions may prove costly or time-consuming and its partners. In
addition to the relationships describedcould divert management's attention. Acquisitions or developments in the immediately preceding paragraph,
Michael D. Fascitelli, the President and a trustee of Vornado, is the Company's
President and a member of its Board of Directors. Mr. Richard West is a trustee
of Vornado and a member of the Company's Board of Directors. In addition, Joseph
Macnow, Executive Vice President and Chief Financial Officer, holdsnew markets or industries where we do not have the same positions with Vornado.

      Becauselevel of their overlapping interests, Mr. Roth, Interstate Properties
and the other individuals noted in the preceding paragraphs may have substantial
influence over both Vornado and Alexander's, and on the outcome of any matters
submitted to Vornado shareholders or Alexander's stockholders for approval. In
addition, certain decisions concerning the Company's operations or financial
structure may present conflicts of interest among Messrs. Roth, Mandelbaum and
Wight and Interstate and other security holders. Mr. Roth and Interstate may, in
the future, engage in a wide variety of activities in the real estate business
whichmarket knowledge may result in conflicts of interest with respectpoorer than anticipated performance. We may abandon acquisition or development opportunities that we have begun pursuing and consequently fail to matters affecting
Vornadorecover expenses already incurred and have devoted management time to a matter not consummated.
It may be difficult to buy and sell real estate quickly.
        Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limited ability to vary our portfolio promptly in response to changes in economic or the Company, such as whichother conditions.
Our Organizational and Financial Structure Gives Rise to Operational and Financial Risks.
Alexander's depends on dividends and distributions from its direct and indirect subsidiaries. The creditors of these entitiessubsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or persons, if any, may
take advantage of potential business opportunities, the business focus of these
entities, the types of properties and geographic locations in which these
entities make investments, potential competition between business activities
conducted, or soughtdistributions to be conducted, by Vornado or the Company, competition for
properties and tenants, possible corporate transactions such as acquisitions,
and other strategic decisions affecting the future of these entities.

THERE MAY BE CONFLICTS OF INTEREST BETWEEN VORNADO REALTY TRUST, ITS AFFILIATES
AND THE COMPANY.

      At December 31, 2004, Vornado had loans receivable from the Company of
$124,000,000 at an interest rate of 9.00%. These loans mature on the earlier of
January 3, 2006 or the date that the 731 Lexington Avenue construction loan is
finally repaid. In addition, $21,000,000 was available under the line of credit
with Vornado at December 31, 2004. Vornado also manages, develops and leases the
Company's properties under agreements under which Vornado receives annual fees
and will receive a development fee and guarantee fee for the 731 Lexington
Avenue property. These agreements have one-year terms expiring in March of each
year, except that the 731 Lexington Avenue management and development agreements
have terms lasting until substantial completion of the construction of the 731
Lexington Avenue property, and are all automatically renewable. Because the
Company and Vornado share common senior management and because a majority of the
trustees of Vornado also constitute the majority of the Company's directors, the
terms of the foregoing agreements and any future agreements between the Company
and Vornado and its affiliates may not be comparable to those the Company could
have negotiated with an unaffiliated third party.

      For a description of Interstate's ownership of Vornado and Alexander's,
see " -- Steven Roth, Vornado Realty Trust and Interstate Properties may
exercise substantial influence over the Company. They and some of the Company's
other directors and officers have interests or positions in other entities that
may compete with the Company." above.

THE ORGANIZATIONAL AND FINANCIAL STRUCTURE OF THE COMPANY GIVES RISE TO
OPERATIONAL AND FINANCIAL RISKS.

THE COMPANY DEPENDS ON DIVIDENDS AND DISTRIBUTIONS FROM DIRECT AND INDIRECT
SUBSIDIARIES AND THESE SUBSIDIARIES' CREDITORS ARE ENTITLED TO PAYMENT OF
AMOUNTS PAYABLE TO THEM BY THE SUBSIDIARIES BEFORE THE SUBSIDIARIES MAY PAY ANY
DIVIDENDS OR DISTRIBUTIONS TO THE COMPANY.

      Alexander's, Inc. holds substantially
        Substantially all of itsAlexander's properties and assets are held through subsidiaries. Alexander's Inc. therefore depends on cash distributions and dividends from its subsidiaries for substantially all of its cash flow. The creditors of each of its 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 Alexander's, Inc.Alexander's. Thus, Alexander's Inc.'s ability to pay its indebtedness and to makepay dividends, if any, to its security holders depends on its subsidiaries' ability to first satisfy their obligations to their creditors.

THE COMPANY HAS SUBSTANTIAL INDEBTEDNESS, AND THIS INDEBTEDNESS MAY INCREASE.

      As of December 31, 2004, the Company had approximately $952,528,000 in
total debt outstanding, inclusive of $124,000,000 due to Vornado. Our ratio of
total debt to total enterprise value was 50.1% at December 31, 2004. "Enterprise
value" means the market equity value of Alexander's, Inc. plus debt less cash
and cash equivalents at such date.
        In addition, Alexander's participation in any distribution of the Company has significant debt
service obligations. Forassets of any of its direct or indirect subsidiaries upon the year ended December 31, 2004,liquidation, reorganization or insolvency of the Company's
scheduled cashsubsidiary, 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.

Our existing financing documents contain covenants and restrictions that may restrict our operational and financial flexibility and restrict or prohibit our ability to make payments for principal and interest were $64,194,000. In the
future, the Company may incur additional debt, and thus increase the ratio of
total debt to total enterprise value, to finance acquisitions or

                                      -10-


property developments. The Company may review and modify its debt level from
time to time without notice to or any vote of security holders.

ALEXANDER'S, INC. HAS OUTSTANDING AND EXERCISABLE STOCK APPRECIATION RIGHTS. THE
EXERCISE OF THESE STOCK APPRECIATION RIGHTS MAY IMPACT THE COMPANY'S LIQUIDITY.

      As of December 31, 2004, 850,000 stock appreciation rights ("SARs") were
outstanding and exercisable at a weighted-average exercise price of $71.82. The
agreements for these SARs require that they be settled in cash. Had the holders
of these SARs chosen to exercise their rights as of December 31, 2004, the
Company would have had to pay $121,706,000 in cash. Further appreciation in the
Alexander's, Inc. stock price from the closing stock price of $215.00 at
December 31, 2004 will increase the cash the Company would have to pay upon exercise and may impact liquidity by requiring the Company to secure additional
borrowings to replace such a cash outflow.

THE COMPANY'S EXISTING FINANCING DOCUMENTS CONTAIN COVENANTS AND RESTRICTIONS
THAT MAY INHIBIT THE COMPANY'S OPERATIONAL AND FINANCIAL FLEXIBILITY AND
RESTRICT OR PROHIBIT THE ABILITY TO MAKE PAYMENTS UPON SECURITIES.securities.
        At December 31, 2004,2005, substantially all of the Company'sour properties were pledged to secure obligations under $952,528,000$1,079,465,000 of existing secured indebtedness. If the Companywe were to fail to perform itsour obligations under existing indebtedness or become insolvent or were liquidated, secured creditors would be entitled to payment in full from the proceeds of the sale of the pledged assets prior to any proceeds being paid to other creditors or to any holders of the Company'sour securities. In such an event, it is possible that the
Companywe would have insufficient assets remaining to make payments to a holder of the Company'sour securities. In addition, the existing financing documents contain restrictive covenants which limit the ability to incur indebtedness and make prepayments of indebtedness, pay dividends, make investments, engage in
transactions with affiliates, issue or sell capital stock of subsidiaries,
create liens, sell assets, acquire or transfer property and engage in mergers
and acquisitions.indebtedness. These covenants may significantly restrict the Company'sour operational and financial flexibility and may restrict its ability to obtain additional financing or pursue other business activities that may be beneficial.

THE LOSS OF KEY PERSONNEL COULD HARM OPERATIONS.
We have indebtedness, and this indebtedness, and its cost, may increase.
        As of December 31, 2005, we had approximately $1,079,465,000 in total debt outstanding. Our ratio of total debt to total enterprise value was 62.2% at December 31, 2005. "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, 2005, our scheduled cash payments for principal and interest were $70,216,000. 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 that 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.
We have issued outstanding and exercisable stock appreciation rights. The Company is dependent onexercise of these stock appreciation rights may impact our liquidity.
        As of January 31, 2006, 850,000 stock appreciation rights ("SARs") were outstanding and exercisable at a weighted-average exercise price of $141.80. Since the efforts of Steven Roth, its Chief
Executive Officer, and Michael D. Fascitelli, its President. WhileSARs agreements require that they be settled in cash, the Company believes that it could find replacements forwould have had to pay $89,295,000 if the holders of these individuals,SARs had exercised their SARs on January 31, 2006. Any change in the lossCompany's stock price from the closing price of their services could harm operations.

THE COMPANY MIGHT FAIL TO QUALIFY OR REMAIN QUALIFIED AS A REAL ESTATE
INVESTMENT TRUST.

      Although$246.85 at January 31, 2006 would increase or decrease the amount the Company believeswould have to pay upon exercise.
Alexander's might fail to qualify or remain qualified as a REIT, and may be required to pay income taxes at corporate rates.
        Although we believe that Alexander's, Inc.we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, itwe might fail to remain qualified in this way.qualified. Qualification as a REIT for federal income tax purposes is governed by highly technical and complex provisions of the Internal Revenue Code (the "Code") for which there are only limited judicial or administrative interpretations. Qualification as a REIT also depends on various facts and circumstances that are not entirely within the control of
the Company.our control. In addition, legislation, new regulations, administrative interpretations or court decisions might significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualification as a REIT.
        In order to qualify and maintain itsour qualification as a REIT for federal income tax purposes, the Company iswe are required, among other conditions, to distribute as dividends to itsour stockholders, at least 90% of annual REIT taxable income. As of December 31, 2004, the Company2005, we had reported net operating loss carryovers ("NOLs") of $49,211,000,$31,739,000, which generally would be available to offset the amount of REIT taxable income that itwe otherwise would be required to distribute. However, the NOLs reported on the tax returns are not binding on the Internal Revenue Service and are subject to adjustment as a result of future audits. In addition, under Section 382 of the Internal Revenue Code, the ability to use the Company'sour NOLs could be limited if, generally, there are significant changes in the ownership of the Company'sour outstanding stock. Since itsour reorganization as a REIT commencing in 1995, the Company haswe have not paid regular dividends and doesdo not believe that itwe will be required to, and may not, pay regular dividends until the NOLs have been fully utilized.

LIMITS ON CHANGES IN CONTROL MAY DISCOURAGE TAKEOVER ATTEMPTS BENEFICIAL TO
STOCKHOLDERS.

We face possible adverse changes in tax laws.
        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. The shortfall in tax revenues for states and municipalities in recent years may lead to an increase in the frequency and size of such changes. 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 payment of dividends.
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, and Michael D. Fascitelli, our President. While we believe that we could find replacements for these key personnel, the loss of their services could harm our operations and adversely affect the value of our common stock.
Alexander's charter documents and applicable law may hinder any attempt to acquire us.
        Provisions in the Company'sAlexander's certificate of incorporation and by laws, as well as provisions of the Internal Revenue Code and Delaware corporate law, may delay or prevent a change of control over 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.

      Stock Ownership Limit -
        Primarily to facilitate maintenance of its qualification as a REIT, the Company'sAlexander's certificate of incorporation generally prohibits ownership, directly, indirectly or beneficially, by any single stockholder of more than 9.9% of the outstanding shares of preferred stock of any seriesclass or 4.9% of outstanding common stock.

                                      -11-
stock of any class. The Board of Directors may waive or modify these ownership limits with respect to one or more persons if it is satisfied that ownership in excess of these limits will not jeopardize the Company'sAlexander's status as a REIT for federal income tax purposes. In addition, the Board of Directors has, subject to certain conditions and limitations, exempted Vornado and certain of its affiliates from these ownership limitations. Shares owned in violation of these ownership limits will be subject to the loss of rights and other restrictions. These ownership limits may have the effect of inhibiting or impeding a change in control.

THE NUMBER OF SHARES OF ALEXANDER'S, INC. COMMON STOCK AND THE MARKET FOR THOSE
SHARES GIVE RISE TO VARIOUS RISKS.

ALEXANDER'S, INC. HAS OUTSTANDING AND EXERCISABLE OPTIONS TO PURCHASE ITS COMMON
STOCK. THE EXERCISE OF THESE OPTIONS COULD DECREASE THE MARKET PRICE OF THE
SHARES OF COMMON STOCK CURRENTLY OUTSTANDING.
        Alexander's Board of Directors is divided into three classes of directors. Directors of each class are chosen for three-year staggered terms. Staggered terms of directors may have the effect of delaying or preventing changes in control or management, even though changes in management or a change in control might be in the best interest of our stockholders.
        In addition, Alexander's charter documents authorize the Board of Directors to:
•
cause Alexander's to issue additional authorized but unissued shares of common stock or preferred stock; and
•
set the preferences, rights and other terms of any classified or reclassified shares that Alexander's issues without any further action by our stockholders.
        The Board of Directors could establish a series of preferred stock whose terms could delay, deter or prevent a change in control of Alexander's or other transaction that might involve a premium price or otherwise be in the best interest of our stockholders, although the Board of Directors does not now intend to establish a series of preferred stock of this kind. Alexander's charter documents contain other provisions that may delay, deter or prevent a change in control of the Company or other transaction that might involve a premium price or otherwise be in the best interest of our stockholders.
        In addition, Vornado and Interstate Properties (the three general partners of which are both trustees of Vornado and Directors of Alexander's) together beneficially own approximately 60.5% of our outstanding shares of common stock. This degree of ownership may also reduce the possibility of a tender offer or an attempt to change control of the Company.

We may change our policies without obtaining the approval of our stockholders.
        Our operating and financial policies, including our policies with respect to acquisitions of real estate or other assets, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Directors. Accordingly, our stockholders do not control these policies.
Our Ownership Structure and Related-Party Transactions May Give Rise to Conflicts of Interest.
Steven Roth, Vornado and Interstate may exercise substantial influence over us. They and some of our other directors and officers have interests or positions in other entities that may compete with us.
        As of December 31, 2004, 92,0002005, Interstate and its partners owned approximately 9.2% of the common shares of beneficial interest of Vornado, our manager, and approximately 27.7% of the outstanding common stock of Alexander's. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the partners of Interstate. Mr. Roth is the Chairman of the Board of Directors and Chief Executive Officer of the Company, the Chairman of the Board of Trustees and Chief Executive Officer of Vornado and the Managing General Partner of Interstate. Mr. Wight and Mr. Mandelbaum are both trustees of Vornado and members of the Company's Board of Directors. In addition, Vornado manages and leases the real estate assets of Interstate.
        As of December 31, 2005, Vornado owned 33% of our outstanding common stock, in addition to that owned by Interstate and its partners. In addition to the relationships described in the immediately preceding paragraph, Michael D. Fascitelli, the President and a trustee of Vornado, is our President and a member of our Board of Directors. Richard West is a trustee of Vornado and a member of our Board of Directors. In addition, Joseph Macnow, our Executive Vice President and Chief Financial Officer, holds the same positions with Vornado.
        Because of their overlapping interests, Mr. Roth, Interstate and the other individuals noted in the preceding paragraphs may have substantial influence over both Vornado and Alexander's, and on the outcome of any matters submitted to Vornado shareholders or Alexander's stockholders for approval. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate and other security holders. Mr. Roth and Interstate may, in the future, engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting Vornado or us, such as which of these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic locations in which these entities make investments, potential competition between business activities conducted, or sought to be conducted, by Vornado or us, competition for properties and tenants, possible corporate transactions such as acquisitions, and other strategic decisions affecting the future of these entities.
There may be conflicts of interest between Vornado, its affiliates and us.
        Vornado manages, develops and leases our properties under agreements that have one-year terms expiring in March of each year, which are automatically renewable. Because we and Vornado share common senior management and because five of the trustees of Vornado also constitute the majority of our directors, the terms of the foregoing agreements and any future agreements between us and Vornado and its affiliates may not be comparable to those we could have negotiated with an unaffiliated third party.
        For a description of Interstate's ownership of Vornado and Alexander's, see"Steven Roth, Vornado and Interstate may exercise substantial influence over us. They and some of our other directors and officers have interests or positions in other entities that may compete with us." above.

The Number of Shares of Alexander's Common Stock and the Market for Those Shares Give Rise to Various Risks.
Alexander's has available for issuance shares of its common stock and outstanding and exercisable options to purchase its common stock. The issuance of this stock or the exercise of these options could decrease the market price of the shares of common stock currently outstanding.
        As of December 31, 2005, Alexander's had authorized but unissued 4,826,550 shares of its common stock, par value of $1.00 per share and 3,000,000 shares of its preferred stock, par value $1.00 per share. In addition, as of December 31, 2005, 81,850 options were outstanding and exercisable at a weighted-average exercise price of $70.38.$70.38 and as of January 31, 2006, 850,000 SARs were outstanding and exercisable at a weighted-average exercise price of $141.80. Additionally, 1,745,000895,000 shares are available for future grant under the terms of the Company'sour Omnibus Stock Plan.Plan that may be in the form of options, restricted stock, SARs or other equity-based interests. Since the SARs agreements require that they be settled in cash, the number of shares available for future grant under the terms of our Omnibus Stock Plan will increase upon the exercise of the outstanding SARs. The Company cannot predict the impact that future exercisesissuances of common or preferred stock or any exercise of outstanding options or grants of additional optionsequity-based interests would have on the market price of its common stock.

CHANGES IN MARKET CONDITIONS COULD DECREASE THE MARKET PRICE OF THE COMPANY'S
SECURITIES.
Changes in market conditions could decrease the market price of our securities.
        The value of the Company'sour securities depends on various market conditions, which may change from time to time. Among the market conditions that may affect the value of the Company's sharesour securities are the following:
•
the extent of institutional investor interest in Alexander's, Inc., us;
•
the reputation of REITs generally and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities, the Company'ssecurities;
•
our NOLs which are generally available to offset the amount of the REIT taxable income that the Companywe otherwise would be required to distribute as dividends, the Company'sdividends;
•
our financial condition and performance, the Company's ability to complete the Lexington
Avenue development project on a timely basisperformance; and for the budgeted amount,
prevailing interest rates, and 
•
general financial market conditions.

                                      -12-
        The stock market in recent years has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies.
ITEM 1B.    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.

ITEM 2.    PROPERTIES
        The following table shows the location, ownership, approximate size and leasing status of each of the Company's properties as of December 31, 2004.

                                                                                Average
                                                                 Building      Annualized
                                                                  Area/        Base Rent                                 Square
                                                  Land          Number of      Per Square  Percent     Significant       Footage
           Property               Ownership       Area            Floors          Foot     Leased        Tenants         Leased
- -------------------------------  -----------  -------------- ---------------- ----------- -------- ------------------- ----------

 OPERATING PROPERTIES

   731 Lexington Avenue           Owned       84,420 sq. ft.
   Office and Retail                                           1,052,000/31    $   61.08     84.9%     Bloomberg L.P.    697,000
                                                                                                       The Home Depot     83,000(1)
                                                                                                     The Container Store  34,000
                                                                                                     Hennes & Mauritz     27,000
    Residential Condominiums                                    248,000/24
                                                             -------------
                                                              1,300,000/55



   Kings Plaza Regional           Owned           24.3 acres 759,000(2)(3)/       36.31      98.1%          Sears        289,000
     Shopping Center                                                2 and 4                           123 Mall tenants   455,000
     Brooklyn, New York

   Rego Park I                    Owned            4.8 acres    351,000(2)/3      32.18     100.0%           Sears       195,000
     Queens Boulevard and                                                                                 Circuit City    50,000
     63rd Road                                                                                              Bed Bath &    46,000
..    Queens, New York                                                                                           Beyond
                                                                                                             Marshalls    39,000

   Routes 4 and 17                Owned           30.3 acres           N/A,          N/A,   100.0%      IKEA Property,     N/A,
     Paramus, New Jersey                                             Ground        Ground                         Inc.    Ground
                                                                      Lease         Lease                                  Lease

   Roosevelt Avenue and           Leased (4)  44,975 sq. ft.    177,000(2) /4                   0%
     Main Street
     Queens, New York

                                                             ---------------
                                                                   2,587,000
                                                             ===============

PROPERTY TO BE DEVELOPED

     Rego Park II                 Owned             10 acres
     Adjacent to Rego Park I
     Queens, New York


                                     Lease
                                   Expiration/
                                      Option
           Property                Expiration
- -------------------------------   ------------

 OPERATING PROPERTIES

   731 Lexington Avenue
   Office and Retail                2030/2040
                                    2025/2035
                                         2021
                                         2020
    Residential Condominiums

   Kings Plaza Regional             2023/2033
     Brooklyn, New York              Various

   Rego Park I                      2021/2031
     Queens Boulevard and                2021
     63rd Road                      2013/2021
     Queens, New York

   Routes 4 and 17                  2008/2021
     Paramus, New Jersey

   Roosevelt Avenue and               2041
     Main Street
     Flushing, New York

PROPERTY TO BE DEVELOPED

     Rego Park II
     Adjacent to Rego Park I
     Queens, New York

- --------------------
2005.
Property   Land Area   Building
Area/ Number of
Floors   Average
Annualized
Base Rent
Per Square
Foot   Percent
Leased   Significant
Tenants   Square
Footage
Leased   Lease
Expiration/
Option
Expiration
Operating Properties                              
731 Lexington Avenue
New York, New York
Office and Retail   84,420 sq. ft. 1,059,000 (1)/31 $ 65.92   99 % Bloomberg L.P.
Citibank N.A.
The Home Depot
The Container Store
Hennes & Mauritz   697,000
176,000
83,000
34,000
27,000 

(2)

2030/2040
2016
2025/2035
2021
2020

Kings Plaza Regional
Shopping Center
Brooklyn, New York 
  
24.3 
acres 
759,000 
(3)(4)/2 
  
36.14 
  
98 
% 
Sears
123 Mall tenants 
  
289,000
455,000 
  
2023/2033
Various

Rego Park I
Queens Boulevard and
63^rd Road
Queens, New York 
  
4.8 
acres 
351,000 
(3)/3 
  
32.18 
  
100 
% 
Sears
Circuit City
Bed Bath & Beyond
Marshalls 
  
195,000
50,000
46,000
39,000 
  
2021/2031
2021
2013/2021
2008/2021

Routes 4 and 17
Paramus, New Jersey 
  
30.3 
acres 
N/A,
Ground
Lease 
  
  
N/A,
Ground
Lease 
  
100 
% 
IKEA 
  
N/A, Ground Lease 
  
2041

Roosevelt Avenue and
Main Street(5)
Queens, New York 
  
44,975 
sq. ft. 
177,000 
(3)/4 
  
  
  
0 
% 
  
  
  
  
 
                             
        2,346,000                      
                             
Property to Be Developed                              

Rego Park II
Adjacent to Rego Park I
Queens, New York 
  
10 acres 
  
  
  
  
  
  
  
  
  
  
  
  
 
(1)
Excludes 248,000 net saleable square feet of residential space consisting of 105 condominium units.
(2)
Excludes 14,800 square feet of the mezzanine space.

(2) 
(3)
Excludes parking garages.

(3) 
(4)
Excludes the 339,000 square foot Macy's store, owned and operated by Federated Department Stores, Inc. ("Federated").

(4) 
(5)
Leased to the Company through January 2027. The rent under the lease is as
follows: $331,000 per year from February 1997 through January 2007, $220,000 per
year from February 2007 through January 2017, and $147,000 per year from
February 2017 through January 2027.
        For details of encumbrances-seeencumbrances, see descriptions of properties which follows.

