UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM10-Q

(Mark one)



☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:September 30, ~~2017~~

2019



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

For the transition period from:



Commission File Number:				001-06064

~~ALEXANDER’S, INC.~~

ALEXANDERS INC

(Exact name of registrant as specified in its charter)



Delaware			51-0100517
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

210 Route 4 East,	Paramus,	New Jersey	07652
(Address of principal executive offices)			(Zip Code)

~~(201)587-8541~~



(201)	587-8541

(Registrant’s telephone number, including area code)

~~N/A~~



N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value per share	ALX	New York Stock Exchange

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.



☑	Large Accelerated Filer	☐	Accelerated Filer
☐	Non-Accelerated Filer	☐	Smaller Reporting Company
		☐ ~~Accelerated Filer~~
~~☐ Non-Accelerated Filer (Do not check if smaller reporting company)~~		~~☐ Smaller Reporting Company~~
		☐ Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). ☐ Yes ☑ No

As of October ~~30,2017,~~25, 2019, there were 5,107,290 shares of common stock, par value $1 per share, outstanding.

~~ALEXANDER’S, INC.~~

~~INDEX~~

ALEXANDER’S, INC.

INDEX



				Page Number
PART I.	Financial Information
~~PART I.~~		~~Financial Information~~

Item 1.		Financial Statements:


		Consolidated Balance Sheets (Unaudited) as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018	4
			3

		Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	5
			4

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	6
			5

		Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	7
			6

		Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	8
			7

		Notes to Consolidated Financial Statements (Unaudited)	9
			8

		Report of Independent Registered Public Accounting Firm	20
			16

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
			17

Item 3.		Quantitative and Qualitative Disclosures about Market Risk	28

26Item 4.	Controls and Procedures	28

PART II.	Other Information
~~Item 4.~~		~~Controls and Procedures~~
26Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors					29
~~PART II.~~		~~Other Information~~

~~Item 1.~~		~~Legal Proceedings~~			27

~~Item 1A.~~		~~Risk Factors~~			27

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	29

27Item 3.	Defaults Upon Senior Securities	29

Item 4.	Mine Safety Disclosures					29
~~Item 3.~~		~~Defaults Upon Senior Securities~~
27Item 5.	Other Information	29

Item 6.	Exhibits					29
~~Item 4.~~		~~Mine Safety Disclosures~~
27Exhibit Index		30

Signatures
~~Item 5.~~		~~Other Information~~31			27

~~Item 6.~~		~~Exhibits~~			27

~~Exhibit Index~~					28

~~Signatures~~					29

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)

ASSETS
    September 30,
2017

    December 31,
2016

Real estate, at cost:

Land
$    44,971 $    44,971
Buildings and leasehold improvements
   988,261    985,800
Development and construction in progress
   3,276    2,780




Total
   1,036,508    1,033,551
Accumulated depreciation and amortization
   (273,898 )    (252,737 )




Real estate, net
   762,610    780,814
Cash and cash equivalents
   280,010    288,926
Restricted cash
   84,504    85,752
Rego Park II loan participation
   199,275    -
Marketable securities
   29,424    37,918
Tenant and other receivables, net of allowance for doubtful accounts of $1,476 and $1,473, respectively
   4,003    3,056
Receivable arising from the straight-lining of rents
   175,787    179,010
Deferred leasing costs, net, including unamortized leasing fees to Vornado
of $34,251 and $36,960, respectively
   44,951    48,387
Other assets
   41,493    27,367




$    1,622,057 $    1,451,230




LIABILITIES AND EQUITY

Mortgages payable, net of deferred debt issuance costs
$    1,240,069 $    1,052,359
Amounts due to Vornado
   533    897
Accounts payable and accrued expenses
   36,461    42,200
Other liabilities
   2,908    2,929




Total liabilities
   1,279,971    1,098,385





Commitments and contingencies


Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares;
issued and outstanding, none
   -    -
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued, 5,173,450 shares; outstanding, 5,107,290 and, 5,106,196 shares, respectively
   5,173    5,173
Additional capital
   31,577    31,189
Retained earnings
   306,403    308,995
Accumulated other comprehensive (loss) income
   (699 )    7,862




   342,454    353,219
Treasury stock: 66,160 shares and 67,254 shares respectively, at cost
   (368 )    (374 )




Total equity
   342,086    352,845




$    1,622,057 $    1,451,230



ASSETS	September 30, 2019			December 31, 2018
Real estate, at cost:
Land	$	44,971		$	44,971
Buildings and leasehold improvements	981,136			978,474
Development and construction in progress	9,414			4,246
Total	1,035,521			1,027,691
Accumulated depreciation and amortization	(317,751		)	(297,421		)
Real estate, net	717,770			730,270
Cash and cash equivalents	304,229			283,056
Restricted cash	9,548			6,439
Marketable securities	16,909			23,166
Tenant and other receivables	5,624			4,075
Receivable arising from the straight-lining of rents	166,839			168,789
Deferred leasing costs, net, including unamortized leasing fees to Vornado of $32,591 and $31,039, respectively	41,583			40,669
Other assets	20,881			29,085
	$	1,283,383		$	1,285,549