                                      -13-

Operating Properties
731 Lexington Avenue
        The 731 Lexington Avenue property which comprises the entire square block
bounded byis located on Lexington Avenue East 59th Street, Third Avenue and East 58th59^th Street and is situated in the heart of one of Manhattan's busiest business and shopping districts, with convenient access to several subway and bus lines. The property is located directly across the street from Bloomingdale's flagship store and only a few blocks away from Fifth Avenue and 57th57^th Street.
        731 Lexington Avenue is a 1.31.1 million square foot multi-use building. The building contains approximately 885,000 net rentable square feet of office space and approximately 174,000 net rentable square feet of retail space andspace. 731 Lexington Avenue also contains approximately 248,000 net saleable square feet (which is not included in the 1.1 million square feet above) of residential space consisting of 105 condominium units (through a taxable REIT subsidiary ("TRS")). Of the
construction budget
        As of $630,000,000 (which excludes $29,000,000 for development
and guarantee fees to Vornado), $489,400,000 has been expended through December 31, 2004 and an additional $23,500,000 has been committed to at December 31,
2004. The remaining construction is expected to be completed by the end of 2005.

      At December 31, 2004,2005, the Company has leased all of the office space, of which 697,000 square feet of office space is leased to Bloomberg L.P., and 144,000176,000 square feet of office space is leased to Citibank N.A. In addition, the Company has leased 169,000 square feet of retail space to, among others, The Home Depot, (excluding 14,800 square feet of the mezzanine also
leased to The Home Depot), Hennes & Mauritz, and The Container Store. On January
25, 2005, the Company leased an additional 176,000 square feetStore, Wachovia Bank and Bank of office space
to Citibank N.A. As a result, 100% of the property's 885,000 square feet of
office space has been leased.

      The residential space is comprised of 105 condominium units. The original
offering plan filed for these units, as amended for price increases through
December 31, 2004, would produce an aggregate sale price of approximately
$500,000,000 (reflecting the value of existing contracts and the offering price
for the remaining units).America.
        As of December 31, 2004,2005, 100 of the 105 residential condominium units were sold and closed.
        On July 6, 2005, the Company has received
deposits of $64,060,000 on sales of the condominium units.

      On January 24, 2005, the condominium offering plan was declared effective
by the State of New York at which time 83 units were under sales contract.
Accordingly, the Company will recognize approximately $38,000,000 of income
after taxes in 2005 from these sales for the units under contract. In the first
quarter of 2005, $32,000,000 of this income will be recognized using the
percentage of completion method.

      On February 13, 2004, the Company closedcompleted a $400,000,000$320,000,000 mortgage financing on the officeretail space. The loan bearsis interest only at 5.33%a fixed rate of 4.93% and matures in July 2015. Of the net proceeds of approximately $312,000,000 (net of mortgage recording tax and closing costs), $90,000,000 was used to repay the construction loan and $124,000,000 was used to repay the loans from Vornado. In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
        The office space is encumbered by a first mortgage loan with a balance of $400,000,000 at December 31, 2005. The loan matures in February 2014 and beginning in the third year, provides for principal payments based on a
25-year amortization schedule such that over the remaining eight years of the
loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000
was used to repay the entire amount outstanding under the previously existing
Construction Loan.

      The Construction Loan was modified on February 13, 2004, so that the
remaining availability was $237,000,000, which was approximately the amount
estimated to complete the 731 Lexington Avenue projectbears interest at the closing date (not
including the development and guarantee fees to Vornado)5.33%. The interest rate on
the Construction Loan of LIBOR plus 2.5% (4.92% at December 31, 2004) and the
maturity date of January 2006, with two one-year extensions, were not changed.
The collateral for the Construction Loan is the same except that the office
space has been removed from the lien. Further, the Construction Loan permits the
release of the retail space for a payment of $15 million and requires all
proceeds from the sale of the residential condominium units to be applied to the
Construction Loan balance until it is finally repaid. Vornado has agreed to
guarantee to the construction lender, the lien free, timely completion of the
construction of 731 Lexington Avenue and funding of project costs in excess of a
stated loan budget, if not funded by the Company. If Vornado should advance any
funds under the Completion Guarantee in excess of $21,000,000, which was the
amount available at December 31, 2004 under the line of credit with Vornado,
interest on those advances would be at 15% per annum.

      While the project is nearing completion, there can be no assurance that
the remainder of the project will be completed on time or completed for the
budgeted amount. Any failure to complete the 731 Lexington Avenue project on
time or within budget may adversely affect future cash flows, funds from
operations and financial condition.


Kings Plaza Regional Shopping Center
        The Kings Plaza Regional Shopping Center (the "Center") contains 1,098,000 square feet and is comprised of a two-level mall (the "Mall") containing 470,000 square feet and two four-level anchor stores. One of the anchor stores is owned by the Company and leased to Sears, while the other anchor store is owned and operated as a Macy's store by Federated. The Center occupies a 24.3 acre site at the intersection of Flatbush Avenue and Avenue U in Brooklyn, -14-
New York. Among the Center's features are a marina, a five-level parking garage and an energy plant that generates all ofelectrical power at the Center's electrical power. The
Company completed renovations of the interior of the Mall in 2001 and the
exterior of the Mall in 2002.Center.
        The Company plans to construct a two-story freestanding building adjacent to the Mall of approximately 200,000 square feet. The first story ofcontaining approximately 120,000 square feet, will be operated as awhich has been leased to Lowe's Home Improvement Warehouse ("Lowe's"). The Lowe'sThis lease is expected to commence in 2006.2007. The cost of thethis project will be approximately $21$11.5 million, which is net of the Lowe'sa tenant reimbursement of $16.5 million. This cost includes construction of structured elements, which will support a second and before reimbursement, if any, from the second story tenant(s).
The Company's plans may change and thesethird level. There can be no assurance that this project will commence, be completed, completed on time or completed for the budgeted amount.
        The following table sets forth lease expirations for the Mall tenants in the Center as of December 31, 2005, for each of the next ten years, assuming none of the tenants exercise their renewal options.
                                          Annual Fixed Rent of Expiring
                                                    Leases                                  Percent of
           Number of   Square Feet of     -----------------------------     Percent of      2004 Gross
            Leases        Expiring                          Per Square     Total Leased     Annual Base
Year       Expiring        Leases            Total            Feet          Square Feet       Rentals
- ----       ---------   --------------     -----------       -----------    ------------     -----------

2005          9             43,300        $   634,203         $14.65            9.5%            2.8%
2006         16             87,947          2,734,485          31.09           19.4%           12.1%
2007         15             48,326          2,569,830          53.18           10.6%           11.4%
2008          9             15,791          1,052,015          66.62            3.5%            4.7%
2009         16             69,144          4,089,639          59.15           15.2%           18.1%
2010          9             21,464          1,422,347          66.27            4.7%            6.3%
2011         12             38,265          2,208,055          57.70            8.4%            9.8%
2012         13             49,330          2,464,465          49.96           10.9%           10.9%
2013         13             39,440          2,441,125          61.89            8.7%           10.8%
2014          7             31,133          1,967,954          63.21            6.9%            8.7%
2015          3              7,457            446,109          59.82            1.6%            2.0%
2016          1              2,950            118,000          40.00            0.6%            0.5%
 
   
   
  Annual Fixed Rent of Expiring Leases    
   
 
 
   
   
   
  Percent of
2005 Gross
Annual Base
Rentals  
Year
  Number of
Expiring
Leases   Square Feet of Expiring Leases   Total   Per Square Foot   Percent of
Total Leased
Square Feet  
2006   16   110,517   3,653,555   33.06   24.4 % 15.8 %
2007   15   48,326   2,438,857   50.47   10.7 % 10.5 %
2008   10   17,970   1,223,465   68.08   4.0 % 5.3 %
2009   16   69,144   4,150,714   60.03   15.3 % 17.9 %
2010   13   22,166   1,716,707   77.45   4.9 % 7.4 %
2011   11   33,629   2,113,680   62.85   7.4 % 9.1 %
2012   11   45,038   2,290,900   50.87   9.9 % 9.9 %
2013   12   38,540   2,430,889   63.07   8.5 % 10.5 %
2014   7   31,133   1,967,954   63.21   6.9 % 8.5 %
2015   5   11,385   548,148   48.15   2.5 % 2.4 %
2016   3   25,038   485,730   19.40   5.5 % 2.1 %
        The following table sets forth the occupancy rate and the average annual rent per square foot for the Mall stores for each of the past five years.
                                                 Average
                                             Annual Base Rent
As of December 31,    Occupancy Rate          Per Square Foot
- ------------------    --------------         ----------------

       2004                97%                 $  49.65
       2003                98%                    47.95
       2002                97%                    45.59
       2001                96%                    45.97
       2000                91%                    44.66
As of December 31,   Occupancy Rate   Average
Annual Base Rent
Per Square Foot
2005   96%   $ 51.15
2004   97%     49.65
2003   98%     47.95
2002   97%     45.59
2001   96%     45.97
        The Center is encumbered by a first mortgage loan with a balance of $213,699,000$210,539,000 at December 31, 2004.2005. The loan matures in June 2011 and bears interest at 7.46%.
Rego Park I
        The Rego Park I property, located in Queens, New York, encompasses the entire block fronting on Queens Boulevard and bounded by 63rd63^rd Road, 62nd62^nd Drive, 97th97^th Street and Junction Boulevard. The existing 351,000 square foot building was redeveloped in 1996 and is fully leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy. In conjunction with the redevelopment, a multi-level parking structure was constructed to provide paid parking spaces for approximately 1,200 vehicles.
        The property is encumbered by a first mortgage loan with a balance of $81,661,000$80,926,000 at December 31, 2004.2005. The loan matures in June 2009 and bears interest at 7.25%.

                                      -15-

Paramus
        The Company owns 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey. The Company's property is located directly across from the Garden State Plaza regional shopping mall and is within two miles of three other regional shopping malls and ten miles of New York City. This land is leased to IKEA Property, Inc. The lease has a 40-year term with a purchase option at the end of the twentieth year for $75,000,000. Further, theThe Company has a $68,000,000 interest only, non-recourse mortgage loan on the property from a third party lender. The fixed interest rate on the debt is 5.92% with interest payable monthly until maturity in October 2011. The triple-net rent each year is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is not exercised at the endCompany will receive net cash proceeds of approximately $7,000,000 and recognize a gain on the sale of the twentieth year,land of approximately $62,000,000. If the purchase option is not exercised the triple-net rent for the last 20 years must include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.
Flushing
        The Flushing property is located on Roosevelt Avenue and Main Street in the downtown, commercial section of Flushing, Queens, New York. Roosevelt Avenue and Main Street are active shopping districts and there are many national retailers located in the area. A subway entrance is located directly in front of the property with bus service across the street. The property comprises a vacant four-floor building containing 177,000 square feet and a parking garage.
        In the fourth quarter of 2003, the Company recognized $1,289,000 of income representing a non-refundable deposit of $1,875,000, net of $586,000 of costs associated with the transaction, from a party that had agreed to purchase this property, as such party had not met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8, 2004, the Company received letters from the party demanding return of the deposit. On December 28, 2005, the party filed a complaint against the Company in the Supreme Court of the State of New York alleging the Company failed to honor the terms and conditions of the agreement. The complaint seeks specific performance and, if specific performance is denied, it seeks the return of the deposit plus interest and $50,000 in costs. The Company, after consulting with its legal counsel, does not believe the party is entitled to either specific performance or a return of the deposit and is defending the action.
        The Company is currently in negotiations with various retailers to lease all or a portion of the property.
Property to Be Developed
Rego Park II
        The Company owns two land parcels containing approximately 10 acres adjacent to its Rego Park I property in Queens, New York. One parcel comprises the entire square block bounded by the Horace Harding Service Road, 97th97^th Street, 62nd62^nd Drive and Junction Boulevard. The other is a parcel of approximately one-halfone-quarter square block at the intersection of Junction Boulevard and the Horace Harding Service Road. Both parcels are zoned
        The Company's plan for residential use, while
commercial uses are permitted as-of-right only on the smaller parcel. Eachentire square block parcel is currently being used for paid public parking.

      The Company is considering the development of two projects at its Rego
Park II property. One project is a mixed-use, three-level development containing approximately 600,000 square feet of retail space on four levels, a multi-level parking garagedeck of approximately 1,400 spaces and may also include up to 450,000450 apartment units in two towers. On September 20, 2005, the Company received governmental approvals for this project. The Company has entered into a lease with Century 21 for 134,000 square feet of residential space. This project is subject to
governmental approvals including rezoning ofretail space at this project.
        While the larger parcel. The current plans for the otherone-quarter square block parcel are very preliminary, we anticipate it may consist ofinclude up to 80,000 square feet of retail. It
is anticipated that neither of these projects will commence prior to 2006.retail space.
        There can be no assurance that these projects will commence, be completed, completed on time or completed for the budgeted amount.

Other Encumbrances

      At December 31, 2004, the Company was indebted to Vornado in the amount of
$124,000,000, comprised of (i) a $95,000,000 note and (ii) $29,000,000 under a
$50,000,000 line of credit. The loans are collateralized by, among other things,
a pledge given by the Company of its interests in the entities holding (a) the
Lexington Avenue property, (b) the Flushing property and (c) the Rego Park II
property.


Insurance

      The Company carries
        We carry comprehensive liability and all-riskall risk property insurance (fire,((i) fire, (ii) flood, (iii) extended coverage, (iv) "acts of terrorism" as defined in the Terrorism Risk Insurance Extension Act of 2005 which expires in 2007, and (v) rental loss insurance) with respect to our assets.
        On June 30, 2005, we renewed our annual all risk policy with limits of (i) $960,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for its assets, but is at risk731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for financial lossnon-certified terrorist acts for the remaining properties. To the extent that we incur losses in excess of the
policies' limits. Such a lossour insurance coverage, these losses would be borne by us and could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.

                                      -16-


      The Company's
        Our debt instruments, consisting of mortgage loans secured by itsour properties (which are generally non-recourse to the Company)Alexander's), contain customary covenants requiring the Companyus to maintain insurance. There can be no
assuranceAlthough we believe that the lenderswe have adequate insurance coverage under these instruments willagreements, we may not takebe able to obtain an equivalent amount of coverage at reasonable costs in the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition,future. Further, if lenders insist on greater coverage for these risks and the Company is unablethan we are able to obtain, coverageor if the Terrorism Risk Insurance Extension Act of 20022005 is not extended past 2007, it maycould adversely affect the Company'sour ability to finance and/or refinance itsour properties and businesses.

expand our portfolio.
ITEM 3.    LEGAL PROCEEDINGS
        Neither the Company nor any of its subsidiaries is a party to, nor is their property the subject of, any material pending legal proceeding other than routine litigation incidental to their businesses. The Company believes that these legal actions will not be material to the Company's financial condition or results of operations.
        For a discussion of the litigation concerning the sale of the Company's subsidiary which owns the building and has the ground lease for the Company's property in Flushing, New York, see "Item 2. Properties—Operating Properties—Flushing."
        For discussion concerning environmental matters, see "Item 1. Business --
Business—Environmental Matters".

Matters."
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 2004.

                                      -17-
2005.

EXECUTIVE OFFICERS OF THE REGISTRANT
        The following is a list of the names, ages, principal occupations and positions with the Company of the executive officers of the Company and the positions held by such officers during the past five years.

                                    PRINCIPAL OCCUPATIONS AND OFFICES (CURRENT AND DURING THE PAST FIVE YEARS WITH THE COMPANY
      NAME                AGE                                    UNLESS OTHERWISE STATED)
      ----                ---       ------------------------------------------------------------------------------------------
Name Age Principal Occupations and Offices (current and during the past five years with the Company unless otherwise stated)
Steven Roth                63       64 Chairman of the Board of Directors since May 2004 and Chief Executive Officer since March 1995; Chairman of the Board and Chief Executive Officer of Vornado Realty Trust since May 1989; Chairman of Vornado Realty Trust's Executive Committee of the Board since April 1980; and a trustee of Vornado Realty Trust since 1979; and Managing General Partner of Interstate Properties.

Michael D. Fascitelli      48       

49 

President since August 2000; Director of the Company and President and trustee of Vornado Realty Trust since December 1996; Partner at Goldman Sachs & Co., in charge of its real estate practice, from December 1992 to December 1996; and, prior thereto, Vice President at Goldman Sachs & Co.

Stephen Mann               69       

70 

Chief Operating Officer since May 2004; Chairman of the Board of Directors from March 1995 to May 2004; Interim Chairman of the Board of Directors from August 1994 to March 1995; Chief Executive Officer of Prescott Funding Company since January 2003; and Chairman of the Clifford Companies from 1990 to January 2003.

Joseph Macnow              59       

60 

Executive Vice President and Chief Financial Officer since June 2002; Executive Vice President -— Finance and Administration from March 2001 to June 2002; Vice President and Chief Financial Officer from August 1995 to March 2001; Executive Vice President -— Finance and Administration of Vornado Realty Trust since January 1998 and Chief Financial Officer of Vornado Realty Trust since March 2001; and Vice President and Chief Financial Officer of Vornado Realty Trust from 1985 to January 1998.


                                      -18-


PART II
ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
                   ISSUER PURCHASES OF EQUITY SECURITIES
        The Company's common stock is listed on the New York Stock Exchange under the symbol "ALX." The transfer agent and registrar for the common stock is
Wachovia Bank, N.A. Set forth below are the high and low sales prices for the shares of common stock for each full quarterly period within the two most recent years.
                                            YEAR ENDED DECEMBER 31,
                             -------------------------------------------------------
                                       2004                           2003
                             -----------------------       -------------------------
QUARTER                        HIGH           LOW             HIGH            LOW
- -------                      ---------     ---------       ---------       ---------

First......................  $  162.45     $  124.91       $   66.98       $   61.40
Second.....................     172.00        146.00           86.90           63.75
Third......................     203.50        164.00          106.50           83.20
Fourth.....................     230.05        195.00          126.00          102.50
 
  Year Ended December 31,
 
  2005   2004
Quarter
  High   Low   High   Low
First   $ 257.75   $ 210.48   $ 162.45   $ 124.91
Second     259.29     223.00     172.00     146.00
Third     295.00     248.00     203.50     164.00
Fourth     271.63     231.75     230.05     195.00
        As of February 4, 2005,1, 2006, there were approximately 1,100484 holders of record of the Company's common stock. The Company pays dividends only if, as and when declared by its Board of Directors. No dividends were paid in 20042005 and 2003.2004. In order to qualify and maintain its qualification as a real estate investment trust,REIT, the Company generally is required, among other conditions, to distribute as dividends to its stockholders at least 90% of itsannual REIT taxable income as a dividend. Atincome. As of December 31, 2004,2005, the Company had net operating loss carryoversNet Operating Loss Carryovers ("NOLs") of approximately $49,211,000. Under the Internal Revenue Code of 1986, as amended, the Company's
NOLs$31,739,000, which generally would be available to offset the amount of the Company'sREIT taxable income (excluding income from taxable REIT subsidiaries) that otherwise would be required to be distributed as a dividend to stockholders.

                                      -19-


ITEM

Item 6.    SELECTED FINANCIAL DATA
        The following table sets forth selected financial and operating data. This data should be read in conjunction with the consolidated financial statements and notes thereto and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K. This data may not be comparable to, or indicative of, future operating results.
                                                                              YEAR ENDED DECEMBER 31,
                                                --------------------------------------------------------------------------------
(amounts in thousands, except per share data)       2004              2003              2002            2001            2000
                                                ------------      ------------      ------------    ------------    ------------

Total revenues ..............................   $    148,895      $     87,162      $     76,800    $     67,792    $     62,696
                                                ============      ============      ============    ============    ============

(Loss) income from continuing operations ....   $    (37,331)(1)  $    (18,948)(1)  $     12,400    $      7,414    $      4,425
Gain on sale of real estate .................          3,862                --                --          19,026              --
Income from discontinued operations .........             --             1,206            11,184             946             772
                                                ------------      ------------      ------------    ------------    ------------
Net (loss) income ...........................   $    (33,469)     $    (17,742)     $     23,584    $     27,386    $      5,197
                                                ============      ============      ============    ============    ============

Net (loss) income per common share
(basic and diluted):
   (Loss) income from continuing operations .   $      (7.45)     $      (3.79)     $       2.48    $       1.48    $       0.89
   Gain on sale of real estate ..............           0.77                --                --            3.81              --
   Income from discontinued operations ......             --              0.24              2.24            0.19            0.15
                                                ------------      ------------      ------------    ------------    ------------
   Net (loss) income ........................   $      (6.68)     $      (3.55)     $       4.72    $       5.48    $       1.04
                                                ============      ============      ============    ============    ============

Balance sheet data:
   Total assets .............................   $  1,244,801      $    920,996      $    664,912    $    583,339    $    403,305
   Real estate, net .........................        881,079           763,802           542,975         377,961         343,612
   Debt .....................................        952,528           731,485           543,807         515,831         367,788
   Stockholders' equity .....................         18,368            50,923            68,665          45,081          17,695


- --------------------------
 
  Year Ended December 31,
(Amounts in thousands, except per share data)

  2005   2004   2003   2002   2001
Total revenues   $ 187,085   $ 148,895   $ 87,162   $ 76,800   $ 67,792
            
Income (loss) from continuing operations   $ 21,298(1 ) $ (37,331 )(1) $ (18,948 )(1) $ 12,400   $ 7,414
Income from discontinued operations     —     —     1,206     11,184     19,972
Net gain on sale of condominiums in 2005 and
    other real estate in 2004, after income taxes     60,943     3,862     —     —     —
            
Net income (loss)   $ 82,241   $ (33,469 ) $ (17,742 ) $ 23,584   $ 27,386
            

Income (loss) per common share (basic and
    diluted): 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
Income (loss) from continuing
    operations—basic 
  
$ 
4.24 
  
$ 
(7.45 
) 
$ 
(3.79 
) 
$ 
2.48 
  
$ 
1.48
  Income (loss) from continuing
    operations—diluted     4.19     (7.45 )   (3.79 )   2.48     1.48
  Income (loss) per common share—basic     16.38     (6.68 )   (3.53 )   4.72     5.48
  Income (loss) per common share—diluted     16.19     (6.68 )   (3.53 )   4.72     5.48

Balance sheet data: 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  Total assets   $ 1,403,317   $ 1,244,801   $ 920,996   $ 664,912   $ 583,339
  Real estate, at cost     699,136     955,107     826,546     600,661     434,344
  Accumulated depreciation     88,976     74,028     62,744     57,686     56,383
  Debt     1,079,465     952,528     731,485     543,807     515,831
  Stockholders' equity     101,324     18,368     50,923     68,665     45,081
(1)
Includes SARs compensation expense accruals of $76,789$27,588,000, $76,789,000 and $44,917$44,917,000 in 2005, 2004 and 2003, respectively, for
compensation expense for stock appreciation rights due to increases in the
Company's stock price.

                                      -20-


ITEMrespectively.

Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS

OVERVIEW

      The Company
Overview
        Alexander's, Inc. (the "Company" or "Alexander's") is a real estate investment trust ("REIT") engaged in leasing, managing, developing and redeveloping properties. Alexander's conducts its activities are
conducted through its manager, Vornado Realty Trust ("Vornado"). Alexander's has six properties in the greater New York City metropolitan area including the 731 Lexington Avenue property, a 1,300,000 square foot multi-use building in Manhattan, and the Kings Plaza Regional Shopping Center located in Brooklyn.
        The Company competes with a large number of real estate property owners and developers. The CompanyCompany's success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants, the availability and cost of capital, interest rates, construction and renovation costs, taxes, governmental regulations and legislation, population trends, zoning laws, and the ability of the Company to lease, sublease or sell its properties, including the condominium units at 731
Lexington Avenue, at profitable levels. The Company's success is also subject to its ability to refinance existing debts as they come due and on acceptable terms.

      In 2004,
        The Company has substantially completed the Company continued to phase-in componentsdevelopment of its 731 Lexington Avenue and placed the property in to operations; asinto service during 2005. As a result, the Company's revenues, expenses and cash flow
providedflows from operating activities increased substantially over the previousprior year. See "Results of OperationsOperations" and Liquidity"Liquidity and Capital Resources" for further details.

CRITICAL ACCOUNTING POLICIES
        On July 6, 2005, the Company completed a $320,000,000 mortgage financing on the retail space. The loan is interest only at a fixed rate of 4.93% and matures in July 2015. Of the net proceeds of approximately $312,000,000 (net of mortgage recording tax and closing costs), $90,000,000 was used to repay the construction loan and $124,000,000 was used to repay the loans from Vornado. In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
        As of December 31, 2005, 100 of the 105 residential condominium units were sold and closed, which resulted in an after-tax net gain of $62,851,000, of which $60,943,000 was recognized in the year ended December 31, 2005, under the percentage of completion method. Subsequent to December 31, 2005, the Company has entered into sales contracts for 3 of the remaining 5 residential condominium units.
Critical Accounting Policies and Estimates
        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the Company's consolidated financial statements. This summary should be read in conjunction with the more complete discussion of the Company's accounting policies included in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K.
Real Estate -
        Real estate is carried at cost, net of accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the assets' estimated useful lives, which range from seven to 50 years. Betterments, significant renewals and certain costs directly related to the acquisition, improvement and leasing of real estate are capitalized. Maintenance and repairs are charged to operations as incurred. As real estate is undergoing development activities, all property operating expenses, including interest expense, are capitalized to the cost of the real property to the extent that management believes such costs are recoverable through the value of the property. The recognition of depreciation expense requires estimates by management of the useful life of each property and improvement, as well as an allocation of the costs associated with a property, including capitalized costs, to its various components. If the Company does not allocate these costs appropriately or incorrectly estimates the useful lives of its real estate, depreciation expense could be misstated.

      As construction of the 731 Lexington Avenue property progresses and as
components of the building are placed into service, the Company is no longer
capitalizing property operating expenses, including interest expense, and
beginning to expense these items, as well as depreciation, for those components.
The office and retail components of the building will be fully placed in service
by March 31, 2005.

        The Company's properties are reviewed for impairment if events or circumstances change, indicating that the carrying amount of the property may not be recoverable. In such an event, a comparison is made of the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis to the carrying amount of the property. The carrying amount of an asset would be adjusted, if necessary, to reflect an impairment in the value of the asset. If the Company incorrectly estimates undiscounted cash flows, impairment charges may be different. The impact of such estimates in connection with future impairment analyses could be material to the Company's consolidated financial statements.
Allowance for Doubtful Accounts -
        The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. The Company also maintains an allowance for receivables -21-
arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates.
Revenue Recognition -
        The Company has the following revenue sources and revenue recognition policies:
•
Base rent (revenue arising from tenant leases) - —These rents are recognized over the non-cancelable term of the related leases on a straight-line basis, which includes the effects of rent steps and free rent abatements under the leases.

•
Percentage Rents (revenue arising from retail tenant leases that is contingent upon the sales of tenants exceeding defined thresholds) - —These rents are recognized in accordance with Staff Accounting Bulletin No. 104,Revenue Recognition, which states that this contingent revenue is only to be recognized after the contingency has been removed (i.e., the sales threshold has been achieved).

•
Expense Reimbursements (revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective properties) - —This revenue is accrued in the same periods as the expenses are incurred.

•
Condominium Sales (income arising from the sales of condominium units at the Lexington Avenue property) - —Income on deposits received for sales of condominium units has been deferred in accordance with the deposit method of SFAS No. 66,Accounting for Sales of Real Estate.Estate. Gains on sales of condominium units are recognized under the percentage of completion method.
        The Company assesses, among other things, the collectibility of revenue before recognition. If the Company incorrectly assesses collectibility of revenue, net earnings and assets could be misstated.
Income Taxes -
        The Company operates in a manner intended to enable it to continue to qualify as a real estate investment trust ("REIT")REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under the Code, the Company's net operating loss carryovers ("NOLs") generally would be available to offset the amount of the Company's REIT taxable income that would otherwise be required to be distributed as dividends to its stockholders.
        The Company has elected to treat its wholly owned subsidiary, 731 Residential LLC, ("Residential"), as a taxable REIT subsidiary ("TRS"). AThe TRS is subject to income tax at regular corporate tax rates. The Company's NOLs will not be available to offset taxable income of Residential. Residential ownsTRS. As of December 31, 2005, 100 of the assets comprising the105 residential condominium units atwere sold and closed. In connection therewith, TRS recognized $51,825,000 of income tax expense, of which $13,870,000 was paid in the Company's 731
Lexington Avenue property. Residentialyear ended December 31, 2005. TRS paid no income taxes in the years ended
December 31, 2004 2003 and 2002.or 2003. TRS deferred income taxes, where applicable, are accounted for in accordance with SFASStatements of Financial Accounting Standards ("SFAS") 109, "AccountingAccounting For Income Taxes"Taxes using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting basis of assets and liabilities and their respective tax basis and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors.

Stock Appreciation Rights
        Stock Appreciation Rights - SARs("SARs") are granted at 100% of the market price of the Company's common stock on the date of grant. SARs vest ratably, becoming
fully vested 36 months after grant, and generate compensationCompensation expense for each SAR is measured by the excess of the stock price at the current balance sheet date over the exercisestock price at the previous balance sheet date. On subsequent balance sheet dates, ifIf the stock price falls,is lower at the current balance sheet date, previously recognized expense is reversed, but not below zero.
Recently Issued Accounting Literature -
        On December 16, 2004, the FASBFinancial Accounting Standards Board ("FASB") issued SFAS No. 153:153, Exchanges of Nonmonetary Assets - Assets—An Amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company
does not believe the adoption of SFAS No. 153 willon its effective date did not have a material effect on the Company's consolidated financial statements.
        On December 16, 2004, the FASB issued SFAS No. 123: (Revised 2004) -, Share-Based Payment ("SFAS No. 123R"). SFAS 123R replaces SFAS No. 123, using the prospective method, and supersedes APB Opinion No. 25: Accounting for Stock Issued to Employees. SFAS No. 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements and be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R is effective as of the first interim or annual reporting period that beginsbeginning after JuneDecember 15, 2005. The Company does not believe that the adoption of SFAS No. 123R will have a material effect on its consolidated financial statements.
        In March 2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143, Asset Retirement Obligations. FIN 47 provides clarification of the term "conditional asset retirement obligation" as used in SFAS 143, defined as a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. Under this standard, a company must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated. FIN 47 became effective in the Company's fiscal quarter ended December 31, 2005. Upon review of its assets, the Company has concluded that no asset retirement obligation exists as of December 31, 2005. Accordingly, the adoption of FIN 47 on its effective date had no impact on the Company's consolidated financial statements.

                                      -22-


RESULTS OF OPERATIONS

        In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154 changes the requirements for the accounting and reporting for a change in accounting principle by requiring that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that (i) a change in the method of depreciating or amortizing a long-lived non-financial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) corrections of errors in previously issued financial statements should be termed a "restatement". SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company does not believe that the adoption of SFAS 154 will have a material effect on its consolidated financial statements.
        In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") on Issue No. 04-05, "Determining Whether a General Partner, or General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights" ("EITF 04-05"). EITF 04-05 provides a framework for determining whether a general partner controls, and should consolidate, a limited partnership or a similar entity. EITF 04-05 became effective on June 29, 2005, for all newly formed or modified limited partnership arrangements and January 1, 2006 for all existing limited partnership arrangements. The Company has elected to early adopt the provisions of EITF 04-05 and accordingly, has consolidated its investment in the Kings Plaza energy plant joint venture in the fourth quarter of 2005.

Results of Operations
Years Ended December 31, 2005 and December 31, 2004
        The Company had net income of $82,241,000 for the year ended December 31, 2005, compared to a net loss of $33,469,000 in the prior year, an increase of $115,710,000. Net income for 2005 includes (i) $60,943,000 for an after-tax net gain from the sale of residential condominium units at 731 Lexington Avenue, (ii) $2,088,000 of income from the settlement of claims against third parties for environmental remediation at Kings Plaza, partially offset by, (iii) $27,588,000 for an accrual of SARs compensation expense. Net loss for the year ended December 31, 2004 includes (i) $76,789,000 for an accrual of SARs compensation expense, (ii) $3,050,000 for the write-off of the proportionate share of unamortized debt issuance costs in connection with the reduction of the principal amount of a construction loan, partially offset by, (iii) $3,862,000 for a net gain on sale of non-depreciable real estate.
        Property rentals were $132,949,000 in 2005, compared to $110,541,000 in 2004, an increase of $22,408,000. The following table details the increase by property:
Tenant   Delivery Date   Increase
731 Lexington Avenue:          
  Citibank N.A.   Feb. 2005   $ 11,150,000
  The Container Store   Mar. 2005     4,132,000
  Hennes & Mauritz   May 2004     2,136,000
  The Home Depot   Mar. 2004     1,925,000
  Other tenants   Various     2,145,000
        
          21,488,000
Other properties         920,000
        
        $ 22,408,000
        
        Tenant expense reimbursements were $54,136,000 in 2005, compared to $38,354,000 in 2004, an increase of $15,782,000. This increase was largely due to reimbursements from tenants at 731 Lexington Avenue under leases that commenced subsequent to the second quarter of 2004.
        Operating expenses were $64,872,000 in 2005, compared to $47,615,000 in 2004, an increase of $17,257,000. This increase was primarily due to lower amounts being capitalized in the current year period as well as additional operating costs being incurred at 731 Lexington Avenue as a result of the property being substantially placed into service during 2005.
        General and administrative expenses were $32,393,000 in 2005, compared to $81,285,000 in 2004, a decrease of $48,892,000. This decrease was primarily due to a $49,201,000 decrease in the accrual for SARs compensation expense in 2005.
        Depreciation and amortization expense was $19,877,000 in 2005, compared to $15,527,000 in 2004, an increase of $4,350,000. This increase was due to depreciation on the 731 Lexington Avenue building and improvements, which were substantially placed into service during 2005.
        Interest and other income, net was $14,769,000 in 2005, compared to $1,571,000 in 2004, an increase of $13,198,000. This increase was primarily due to (i) an increase in average cash balances of $274,000,000, (ii) an increase in the average yield on investments of approximately 2%, and (iii) income of $2,088,000 from the settlements of claims against third parties for environmental remediation at Kings Plaza.
        Interest and debt expense was $62,678,000 in 2005, compared to $40,320,000 in 2004, an increase of $22,358,000. This increase was primarily due to (i) lower amounts of capitalized interest in the current year as a result of 731 Lexington Avenue being substantially placed into service during 2005 (interest of $6,935,000 was capitalized in 2005, compared to $25,087,000 in 2004) and (ii) an increase of $131,000,000 in the average debt outstanding, primarily due to the 731 Lexington Avenue retail financing of $320,000,000 in July 2005.

Years Ended December 31, 2004 and December 31, 2003
        The Company had a net loss of $33,469,000 for the year ended December 31, 2004, compared to a net loss of $17,742,000 in the prior year. The net loss for 2004 includes (i) an accrual of $76,789,000 for SAR's compensation expense, (ii) a $3,050,000 write-off of for stock
appreciation rights ("SARs"), (ii) expense of $3,050,000 from the write-offproportionate share of unamortized deferred debt expense in connection with the reduction of the principal amount of the construction loan for the 731 Lexington Avenue project, and (iii) income of $3,862,000 from the sale of land in White Plains, New York. The net loss for 2003 includes (i) an accrual of $44,917,000 for SARs, (ii) $1,289,000 resulting from the recognition as income of the non-refundable deposit from the planned sale of the Flushing property of $1,875,000, net of $586,000 for costs associated with this transaction, and (iii) income from discontinued operations of $1,206,000 representing the reversal of previously accrued contingent liabilities.
        Property rentals were $110,541,000 in 2004, compared to $56,785,000 in 2003, an increase of $53,756,000. The following table details the increase by property:
        TENANT               DELIVERY DATE             INCREASE
- ---------------------        -------------         ----------------

731 Lexington Avenue;
 Bloomberg L.P.                  Various            $    40,771,000
 The Home Depot               Mar. 29, 2004               6,086,000
 Hennes & Mauritz              May 15, 2004               3,622,000
  Other tenants                  Various                  2,687,000
                                                   ----------------
                                                         53,166,000
Other properties                                            590,000
                                                   ----------------
                                                   $     53,756,000
                                                   ================
Tenant   Delivery Date   Increase
731 Lexington Avenue:          
  Bloomberg L.P.   Various   $ 40,771,000
  The Home Depot   Mar. 2004     6,086,000
  Hennes & Mauritz   May 2004     3,622,000
  Other tenants   Various     2,687,000
        
          53,166,000
Other properties         590,000
        
        $ 53,756,000
        
        Tenant expense reimbursements were $38,354,000 in 2004, compared to $30,377,000 in 2003, an increase of $7,977,000. This increase was largely due to reimbursements from Bloomberg L.P.
        Operating expenses were $47,615,000 in 2004, compared to $37,984,000 in 2003, an increase of $9,631,000. This increase resulted primarily from operating expenses at 731 Lexington Avenue of $9,435,000.
        General and administrative expenses were $81,285,000 in 2004, compared to $48,921,000 in 2003, an increase of $32,364,000. This primarily resulted from the increase in the accrual for SARs compensation expense.
        Depreciation and amortization expense was $15,527,000 in 2004, compared to $7,497,000 in 2003, an increase of $8,030,000. This increase was due to depreciation on the space delivered to tenants at 731 Lexington Avenue, as noted above.
        Interest and other income, net was $1,571,000 in 2004, compared to $1,983,000 in 2003, a decrease of $412,000. This decrease was due to $1,289,000 recognized in 2003 representing a non-refundable deposit from the planned sale of the Flushing property, offset by an increase in interest income from higher average cash balances in 2004.
        Interest and debt expense was $40,320,000 in 2004, compared to $13,691,000 in 2003, an increase of $26,629,000. This increase resulted from (i) lower amounts of capitalized interest in the current year because of placing portions of 731 Lexington Avenue in service (interest of $25,087,000 has been capitalized in 2004, as compared to $37,516,000 in 2003) and (ii) an increase in average debt outstanding of $266,853,000, primarily due to the 731 Lexington Avenue office financing of $400,000,000, partially offset by a decline in average interest rates of 0.83%.

Years Ended December 31, 2003 and December 31, 2002

      Property rentals were $56,785,000 in 2003, compared to $50,630,000 in
2002, an increase of $6,155,000. This increase resulted primarily from
recognizing rent of $5,081,000 from the lease

Relationship with Bloomberg L.P., which took
possession of 87% of the 695,000 square feet under the lease on November 15,
2003.

                                      -23-


      Tenant expense reimbursements were $30,377,000 in 2003, compared to
$26,170,000 in 2002, an increase of $4,207,000. The increase was largely due to
higher reimbursements as real estate taxes, insurance and repairs and
maintenance also increased.

      Operating expenses were $37,984,000 in 2003, compared to $33,042,000 in
2002, an increase of $4,942,000. Of this increase, (i) $1,541,000 resulted
primarily from higher fuel costs for the utility plant at the Company's Kings
Plaza Regional Shopping Center and (ii) $373,000 resulted from bad debt expense
this year as compared to a bad debt recovery in the prior year. The balance of
the increase was due to higher real estate taxes, insurance and repairs and
maintenance, which were billed to tenants.

      General and administrative expenses were $48,921,000 in 2003, compared to
$3,980,000 in 2002, an increase of $44,941,000. This increase resulted from an
accrual of $44,917,000 of compensation expense for SARs based on the Company's
closing stock price of $124.66 at December 31, 2003. There was no SARs
compensation expense in 2002.

      Depreciation and amortization expense was $7,497,000 in 2003, compared to
$6,668,000 in 2002, an increase of $829,000. The increase was largely due to
depreciation commencing on November 15, 2003 for space delivered to Bloomberg
L.P.

      Interest and other income, net was $1,983,000 in 2003, compared to
$2,178,000 in 2002, a decrease of $195,000. This decrease is largely
attributable to lower average cash balances in 2003 due to greater expenditures
for the Lexington Avenue project and lower yields on cash investments primarily
offset by $1,289,000 resulting from the recognition as income of the
non-refundable deposit from the planned sale of the Flushing property of
$1,875,000, net of $586,000 for costs associated with this transaction. Also,
2002 results include a non-recurring gain of $169,000 resulting from the sale of
air rights.

      Interest and debt expense was $13,691,000 in 2003, compared to $22,888,000
in 2002, a decrease of $9,197,000. This decrease primarily resulted from (i)
higher capitalized interest in 2003 for the Lexington Avenue property (interest
of $37,516,000 was capitalized in 2003, as compared to $23,788,000 in 2002) and
(ii) a decrease in average interest rates from 8.23% to 7.47%, partially offset
by (iii) an increase in average debt of $94,991,000.

RELATIONSHIP WITH VORNADO REALTY TRUSTVornado
        The Company is managed, and its properties are leased and developed, by Vornado pursuant to agreements with one-year terms, expiring in March of each year, which are automatically renewable except for the 731 Lexington Avenue
property which provides for a term lasting until substantial completion of the
development of the property.

renewable.
Management and Development Agreements
        The annual fee payable to Vornado for management of the Company is equal to the sum of (i) $3,000,000 and (ii) 3% of gross income from the Kings Plaza Regional Shopping Center, and (iii)Center.
        In addition, Vornado is entitled to a development fee equal to 6% of development costs, as defined, with a minimum guaranteed feesfee of $750,000 per annum.
Leasing Agreements
        Vornado also provides all leasing services for the Company 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 of the sale of an asset, the fee is 3% of the gross proceeds, as defined. Such amounts are payable annually in an amount not to exceed $2,500,000, until the present value of such installments, calculated at a discount rate of 9% per annum, equals the amount that would have been paid had they been paid at the time the transactions which gave rise to the commissions occurred. Pursuant to the leasing agreement, 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, except in connection with the Bloomberg L.P. lease, where the tenant paid the third party broker directly.
731 Lexington Avenue Fees

      Pursuant to management agreements discussed above, Vornado is entitled to
        On July 6, 2005, the Company completed a development fee for the construction$320,000,000 mortgage financing of the Company's 731 Lexington Avenue
project, estimated to be $26,300,000 payable onretail space. In connection therewith, the earlier of January 3, 2006
orCompany repaid the date of payment in fullremaining balance of the construction loan encumberingand the property. Further,$124,000,000 loan to Vornado. In addition, the Company paid Vornado has agreed to guarantee to the construction lender,
the lien free, timely completionunpaid balance of the constructiondevelopment fee of the 731 Lexington Avenue
project$20,624,000 and funding of project costs in excess of a stated budget, if not funded
by the Company (the "Completion Guarantee"). The fee payable by the Company to
Vornado$6,300,000 for the Completion Guarantee is 1% of

                                      -24-


construction costs, as defined. This fee is estimated to be $6,300,000 and is
due at the same time that the development fee is due. In addition, if Vornado
should advance any funds under the Completion Guarantee in excess of
$21,000,000, which was the amount available at December 31, 2004 under the line
of credit with Vornado (see "Debt and Contractual Obligations"), interest on
those advances would be at 15% per annum.Fee.
        On May 27, 2004, Alexander's entered into an agreement with Vornado under which it provides property management services at 731 Lexington Avenue for an annual fee of $0.50 per square foot of the tenant-occupied office and retail space. Further, the Company entered into an agreement with Building Maintenance Services ("BMS"), a wholly-owned subsidiary of Vornado, to supervise the cleaning, engineering and security at the 731 Lexington Avenue property for an annual fee of 6% of coststhe cost for such services.services plus 6%. In addition, in October 2004, the Company entered into an agreement with BMS to provide the same services at the Kings Plaza Regional Shopping Center. These agreements were negotiated and approved on behalf of the Company by a committee of directors of the Company unaffiliated with Vornado.

      At December 31, 2004, the Company owed Vornado (i) $18,635,000 for
development fees, (ii) $23,748,000 for leasing fees, (iii) $4,894,000 for the
guarantee fee, (iv) $537,000 for interest, and (v) $1,411,000 for management
fees and property management and cleaning fees.
        The following table shows the amounts incurred under the management, leasing and development agreements.
                                                                   YEAR ENDED DECEMBER 31,
                                                         -------------------------------------------
(amounts in thousands)                                     2004              2003            2002
                                                         ---------         ---------       ---------

Company management fees...........................       $   3,000         $   3,000       $   3,000
Development fee, guarantee fee and rent for
  development office..............................           5,955            10,292          10,769
Leasing fees......................................          12,156            17,919           3,056
Property management fees and payments for
  cleaning, engineering and security services.....           2,481               887             602
                                                         ---------         ---------       ---------
                                                         $  23,592         $  32,098       $  17,427
                                                         =========         =========       =========
 
  Year Ended December 31,
(Amounts in thousands)
  2005   2004   2003
Company management fees   $ 3,000   $ 3,000   $ 3,000
Development fee, guarantee fee and rent for development office     4,431     5,955     10,292
Leasing fees     11,671     12,156     17,919
Property management fees and payments for cleaning, engineering and security services     4,776     2,481     887
        
    $ 23,878   $ 23,592   $ 32,098
                At December 31, 2004, in addition to2005, the Company owed Vornado $32,804,000 for leasing fees, and costs described above,
the Company was indebted to Vornado in the amount of $124,000,000 (see " - Debt$1,520,000 for management, property management and Contractual Obligations").

      In July 2002, Alexander's Tower LLC, a wholly owned subsidiary of the
Company, purchased 28,821 square feet of air rights from a joint venture
developing a property at Lexington Avenuecleaning fees.

Liquidity and 30th Street in Manhattan, and
owned by Vornado and an unrelated third party (the "30th Street Venture") for a
purchase price of $3,459,000 ($120 per square foot). The Company purchased these
air rights in order to increase the amount of square footage that it could
develop for the residential portion of its Lexington Avenue project to the
maximum amount permitted for residential use by the New York City zoning code.
The 30th Street Venture also identified third party buyers for an additional
28,111 square feet of air rights which it owned. These third party buyers
desired to use the air rights for the development of two projects located in
upper Manhattan in the general area of 86th Street. However, the air rights held
by the 30th Street Venture could not be transferred to the applicable sites
because they were not within the required geographical limited radius nor were
they in the same Community Board District as the 30th Street Venture. The 30th
Street Venture asked the Company to sell 28,111 square feet of its existing air
rights to these third party buyers, who could use them; the 30th Street Venture
would replace them with 28,111 square feet of the 30th Street Venture's air
rights. In October 2002, the Company purchased 28,111 square feet of air rights
from the 30th Street Venture in two transactions for an aggregate purchase price
of $3,058,000 (an average of $109 per square foot). The Company then sold an
equal amount of air rights it previously owned at the Lexington Avenue project
to the third party buyers for a sales price of $3,339,000, resulting in a gain
of $169,000. This gain is included in "Interest and other income, net" in the
Company's 2002 consolidated statement of operations.

LIQUIDITY AND CAPITAL RESOURCESCapital Resources
        The Company anticipates that cash from operations, over the next twelve
months, together with existing cash balances, will be adequate to fund its business operations, recurring capital expenditures, and debt amortization.
Capital requirementsamortization over the next twelve months.
Development Projects
Rego Park II
        The Company owns two land parcels containing approximately 10 acres adjacent to its Rego Park I property in Queens, New York. One parcel comprises the entire square block bounded by the Horace Harding Service Road, 97^th Street, 62^nd Drive and Junction Boulevard. The other is a parcel of approximately one-quarter square block at the intersection of Junction Boulevard and the Horace Harding Service Road.
        The Company's plan for the completionentire square block parcel is a mixed-use, development containing approximately 600,000 square feet of the 731 Lexington Avenue project
(currently estimatedretail space on four levels, about a 1,400 space parking deck and may also include up to be $150,000,000) may be funded from either existing
cash, proceeds from the sale of condominium450 apartment units additional borrowings and/or
the Company's construction loan.

                                      -25-


Development Projects

      731 LEXINGTON AVENUE

      As of December 31, 2004,in two towers. On September 20, 2005, the Company has received deposits of $64,060,000
on sales of the condominium units in the building. On January 24, 2005, the
condominium offering plan was declared effective by the State of New York at
which time 83 units were under sales contract.governmental approvals for this project. The Company expectshas entered into a lease with Century 21 for 134,000 square feet of retail space at this project.
        While the current plans for the one-quarter square block parcel are very preliminary, we anticipate it may include up to close80,000 square feet of retail space.
        There can be no assurance that these projects will commence, be completed, completed on these sales during 2005. Net proceeds after income taxes from these sales will
be approximately $310,000,000 (includingtime or completed for the deposits received).