LIABILITIES AND EQUITY
Mortgages payable, net of deferred debt issuance costs	$	969,673		$	965,826
Amounts due to Vornado	4,638			708
Accounts payable and accrued expenses	38,973			30,889
Other liabilities	8,008			3,034
Total liabilities	1,021,292			1,000,457

Commitments and contingencies

Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued and outstanding, none	—			—
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued, 5,173,450 shares; outstanding, 5,107,290 shares	5,173			5,173
Additional capital	32,365			31,971
Retained earnings	224,994			248,443
Accumulated other comprehensive loss	(73		)	(127		)
	262,459			285,460
Treasury stock: 66,160 shares, at cost	(368		)	(368		)
Total equity	262,091			285,092
	$	1,283,383		$	1,285,549

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)

Three Months Ended
September 30,
Nine Months Ended
September 30,

2017
2016 2017 2016
REVENUES

Property rentals
$ 37,970 $ 37,598 $ 114,507 $ 113,129
Expense reimbursements
20,124 19,522 58,006 56,554

Total revenues
58,094 57,120 172,513 169,683

EXPENSES

Operating, including fees to Vornado of $1,146, $1,082,
$3,365 and $3,389, respectively
21,272 21,714 62,937 60,702
Depreciation and amortization
8,430 8,045 24,613 25,745
General and administrative, including management fees
to Vornado of $595 and $1,785 in each three and nine
month period, respectively
1,228 1,225 4,080 4,285

Total expenses
30,930 30,984 91,630 90,732

OPERATING INCOME
27,164 26,136 80,883 78,951

Interest and other income, net
2,081 522 4,105 2,388
Interest and debt expense
(8,940 ) (5,615 ) (22,355 ) (16,476 )

Income before income taxes
20,305 21,043 62,633 64,863
Income tax expense
(6 ) (7 ) (7 ) (41 )

Net income
$ 20,299 $ 21,036 $ 62,626 $ 64,822

Net income per common share – basic and diluted
$ 3.97 $ 4.11 $ 12.24 $ 12.68

Weighted average shares outstanding – basic and diluted
5,115,982 5,114,701 5,115,339 5,113,877

Dividends per common share
$ 4.25 $ 4.00 $ 12.75 $ 12.00



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
REVENUES
Rental revenues	$	57,760		$	59,125		$	170,470		$	175,258
EXPENSES
Operating, including fees to Vornado of $1,310, $1,158, $3,930 and $3,433, respectively	(23,389		)	(26,419		)	(66,905		)	(70,207		)
Depreciation and amortization	(7,831		)	(8,225		)	(23,528		)	(25,208		)
General and administrative, including management fees to Vornado of $595 and $1,785 in each three and nine month period, respectively	(1,333		)	(1,126		)	(4,471		)	(4,078		)
Total expenses	(32,553		)	(35,770		)	(94,904		)	(99,493		)


Interest and other income, net	2,075			3,813			6,428			8,581
Interest and debt expense	(9,772		)	(11,341		)	(30,096		)	(32,115		)
Change in fair value of marketable securities	(1,017		)	(824		)	(6,257		)	(5,561		)
Income from continuing operations	16,493			15,003			45,641			46,670
Loss from discontinued operations (see Note 7)	—			—			—			(23,797		)
Net income	$	16,493		$	15,003		$	45,641		$	22,873

Income per common share – basic and diluted:
Income from continuing operations	$	3.22		$	2.93		$	8.92		$	9.12
Loss from discontinued operations (see Note 7)	—			—			—			(4.65		)
Net income per common share	$	3.22		$	2.93		$	8.92		$	4.47

Weighted average shares outstanding	5,118,698			5,117,347			5,118,030			5,116,667

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Amounts in thousands)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income
$    20,299 $    21,036 $    62,626 $    64,822
Other comprehensive (loss) income:

Change in unrealized net gain or loss onavailable-for-sale
securities
   (1,653 )    (2,419 )    (8,494)    96
Change in value of interest rate cap
   (11 )    37    (67)    80








Comprehensive income
$    18,635 $    18,654 $    54,065 $    64,998



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019		2018
Net income	$	16,493	$	15,003		$	45,641	$	22,873
Other comprehensive income (loss):
Change in fair value of interest rate cap	22		(1		)	54		(5		)
Comprehensive income	$	16,515	$	15,002		$	45,695	$	22,868