      KINGS PLAZAbudgeted amount.
Kings Plaza
        The Company plans to construct a two-story freestanding building adjacent to the Mall of approximately 200,000 square feet. The first story ofcontaining approximately 120,000 square feet, will be operated as awhich has been leased to Lowe's Home Improvement Warehouse ("Lowe's"). The Lowe'sThis lease is expected to commence in 2006.2007. The cost of thethis project will be approximately $21$11.5 million, which is net of a tenant reimbursement of $16.5 million. This cost includes construction of structured elements, which will support a second and third level. There can be no assurance that this project will commence, be completed, completed on time or completed for the Lowe's
reimbursementbudgeted amount.
        Prior to April 15, 2005, the Company owned and before reimbursement, if any, fromoperated an energy plant that generates electrical power at its Kings Plaza Regional Shopping Center. On April 15, 2005, the second story tenant(s).Company contributed this 35 year old plant, which has been fully depreciated, and $750,000 in cash to a joint venture for a 25% interest. Pursuant to the provisions of EITF 04-05, the Company is presumed to have "control" over the joint venture and accordingly, has consolidated its investment in this joint venture in the fourth quarter of 2005. The joint venture plans to rebuild the plant at a total cost of approximately $18,000,000. There can be no assurance that this project will be completed, completed on time or completed for the budgeted amount.
Insurance
        The Company carries comprehensive liability and all-riskall risk property insurance (fire,((i) fire, (ii) flood, (iii) extended coverage, (iv) "acts of terrorism" as defined in the Terrorism Risk Insurance Extension Act of 2005 which expires in 2007, and (v) rental loss insurance) with respect to its assets but is atassets.
        On June 30, 2005, the Company renewed its annual all risk policy with limits of (i) $960,000,000 per occurrence including certified terrorist acts and $350,000,000 for financial lossnon-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remaining properties. To the extent that the Company incurs losses in excess of its insurance coverage, these losses would be borne by the policies' limits. Such a lossCompany and could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.
        The Company's debt instruments, consisting of mortgage loans secured by its properties (which are generally non-recourse to the Company)Alexander's), contain customary covenants requiring the Company to maintain insurance. There can be no
assuranceAlthough the Company believes that the lendersit has adequate insurance coverage under these instruments willagreements, it may not takebe able to obtain an equivalent amount of coverage at reasonable costs in the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition,future. Further, if lenders insist on greater coverage for these risks andthan the Company is unableable to obtain, coverageor if the Terrorism Risk Insurance Extension Act of 20022005 is not extended past 2007, it maycould adversely affect the Company's ability to finance and/or refinance its properties and businesses.

      expand its portfolio.

Debt and Contractual Obligations
        Below is a summary of the Company's properties and their encumbrances at December 31, 2004:


                                                                     INTEREST
(amounts in thousands except interest rates)       BALANCE             RATE            MATURITY
                                                ---------------      --------          ---------

Lexington Avenue Office ...............         $       400,000         5.33%          Feb. 2014
Lexington Avenue Construction..........                  65,168         4.92%          Jan. 2006
Kings Plaza............................                 213,699         7.46%          June 2011
Rego Park I............................                  81,661         7.25%          June 2009
Paramus................................                  68,000         5.92%          Oct. 2011
Rego Park II (raw land)................                      --          N/A              N/A
Flushing (leasehold interest)..........                      --          N/A              N/A
Loans with Vornado(1)..................                 124,000         9.00%          Jan. 2006
                                                ---------------
                                                $       952,528
                                                ===============


- ------------------------
2005:
(Amounts in thousands)

  Balance   Interest Rate   Maturity
Lexington Office   $ 400,000   5.33 % Feb. 2014
Lexington Retail(1)     320,000   4.93 % July 2015
Kings Plaza     210,539   7.46 % June 2011
Rego Park I     80,926   7.25 % July 2009
Paramus     68,000   5.92 % Oct. 2011
Rego Park II (raw land)     —   N/A   N/A
Flushing (leasehold interest)     —   N/A   N/A
           
    $ 1,079,465        
           
(1) At December 31, 2004,
In the Company was indebtedevent of a substantial casualty, up to Vornado in the amount$75,000,000 of $124,000, comprised of (i) a $95,000 note and (ii) $29,000 under a $50,000 line
of credit (which carries a 1% unused commitment fee). The current interest rate
on thethis loan and line of credit is 9.00% and resets quarterly using a 6.00%
spread to one-year treasury with a 3% floor for treasuries. On July 3, 2002, in
conjunction with the original closing of the Construction Loan, the maturity of
the Vornado debt was extended to the earlier of January 3, 2006 or the date the
Construction Loan is finally repaid. This loan bears interest at a variable
rate. The rate shown is as of December 31, 2004.

                                      -26-
may become recourse.
        Below is a summary of the Company's contractual obligations at December 31, 2004.


                                                             Less than       One to        Three to      More than
           (amounts in thousands)                Total        One Year     Two Years      Five Years    Five Years
                                              ----------     ---------     ---------      ----------    ----------

Contractual obligations
  Long-term debt obligations.............     $1,428,641     $ 240,798     $ 108,867       $ 195,732    $  883,244
  Operating lease obligations............          5,679           416           731             638         3,894
  Purchase obligations, primarily
     construction commitments............         23,500        23,500(1)         --              --            --
  Other obligations......................        174,455       124,207(2)     34,000(3)        5,000        11,248
                                              ----------     ---------     ---------       ---------    ----------
                                              $1,632,275     $ 388,921     $ 143,598       $ 201,370    $  898,386
                                              ==========     =========     =========       =========    ==========

Commitments
  Standby letters of credit............       $    4,130     $   4,130     $      --       $      --    $       --
                                              ==========     =========     =========       =========    ==========


- --------------------------
2005.
(Amounts in thousands)

  Total   Less than One
Year   One to Two
Years   Three to
Five Years   More than
Five Years
Contractual obligations                              
  Long-term debt obligations   $ 1,515,798   $ 74,004   $ 152,638   $ 535,661   $ 753,495
  Operating lease obligations     16,989     785     1,581     2,407     12,216
  Purchase obligations, primarily construction commitments     3,654     3,654     —     —     —
  Other obligations     120,332     90,062 (1)   5,000     7,500     17,770
            
    $ 1,656,773   $ 168,505   $ 159,219   $ 545,568   $ 783,481
            
Commitments                              
  Standby letters of credit   $ 4,130   $ 4,130   $ —   $ —   $ —
            
(1) The construction budget for the Lexington Avenue project is $630,000 (which
excludes $29,000 of development and guarantee fees to Vornado) of which $489,400
has been expended through December 31, 2004 and an additional $23,500 has been
committed to at December 31, 2004.

(2) 
This amount includes $121,706$87,563,000 of liabilities for SARs expense based onSARs.

Stock Appreciation Rights
        On December 29, 2005, Michael Fascitelli, the Company closingCompany's President, exercised 350,000 of his existing stock appreciation rights ("SARs") which were scheduled to expire in December 2006 and received $173.82 for each SAR exercised, representing the difference between the Company's stock price of $215.00 at December 31, 2004.

(3)$247.70 (the average of the high and low market price) on the date of exercise and the exercise price of $73.88. This amount primarily representsexercise was consistent with the estimated developmentCompany's tax planning.
        On January 10, 2006, the Omnibus Stock Plan Committee of the Board of Directors of the Company granted Mr. Fascitelli a SAR covering 350,000 shares of the Company's common stock. The exercise price of the SAR is $243.83 per share of common stock, which is the average of the high and guarantee
fees due to Vornadolow trading price of the Company's common stock on the date of grant. The SAR will become exercisable on July 10, 2006, provided Mr. Fascitelli is employed with the Company on such date, and will expire on March 14, 2007. Mr. Fascitelli's early exercise and the related tax consequences for the Lexington Avenue project. These fees areCompany were factors in the Company's decision to be paid
uponmake the earliernew grant to him.
        As of January 3,31, 2006, or the payment in full of the Construction
Loan encumbering the property.

Stock Appreciation Rights

      As of December 31, 2004, 850,000 SARs were outstanding and exercisable at a weighted-average exercise price of $71.82. The$141.80. Since the SARs agreements for these SARs require that they be settled in cash. Had the holders of these SARs chosen to
exercise their rights as of December 31, 2004,cash, the Company would have had to pay $121,706,000 in cash. Further appreciation$89,295,000 if the holders of these SARs had exercised their SARs on January 31, 2006. Any change in the Alexander's, Inc.Company's stock price from the closing stock price of $215.00$246.85 at DecemberJanuary 31, 2004 will2006 would increase or decrease the cashamount the Company would have to pay upon exerciseexercise.

Cash Flows
Year Ended December 31, 2005
        Cash and may impact liquiditycash equivalents were $578,406,000 at December 31, 2005, compared to $128,874,000 at December 31, 2004, an increase of $449,532,000.
        Net cash used in operating activities of $6,119,000 was primarily comprised of (i) adjustments for non-cash items of $116,244,000, partially offset by, requiring(ii) net income of $82,241,000 and (iii) a net change in operating assets and liabilities of $27,884,000. The adjustments for non-cash items were primarily comprised of (i) a pre-tax net gain of $112,768,000 from the Company to secure additionalsale of residential condominiums at 731 Lexington Avenue, (ii) straight-lining of rental income of $29,298,000, partially offset by (iii) depreciation and amortization of $22,836,000, and (iv) minority interest of $2,250,000.
        Net cash provided by investing activities of $337,516,000 was primarily comprised of (i) net proceeds from the sale of residential condominiums at 731 Lexington Avenue of $455,012,000, partially offset by (ii) capital expenditures of $110,481,000 and (iii) real estate acquisitions of $7,121,000.
        Net cash provided by financing activities of $118,135,000 was primarily comprised of (i) proceeds from borrowing of $344,832,000, partially offset by (ii) repayments of borrowings to replace such a cash
outflow.

CASH FLOWS

of $217,895,000 and (iii) debt issuance costs of $9,517,000.
Year Ended December 31, 2004
        Net cash provided by operating activities of $27,853,000 was comprised of (i) the net change in operating assets and liabilities of $86,643,000, partially offset by (ii) a net loss of $33,469,000 and (iii) non-cash items of $25,321,000. The adjustments for non-cash items were comprised of (a) the effect of straight-lining of rental income of $43,327,000, (b) the gain on sale of real estate of $3,862,000, partially offset by (c) $18,818,000 of depreciation and amortization and (d) $3,050,000 resulting from the write-off of unamortized deferred debt expense.
        Net cash used in investing activities of $138,942,000 was comprised of (i) capital expenditures of $146,232,000, partially offset by (ii) net cash restricted for operating liabilities of $2,996,000 and (iii) proceeds from the sale of real estate of $4,294,000. The capital expenditures were primarily related to the 731 Lexington Avenue project.
        Net cash provided by financing activities of $218,627,000 resulted primarily from (i) borrowings collateralized by 731 Lexington Avenue of $477,798,000, partially offset by (ii) debt repayments of $256,755,000 and (iii) debt issuance costs of $3,330,000.
Year Ended December 31, 2003
        Net cash provided by operating activities of $7,023,000 was comprised of (i) non-cash items of $4,568,000 and (ii) the net change in operating assets and liabilities of $20,197,000, partially offset by (iii) a net loss of $17,742,000. The adjustments for non-cash items include depreciation and amortization of $11,310,000, partially offset by the effect of straight-lining of rental income of $6,742,000.
        Net cash used in investing activities of $218,604,000 was largely comprised of capital expenditures of $215,158,000. The capital expenditures are primarily related to the Lexington Avenue development project.
        Net cash provided by financing activities of $187,678,000 resulted from borrowings of $190,399,000, mainly to fund expenditures for the Lexington Avenue development project, offset by debt repayments of $2,721,000.

                                      -27-


Year

Funds from Operations ("FFO") for the Years Ended December 31, 2002

      Net cash provided by operating activities of $7,643,000 was comprised of
(i) net income of $23,584,000, partially offset by (ii) non-cash items of
$4,600,0002005 and (iii) the net change in operating assets and liabilities of
$11,341,000. The adjustments for non-cash items include (a) the gain on the sale
of the Third Avenue property of $10,366,000, (b) the effect of straight-lining
of rental income of $3,099,000 and (c) the gain on the sale of air rights of
$169,000, partially offset by depreciation and amortization of $9,034,000.

      Net cash used in investing activities of $114,028,000 (includes cash
provided by discontinued operations of $13,176,000) was largely comprised of
capital expenditures of $133,250,000, partially offset by the proceeds from the
sale of the Third Avenue property of $13,176,000. The capital expenditures were
primarily related to the Lexington Avenue development project.

      Net cash provided by financing activities of $16,366,000 resulted mainly
from debt proceeds of $55,500,000, partially offset by debt repayments of
$27,524,000 and debt issuance costs of $11,110,000.

FUNDS FROM OPERATIONS ("FFO") FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      FFO was a negative $18,014,000, or $3.60 per share in the year ended
December 31, 2004, compared to a negative $10,245,000, or $2.05 per share in the
year ended December 31, 2003. FFO for the year ended December 31, 2004 includes
(i) accrued compensation expense for SARs of $76,789,000, based on the Company's
closing stock price of $215.00 at December 31, 2004, (ii) $3,862,000 resulting
from the gain on the sale of non-depreciable real estate in White Plains, New
York and (iii) $3,050,000 resulting from the write-off of unamortized deferred
debt expense in connection with the reduction of the principal amount of the
Construction Loan for the 731 Lexington Avenue project. FFO for the year ended
December 31, 2003 includes (i) accrued compensation expense for SARs of
$44,917,000, based on the Company's closing stock price of $124.66 at December
31, 2003, (ii) $1,289,000 resulting from the recognition as income of the
non-refundable deposit from the planned sale of the Flushing property of
$1,875,000, net of $586,000 for costs associated with this transaction and (iii)
income from discontinued operations of $1,206,000 representing the reversal of
previously accrued contingent liabilities.

      The following table reconciles Net loss to FFO.


                                                                        FOR THE YEAR
      (amounts in thousands except per share amounts)                ENDED DECEMBER 31,
                                                               ------------------------------
                                                                   2004               2003
                                                               -----------        -----------

Net loss.................................................      $   (33,469)       $   (17,742)
Depreciation of real property............................           15,455              7,497
                                                               -----------        -----------
FFO......................................................      $   (18,014)       $   (10,245)
                                                               ===========        ===========

FFO per common share - basic and diluted.................      $     (3.60)       $     (2.05)
                                                               ===========        ===========
        FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income or loss determined in accordance with generally accepted accounting principles in the United States of AmericaGenerally Accepted Accounting Principles ("GAAP"), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO isand FFO per diluted share are used by management, investors and industry analysts as a
supplemental measuremeasures of operating performance of equity REITs. FFO and FFO per diluted share should be evaluated along with GAAP net earningsincome and net earningsincome per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating activities, investing activities and financing activities, in evaluating the operating performance of equity REITs. Management believes that FFO isand FFO per diluted share are helpful to investors as a supplemental performance measuremeasures because this measure excludesthese measures exclude the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have instead historically risen or fallen with market conditions, these non-GAAP measures can facilitate comparisons of operating performance between periods and among other equity REITs. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as disclosed in the Company's Statements of Cash Flows. FFO should not be considered as an alternative to net lossincome as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity.

                                      -28-
        FFO for the year ended December 31, 2005 was $102,037,000, or $20.09 per diluted share, compared to negative FFO of $18,014,000, or $3.60 per diluted share, for the year ended December 31, 2004, an increase of $120,051,000, or $23.69 per diluted share.
        FFO for the year ended December 31, 2005 includes (i) $60,943,000 for an after-tax net gain from the sale of residential condominium units at 731 Lexington Avenue, (ii) income of $2,088,000 from the settlement of claims against third parties for environmental remediation at Kings Plaza, partially offset by, (iii) $27,588,000 for an accrual of SARs compensation expense. These items, in the aggregate, increased FFO by $35,443,000, or $6.98 per diluted share.
        Negative FFO for the year ended December 31, 2004 includes (i) $76,789,000 for an accrual of SARs compensation expense, (ii) $3,050,000 for the write-off of the proportionate share of unamortized debt issuance costs in connection with the reduction of the principal amount of a construction loan, partially offset by, (iii) $3,862,000 for a net gain on sale of non-depreciable real estate. These items, in the aggregate, decreased FFO by $75,977,000, or $15.17 per diluted share.
 
  For the Year Ended December 31,  
(Amounts in thousands, except share and per share amounts)

  2005   2004  
Net income (loss)   $ 82,241   $ (33,469 )
Depreciation and amortization of real property     19,796     15,455  
       
FFO (negative FFO)   $ 102,037   $ (18,014 )
       
FFO (negative FFO) per common share—diluted   $ 20.09   $ (3.60 )
       
Weighted average shares used in computing FFO per common share—diluted     5,080,171     5,008,222  
       ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The following table summarizes
        At December 31, 2005, the Company'sCompany had $1,079,465,000 of fixed rate debt at a weighted average interest rate of 5.81%, as such the Company has no exposure to a changechanges in interest rates.

                (amounts in thousands except per share amounts)


                                                                   EFFECT OF
                             AT DECEMBER     WEIGHTED-AVERAGE      CHANGE IN
                               31, 2004       INTEREST RATE     BASE RATES OF 1%
                             -----------     ----------------   ----------------

Variable rate.............   $   189,168           7.59%          $     1,892
Fixed rate................       763,360           6.18%                   --
                             -----------                          -----------
                             $   952,528                          $     1,892
                             ===========                          ===========

Total effect on the
Company's annual
net earnings per share -
diluted...................                                        $      0.38
                                                                  ===========
rates for the remaining terms of its existing debt.
        The fair value of the Company's debt, estimated by discounting the future cash flows using the current rates available to borrowers with similar credit ratings for the remaining terms of such debt, exceedsis less than the aggregate carrying amount by approximately $1,095,000$15,710,000 at December 31, 2004. Such fair value
estimates are not necessarily indicative of the amounts that would be paid upon
liquidation of the Company's debt.

ITEM2005.

Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Index to Consolidated Financial Statements

Page
Number
                                                                                     ------
Report of Independent Registered Public Accounting Firm.........................       30

Firm 34

Consolidated Balance Sheets at December 31, 20042005 and 2003.......................       31

2004 

35

Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 2003 and 2002..................................       32

2003 

36

Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2005, 2004 2003 and 2002..................................       33

2003 

37

Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 2003 and 2002..................................       34

2003 

38

Notes to Consolidated Financial Statements......................................       35
Statements 

39


                                      -29-


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Alexander's, Inc.
Paramus, New Jersey
We have audited the accompanying consolidated balance sheets of Alexander's, Inc. (the "Company") as of December 31, 20042005 and 2003,2004, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2004.2005. Our audits also included the financial statement schedules included in the index at item 15(a)(2). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Alexander's, Inc.the Company at December 31, 20042005 and 2003,2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004,2005, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of December 31, 2004,2005, based on the criteria established in Internal Control -- Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 200527, 2006 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 24, 2005

                                      -30-
27, 2006


ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
            (amounts
(Amounts in thousands, except share and per share amounts)
                                                                                               DECEMBER 31,
                                                                                         ------------------------
                                                                                             2004        2003
                                                                                         -----------  -----------

ASSETS
Real estate, at cost:
   Land................................................................................  $    91,677  $    91,496
   Buildings, leaseholds and leasehold improvements....................................      466,593      371,353
   Construction in progress............................................................      379,306      346,166
   Air rights for 731 Lexington Avenue.................................................       17,531       17,531
                                                                                         -----------  -----------
     Total.............................................................................      955,107      826,546
   Accumulated depreciation and amortization...........................................      (74,028)     (62,744)
                                                                                         -----------  -----------
Real estate, net.......................................................................      881,079      763,802
Asset held for sale....................................................................           --          432
Cash and cash equivalents..............................................................      128,874       21,336
Deposits on the sale of condominiums units and restricted cash.........................       66,930       16,291
Accounts receivable, net of allowance for doubtful accounts of $379 and $55............        4,872        3,101
Receivable arising from the straight-lining of rents...................................       70,739       27,412
Deferred lease and other property costs (including unamortized leasing fees to Vornado
   of $38,819 and $31,021), net........................................................       68,148       61,594
Deferred debt expense, net.............................................................       15,027       10,806
Other assets...........................................................................        9,132       16,222
                                                                                         -----------  -----------
TOTAL ASSETS                                                                             $ 1,244,801  $   920,996
                                                                                         ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt (including $124,000 due to Vornado in 2004 and 2003)..............................  $   952,528  $   731,485
Amounts due to Vornado.................................................................       49,225       34,427
Accounts payable and accrued expenses..................................................       37,706       47,402
Liability for stock appreciation rights................................................      121,706       44,917
Other liabilities......................................................................       65,268       11,842
                                                                                         -----------  -----------
TOTAL LIABILITIES                                                                          1,226,433      870,073
                                                                                         -----------  -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued, none.           --           --
Common stock:  $1.00 par value per share; authorized, 10,000,000 shares; issued,
    5,173,450 shares...................................................................        5,174        5,174
Additional capital.....................................................................       25,685       24,843
(Accumulated deficit) retained earnings................................................      (11,603)      21,866
                                                                                         -----------  -----------
                                                                                              19,256       51,883
Treasury shares: 159,600 and 172,600 shares at cost....................................         (888)        (960)
                                                                                         -----------  -----------
Total stockholders' equity.............................................................       18,368       50,923
                                                                                         -----------  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $ 1,244,801  $   920,996
                                                                                         ===========  ===========

 
  December 31,  
 
  2005   2004  
ASSETS              
Real estate, at cost:              
  Land   $ 69,455   $ 69,455  
  Buildings, leaseholds and leasehold improvements     594,574     466,593  
  Construction in progress     35,107     419,059  
       
    Total     699,136     955,107  
Accumulated depreciation and amortization     (88,976 )   (74,028 )
       
Real estate, net     610,160     881,079  

Cash and cash equivalents 
  
  
578,406 
  
  
128,874 
 
Deposits on the sale of condominium units and restricted cash     2,764     66,930  
Accounts receivable, net of allowance for doubtful accounts of $526 and $379     3,215     4,872  
Receivable arising from the straight-lining of rents     100,037     70,739  
Deferred lease and other property costs, net (including unamortized leasing fees to
    Vornado Realty Trust ("Vornado") of $44,831 and $38,819)     72,600     68,148  
Deferred debt issuance costs, net     20,849     15,027  
Other assets     15,286     9,132  
       
TOTAL ASSETS   $ 1,403,317   $ 1,244,801  
       

LIABILITIES AND STOCKHOLDERS' EQUITY 
  
  
  
  
  
  
 
Debt (2004 includes $124,000 due to Vornado)   $ 1,079,465   $ 952,528  
Amounts due to Vornado     34,324     49,225  
Accounts payable and accrued expenses     44,867     37,706  
Liability for stock appreciation rights     87,563     121,706  
Other liabilities (including taxes payable of $37,955 in 2005)     53,524     65,268  
       
TOTAL LIABILITIES     1,299,743     1,226,433  
       

MINORITY INTEREST 
  
  
2,250 
  
  
— 
 
       
COMMITMENTS AND CONTINGENCIES              

STOCKHOLDERS' EQUITY 
  
  
  
  
  
  
 
Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued,
    none     —     —  
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued
    and outstanding, 5,173,450 shares     5,173     5,173  
Additional capital     26,343     25,685  
Retained earnings (deficit)     70,639     (11,602 )
       
      102,155     19,256  
Treasury stock: 149,450 and 159,600 shares, at cost     (831 )   (888 )
       
TOTAL STOCKHOLDERS' EQUITY     101,324     18,368  
       
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,403,317   $ 1,244,801  
       See notes to consolidated financial statements.