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

(Amounts in thousands)

    Accumulated
Other
   Comprehensive
   Income (Loss)
Common Stock   Additional
Capital   Retained
  Earnings     Treasury
Stock Total
  Equity
  Shares     Amount
Balance, December 31, 2015
5,173 $   5,173 $ 30,739 $ 304,340 $ 13,002 $ (374 ) $ 352,880
Net income
- - - 64,822 - - 64,822
Dividends paid
- - - (61,363 ) - - (61,363)
Change in unrealized net gain on
available-for-sale securities
- - - - 96 - 96
Change in value of interest rate cap
- - - - 80 - 80
Deferred stock unit grants
- - 450 - - - 450

Balance, September 30, 2016
5,173 $ 5,173 $ 31,189 $ 307,799 $ 13,178 $ (374 ) $ 356,965

Balance, December 31, 2016
5,173 $   5,173 $ 31,189 $ 308,995 $ 7,862 $ (374 ) $ 352,845
Net income
- - - 62,626 - - 62,626
Dividends paid
- - - (65,218 ) - - (65,218)
Change in unrealized net gain or loss on
available-for-sale securities
- - - - (8,494 ) - (8,494)
Change in value of interest rate cap
- - - - (67 ) - (67)
Deferred stock unit grants
- - 394 - - - 394
Other
- - (6 ) - - 6 -

Balance, September 30, 2017
5,173 $   5,173 $ 31,577 $ 306,403 $ (699 ) $ (368 ) $ 342,086



				Additional Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Equity
	Common Stock
	Shares	Amount
Three Months Ended September 30, 2019
Balance, June 30, 2019	5,173	$	5,173	$	32,365	$	231,535		$	(95	)	$	(368	)	$	268,610
Net income	—	—		—		16,493			—			—			16,493
Dividends paid ($4.50 per common share)	—	—		—		(23,034		)	—			—			(23,034		)
Change in fair value of interest rate cap	—	—		—		—			22			—			22
Balance, September 30, 2019	5,173	$	5,173	$	32,365	$	224,994		$	(73	)	$	(368	)	$	262,091

Three Months Ended September 30, 2018
Balance, June 30, 2018	5,173	$	5,173	$	31,971	$	269,525		$	(130	)	$	(368	)	$	306,171
Net income	—	—		—		15,003			—			—			15,003
Dividends paid ($4.50 per common share)	—	—		—		(23,028		)	—			—			(23,028		)
Change in fair value of interest rate cap	—	—		—		—			(1		)	—			(1		)
Balance, September 30, 2018	5,173	$	5,173	$	31,971	$	261,500		$	(131	)	$	(368	)	$	298,145



				Additional Capital		Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Total Equity
	Common Stock
	Shares	Amount

Nine Months Ended September 30, 2019
Balance, December 31, 2018	5,173	$	5,173	$	31,971	$	248,443		$	(127	)	$	(368	)	$	285,092
Net income	—	—		—		45,641			—			—			45,641
Dividends paid ($13.50 per common share)	—	—		—		(69,090		)	—			—			(69,090		)
Change in fair value of interest rate cap	—	—		—		—			54			—			54
Deferred stock unit grants	—	—		394		—			—			—			394
Balance, September 30, 2019	5,173	$	5,173	$	32,365	$	224,994		$	(73	)	$	(368	)	$	262,091

Nine Months Ended September 30, 2018
Balance, December 31, 2017	5,173	$	5,173	$	31,577	$	302,543		$	5,030		$	(368	)	$	343,955
Net income	—	—		—		22,873			—			—			22,873
Dividends paid ($13.50 per common share)	—	—		—		(69,072		)	—			—			(69,072		)
Cumulative effect of change in accounting principle	—	—		—		5,156			(5,156		)	—			—
Change in fair value of interest rate cap	—	—		—		—			(5		)	—			(5		)
Deferred stock unit grants	—	—		394		—			—			—			394
Balance, September 30, 2018	5,173	$	5,173	$	31,971	$	261,500		$	(131	)	$	(368	)	$	298,145

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Amounts in thousands)

Nine Months Ended
September 30,
CASH FLOWS FROM OPERATING ACTIVITIES 2017 2016
Net income
$ 62,626 $ 64,822
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization, including amortization of debt issuance costs
27,049 27,666
Straight-lining of rental income
3,223 1,594
Stock-based compensation expense
394 450
Changes in operating assets and liabilities:

Tenant and other receivables, net
(947) 1,081
Other assets
(14,209) (23,088)
Amounts due to Vornado
(334) (1,951)
Accounts payable and accrued expenses
(5,571) 11,346
Other liabilities
(21) (22)