                                      -31-


ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                 (amounts
(Amounts in thousands, except per share amounts)
                                                                                  YEAR ENDED DECEMBER 31,
                                                                               ------------------------------
                                                                                 2004       2003       2002
                                                                               --------   --------   --------

REVENUES
  Property rentals.........................................................    $110,541    $56,785    $50,630
  Expense reimbursements...................................................      38,354     30,377     26,170
                                                                               --------   --------   --------
Total revenues.............................................................     148,895     87,162     76,800
                                                                               --------   --------   --------

EXPENSES

  Operating (including fees to Vornado of $1,937, $1,475 and $1,442).......      47,615     37,984     33,042
  General and administrative (including fees to Vornado of $2,160 in each
    year)..................................................................      81,285     48,921      3,980
  Depreciation and amortization............................................      15,527      7,497      6,668
                                                                               --------   --------   --------
Total expenses.............................................................     144,427     94,402     43,690
                                                                               --------   --------   --------

OPERATING INCOME (LOSS)....................................................       4,468     (7,240)    33,110

Interest and other income, net.............................................       1,571      1,983      2,178
Interest and debt expense (including interest on loans from Vornado).......     (40,320)   (13,691)   (22,888)
Write-off of unamortized deferred debt expense.............................      (3,050)        --         --
                                                                               --------   --------   --------

(Loss) income from continuing operations...................................     (37,331)   (18,948)    12,400

Gain on sale of real estate................................................       3,862         --         --
                                                                               --------   --------   --------
(Loss) income before discontinued operations...............................     (33,469)   (18,948)    12,400

Income from discontinued operations........................................          --      1,206     11,184
                                                                               --------   --------   --------

NET (LOSS) INCOME..........................................................    $(33,469)  $(17,742)  $ 23,584
                                                                               ========   ========   ========

Net (loss) income per common share (basic and diluted):
  (Loss) income from continuing operations.................................    $  (7.45)  $  (3.79)  $   2.48
  Gain on sale of real estate..............................................        0.77         --         --
  Income from discontinued operations......................................          --       0.24       2.24
                                                                               --------   --------   --------
  Net (loss) income........................................................    $  (6.68)  $  (3.55)  $   4.72
                                                                               ========   ========   ========

 
  Year Ended December 31,  
 
  2005   2004   2003  
REVENUES                    
  Property rentals   $ 132,949   $ 110,541   $ 56,785  
  Expense reimbursements     54,136     38,354     30,377  
         
Total revenues     187,085     148,895     87,162  
         

EXPENSES 
  
  
  
  
  
  
  
  
  
 
  Operating (including fees to Vornado of $2,451, $1,937 and $1,475,
    respectively)     64,872     47,615     37,984  
  General and administrative (including stock appreciation rights
    compensation expense of $27,588, $76,789 and $44,917,
    respectively, and management fees to Vornado of $2,160 in each
    year)     32,393     81,285     48,921  
  Depreciation and amortization     19,877     15,527     7,497  
         
Total expenses     117,142     144,427     94,402  
         

OPERATING INCOME (LOSS) 
  
  
69,943 
  
  
4,468 
  
  
(7,240 
)
  Interest and other income, net     14,769     1,571     1,983  
  Interest and debt expense (including interest to Vornado of $8,853,
    $14,554 and $15,746, respectively)     (62,678 )   (40,320 )   (13,691 )
  Write off of unamortized deferred debt expense     (736 )   (3,050 )   —  
         
  Income (loss) from continuing operations     21,298     (37,331 )   (18,948 )
  Income from discontinued operations     —     —     1,206  
         
  Income (loss) before gain on sale of real estate and income taxes     21,298     (37,331 )   (17,742 )
  Net gain on sale of condominiums in 2005 and other real estate in
    2004     112,768     3,862     —  
  Income tax expense of taxable REIT subsidiary     (51,825 )   —     —  
         
NET INCOME (LOSS)   $ 82,241   $ (33,469 ) $ (17,742 )
         
Income (loss) per common share—Basic:                    
  Income (loss) from continuing operations   $ 4.24   $ (7.45 ) $ (3.79 )
  Income from discontinued operations     —     —     .26  
  Net gain on sale of condominiums in 2005 and other real estate in
    2004, after income taxes     12.14     .77     —  
         
  Net income (loss) per common share   $ 16.38   $ (6.68 ) $ (3.53 )
         
Income (loss) per common share—Diluted:                    
  Income (loss) from continuing operations   $ 4.19   $ (7.45 ) $ (3.79 )
  Income from discontinued operations     —     —     .26  
  Net gain on sale of condominiums in 2005 and other real estate in
    2004, after income taxes     12.00     .77     —  
         
  Net income (loss) per common share   $ 16.19   $ (6.68 ) $ (3.53 )
         See notes to consolidated financial statements.

                                      -32-


ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (amounts
(Amounts in thousands)
                                                                    RETAINED
                                                                    EARNINGS                     TOTAL
                                                      ADDITIONAL  (ACCUMULATED   TREASURY    STOCKHOLDERS'
                                        COMMON STOCK    CAPITAL     DEFICIT)      SHARES         EQUITY
                                        ------------  ----------  ------------  ---------    -------------

Balance, January 1, 2002.............    $    5,174   $   24,843  $   16,024    $     (960)    $   45,081

Net income...........................            --           --      23,584            --         23,584
                                         ----------   ----------  ----------    ----------     ----------
Balance, December 31, 2002...........         5,174       24,843      39,608          (960)        68,665

Net loss                                         --           --     (17,742)           --        (17,742)
                                         ----------   ----------  ----------    ----------     ----------
Balance, December 31, 2003...........         5,174       24,843      21,866          (960)        50,923

Net loss.............................            --           --     (33,469)           --        (33,469)
Common shares issued under
   share option plan.................            --          842          --            72            914
                                         ----------   ----------  ----------    ----------     ----------
Balance, December 31, 2004...........    $    5,174   $   25,685  $  (11,603)   $     (888)    $   18,368
                                         ==========   ==========  ==========    ==========     ==========



                 See notes to consolidated financial statements


                                      -33-

 
  Common
Stock   Additional
Capital   Retained
Earnings
(Accumulated
Deficit)   Treasury
Shares   Total
Stockholders'
Equity  
Balance, January 1, 2003   $ 5,173   $ 24,843   $ 39,609   $ (960 ) $ 68,665  
Net loss     —     —     (17,742 )   —     (17,742 )
             
Balance, December 31, 2003     5,173     24,843     21,867     (960 )   50,923  

Net loss 
  
  
— 
  
  
— 
  
  
(33,469 
) 
  
— 
  
  
(33,469 
)
Common shares issued under share
    option plan     —     842     —     72     914  
             
Balance, December 31, 2004     5,173     25,685     (11,602 )   (888 )   18,368  

Net income 
  
  
— 
  
  
— 
  
  
82,241 
  
  
— 
  
  
82,241 
 
Common shares issued under share
    option plan     —     658     —     57     715  
             
Balance, December 31, 2005   $ 5,173   $ 26,343   $ 70,639   $ (831 ) $ 101,324  
             

ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (amounts
(Amounts in thousands)
                                                                                 YEAR ENDED DECEMBER 31,
                                                                           ------------------------------------
                                                                              2004         2003        2002
                                                                           ----------   ----------   ----------

CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) income from continuing operations: ..............................   $ (33,469)   $ (18,948)   $  12,400
Adjustments to reconcile (loss) income from continuing operations to net
     cash provided by continuing operations:
     Write-off of unamortized deferred debt expense ....................       3,050           --           --
     Gain on sale of real estate .......................................      (3,862)          --           --
     Depreciation and amortization (including debt issuance costs) .....      18,818       11,310        8,999
     Straight-lining of rental income ..................................     (43,327)      (6,742)      (3,099)
     Gain on sale of air rights ........................................          --           --         (169)
Change in operating assets and liabilities:
     Accounts receivable, net ..........................................      (1,771)        (593)        (974)
     Amounts due to Vornado ............................................       9,977       14,012       (3,115)
     Accounts payable and accrued expenses .............................       5,564         (379)      (2,845)
     Liability for stock appreciation rights ...........................      76,789       44,917           --
     Other liabilities .................................................        (210)     (33,725)        (789)
     Other .............................................................      (3,706)      (2,829)      (3,618)
                                                                           ---------    ---------    ---------
Net cash provided by continuing operations .............................      27,853        7,023        6,790
                                                                           ---------    ---------    ---------

Income from discontinued operations ....................................          --        1,206       11,184
     Depreciation and amortization .....................................          --           --           35
     Change in other liabilities .......................................          --       (1,206)          --
     Gain on sale of Third Avenue property .............................          --           --      (10,366)
                                                                           ---------    ---------    ---------
Net cash provided by discontinued operations ...........................          --           --          853
                                                                           ---------    ---------    ---------
Net cash provided by operating activities ..............................      27,853        7,023        7,643
                                                                           ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from continuing operations:
     Additions to real estate ..........................................    (146,232)    (215,158)    (133,250)
     Cash restricted for operating liabilities .........................       2,996       (3,446)       4,171
     Net proceeds from sale of real estate .............................       4,294           --           --
     Deposit on sale of Flushing property ..............................          --           --        1,875
                                                                           ---------    ---------    ---------
Net cash used in continuing operations .................................    (138,942)    (218,604)    (127,204)
Cash flows from discontinued operations:
     Net proceeds from sale of Third Avenue property ...................          --           --       13,176
                                                                           ---------    ---------    ---------
Net cash used in investing activities ..................................    (138,942)    (218,604)    (114,028)
                                                                           ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings (including $5,000 from
       Vornado in 2003) ................................................     477,798      190,399       55,500
     Repayments of borrowings ..........................................    (256,755)      (2,721)     (27,524)
     Deferred debt expense .............................................      (3,330)          --      (11,110)
     Exercise of share options .........................................         914           --           --
     Payment of acquisition obligation .................................          --           --         (500)
                                                                           ---------    ---------    ---------
Net cash provided by financing activities ..............................     218,627      187,678       16,366
                                                                           ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents ...................     107,538      (23,903)     (90,019)
Cash and cash equivalents at beginning of year .........................      21,336       45,239      135,258
                                                                           ---------    ---------    ---------
Cash and cash equivalents at end of year ...............................   $ 128,874    $  21,336    $  45,239
                                                                           =========    =========    =========

SUPPLEMENTAL INFORMATION
Cash payments for interest (of which $25,087, $37,516 and $23,788 have
    been capitalized) ..................................................   $  60,968    $  46,861    $  45,818
                                                                           =========    =========    =========

 
  Year Ended December 31,  
 
  2005   2004   2003  
CASH FLOWS FROM OPERATING ACTIVITIES                    
Net income (loss):   $ 82,241   $ (33,469 ) $ (17,742 )
Adjustments to reconcile net income (loss) to net cash (used in)
    provided by operating activities:                    
  Net gain on sale of condominiums in 2005 and other real estate in
    2004     (112,768 )   (3,862 )   —  
  Straight-lining of rental income     (29,298 )   (43,327 )   (6,742 )
  Depreciation and amortization (including amortization of debt
    issuance costs)     22,836     18,818     11,310  
  Minority interest     2,250     —     —  
  Write-off of unamortized deferred debt expense     736     3,050     —  
Change in operating assets and liabilities:                    
  Accounts receivable, net     1,657     (1,771 )   (593 )
  Amounts due to Vornado     8,628     9,977     14,012  
  Accounts payable and accrued expenses     7,840     5,564     (379 )
  Liability for stock appreciation rights     (34,143 )   76,789     44,917  
  Income tax expense of taxable REIT subsidiary     37,955     —     —  
  Other liabilities     14,361     (210 )   (34,931 )
  Other assets     (8,414 )   (3,706 )   (2,829 )
         
Net cash (used in) provided by operating activities     (6,119 )   27,853     7,023  
         

CASH FLOWS FROM INVESTING ACTIVITIES 
  
  
  
  
  
  
  
  
  
 
  Net proceeds from sale of condominiums in 2005 and other real
    estate in 2004     455,012     4,294     —  
  Additions to real estate     (110,481 )   (146,232 )   (215,158 )
  Real estate acquisitions     (7,121 )   —     —  
  Cash restricted for operating liabilities     106     2,996     (3,446 )
         
Net cash provided by (used in) investing activities     337,516     (138,942 )   (218,604 )
         

CASH FLOWS FROM FINANCING ACTIVITIES 
  
  
  
  
  
  
  
  
  
 
  Proceeds from borrowings (including $5,000 from Vornado in
    2003)     344,832     477,798     190,399  
  Repayments of borrowings     (217,895 )   (256,755 )   (2,721 )
  Debt issuance costs     (9,517 )   (3,330 )   —  
  Exercise of share options     715     914     —  
         
Net cash provided by financing activities     118,135     218,627     187,678  
         
Net increase (decrease) in cash and cash equivalents     449,532     107,538     (23,903 )
Cash and cash equivalents at beginning of year     128,874     21,336     45,239  
         
Cash and cash equivalents at end of year   $ 578,406   $ 128,874   $ 21,336  
         

SUPPLEMENTAL INFORMATION 
  
  
  
  
  
  
  
  
  
 
Cash payments for interest (of which $6,935, $25,087 and $37,516
    have been capitalized)   $ 66,321   $ 60,968   $ 46,861  
         
Cash payments for income taxes   $ 13,870   $ —   $ —  
         See notes to consolidated financial statements.

                                      -34-


ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
        Alexander's, Inc. (the "Company" or "Alexander's") is a real estate investment trust ("REIT"), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. Alexander'sThe Company conducts its activities are conducted through its manager, Vornado Realty Trust ("Vornado").
        Alexander's has six properties in the greater New York City metropolitan area consisting of:
Operating properties
(i)
the 731 Lexington Avenue property, a 1,300,0001.1 million square foot multi-use building which comprises the entire square block bounded bylocated on Lexington Avenue East 59th Street, Third Avenue and East 58th59^th Street in Manhattan, New York;

      York. 731 Lexington Avenue contains 885,000 net rentable square feet of office space and 174,000 net rentable square feet of retail space. 731 Lexington Avenue also contains approximately 248,000 net saleable square feet (which is not included in the 1.1 million square feet above) of residential space consisting of 105 condominium units (though a taxable REIT subsidiary ("TRS")).
The Company has leased all of the office space of which 697,000 square feet is leased to Bloomberg L.P., and 176,000 square feet is leased to Citibank N.A. In addition, the Company has leased 169,000 square feet of retail space to, among others, The Home Depot, Hennes & Mauritz, The Container Store, Wachovia Bank and Bank of America. As of December 31, 2005, 100 of the 105 residential condominium units were sold and closed;
(ii)
the Kings Plaza Regional Shopping Center, located on Flatbush Avenue in Brooklyn, New York, which contains 1,098,000 square feet and is comprised of a two-level mall containing 470,000 square feet, a 289,000 square foot department store leased to Sears and another anchor department store owned and operated as a Macy's by Federated Department Stores, Inc.;

(iii)
the Rego Park I property, located on Queens Boulevard and 63rd63^rd Road in Queens, New York, which contains a 351,000 square foot building that is 100% leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy;

(iv)
the Paramus property, which consists of 30.3 acres of land located at the intersection of Routes 4 and 17 in Paramus, New Jersey, which is leased to IKEA Property, Inc;

(v)
the Flushing property, located at Roosevelt Avenue and Main Street in Queens, New York, which contains a 177,000 square foot building that is currently vacant; and
Property to be developed
(vi)
the Rego Park II property, which comprises one and one-half square blocks of vacant land adjacent to the Rego Park I property.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation - The accompanying consolidated financial statements
include the accounts of the Company and all of its wholly owned subsidiaries.
All significant intercompany amounts have been eliminated. The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
        The Company defines each of its properties as an individual operating segment. It has determined that all properties have similar economic characteristics and meet the other criteria which permit the properties to be aggregated into one reportable segment (the leasing, management, development and redeveloping of properties in the greater New York City metropolitan area). The Company's chief operating decision-maker assess and measure segment operating results based on a performance measure referred to as net operating income at the individual operating segment. Net operating income for each property represents its net rental revenues less its real estate operating expenses.


ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation—The accompanying consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany amounts have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Real Estate - —Real estate is carried at cost, net of accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the assets' estimated useful lives, which range from seven to 50 years. Betterments, significant renewals and certain costs directly related to the acquisition, improvement and leasing of real estate are capitalized. Maintenance and repairs are charged to operations as incurred. As real estate is undergoing -35-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

development activities, all property operating expenses, including interest expense, are capitalized to the cost of the real property to the extent that management believes such costs are recoverable through the value of the property.
        The Company's properties are reviewed for impairment if events or circumstances change indicating that the carrying amount of the property may not be recoverable. In such an event, a comparison is made of the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis to the carrying amount of the property. The carrying amount of an asset would be adjusted, if necessary, to reflect an impairment in the value of the asset.
Cash and Cash Equivalents - —Cash and cash equivalents consist of highly liquid investments purchased with original maturities of three months or less. Cash and cash equivalents do not include deposits received on sales of condominium units at the Lexington Avenue property or cash restricted under financing arrangements. Such cash is reflected on the consolidated balance sheets as "Deposits on the sale of condominium units and restricted cash."
Allowance for Doubtful Accounts - —The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. The Company also maintains an allowance for receivables arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates.
Deferred Charges - —Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest and debt expense. Direct costs related to leasing activities are capitalized and amortized on a straight-line basis over the lives of the related leases. All other deferred charges are amortized on a straight-line basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.
Fair Value of Financial Instruments - Instruments—The fair value of the Company's debt, estimated by discounting the future cash flows using the current rates available to borrowers with similar credit ratings for the remaining terms of such debt, exceedsis less than the aggregate carrying amount by approximately $1,095,000$15,710,000 at December 31, 2004. Such fair value estimates are not necessarily indicative of
the amounts that would be paid upon liquidation of the Company's debt.

      2005.
Revenue Recognition - —The Company has the following revenue sources and revenue recognition policies:
Base rent (revenue arising from tenant leases) - —These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and free rent abatements under the leases.


ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Percentage Rents (revenue arising from retail tenant leases that is contingent upon the sales of tenants exceeding defined thresholds) - —These rents are recognized in accordance with Staff Accounting Bulletin No. 104,Revenue Recognition, which states that this contingent revenue is only to be recognized after the contingency has been removed (i.e., the sales threshold has been achieved).
Expense Reimbursements (revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective properties) - —This revenue is accrued in the same periods as the expenses are incurred.
Condominium Sales (income arising from the sales of condominium units at the Lexington Avenue property) - —Income on deposits received for sales of condominium units has been deferred in accordance with the deposit method of Statement of Financial Accounting Standards ("SFAS") No. 66,Accounting for Sales of Real Estate.

      Estate. Gains on sales of condominium, units are recognized under the percentage of completion method.
Income Taxes - —The Company operates in a manner intended to enable it to continue to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). Under the Code, the Company's net operating loss carryovers ("NOLs") generally would be available to offset the amount of the Company's REIT taxable income that would otherwise be required to be distributed as dividends to its stockholders.

                                      -36-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        At December 31, 20042005 the Company has reported NOLs for federal tax purposes of approximately $49,211,000,$31,739,000, expiring from 2007 to 2020. The Company also has investment and targeted jobs tax credits of approximately $2,755,000 expiring from 2008 to 2014.
        The following table reconciles net income (loss) income to REIT taxable income for the years ended December 31, 2005, 2004 2003 and 2002.


                                                                     YEARS ENDED DECEMBER 31,
                                                                 ---------------------------------
                       (amounts in thousands)                      2004        2003        2002
                                                                 --------    ---------   ---------


Net (loss) income .............................................  $(33,469)   $(17,742)   $  23,584
Straight-line rent adjustments ................................   (43,327)     (6,668)      (2,953)
Depreciation and amortization timing differences ..............     1,480       2,859        2,985
Interest expense ..............................................    (2,733)     (2,837)      (2,972)
Stock appreciation rights compensation expense ................    76,789      44,917           --
Interest income ...............................................    17,684      10,439           --
Differences on gain of sale of assets .........................        --          --        1,345
Other .........................................................    (1,117)     (1,422)         988
                                                                 --------    --------    ---------
Taxable income ................................................    15,307      29,546       22,977
NOL carry forward beginning balance ...........................   (64,518)    (94,064)    (117,041)
                                                                 --------    --------    ---------
NOL carry forward ending balance ..............................  $(49,211)   $(64,518)   $ (94,064)
                                                                 ========    ========    =========
2003.
 
  Years Ended December 31,  
(Amounts in thousands)
  2005   2004   2003  
Net income (loss)   $ 82,241   $ (33,469 ) $ (17,742 )
Straight-line rent adjustments     (29,298 )   (43,327 )   (6,668 )
Depreciation and amortization timing differences     345     1,480     2,859  
Interest expense     3,622     (2,733 )   (2,837 )
Stock appreciation rights compensation expense     16,751     76,789     44,917  
Interest income     8,336     17,684     10,439  
Differences on gain of sale of assets     (60,943 )   —     —  
Other     (3,582 )   (1,117 )   (1,422 )
         
Taxable income     17,472     15,307     29,546  
NOL carry forward beginning balance     (49,211 )   (64,518 )   (94,064 )
         
NOL carry forward ending balance   $ (31,739 ) $ (49,211 ) $ (64,518 )
         
        The net basis of the Company's assets and liabilities for tax purposes is approximately $13,000,000 higher$28,000,000 lower than the amount reported for financial statement purposes.
        The Company has elected to treat its wholly owned subsidiary, 731 Residential LLC, ("Residential"), as a taxable REIT subsidiary ("TRS"). AThe TRS is subject to income tax at regular corporate tax rates. The Company's NOLs will not be available to offset taxable income of Residential. Residential ownsTRS. As of December 31, 2005, 100 of the assets comprising the105 residential condominium units atwere sold and closed. In connection therewith, TRS recognized $51,825,000 of income tax expense, of which $13,870,000 was paid in the Company's 731
Lexington Avenue Property. Residentialyear ended December 31, 2005. TRS paid no income taxes in the years ended
December 31, 2004 2003 and 2002.or 2003. TRS deferred income taxes, where applicable, are accounted for in accordance with SFASStatements of Financial Accounting Standards ("SFAS") 109, "AccountingAccounting For Income Taxes"Taxes using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting basesbasis of assets and liabilities and their respective tax basesbasis and for operating loss and tax credit carry forwardscarryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors. Residential's net basis in its assets and
liabilities for tax purposes is approximately $52,000,000 higher than the amount
for financial reporting purposes. In addition, the TRS has incurred certain
costs for which it has not recognized an income tax benefit for financial
reporting purposes. This benefit will be recorded at such time that the
uncertainties with respect to the realization have been resolved.

      Amounts

Income Per Share - —Basic earningsincome per share areis computed based on weighted average shares outstanding. Diluted earningsincome per share considerconsiders the effect of outstanding stock options.
Stock Options - —The Company accounts for stock-based compensation using the intrinsic value method. Under the intrinsic value method, compensation cost is measured as the excess, if any, of the quoted market price of the Company's common stock at the date of grant over the exercise price of the option granted. Compensation cost for stock options, if any, is recognized ratably over the vesting period. The Company's policy is to grant options with an exercise price equal to the quoted market price of the Company's common stock on the grant date. Accordingly, no compensation expense has been recognized for the Company's stock options. -37-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      If compensation costSince the Company had no option grants in each of the past five years, there were no pro forma effects for stock option awards had been determined based on
the fair values at the grant dates, net (loss) income and net (loss) income per
share would have been the pro forma amounts shown below in the years ended
December 31, 2004, 2003 and 2002.


                                                                        YEAR ENDED DECEMBER 31,
                                                             ----------------------------------------------
          (amounts in thousands except                           2004             2003            2002
               per share amounts)                            -------------    -------------    ------------

Net (loss) income:
  As reported..............................................  $     (33,469)   $     (17,742)   $     23,584
  Less: stock - based compensation expense determined
  underfair value method...................................             --               --             384
                                                             -------------    -------------    ------------
  Pro forma................................................  $     (33,469)   $     (17,742)   $     23,200
                                                             =============    =============    ============
Net (loss) income per common share (basic and diluted):
  As reported..............................................  $       (6.68)   $       (3.55)   $       4.72
  Pro forma................................................  $       (6.68)   $       (3.55)   $       4.64
compensation.
        On December 16, 2004, the FASB issued SFAS No. 123: (Revised 2004) -, Share-Based Payment ("SFAS No. 123R"). SFAS 123R replaces SFAS No. 123, using the prospective method, and supersedes APB Opinion No. 25: Accounting for Stock Issued to Employees. SFAS No. 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements and be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R is effective as of the first interim or annual reporting period that beginsbeginning after JuneDecember 15, 2005. The Company does not believe that the adoption of SFAS No. 123R will have a material effect on the Company'sits consolidated financial statements.
Stock Appreciation Rights - —Stock appreciation rightsAppreciation Rights ("SARs") are granted at 100% of the market price of the Company's common stock on the date of grant. SARs vest ratably, becoming fully vested 36 months after grant, and generate
compensationCompensation expense for each SAR is measured by the excess of the stock price at the current balance sheet date over the exercisestock price at the previous balance sheet date. On subsequent balance sheet dates, ifIf the stock price falls,is lower at the current balance sheet date, previously recognized expense is reversed, but not below zero.
Other Recently Issued Accounting Literature - —On December 16, 2004, the FASB issued SFAS No. 153:153, Exchanges of Nonmonetary Assets - Assets—An Amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 on its effective date did not have a material effect on consolidated financial statements.
        In March 2005, the FASB issued FIN 47,Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143,Asset Retirement Obligations. FIN 47 provides clarification of the term "conditional asset retirement obligation" as used in SFAS 143, defined as a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. Under this standard, a company must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated. FIN 47 became effective in the Company's fiscal quarter ended December 31, 2005. Upon review of its assets, the Company has concluded that no asset retirement obligation exists as of December 31, 2005. Accordingly, the adoption of FIN 47 on its effective date had no impact on the Company's consolidated financial statements.
        In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154 changes the requirements for the accounting and reporting for a change in accounting principle by requiring that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that (i) a change in the method of depreciating or amortizing a long-lived non-financial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) corrections of errors in previously issued financial statements should be termed a "restatement". SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company does not believe that the adoption of SFAS No. 153154 will have a material effect on the
Company'sits consolidated financial statements.
        In June 2005, the FASB ratified the consensus reached by the Emerging Issues Task Force ("EITF") on Issue No. 04-05, "Determining Whether a General Partner, or General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights" ("EITF 04-05"). EITF 04-05 provides a framework for determining whether a general partner controls, and should consolidate, a limited partnership or a similar entity. EITF 04-05 became effective on June 29, 2005, for all newly formed or modified limited partnership arrangements and January 1, 2006 for all existing limited partnership arrangements. The Company has elected to early adopt the provisions of EITF 04-05 and accordingly, has consolidated its investment in the Kings Plaza energy plant joint venture in the fourth quarter of 2005 (see note 5).


ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. RELATED PARTY TRANSACTIONS
Vornado Realty Trust
        The Company is managed, and its properties are leased and developed, by Vornado pursuant to agreements with one-year terms, expiring in March of each year, which are automatically renewable except for the 731 Lexington Avenue
property which provides for a term lasting until substantial completion of the
development of the property.

renewable.
Management and Development Agreements
        The annual fee payable to Vornado for management of the Company is equal to the sum of (i) $3,000,000 (ii)and 3% of gross income from the Kings Plaza Regional Shopping Center, and (iii)Center.
        In addition, Vornado is entitled to a development fee equal to 6% of development costs, as defined, with a minimum guaranteed feesfee of $750,000 per annum.
Leasing Agreements
        Vornado also provides all leasing services for the Company 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 of the sale of an asset, the fee is 3% of the gross proceeds, as defined. Such amounts are payable annually in an amount not to exceed $2,500,000, until the present value of such installments, calculated at a discount rate of 9% per annum, equals the amount that would have been paid had they been paid at the time the transactions which gave rise to the commissions occurred. Pursuant -38-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to the leasing agreement, 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, except in connection with the Bloomberg L.P. lease, where the tenant paid the third party broker directly.
731 Lexington Avenue Fees

      Pursuant to
        On July 6, 2005, the management agreements discussed above, Vornado is entitled
toCompany completed a development fee for the construction$320,000,000 mortgage financing of the Company's 731 Lexington Avenue
project, estimated to be $26,300,000, payable onretail space. In connection therewith, the earlier of January 3, 2006
orCompany repaid the date of payment in fullremaining balance of the construction loan encumberingand the property. Further,$124,000,000 loan to Vornado. In addition, the Company paid Vornado has agreed to guarantee to the construction lender,
the lien free, timely completionunpaid balance of the constructiondevelopment fee of the 731 Lexington Avenue
project$20,624,000 and funding of project costs in excess of a stated budget, if not funded
by the Company (the "Completion Guarantee"). The fee payable by the Company to
Vornado$6,300,000 for the Completion Guarantee is 1% of construction costs, as defined.
This fee is estimated to be $6,300,000 and is due at the same time that the
development fee is due. In addition, if Vornado should advance any funds under
the Completion Guarantee in excess of $21,000,000, which was the amount
available at December 31, 2004 under the line of credit with Vornado (see "Debt
and Contractual Obligations"), interest on those advances would be at 15% per
annum.Fee.
        On May 27, 2004, Alexander's entered into an agreement with Vornado under which it provides property management services at 731 Lexington Avenue for an annual fee of $0.50 per square foot of the tenant-occupied office and retail space. The Company entered into an agreement with Building Maintenance Services ("BMS"), a wholly-owned subsidiary of Vornado, to supervise the cleaning, engineering and security at the 731 Lexington Avenue property for an annual fee of 6% of coststhe cost for such services.services plus 6%. In addition, in October 2004, the Company entered into an agreement with BMS to provide the same services at the Kings Plaza Regional Shopping Center. These agreements were negotiated and approved on behalf of the Company by a committee of directors of the Company unaffiliated with Vornado.

      In July 2002, Alexander's Tower LLC, a wholly owned subsidiary of the
Company, purchased 28,821 square feet of air rights from a joint venture
developing a property at Lexington Avenue and 30th Street in Manhattan, and
owned by Vornado and an unrelated third party (the "30th Street Venture") for a
purchase price of $3,459,000 ($120 per square foot). The Company purchased these
air rights in order to increase the amount of square footage that it could
develop for the residential portion of its Lexington Avenue project to the
maximum amount permitted for residential use by the New York City zoning code.
The 30th Street Venture also identified third party buyers for an additional
28,111 square feet of air rights which it owned. These third party buyers
desired to use the air rights for the development of two projects located in
upper Manhattan in the general area of 86th Street. However, the air rights held
by the 30th Street Venture could not be transferred to the applicable sites
because they were not within the required geographical limited radius nor were
they in the same Community Board District as the 30th Street Venture. The 30th
Street Venture asked the Company to sell 28,111 square feet of its existing air
rights to these third party buyers, who could use them; the 30th Street Venture
would replace them with 28,111 square feet of the 30th Street Venture's air
rights. In October 2002, the Company purchased 28,111 square feet of air rights
from the 30th Street Venture in two transactions for an aggregate purchase price
of $3,058,000 (an average of $109 per square foot). The Company then sold an
equal amount of air rights it previously owned at the Lexington Avenue project
to the third party buyers for a sales price of $3,339,000, resulting in a gain
of $169,000. This gain is included in "Interest and other income, net" in the
Company's 2002 consolidated statement of operations.

      At December 31, 2004, the Company owed Vornado (i) $18,635,000 for
development fees, (ii) $23,748,000 for leasing fees, (iii) $4,894,000 for the
guarantee fee, (iv) $537,000 for interest, and (v) $1,411,000 for management
fees and property management and cleaning fees.
        The following table shows the amounts incurred under the management, leasing and development agreements.
                                                          YEAR ENDED DECEMBER 31,
                                                      -------------------------------
(amounts in thousands)                                   2004       2003       2002
                                                      ---------  ---------  ---------

Company management fees...........................    $   3,000  $   3,000  $   3,000
Development fee, guarantee fee and rent for
  development office..............................        5,955     10,292     10,769
Leasing fees......................................       12,156     17,919      3,056
Property management fees and payments for cleaning,
  engineering and security services...............        2,481        887        602
                                                      ---------  ---------  ---------
                                                      $  23,592  $  32,098  $  17,427
                                                      =========  =========  =========


                                      -39-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      In addition to
 
  Years Ended December 31,
(Amounts in thousands)
  2005   2004   2003
Company management fees   $ 3,000   $ 3,000   $ 3,000
Development fee, guarantee fee and rent for development
    office     4,431     5,955     10,292
Leasing fees     11,671     12,156     17,919
Property management fees and payments for cleaning,
    engineering and security services     4,776     2,481     887
        
    $ 23,878   $ 23,592   $ 32,098
        
        At December 31, 2005, the Company owed Vornado $32,804,000 for leasing fees, and costs described above, the Company was
indebted to Vornado in the amount of $124,000,000 at December 31, 2004$1,520,000 for management, property management and 2003
and $119,000,000 at December 31, 2002 (see Note 8). The Company incurred
interest (including a 1% unused commitment fee on the line of credit) on this
debt of $12,650,000, $15,633,000 and $15,547,000 for the years ended December
31, 2004, 2003 and 2002, respectively.

cleaning fees.
Other
        In the years ended December 31, 2005, 2004 2003 and 2002,2003, Winston & Strawn LLP, a law firm in which Neil Underberg, a director of the Company, is of counsel, performed legal services for the Company for which it was paid $368,000, $323,000 and $100,000, respectively.

4. DEBT
        On July 6, 2005, the Company completed a $320,000,000 mortgage financing on the retail space. The loan is interest only at a fixed rate of 4.93% and $480,000, respectively.

4. 731 LEXINGTON AVENUE PROPERTYmatures in July 2015. Of the net proceeds of approximately $312,000,000 (net of mortgage recording tax and closing costs), $90,000,000 was used to repay the construction loan and $124,000,000 was used to repay the loans from Vornado. In the event of a substantial casualty, up to $75,000,000 of this loan may become recourse.
        On February 13, 2004, the 731 Lexington Avenue is a 1.3 million square foot multi-use building. The
building containsConstruction Loan was modified so that the remaining availability was $237,000,000, which was approximately 885,000 net rentable square feet of office
space, approximately 174,000 net rentable square feet of retail space and
approximately 248,000 net saleable square feet of residential space consisting
of 105 condominium units (through a taxable REIT subsidiary ("TRS")). Of the construction budget of $630,000,000 (which excludes $29,000,000 foramount estimated to complete the 731 Lexington Avenue project at the closing date (not including the development and guarantee fees to Vornado), $489,400,000 has. The interest rate on the Construction Loan of LIBOR plus 2.5% and the maturity date of January 2006, with two one-year extensions, were not changed. The collateral for the Construction Loan was the same except that the office space had been expended through December
31, 2004removed from the lien. Further, the Construction Loan permitted the release of the retail space for a payment of $15 million and an additional $23,500,000 has been committed to at December 31,
2004. The remaining construction is expectedrequired all proceeds from the sale of the residential condominium units to be completed byapplied to the endConstruction Loan balance until it was finally repaid. In connection with reducing the principal amount of 2005.

      At December 31, 2004,the Construction Loan, the Company has leased 697,000 square feetwrote-off $3,050,000, representing the proportionate share of office
space to Bloomberg L.P. and 144,000 square feet of retail space to, among
others, The Home Depot (excluding 14,800 square feet of the mezzanine also
leased to The Home Depot), Hennes & Mauritz and The Container Store. On January
25, 2005, the Company leased an additional 176,000 square feet of office space
to Citibank N.A. As a result, 100% of the property's 885,000 square feet of
office space has been leased.

      The residential space is comprised of 105 condominium units. The original
offering plan filed for these units, as amended for price increases through
December 31, 2004, would produce an aggregate sale price of approximately
$500,000,000 (reflecting the value of existing contracts and the offering price
for the remaining units). As of December 31, 2004, the Company has received
deposits of $64,060,000 on sales of the condominium units.

      On January 24, 2005, the condominium offering plan was declared effective
by the State of New York at which time 83 units were under sales contract.
Accordingly, the Company will recognize approximately $38,000,000 of income
after taxesunamortized deferred debt expense, in 2005 from these sales for the units under contract. In the first quarter of 2005, $32,000,0002004, which is included in the Company's Consolidated Statement of this income will be recognized using the
percentage of completion method.

      DuringOperations for the year ended December 31, 2004, the Company transferred
approximately $94,800,000 from "Construction in progress" to "Land" and
"Buildings, leaseholds and leasehold improvements," representing the space
delivered to tenants and placed into service during such period.2005.
        On February 13, 2004, the Company closed a $400,000,000 mortgage financing on the office space. The loan bears interest at 5.33%, matures in February 2014 and beginning in the third year, provides for principal payments based on a 25-year amortization schedule such that over the remaining eight years of the loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000 was used to repay the entire amount outstanding under the previously existing Construction Loan.
        The Construction Loan was modified on February 13, 2004, so thatfollowing is a summary of the remaining availability was $237,000,000,Company's outstanding debt, all of which was approximatelyhave fixed interest rates.
 
   
   
  Balance at
December 31,
 
   
  Interest
Rate at
December 31,
2005
(Amounts in thousands)

  Maturity   2005   2004
First mortgage, secured by the office space at the 731                    
  Lexington Avenue property   Feb. 2014   5.33%   $ 400,000   $ 400,000
First mortgage, secured by the retail space at the 731                    
  Lexington Avenue property(1)   Jul. 2015   4.93%     320,000     —
First mortgage, secured by the Kings Plaza Regional                    
  Shopping Center   Jun. 2011   7.46%     210,539     213,699
First mortgage, secured by the Rego Park I Shopping                    
  Center   Jun. 2009   7.25%     80,926     81,661
First mortgage, secured by the Paramus property   Oct. 2011   5.92%     68,000     68,000
Term loan and line of credit to Vornado   N/A   N/A     —     124,000
Construction loan, secured by the retail and                    
  residential space at the Lexington Avenue property   N/A   N/A     —     65,168
              
            $ 1,079,465   $ 952,528
              
(1)
In the amount
estimatedevent of a substantial casualty, up to complete$75,000,000 of this loan may become recourse.

        At December 31, 2005, the 731 Lexington Avenue project atprincipal repayments for the closing date (not
includingnext five years and thereafter are as follows:
(Amounts in thousands)

   
Year Ending December 31,
  Amount
2006   $ 10,966
2007     14,088
2008     14,850
2009     93,304
2010     15,842
Thereafter     930,415
        All of the development and guarantee feesCompany's debt is secured by mortgages and/or pledges of the stock of the subsidiaries holding the properties. The net carrying value of real estate collateralizing the debt amounted to Vornado). The interest rate on
the Construction Loan of LIBOR plus 2.5% (4.92%$599,863,000 at December 31, 2004)2005.
        The Company's existing financing documents contain restrictive covenants which limit the ability to incur indebtedness, make prepayments of indebtedness, pay dividends, make investments, engage in transactions with affiliates, issue or sell capital stock of subsidiaries, create liens, sell assets, acquire or transfer property and engage in mergers and acquisitions.
5. MINORITY INTEREST
        Prior to April 15, 2005, the maturity date of January 2006, with two one-year extensions, were not changed.
The collateral forCompany owned and operated an energy plant that generates electrical power at its Kings Plaza Regional Shopping Center. On April 15, 2005, the Construction Loan is the same except that the office
spaceCompany contributed this 35 year old plant, which has been removed from the lien. Further, the Construction Loan permits the
release of the retail spacefully depreciated, and $750,000 in cash to a joint venture for a payment25% interest. The joint venture plans to rebuild the plant at a total cost of $15 million and requires all
proceeds from the sale of the residential condominium units to be appliedapproximately $18,000,000. Pursuant to the Construction Loan balance until it is finally repaid. In connection with
reducing the principal amountprovisions of the Construction Loan,EITF 04-05, the Company wrote-off
$3,050,000,is presumed to have "control" over the proportionate share of unamortized deferred financing costs,joint venture and accordingly, has consolidated its investment in the firstjoint venture in the fourth quarter of 2004 (shown in2005. As a result, the Consolidated StatementCompany has a minority interest liability of Operations as
"Write-off of unamortized deferred debt expense"). Vornado has agreed to
guarantee to the construction lender, the lien free, timely completion of the
construction of 731 Lexington Avenue and funding of project costs in excess of a
stated loan budget, if not funded by the Company. If

                                      -40-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Vornado should advance any funds under the Completion Guarantee in excess of
$21,000,000, which was the amount available$2,250,000 at December 31, 2004 under2005, representing the linelimited partner's investment in the joint venture.
6. DISCONTINUED OPERATIONS
        Income from discontinued operations of credit with Vornado, interest on those advances would be at 15% per annum.

      While the project is nearing completion, there can be no assurance that
the remainder of the project will be completed on time or completed$1,206,000 for the budgeted amount. Any failure to completeyear ended December 31, 2003 represents the 731 Lexington Avenue project on
time or within budget may adversely affect future cash flows, funds from
operations and financial condition.

5.reversal of previously accrued contingent liabilities.

7. NET GAIN ON SALE OF LANDCONDOMINIUMS AND OTHER REAL ESTATE
731 Lexington Avenue
        As of December 31, 2005, 100 of the 105 residential condominium units were sold and closed, which resulted in an after-tax net gain of $62,851,000, of which $60,943,000 was recognized in the year ended December 31, 2005, under the percentage of completion method.
Other
        On August 12, 2004, the Company sold 1.29 acres of land in White Plains, New York for $4,500,000, resulting in a net gain on sale of $3,862,000. The Company paid a commission of $135,000 to Vornado, which iswas included in the expenses relating to the sale.

6.
8. LEASES
As Lessor
        The Company leases space to tenants in retail centers and an office building. The rental terms range from approximately five5 to 25 years. The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs. Retail leases also provide for the payment by the lessee of additional rents based on a percentage of their sales.
        Future base rental revenue under these non-cancelable operating leases (other than leases which have not commenced, including the lease with Citibank,
N.A.) is as follows:
(amounts in thousands)
Year Ending December 31,

2005.........................................   $  91,774
2006.........................................      90,030
2007.........................................      87,427
2008.........................................      90,229
2009.........................................      85,817
Thereafter...................................   1,403,068
(Amounts in thousands)

   
Year Ending December 31,
  Amount
2006   $ 108,394
2007     106,388
2008     109,005
2009     104,949
2010     104,142
Thereafter     1,459,186
        These future minimum amounts do not include additional rents based on a percentage of tenants' sales. For the years ended December 31, 2005, 2004 2003 and 2002,2003, these rents were $804,000, $911,000 and $945,000, and $977,000, respectively.
        Bloomberg L.P. and Sears accounted for 36%34%, and 11%36% of the Company's consolidated revenues for the year ended December 31, 2005 and 2004, andrespectively. Sears accounted for 11% and 18% of the Company's consolidated revenues in 2004 and 19% in 2003, and 2002, respectively. No other tenant accounted for more than 10% of revenues.

revenues in any of the last three years.
As Lessee
        The Company is a tenant under long-term leases.leases that range from approximately 13 to 22 years. Future minimum lease payments under these operating leases are as follows:
(amounts in thousands)
Year Ending December 31,

2005.........................................  $ 416
2006.........................................    416
2007.........................................    315
2008.........................................    315
2009.........................................    323
Thereafter...................................  3,894
(Amounts in thousands)

   
Year Ending December 31,
  Amount
2006   $ 785
2007     785
2008     795
2009     802
2010     802
Thereafter     13,018
        Rent expense was $662,000, $416,000 and $416,000 for each of the years ended December 31, 2004,
2003 and 2002.

                                      -41-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. DISCONTINUED OPERATIONS

      On August 30, 2002, the Company sold its Third Avenue property, located in
Bronx, New York. The 173,000 square foot property was sold for $15,000,000,
resulting in a gain of $10,366,000. Included in the expenses relating to the
sale, the Company paid a commission of $600,000, of which $350,000 was paid to
Vornado.

      Discontinued operations reflect the Third Avenue property and the reversal
of liabilities:


                                                                   YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------
(amounts in thousands)                                      2004             2003             2002
                                                        ------------     ------------     ------------

Total revenues.......................................   $         --     $         --     $      1,198
Less: total expenses.................................             --               --              380
                                                        ------------     ------------     ------------
                                                                  --               --              818
Reversal of previously accrued contingent liabilities             --            1,206               --
Gain on sale of Third Avenue property................             --               --           10,366
                                                        ------------     ------------     ------------
Income from discontinued operations..................   $         --     $      1,206     $     11,184
                                                        ============     ============     ============


8. DEBT

      The following is a summary of the Company's outstanding debt.


                                                                  INTEREST
                                                                  RATE AT         BALANCE AT DECEMBER 31,
              (amounts in thousands                               DECEMBER     -----------------------------
             except for percentages)               MATURITY       31, 2004         2004             2003
                                                   ---------      --------     --------------   ------------

First mortgage, secured by the 731 Lexington
  Avenue office space (see Note 4)...............  Feb. 2014       5.33%       $      400,000   $         --
Construction loan, secured by the Lexington
  Avenue property (see Note 4)...................  Jan. 2006       4.92%               65,168        240,899
First mortgage, secured by the Kings Plaza
  Regional Shopping Center (1)...................  June 2011       7.46%              213,699        216,586
Term loan and line of credit to Vornado (2)......  Jan. 2006       9.00%              124,000        124,000
First mortgage, secured by the Rego Park I
  Shopping Center (3)............................  June 2009       7.25%               81,661         82,000
First mortgage, secured by the Paramus property..  Oct. 2011       5.92%               68,000         68,000
                                                                               --------------   ------------
                                                                               $      952,528   $    731,485
                                                                               ==============   ============


- --------------------------
(1) This mortgage loan, which is an obligation of a wholly owned subsidiary,
bears interest at a fixed rate of 7.46% and provides for monthly principal
payments based on a 27-year amortization schedule.

(2) At December 31,2005, 2004 and 2003, the Company was indebted to Vornado in the
amount of $124,000, comprised of (i) a $95,000 note and (ii) $29,000 under a
$50,000 line of credit (which carries a 1% unused commitment fee). The current
interest rate on the loan and line of credit is 9.00% and resets quarterly using
a 6.00% spread to one-year treasury with a 3% floor for treasuries. On July 3,
2002, in conjunction with the original closing of the Construction Loan, the
maturity of the Vornado debt was extended to the earlier of January 3, 2006 or
the date the Lexington Avenue Construction Loan is finally repaid.

The Company's wholly owned subsidiary, Residential, is the borrower with respect
to $40,000 of these loans, which are guaranteed by the Company. The Company is
the borrower for the remaining $84,000. The existing collateral for each of
these loans is (i) back-up guaranties given by the Company's wholly owned
subsidiaries, Alexander's of Rego Park II, Inc. ("Rego II"), Alexander's of Rego
Park III, Inc. ("Rego III") and Alexander's of Flushing, Inc. ("Flushing"), (ii)
a pledge given by the Company of its interest in the entities holding the
commercial parcel of the Lexington Avenue property, Residential, Rego II, Rego
III and Flushing, (iii) a lockbox agreement between the Company and Vornado,
giving Vornado a security interest and springing control of the Company's
corporate bank account into which, among other things, any distributions to the
Company from its subsidiaries owning the Kings Plaza Shopping Center, the Rego
Park I Shopping Center, and the Paramus property are deposited, and (iv)
unrecorded mortgages on the Rego II and Rego III properties given by such
entities to secure their guaranties.

                                      -42-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) This mortgage loan, which is an obligation of a wholly owned subsidiary and
is guaranteed by the Company, bears interest at a fixed rate of 7.25%. The
amortization of principal begins in July 2004 based on a 30-year schedule.

At December 31, 2004, the principal repayments for the next five years and
thereafter are as follows:


(amounts in thousands)
Year Ending December 31,

2005.........................................   $  3,895
2006.........................................    200,134
2007.........................................     14,088
2008.........................................     14,850
2009.........................................     93,304
Thereafter...................................    626,257


      All of the Company's debt is secured by mortgages and/or pledges of the
stock of the subsidiaries holding the properties. The net carrying value of real
estate collateralizing the debt amounted to $881,079,000 at December 31, 2004.

      The Company's existing financing documents contain restrictive covenants
which limit the ability to incur indebtedness, make prepayments of indebtedness,
pay dividends, make investments, engage in transactions with affiliates, issue
or sell capital stock of subsidiaries, create liens, sell assets, acquire or
transfer property and engage in mergers and acquisitions.

respectively.

9. COMMITMENTS AND CONTINGENCIES
        Neither the Company nor any of its subsidiaries is a party to, nor is their property the subject of, any material pending legal proceeding other than routine litigation incidental to their businesses. The Company believes that these legal actions will not be material to the Company's financial condition or results of operations.
Insurance
        The Company carries comprehensive liability and all-riskall risk property insurance (fire,((i) fire, (ii) flood, (iii) extended coverage, (iv) "acts of terrorism" as defined in the Terrorism Risk Insurance Extension Act of 2005 which expires in 2007, and (v) rental loss insurance) with respect to its assets but is atassets.
        On June 30, 2005, the Company renewed its annual all risk policy with limits of (i) $960,000,000 per occurrence including certified terrorist acts and $350,000,000 for financial lossnon-certified terrorist acts for its 731 Lexington Avenue property, and (ii) $510,000,000 per occurrence including certified terrorist acts and $350,000,000 for non-certified terrorist acts for the remaining properties. To the extent that the Company incurs losses in excess of its insurance coverage, these losses would be borne by the policies' limits. Such a lossCompany and could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.
        The Company's debt instruments, consisting of mortgage loans secured by itsour properties (which are generally non-recourse to the Company)Alexander's), contain customary covenants requiring the Companyus to maintain insurance. There can be no
assuranceAlthough the Company believes that the lendersit has adequate insurance coverage under these instruments willagreements, it may not takebe able to obtain an equivalent amount of coverage at reasonable costs in the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition,future. Further, if lenders insist on greater coverage for these risks andthan the Company is unableable to obtain, coverageor if the Terrorism Risk Insurance Extension Act of 20022005 is not extended past 2007, it maycould adversely affect the Company's ability to finance and/or refinance its properties and businesses.

expand its portfolio.
Environmental Remediation
        In June 1997, the Kings Plaza Regional Shopping Center commissioned an Environmental Study and Contamination Assessment Site Investigation (the "Phase II Study") to evaluate and delineate environmental conditions disclosed in a Phase I study. The results of the Phase II Study indicated the presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and groundwater. The Company has delineated the contamination and -43-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

has developed a remediation approach, which is ongoing. The New York State Department of Environmental Conservation ("NYDEC"NYSDEC") has approved a portion of the remediation approach. The Company accrued $2,675,000 in previous years, of which $2,550,000$2,612,000 has been paid as of December 31, 2004,2005, for its estimated obligation with respect to the cleanup of the site, and which includes costs of (i) remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial action and (v) professional fees. Costs of future expenditures for
these environmental remediation obligations were not discounted to their present
value. If NYDECNYSDEC insists on a more extensive remediation approach, the Company could incur additional obligations.
        The Company has concluded that the large majoritymost of the contamination at the site is historic and the result of past activities of third parties. AlthoughIn connection with the pursuit of claims against third parties, on January 31, 2005 and November 14, 2005, the Company is pursuing claims against potentially responsible third
parties, and negotiations are ongoing with a former owner of the property, there
can be no assurance as to the extent that the Company will be successful in
obtaining recoveryreceived settlements from such parties of $337,500 and $1,750,000, respectively, which are included in "Interest and Other Income on the remediation costs incurred. In
addition,Company's" consolidated statements of operations for the costs associated with further pursuit of responsible parties may
be prohibitive. The Company has not recorded an asset as ofyear ended December 31, 2004
for possible recoveries of environmental remediation costs from potentially
responsible third parties. On January 31, 2005, the Company received a
settlement of $337,500 from one of the responsible parties.

2005.

Flushing Property
        In the fourth quarter of 2003, the Company recognized $1,289,000 of income representing a non-refundable deposit of $1,875,000, from a party that had agreed
to purchase the Company's Flushing property, net of $586,000 of costs associated with the transaction, from a party that had agreed to purchase this property, as thesuch party had not met its obligations under a May 30, 2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8, 2004, the Company received letters from the party demanding return of the deposit. On December 28, 2005, the party filed a complaint against the Company in the Supreme Court of the State of New York alleging the Company failed to honor the terms and conditions of the agreement. The complaint seeks specific performance and, if specific performance is denied, it seeks the return of the deposit plus interest and $50,000 in costs. The Company, after consulting with its legal counsel, does not believe the party is entitled to either specific performance or a return of the deposit.deposit and is defending the action.
Rego Park II
        The Company owns two land parcels containing approximately 10 acres adjacent to its Rego Park I property in Queens, New York. One parcel comprises the entire square block bounded by the Horace Harding Service Road, 97^th Street, 62^nd Drive and Junction Boulevard. The other is a parcel of approximately one-quarter square block at the intersection of Junction Boulevard and the Horace Harding Service Road.
        The Company's plan for the entire square block parcel is a mixed-use, development containing approximately 600,000 square feet of retail space on four levels, a parking deck of approximately 1,400 spaces and may also include up to 450 apartment units in two towers. On September 20, 2005, the Company received governmental approvals for this project. The Company has entered into a lease with Century 21 for 134,000 square feet of retail space at this project.
        While the current plans for the one-quarter square block parcel are very preliminary, we anticipate it may include up to 80,000 square feet of retail space.
        There can be no assurance that these projects will commence, be completed, completed on time or completed for the party will not institute legal action and, if it does, that it will not be
successful in requiring the Company to return all or a portion of the deposit.

budgeted amount.
Kings Plaza
        The Company plans to construct a two-story freestanding building adjacent to the Mall of approximately 200,000 square feet. The first story ofcontaining approximately 120,000 square feet, will be operated as awhich has been leased to Lowe's Home Improvement Warehouse ("Lowe's"). The Lowe'sThis lease is expected to commence in 2006.2007. The cost of thethis project will be approximately $21$11.5 million, which is net of a tenant reimbursement of $16.5 million. This cost includes construction of structured elements, which will support a second and third level. There can be no assurance that this project will commence, be completed, completed on time or completed for the Lowe's
reimbursementbudgeted amount.
        Prior to April 15, 2005, the Company owned and before reimbursement, if any, fromoperated an energy plant that generates electrical power at its Kings Plaza Regional Shopping Center. On April 15, 2005, the second story tenant(s).Company contributed this 35 year old plant, which has been fully depreciated, and $750,000 in cash to a joint venture for a 25% interest. Pursuant to the provisions of EITF 04-05, the Company is presumed to have "control" over the joint venture and accordingly, has consolidated its investment in this joint venture in the fourth quarter of 2005. The joint venture plans to rebuild the plant at a total cost of approximately $18,000,000. There can be no assurance that this project will be completed, completed on time or completed for the budgeted amount.
Letters of Credit
        Approximately $4,130,000 of standby letters of credit were issued atand outstanding as of December 31, 2004.

2005.

10. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
        Under the Company's Omnibus Stock Plan (the "Plan"), originally approved by the Company's stockholders in May 1996, directors, officers and employees of the Company and Vornado, and any other person or entity as designated by the Omnibus Stock Plan Committee of the Company's Board of Directors, are eligible for grants of incentive and non-qualified options to purchase common shares. Options granted have exercise prices equal to 100% of the market price of the Company's common stock at the date of grant, vest on a graduated basis, becoming fully vested 36 months after grant, and expire ten years after grant. The Plan also provides for the award of SARs, performance shares and restricted stock, as defined.

      The 92,000
        At December 31, 2005, 81,850 options which were outstanding and exercisable at December 31,
2004 havewith a remaining contractual life of 4.23.2 years and ana weighted-average exercise price of $70.38. In 2004,There were 10,150, 13,000 and 0 options were exercised. No options were exercised in 2005, 2004 and 2003, and 2002. Sharesrespectively. There were no option grants in 2005. At December 31, 2005, there were 1,745,000 shares available for future grant under the Plan.
        On December 29, 2005, Michael Fascitelli, the Company's President, exercised 350,000 of his existing stock appreciation rights ("SARs") which were scheduled to expire in December 2006 and received $173.82 for each SAR exercised, representing the difference between the Company's stock price of $247.70 (the average of the high and low market price) on the date of exercise and the exercise price of $73.88. This exercise was consistent with the Company's tax planning.
        On January 10, 2006, the Omnibus Stock Plan at DecemberCommittee of the Board of Directors of the Company granted Mr. Fascitelli a SAR covering 350,000 shares of the Company's common stock. The exercise price of the SAR is $243.83 per share of common stock, which is the average of the high and low trading price of the Company's common stock on the date of grant. The SAR will become exercisable on July 10, 2006, provided Mr. Fascitelli is employed with the Company on such date, and will expire on March 14, 2007. Mr. Fascitelli's early exercise and the related tax consequences for the Company were factors in the Company's decision to make the new grant to him.
        As of January 31, 2004 were 1,745,000.

      At December 31, 2004,2006, 850,000 SARs were outstanding and exercisable. The
consolidated statementexercisable at a weighted-average exercise price of operations for$141.80. Since the year ended DecemberSARs agreements require that they be settled in cash, the Company would have had to pay $89,295,000 if the holders of these SARs had exercised their SARs on January 31, 2004 and
2003 includes $76,789,000 and $44,917,000, respectively of compensation expense
based on2006. Any change in the Company's closing stock price of $215.00 at December 31, 2004 and
$124.66 at December 31, 2003. Sincefrom the closing stock prices at December 31,
2002 was less than the weighted-average strike

                                      -44-


                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

price of $71.82, there was no compensation expense in$246.85 at January 31, 2006 would increase or decrease the statement of
operations foramount the year ended December 31, 2002. SARs, unlike options, are not
aggregated under the REIT rules.

Company would have to pay upon exercise.

11. EARNINGS PER SHARE
        The following table sets forth the computation of basic and diluted income (loss)
income per share.
                                                                         YEAR ENDED DECEMBER 31,
(amounts in thousands except                                 --------------------------------------------------
shares and per share amounts)                                    2004               2003               2002
                                                             ------------       ------------       ------------

Numerator:
  (Loss) income from continuing operations.................  $    (37,331)      $    (18,948)      $     12,400
  Gain on sale of real estate..............................         3,862                 --                 --
  Income from discontinued operations......................            --              1,206             11,184
                                                             ------------       ------------       ------------
  Net (loss) income........................................  $    (33,469)      $    (17,742)      $     23,584
                                                             ============       ============       ============

Denominator (basic and diluted) - weighted-average shares..     5,008,222          5,000,850          5,000,850

Net (loss) income per common share (basic and diluted):

  (Loss) income from continuing operations.................  $      (7.45)      $      (3.79)      $       2.48
  Gain on sale of real estate..............................          0.77                 --                 --
  Income from discontinued operations......................            --               0.24               2.24
                                                             ------------       ------------       ------------
  Net (loss) income........................................  $      (6.68)      $      (3.55)      $       4.72
                                                             ============       ============       ============
(Amounts in thousands, except share and per share amounts)

  For the Year Ended December 31,  
 
  2005   2004   2003  
Numerator:                    
  Income (loss) from continuing operations   $ 21,298   $ (37,331 ) $ (18,948 )
  Income from discontinued operations     —     —     1,206  
  Net gain on sale of condominiums in 2005 and other real estate
    in 2004, after income taxes     60,943     3,862     —  
         
  Net income (loss) applicable to common shares—Basic and
    Diluted   $ 82,241   $ (33,469 ) $ (17,742 )
         
  Weighted average shares outstanding—Basic     5,021,350     5,008,222     5,000,850  
  Effect of stock options     58,821     —     —  
         
  Weighted average shares outstanding—Diluted     5,080,171     5,008,222     5,000,850  
         

Income (loss) per common share—Basic: 
  
  
  
  
  
  
  
  
  
 
  Income (loss) from continuing operations   $ 4.24   $ (7.45 ) $ (3.79 )
  Income from discontinued operations     —     —     .26  
  Net gain on sale of condominiums in 2005 and other real estate
    in 2004, after income taxes     12.14     .77     —  
         
  Net income (loss) per common share   $ 16.38   $ (6.68 ) $ (3.53 )
         

Income (loss) per common share—Diluted: 
  
  
  
  
  
  
  
  
  
 
  Income (loss) from continuing operations   $ 4.19   $ (7.45 ) $ (3.79 )
  Income from discontinued operations     —     —     .26  
  Net gain on sale of condominiums in 2005 and other real estate
    in 2004, after income taxes     12.00     .77     —  
         
  Net income (loss) per common share   $ 16.19   $ (6.68 ) $ (3.53 )
                 Options to purchase 92,000 and 105,000 shares of the Company's common stock were not included in the calculations of loss per share in the years ended December 31, 2004 and 2003, respectively, as they are anti-dilutive in those
cases and income per share in the year ended December 31, 2002 as the average
market prices of the Company's common stock during that year were less than the
exercise prices.

anti-dilutive.

12. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
    (amounts in thousands except per share amounts)


                                                                                     (LOSS) INCOME PER COMMON SHARE
                                                (LOSS) INCOME                             (BASIC AND DILUTED)
                                   ----------------------------------------      ----------------------------------------
                                   CONTINUING    DISCONTINUED                   CONTINUING      DISCONTINUED
                     REVENUE       OPERATIONS     OPERATIONS        TOTAL       OPERATIONS       OPERATIONS       TOTAL
                     --------      ----------    ------------     ---------     ----------      ------------    ---------

       2004
First quarter......  $ 33,765      $ (22,992)      $    --        $ (22,992)     $   (4.60)       $    --       $   (4.60)
Second quarter.....    34,799          2,523            --            2,523           0.50             --            0.50
Third quarter......    38,835        (11,693)           --          (11,693)         (2.33)            --           (2.33)
Fourth quarter.....    41,496         (1,307)           --           (1,307)         (0.26)            --           (0.26)

       2003
First quarter......  $ 19,723      $   4,804       $    --        $   4,804      $    0.96        $    --       $    0.96
Second quarter.....    20,156         (4,396)           --           (4,396)         (0.88)            --           (0.88)
Third quarter......    19,902        (13,560)           --          (13,560)         (2.71)            --           (2.71)
Fourth quarter.....    27,381         (5,796)        1,206           (4,590)         (1.16)          0.24           (0.92)


                                      -45-
 
   
   
  Income (Loss) Per
Common Share(1)  
 
   
  Net Income
(Loss)
Applicable to
Common Shares  
(Amounts in thousands, except per share amounts)

  Revenue   Basic   Diluted  
2005                          
  December 31   $ 50,286   $ 40,313   $ 8.02   $ 7.93  
  September 30     47,388     (6,754 )   (1.34 )   (1.34 )
  June 30     45,735     17,464     3.48     3.44  
  March 31     43,676     31,218     6.22     6.15  

2004 
  
  
  
  
  
  
  
  
  
  
  
  
 
  December 31   $ 41,496   $ (1,307 ) $ (0.26 ) $ (0.26 )
  September 30     38,835     (11,693 )   (2.33 )   (2.33 )
  June 30     34,799     2,523     0.50     0.50  
  March 31     33,765     (22,992 )   (4.60 )   (4.60 )

2003 
  
  
  
  
  
  
  
  
  
  
  
  
 
  December 31   $ 27,381   $ (4,590 ) $ (0.92 ) $ (0.92 )
  September 30     19,902     (13,560 )   (2.71 )   (2.71 )
  June 30     20,156     (4,396 )   (0.88 )   (0.88 )
  March 31     19,723     4,804     0.96     0.96  
(1)
The total for the year may differ from the sum of the quarters as a result of weighting.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                   FINANCIAL DISCLOSURE

      Not applicable.

        None.
ITEM 9A.    CONTROLS AND PROCEDURES
        (a)   Disclosure Controls and Procedures - Procedures—The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
        Management of Alexander's, Inc., together with its consolidated subsidiaries (the "Company"), is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process designed under the supervision of the Company's principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
        As of December 31, 2004,2005, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established inInternal Control - Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company's internal control over financial reporting as of December 31, 20042005 is effective.
        Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on our financial statements.
        Management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 20042005 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on page 4753 which expresses unqualified opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting as of December 31, 2004.


                                      -46-
2005.
ITEM 9B.    OTHER INFORMATION
        None.


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Alexander's, Inc.
Paramus, New Jersey
        We have audited management's assessment, included within this December 31, 20042005 Form 10-K of Alexander's, Inc. at Item 9A under the heading "Management's Report on Internal Control Over Financial Reporting," that Alexander's, Inc., together with its consolidated subsidiaries (the "Company") maintained effective internal control over financial reporting as of December 31, 2004,2005, based on criteria established inInternal Control -- Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.
        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.
        A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
        Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
        In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of December 31, 2004,2005, is fairly stated, in all material respects, based on the criteria established inInternal Control -- Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004,2005, based on the criteria established inInternal Control -- Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and the related financial statement schedules as of and for the year ended December 31, 20042005 of the Company and our report dated February 23, 200527, 2006 expressed an unqualified opinion on those financial statements and financial statement schedules.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 24, 2005

                                      -47-
27, 2006


PART III
ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
        Information concerning directors of the Company will be contained in a definitive Proxy Statement involving the election of directors and pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. The Company will file the Proxy Statement with the Securities and Exchange Commission not later than 120 days after December 31, 2004.2005. Such information is incorporated by reference herein. For information concerning the executive officers of the Company, see "Executive Officers of the Registrant" in Part I of this Annual Report on Form 10-K. Also incorporated herein by reference is the information under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" of the Proxy Statement.
        The Company has adopted a code of business conduct and ethics that applies to each of its Chief Executive Officer and Executive Vice President and Chief Financial Officer, among others. The code is posted on the Company's website at www. Alx-Inc.com.www.Alx-Inc.com. The Company intends to satisfy its disclosure obligation regarding amendments and waivers of this code applicable to its Chief Executive Office and Executive Vice President and Chief Financial Officer by posting such information on its website at www.Alx-Inc.com.

website.
ITEM 11.    EXECUTIVE COMPENSATION
        Information concerning executive compensation will be contained in the Proxy Statement referred to above in "Item 10. Directors and Executive Officers of the Registrant." Such information is incorporated by reference herein.

                                      -48-
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                     RELATED STOCKHOLDER MATTERS
        Information concerning security ownership of certain beneficial owners and management and related stockholder matters, except as set forth below, will be contained in the Proxy Statement referred to above in "Item 10. Directors and Executive Officers of the Registrant."this Registrant" of this Annual Report on Form 10-K. Such information is incorporated by reference herein.
        A summary of the Company's equity compensation plans follows.
                                      Equity Compensation Plan Information
- --------------------------------------------------------------------------------------------------------------
                                           Number of                                  Number of securities
                                            securities                                remaining available for
                                          to be issued upon                           future issuance under
                                          exercise of           Weighted-average      equity compensation
                                          outstanding           exercise price of        plans (excluding
                                            options,            outstanding options,   securities reflected in
           Plan Category              warrants and rights(a)    warrants and rights         column (a))
- -----------------------------------   ----------------------    --------------------  ------------------------

Equity compensation plans approved
by security holders                          92,000                $70.38                 1,745,000

Equity compensation plans not
approved by security holders                  N/A                    N/A                     N/A
                                             ------                ------                 ---------

Total                                        92,000                $70.38                 1,745,000
                                             ======                ======                 =========
Equity Compensation Plan Information  
Plan Category
  (a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights   Weighted-average
exercise price of
outstanding options,
warrants and rights   Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))  
Equity compensation plans approved by security holders   81,850   $ 70.38   895,000(1 )
Equity compensation plans not approved by security holders   N/A     N/A   N/A  
         
Total   81,850   $ 70.38   895,000(1 )
         
(1)
Excludes 850,000 SARs outstanding as of January 31, 2006, which upon exercise, will increase the number of securities available for future grant under the equity compensation plan.
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
        Information concerning certain relationships and related transactions will be contained in the Proxy Statement referred to above in "Item 10. Directors and Executive Officers of the Registrant." Such information is incorporated by reference herein.
ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
        Information concerning principal accountant fees and services will be contained in the Proxy Statement referred to above in "Item 10. Directors and Executive Officers of the Registrant."Registrant" of the Annual Report on Form 10-K. Such information is incorporated by reference herein.

                                      -49-


PART IV
ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibits and Financial Statement Schedules
(a)
Documents filed as part of this Annual Report on Form 10-K

1.
The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.

2.
The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K.


                                                                                 PAGES IN THIS
                                                                                 ANNUAL REPORT
                                                                                 ON FORM
Pages in this
Annual Report
on Form 10-K
                                                                                 -------------
Schedule II - II—Valuation and Qualifying Accounts - Accounts—years ended
    December 31, 2005, 2004 2003 and 2002..........................................          52
2003 57
Schedule III - III—Real Estate and Accumulated Depreciation as of
    December 31, 2004.........................................................          53
2005 58
All other financial statement schedules are omitted because they are inapplicable,not applicable, not required, or the information is included elsewhere in the consolidated financial statements or the notes thereto.
3. Exhibits:

   See
The following exhibits listed on the Exhibit Index are filed with this Annual Report on page 55.

                                      -50-
Form 10-K.

Exhibit
No.


21 — Subsidiaries of Registrant

23 

— 

Consent of Independent Registered Public Accounting Firm

31.1 

— 

Rule 13a-14 (a) Certification of the Chief Executive Officer

31.2 

— 

Rule 13a-14 (a) Certification of the Chief Financial Officer

32.1 

— 

Section 1350 Certification of the Chief Executive Officer

32.2 

— 

Section 1350 Certification of the Chief Financial Officer


SIGNATURES
        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                       ALEXANDER'S, INC.

                       By: /s/ Joseph Macnow
                           -------------------------------------------
                          Joseph Macnow
                          Executive Vice President and Chief Financial Officer

                       Date: February 24, 2005
ALEXANDER'S, INC.



By: 
/s/  JOSEPH MACNOW      
Joseph Macnow
Executive Vice President and Chief Financial Officer



Date: February 27, 2006
        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

      SIGNATURE                               TITLE                              DATE

/s/ Signature Title Date





/s/  STEVEN ROTH      
Steven Roth Chairman of the Board of Directors and Chief February 24, 2005
- -------------------------
Steven Roth                Executive Officer (Principal Executive Officer)

/s/ February 27, 2006

/s/  MICHAEL D. FASCITELLI      
Michael D. Fascitelli 

President and Director 

February 24, 2005
- -------------------------
Michael D. Fascitelli

/s/ 27, 2006

/s/  JOSEPH MACNOW      
Joseph Macnow 

Executive Vice President and Chief Financial February 24, 2005
- -------------------------
Joseph Macnow              Officer (Principal Financial and Accounting Officer)

/s/ 

February 27, 2006

/s/  THOMAS R. DIBENEDETTO      
Thomas R. DiBenedetto 

Director 

February 24, 2005
- -------------------------
Thomas R. DiBenedetto

/s/ 27, 2006

/s/  DAVID MANDELBAUM      
David Mandelbaum 

Director 

February 24, 2005
- -------------------------
David Mandelbaum

/s/ 27, 2006

/s/  STEPHEN MANN      
Stephen Mann 

Chief Operating Officer and Director 

February 24, 2005
- -------------------------
Stephen Mann

/s/ 27, 2006

/s/  ARTHUR I. SONNENBLICK      
Arthur I. Sonnenblick 

Director 

February 24, 2005
- -------------------------
Arthur I. Sonnenblick

/s/ 27, 2006

/s/  NEIL UNDERBERG      
Neil Underberg 

Director 

February 24, 2005
- -------------------------
Neil Underberg

/s/ 27, 2006

/s/  RICHARD R. WEST      
Richard R. West 

Director 

February 24, 2005
- -------------------------
Richard R. West

/s/ 27, 2006

/s/  RUSSELL B. WIGHT, JR.      
Russell B. Wight, Jr. 

Director 

February 24, 2005
- -------------------------
Russell B. Wight, Jr.
27, 2006


                                      -51-


ALEXANDER'S, INC. AND SUBSIDIARIES

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
                                                       COLUMN B         COLUMN C        COLUMN D         COLUMN E
                                                      -----------      -----------    -------------     ----------
                                                                        ADDITIONS:      DEDUCTIONS:
                   (amounts in thousands)              BALANCE AT        CHARGED      UNCOLLECTIBLE      BALANCE
                                                       BEGINNING         AGAINST         ACCOUNTS         AT END
                                                        OF YEAR        OPERATIONS      WRITTEN OFF       OF YEAR
                                                      -----------      -----------    -------------     ----------
               COLUMN A - DESCRIPTION
               ----------------------

Allowance for doubtful accounts:
Year Ended December 31, 2004.....................     $        55      $       384     $        60      $       379
                                                      ===========      ===========     ===========      ===========

Year Ended December 31, 2003.....................     $        96      $       112     $       153      $        55
                                                      ===========      ===========     ===========      ===========

Year Ended December 31, 2002.....................     $       929      $      (191)    $       642      $        96
                                                      ===========      ===========     ===========      ===========


                                      -52-

(Amounts in thousands)
  Column B   Column C   Column D   Column E
 
  Balance at
Beginning of
Year   Additions:
Charged
Against
Operations   Deductions:
Uncollectible
Accounts Written
Off   Balance at End
of Year
  Column A — Description                        

Allowance for doubtful accounts: 
  
  
  
  
  
  
  
  
  
  
  
 
Year Ended December 31, 2005   $ 379   $ 208   $ 61   $ 526
          
Year Ended December 31, 2004   $ 55   $ 384   $ 60   $ 379
          
Year Ended December 31, 2003   $ 96   $ 112   $ 153   $ 55
          

ALEXANDER'S, INC. AND SUBSIDIARIES

SCHEDULE III - III—REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2004
                             (amounts2005
(Amounts in thousands)
     COLUMN A             COLUMN B                 COLUMN C                 COLUMN D                COLUMN E
- --------------------     -----------      -----------------------------    --------------   --------------------------
                                                                                              GROSS AMOUNT AT WHICH
                                          INITIAL COST TO COMPANY(1)                        CARRIED AT CLOSE OF PERIOD
                                          -----------------------------                     --------------------------
                                                            BUILDING,          COST                      BUILDINGS,
                                                           LEASEHOLDS       CAPITALIZED                   LEASEHOLD
                                                          AND LEASEHOLD    SUBSEQUENT TO                AND LEASEHOLDS
   DESCRIPTION           ENCUMBRANCES       LAND          IMPROVEMENTS     ACQUISITION(2)    LAND       IMPROVEMENTS
- --------------------     ------------     ---------       ------------     --------------   --------    -------------

Commercial Property:
 New York, NY
  Rego Park I            $    81,661      $   1,647        $   8,953       $   57,641       $  1,647     $    66,594
  Rego Park II                    --          3,906            1,467            2,224          3,906           1,566
  Flushing                        --             --            1,660            2,167             --           3,213
  Lexington Ave.             465,168         14,432           12,355          704,234         49,720         288,424
  Kings Plaza
  Regional
  Shopping Center            213,699            497            9,542          120,655         24,483         104,990
 Paramus, NJ                  68,000          1,441               --           10,313         11,754              --
 Other properties                 --            167            1,804                2            167           1,806
                                          ---------        ---------       ----------       --------     -----------
 Other debt (4)              124,000
                         -----------

TOTAL                    $   952,528      $  22,090        $  35,781       $  897,236       $ 91,677     $   466,593
                         ===========      =========        =========       ==========       ========     ===========

     COLUMN A                        COLUMN E           COLUMN F       COLUMN G       COLUMN H       COLUMN I
- --------------------     --------------------------   ------------    ------------   ----------   ---------------
                           GROSS AMOUNT AT WHICH
                         CARRIED AT CLOSE OF PERIOD
                         --------------------------
                                                                                                   LIFE ON WHICH
                                                      ACCUMULATED                                 DEPRECIATION IN
                                                      DEPRECIATION                                 LATEST INCOME
                          CONSTRUCTION                    AND           DATE OF        DATE        STATEMENT IS
DESCRIPTION                IN PROGRESS     TOTAL(2)   AMORTIZATION    CONSTRUCTION   ACQUIRED(1)     COMPUTED
- --------------------     -------------    --------    ------------    ------------   ----------   ---------------

Commercial Property:
 New York, NY
  Rego Park I              $     --       $  68,241   $     22,305         1959         1992       15-39 years
  Rego Park II                2,125           7,597          1,486         1965         1992       38-39 years
  Flushing                      614           3,827          1,859         1975(3)      1992          26 years
  Lexington Ave.            392,877         731,021          7,401         2003         1992        5-39 years
  Kings Plaza
  Regional
  Shopping Center             1,221         130,694         39,171         1970         1992        7-50 years
 Paramus, NJ                     --          11,754             --           --         1992         --
 Other properties                --           1,973          1,806      Various         1992        7-25 years
                           --------       ---------   ------------
 Other debt (4)
TOTAL                      $396,837       $ 955,107   $     74,028
                           ========       =========   ============


- --------------------------

Column A
  Column B
  Column C
  Column D
  Column E
  Column F
  Column G
  Column H
  Column I
 
   
  Initial Cost to Company(1)
   
  Gross Amount at Which Carried at Close of Period    
   
   
   
Description   Encumbrances   Land   Building,
Leaseholds
and
Leasehold
Improvements   Cost
Capitalized
Subsequent to
Acquisition(2)   Land   Buildings,
Leasehold
and
Leaseholds
Improvements   Construction In Progress   Total(2)   Accumulated
Depreciation
and
Amortization   Date of Construction   Date Acquired(1)   Life on Which Depreciation in Latest Income Statement is Computed
Commercial Property:                                                                  
New York, NY                                                                  
Rego Park I   $ 80,926   $ 1,647   $ 8,953   $ 57,641   $ 1,647   $ 66,594   $ —   $ 68,241   $ 23,856   1959   1992   15-39 years
Rego Park II     —     3,906     1,467     4,230     3,906     1,566     4,131     9,603     1,492   1965   1992   38-39 years
Flushing     —     —     1,660     2,277     —     3,213     724     3,937     1,918   1975(3 ) 1992   26 years
Lexington Ave.     720,000     14,432     12,355     441,766     27,498     415,775     25,280     468,553     17,816   2003   1992   5-39 years
Kings Plaza Regional Shopping Center     210,539     497     9,542     125,036     24,483     105,620     4,972     135,075     42,088   1970   1992   7-50 years
Paramus, NJ     68,000     1,441     —     10,313     11,754     —     —     11,754     —   —   1992   —
Other properties     —     167     1,804     2     167     1,806     —     1,973     1,806   Various   1992   7-25 years
                               
TOTAL   $ 1,079,465   $ 22,090   $ 35,781   $ 641,265   $ 69,455   $ 594,574   $ 35,107   $ 699,136   $ 88,976            
                               
(1)
Initial cost is as of May 15, 1 9921992 (the date on which the Company commenced its real estate operations) unless acquired subsequent to that date. See Column H.

(2)
The net basis of the Company's assets and liabilities for tax purposes is approximately $13,000,000$44,000,000 higher than the amount reported for financial statement purposes.

(3)
This date represents the lease acquisition date.

(4) This debt is payable to Vornado Realty Trust (see Note 8 of the consolidated
financial statements).

                                      -53-



ALEXANDER'S, INC. AND SUBSIDIARIES

SCHEDULE III - III—REAL ESTATE AND ACCUMULATED DEPRECIATION
                             (amounts
(Amounts in thousands)
                                                                                DECEMBER 31,
                                                              ---------------------------------------------
                                                                  2004             2003             2002
                                                              ----------        ----------       ----------

REAL ESTATE:
Balance at beginning of period..........................      $  826,546        $  600,661       $  436,742
Additions during the period:
  Land..................................................             181             1,160               --
  Buildings, leaseholds and leasehold improvements......          95,240           194,772            4,608
  Construction in progress..............................          33,140            30,385          164,948
                                                              ----------        ----------       ----------
                                                                 955,107           826,978          606,298
Assets sold.............................................              --              (432)          (5,637)
                                                              ----------        ----------       ----------
Balance at end of period................................      $  955,107        $  826,546       $  600,661
                                                              ==========        ==========       ==========

ACCUMULATED DEPRECIATION:
Balance at beginning of period..........................      $   62,744        $   57,686       $   56,383
Additions charged to operating expenses.................          11,284             5,058            4,563
                                                              ----------        ----------       ----------
                                                                  74,028            62,744           60,946
Assets sold.............................................              --                --           (3,260)
                                                              ----------        ----------       ----------
Balance at end of period................................      $   74,028        $   62,744       $   57,686
                                                              ==========        ==========       ==========


                                      -54-

 
  December 31,  
 
  2005   2004   2003  
REAL ESTATE:                    
Balance at beginning of period   $ 955,107   $ 826,546   $ 600,661  
Additions during the period:                    
  Land     —     181     1,160  
  Buildings, leaseholds and leasehold improvements     127,981     95,240     194,772  
  Construction in progress     (383,952 )   33,140     30,385  
         
      699,136     955,107     826,978  
Assets sold     —     —     (432 )
         
Balance at end of period   $ 699,136   $ 955,107   $ 826,546  
         

ACCUMULATED DEPRECIATION: 
  
  
  
  
  
  
  
  
  
 
Balance at beginning of period   $ 74,028   $ 62,744   $ 57,686  
Additions charged to operating expenses     14,948     11,284     5,058  
         
      88,976     74,028     62,744  
Assets sold     —     —     —  
         
Balance at end of period   $ 88,976   $ 74,028   $ 62,744  
         

EXHIBIT INDEX

EXHIBIT
  NO.
- -------
Exhibit
No. 


3.1 

Amended and Restated Certificate of Incorporation. Incorporated herein by reference from Exhibit 3.1 to the registrant's Registration Statement on Form S-3 filed on September 20, 1995.......................................    1995 

*

3.2 

By-laws, as amended. Incorporated herein by reference from Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000...................................................................    2000 

*

10.1 

Limited Liability Company Operating Agreement of 731 Residential LLC, dated as of July 3, 2002, among 731 Residential Holding LLC, as the sole member, Domenic A. Borriello, as an Independent Manager and Kim Lutthang, as an Independent Manager. Incorporated herein by reference from Exhibit 10(i)(A)(1) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003................................................    2002 

*

10.2 

Limited Liability Company Operating Agreement of 731 Commercial LLC, dated as of July 3, 2002, among 731 Commercial Holding LLC, as the sole member, Domenic A. Borriello, as an Independent Manager and Kim Lutthang, as an Independent Manager. Incorporated herein by reference from Exhibit 10(i)(A)(2) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003................................................    2002 

*

10.3 

Amended and Restated Credit Agreement dated July 3, 2002 between 59th Street Corporation and Vornado Lending, LLC (evidencing $40,000,000 of debt on which 59th Street Corporation became the direct borrower). Incorporated herein by reference from Exhibit 10(i)(B)(1) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.......................................................................    2002 

*

10.4 

Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending LLC evidencing a $20,000,000 loan. Incorporated herein by reference from Exhibit 10(i)(B)(2) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003...............................   2002 

*

10.5 

Amended and Restated Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending LLC evidencing a $50,000,000 line of credit facility. Incorporated herein by reference from Exhibit 10(i)(B)(3) to the registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003........................................................    2002. 

*

10.6 

Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado Lending LLC evidencing a $35,000,000 loan. Incorporated herein by reference from Exhibit 10(i)(B)(4) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003...............................   2002 

*

10.7 

Building Loan Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.......................................................................    2002 

*

10.8 

Project Loan Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(1) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.......................................................................    2002 

*


- ---------------------------
*
Incorporated by reference

                                      -55-


EXHIBIT
  NO.
- -------
Exhibit
No. 







10.9 

Supplemental Loan Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(2) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003......................................     2002 

*

10.10 

Consolidated, Amended and Restated Building Loan Mortgage, dated as of July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(3) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003...........................................    2002 

*

10.11 

Consolidated, Amended and Restated Building Loan Note, dated as of July 3, 2002 by and between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(4) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003...........................................    2002 

*

10.12 

Guaranty of Completion, dated as of July 3, 2002, executed by Vornado Realty L.P. for the benefit of Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(5) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.................. ....................    2002 

*

10.13 

Guaranty of Carry Obligations, dated as of July 3, 2002, executed by Alexander's, Inc. for the benefit of Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(6) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.................. ..........    2002 

*

10.14 

Environmental Indemnity Agreement, dated as of July 3, 2002, executed by Alexander's, Inc., 731 Residential LLC and 731 Commercial LLC in favor of Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(7) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003......................................................................    2002 

*

10.15 

Reimbursement Agreement, dated as of July 3, 2002, by and between Alexander's, Inc., 731 Commercial LLC, 731 Residential LLC and Vornado Realty, L.P. Incorporated herein by reference from Exhibit 10(i)(C)(8) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003..................................................................    2002 

*

10.16 

First Omnibus Amendment to Loan Documents, dated March 5, 2003, among 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10.16 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.........................    2003 

*

10.17 

Second Omnibus Amendment to Loan Documents, dated February 13, 2004, among 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10.17 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003............    2003 

*


- ---------------------------
*
Incorporated by reference

                                      -56-


EXHIBIT
  NO.
- -------
Exhibit
No. 


10.18 

First Amendment to Building Loan Agreement, dated March 5, 2003, between 731 Commercial LLC and 731 Residential LLC, * collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein Incorporated by reference from Exhibit 10.18 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003......................................................................   2003 

*

10.19 

Second Amendment to Building Loan Agreement, dated February 13, 2004, between 731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo Real Estate Capital Corporation, as Agent for the Lenders. Incorporated herein by reference from Exhibit 10.19 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.....................................................................    2003 

*

10.20 

Loan and Security Agreement, dated as of February 13, 2004, between 731 Office One LLC, as Borrower and German American Capital Corporation, as Lender. Incorporated herein by reference from Exhibit 10.20 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.....................................................................    2003 

*

10.21 

Amended, Restated and Consolidated Mortgage, Security Agreement, Financing Statement and Assignment of Leases, Rent and Security Deposits by and between 731 Office One LLC as Borrower and German American Capital Corporation as Lender, dated as of February 13, 2004. Incorporated herein by reference from Exhibit 10.21 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................   2003 

*

10.22 

Amended, Restated and Consolidated Note, dated as of February 13, 2004, by 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.22 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003...........   2003 

*

10.23 

Assignment of Leases, Rents and Security Deposits from 731 Office One LLC to German American Capital Corporation, dated as of February 13, 2004. Incorporated herein by reference from Exhibit 10.23 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003...........   2003 

*

10.24 

Account and Control Agreement, dated as of February 13, 2004, by and among German American Capital Corporation as Lender, and 731 Office One LLC as Borrower, and JP Morgan Chase as Cash Management Bank. Incorporated herein by reference from Exhibit 10.24 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................   2003 

*

10.25 

Manager's Consent and Subordination of Management Agreement dated February 13, 2004 by 731 Office One LLC and Alexander's Management LLC and German American Capital Corporation. Incorporated herein by reference from Exhibit 10.25 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003...................................................   2003 

*

10.26 

Note Exchange Agreement dated as of February 13, 2004 by and between 731 Office One LLC and German American Capital Corporation. Incorporated herein by reference from Exhibit 10.26 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.........................   2003 

*

10.27 

Promissory Note A-1 dated as of February 13, 2004 and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.27 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................   2003 

*


- ---------------------------
*
Incorporated by reference

                                      -57-


EXHIBIT
  NO.
- -------
Exhibit
No. 


10.28 

Promissory Note A-2 dated as of February 13, 2004 and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.28 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................    2003 

*

10.29 

Promissory Note A-3 dated as of February 13, 2004 and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.29 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................    2003 

*

10.30 

Promissory Note A-4 dated as of February 13, 2004, and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.30 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................    2003 

*

10.31 

Promissory Note A-X dated as of February 13, 2004, and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.31 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................    2003 

*

10.32 

Promissory Note B dated as of February 13, 2004, and 731 Office One LLC in favor of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.32 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003.................................    2003 

*

10.33 

Guaranty of Recourse Obligations dated as of February 13, 2004, by Alexander's, Inc. to and for the benefit of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.33 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003......................................................................    2003 

*

10.34 

Environmental Indemnity dated as of February 13, 2004, by Alexander's, Inc. and 731 Office One LLC for the benefit of German American Capital Corporation. Incorporated herein by reference from Exhibit 10.34 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2003......................................................................    2003 

*

10.35 

Amended, Restated and Consolidated Mortgage and Security Agreement, dated May 12, 1999, between The Chase Manhattan Bank, as mortgagee, and Alexander's Rego Shopping Center Inc., as mortgagor. Incorporated herein by reference from Exhibit 10(i)(E) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000............. ...............    2000 

*

10.36 

Real Estate Retention Agreement dated as of July 20, 1992, between Vornado Realty Trust and Keen Realty Consultants, Inc., each as special real estate consultants, and the Company. Incorporated herein by reference from Exhibit 10(i)(O) to the registrant's Annual Report on Form 10-K for the fiscal year ended July 25, 1992...........................................    1992 

*

10.37 

Extension Agreement to the Real Estate Retention Agreement, dated as of February 6, 1995, between the Company and Vornado Realty Trust. Incorporated herein by reference from Exhibit 10(i)(G)(2) to the registrant's Annual Report Form 10-K for the year ended December 31, 1994......................................................................    1994 

*

10.38 

Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by and between Alexander's, Inc. and Vornado Realty, L.P. Incorporated herein by reference from Exhibit 10(i)(E)(3) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002..........................    2002 

*


- ---------------------------
*
Incorporated by reference

                                      -58-


EXHIBIT
  NO.
- -------
Exhibit
No. 


10.39     59th 

59^th Street Real Estate Retention Agreement, dated as of July 3, 2002, by and between Vornado Realty, L.P., 731 * Residential LLC and 731 Commercial LLC. Incorporated herein by reference from Exhibit 10(i)(E)(4) to the Incorporated registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 

*

10.40 

Amended and Restated Management and Development Agreement, dated as of July 3, 2002, by and between Alexander's, Inc., the subsidiaries party thereto and Vornado Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(1) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002..........................................    2002 

*

10.41     59th 

59^th Street Management and Development Agreement, dated as of July 3, 2002, by and between 731 Commercial LLC and Vornado Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(2) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002........................................................... .........    2002 

*

10.42 

Kings Plaza Management Agreement, dated as of May 31, 2001, by and between Alexander's Kings Plaza LLC and Vornado Management Corp. Incorporated herein by reference from Exhibit 10(i)(F)(3) to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002...................   2002 

*

10.43 

Agreement of Lease for Rego Park, Queens, New York, between Alexander's, Inc. and Sears Roebuck & Co. Incorporated herein by reference from Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.....................................................    1994 

*

10.44 

Lease for Roosevelt Avenue, Flushing, New York, dated as of December 1, 1992, between the Company, as landlord, and Caldor, as tenant. Incorporated herein by reference from Exhibit (ii)(E)(7) to the registrant's Annual Report on Form 10-K for the fiscal year ended July 25, 1992.....................................................................    1992 

*

10.45 

First Amendment to Sublease for Roosevelt Avenue, Flushing, New York, dated as of February 22, 1995 between the Company, as sublandlord, and Caldor, as tenant. Incorporated herein by reference from Exhibit 10(ii)(A)(8)(b) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1994.............................................    1994 

*

10.46 

Lease Agreement, dated March 1, 1993 by and between the Company and Alex Third Avenue Acquisition Associates. Incorporated by reference from Exhibit 10(ii)(F) to the registrant's Annual Report on Form 10-K for the fiscal year ended July 31, 1993..........................................    1993 

*

10.47 

Agreement of Lease for Rego Park, Queens, New York, between the Company and Marshalls of Richfield, MN, Inc., dated as of March 1, 1995. Incorporated herein by reference from Exhibit 10(ii)(A)(12)(a) to the registrant s Annual Report on Form 10-K for the year ended December 31, 1994.....................................................................    1994 

*

10.48 

Guaranty, dated March 1, 1995, of the Lease described in Exhibit 10(ii)(A)(6)(a) above by the Company. Incorporated herein by reference from Exhibit 10(ii)(A)(12)(b) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1994................................    1994 

*

10.49 

Employment Agreement, dated February 9, 1995, between the Company and Stephen Mann. Incorporated herein by reference from Exhibit 10(iii)(B) to the registrant's Annual Report on Form 10-K for the year ended December 31, 1994.................................................................    1994 

*

10.50 

Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997. Incorporated herein by reference from Exhibit 10 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997........    1997 

*


- ---------------------------
*
Incorporated by reference

                                      -59-


EXHIBIT
  NO.
- -------
Exhibit
No. 







10.51 

Amended and Restated Consolidated Mortgage and Security Agreement dated as of May 31, 2001 among Alexander's Kings Plaza LLC as mortgagor, Alexander's of King LLC as mortgagor and Kings Parking LLC as mortgagor, collectively borrower, to Morgan Guaranty Trust Company of New York, as mortgagee. Incorporated herein by reference from Exhibit 10(v) A1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001......................................................................    2001 

*

10.52 

Amended, Restated and Consolidated Promissory Note, dated as of May 31, 2001 by and between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by reference from Exhibit 10(v) A2 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.......................................................    2001 

*

10.53 

Cash Management Agreement dated as of May 31, 2001 by and between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by reference from Exhibit 10(v) A3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001......................................................................    2001 

*

10.54 

Note modification and Severance Agreement dated as of November 26, 2001, between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking LLC collectively borrower and JP Morgan Chase Bank of New York, lender. Incorporated herein by reference from Exhibit 10(v)(A)(4) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001......................................................................    2001 

*

10.55 

Agreement of Lease dated as of April 30, 2001 between Seven Thirty One Limited Partnership, landlord, and Bloomberg L.P., tenant. Incorporated herein by reference from Exhibit 10(v) B to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001...................    2001 

*

10.56 

First Amendment of Lease, dated as of April 19, 2002, between Seven Thirty One Limited Partnership, landlord and Bloomberg L.P., tenant. Incorporated herein by reference from Exhibit 10(v)(B)(2) to the registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002............    2002 

*

10.57 

Loan Agreement dated as of October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(1) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001......................................................................    2001 

*

10.58 

Mortgage, Security Agreement and Fixture Financing Statement dated as of October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(2) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001..............................................    2001 

*

10.59 

Environmental undertaking letter dated as of October 2, 2001 by and between ALX of Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from Exhibit 10(v)(C)(3) to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001..............................................    2001 

*

10.60 

Lease dated as of October 2, 2001 by and between ALX of Paramus LLC, as Landlord, and IKEA Property, Inc. as Tenant. Incorporated herein by reference from Exhibit 10(v)(C)(4) to the registrant's Annual Report on Form 10-K for the year ended December 31, 2001............................    2001 

*


- ---------------------------
*
Incorporated by reference

                                      -60-


EXHIBIT
  NO.
- -------
Exhibit
No. 


10.61 

Form of Stock Option Agreement between the Company and certain employees — Incorporated herein by reference from Exhibit 10.61 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 

*

10.62 

Form of Restricted Stock Option Agreement between the Company and certain employees — Incorporated herein by reference from Exhibit 10.62 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 

*

10.63 

Stock Appreciation Right Agreement dated as of January 10, 2006, between Michael D. Fascitelli and Alexander's Inc. — Incorporated herein by reference from Exhibit 10.1 to the registrant's Current Report on Form 8-K for January 10, 2006 

*

21 

Subsidiaries of Registrant 


23 

Consent of Deloitte & Touche LLP

Independent Registered Public Accounting Firm 


31.1 

Rule 13a-14 (a) Certification byof the Chief Executive Officer pursuant to 


31.2 

Rule 13a-14(a)13a-14 (a) Certification of
            the Securities Exchange Act of 1934, as amended

31.2      Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) 


32.1 

Section 1350 Certification of
            the Securities Exchange Act of 1934, as amended

32.1      Certification by the Chief Executive Officer pursuant to 18 U.S.C. 


32.2 

Section 1350 as adopted pursuant to Section 906Certification of the Sarbanes-Oxley Act of 2002

32.2      Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section
            1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




- --------------------------
*Incorporated
*
Incorporated by reference

                                      -61-



QuickLinks
FORWARD-LOOKING STATEMENTS
PART I
PART II
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts)
ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts)
ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands)
ALEXANDER'S, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ALEXANDER'S, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PART III
PART IV
SIGNATURES
ALEXANDER'S, INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
ALEXANDER'S, INC. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2005 (Amounts in thousands)
ALEXANDER'S, INC. AND SUBSIDIARIES SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Amounts in thousands)
EXHIBIT INDEX
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2005
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Delaware (State or other jurisdiction of incorporation or organization)		51-0100517 (IRS Employer Identification No.)
210 Route 4 East, Paramus, New Jersey (Address of principal executive offices)		07652 (Zip Code)