Net cash provided by operating activities
72,210 81,898

CASH FLOWS FROM INVESTING ACTIVITIES

Construction in progress and real estate additions
(3,155) (13,441)
Rego Park II loan participation payment
(200,000) -
Principal repayment proceeds from Rego Park II loan participation
725 -

Net cash used in investing activities
(202,430) (13,441)

CASH FLOWS FROM FINANCING ACTIVITIES

Debt repayments
(302,754) (2,555)
Proceeds from borrowing
500,000 -
Dividends paid
(65,218) (61,363)
Debt issuance costs
(11,972) (16)

Net cash provided by (used in) financing activities
120,056 (63,934)

Net (decrease) increase in cash and cash equivalents and restricted cash
(10,164) 4,523
Cash and cash equivalents and restricted cash at beginning of period
374,678 344,656

Cash and cash equivalents and restricted cash at end of period
$ 364,514 $ 349,179

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents at beginning of period
$ 288,926 $ 259,349
Restricted cash at beginning of period
85,752 85,307

Cash and cash equivalents and restricted cash at beginning of period
$ 374,678 $ 344,656

Cash and cash equivalents at end of period
$ 280,010 $ 264,147
Restricted cash at end of period
84,504 85,032

Cash and cash equivalents and restricted cash at end of period
$ 364,514 $ 349,179

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest
$ 19,358 $ 14,469

NON-CASH TRANSACTIONS

Liability for real estate additions, including $24 and $92 for development fees due to Vornado
in 2017 and 2016, respectively
$ 124 $ 1,053
Write-off of fully amortized and/or depreciated assets
4,265 1,691
Change in unrealized net gain or loss onavailable-for-sale securities
(8,494) 96



	Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES	2019			2018
Net income	$	45,641		$	22,873
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including amortization of debt issuance costs	27,401			29,323
Straight-lining of rental income	1,950			5,589
Stock-based compensation	394			394
Change in fair value of marketable securities	6,257			5,561
Changes in operating assets and liabilities:
Tenant and other receivables, net	(1,549		)	(938		)
Other assets	7,957			11,622
Amounts due to Vornado	3,981			(2,075		)
Accounts payable and accrued expenses	8,375			(5,835		)
Other liabilities	(454		)	139
Net cash provided by operating activities	99,953			66,653


CASH FLOWS FROM INVESTING ACTIVITIES
Construction in progress and real estate additions	(6,566		)	(2,514		)
Repayment of Rego Park II loan participation	—			2,300
Net cash used in investing activities	(6,566		)	(214		)


CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid	(69,090		)	(69,072		)
Debt issuance costs	(15		)	(185		)
Debt repayments	—			(159,460		)
Proceeds from borrowing	—			78,246
Net cash used in financing activities	(69,105		)	(150,471		)

Net increase (decrease) in cash and cash equivalents and restricted cash	24,282			(84,032		)
Cash and cash equivalents and restricted cash at beginning of period	289,495			393,279
Cash and cash equivalents and restricted cash at end of period	$	313,777		$	309,247


RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	283,056		$	307,536
Restricted cash at beginning of period	6,439			85,743
Cash and cash equivalents and restricted cash at beginning of period	$	289,495		$	393,279

Cash and cash equivalents at end of period	$	304,229		$	303,710
Restricted cash at end of period	9,548			5,537
Cash and cash equivalents and restricted cash at end of period	$	313,777		$	309,247


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	$	26,898		$	27,728


NON-CASH TRANSACTIONS
Lease liability arising from the recognition of right-of-use asset	$	5,428		$	—
Reclassification of prepaid real estate taxes to construction in progress for property in redevelopment	1,466			—
Liability for real estate additions, including $18 and $26 for development fees due to Vornado in 2019 and 2018, respectively	233			36
Write-off of fully amortized and/or depreciated assets	—			13,791

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


1.	Organization

Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to “we,” “us,” “our,” “Company” and “Alexander’s” refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (“Vornado”) (NYSE: VNO). We have ~~seven~~7 properties in the greater New York City metropolitan area.


2.	Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Alexander’s and its consolidated subsidiaries. All intercompany amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form10-Q of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form10-K for the year ended December 31, ~~2016,~~2018, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, ~~2017~~2019 are not necessarily indicative of the operating results for the full year.

Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2018, we determined that the $195,708,000 participation in our Rego Park II shopping center mortgage loan was incorrectly classified as an asset, presented as “Rego Park II loan participation,” instead of as a reduction to “mortgages payable, net of deferred debt issuance costs” on our consolidated balance sheet as of December 31, 2018. On December 12, 2018, we refinanced this mortgage loan and the interest rate on the existing loan participation was adjusted to equal the interest rate on the refinanced loan. Consequently, we should have considered $195,708,000 of the Rego Park II shopping center mortgage loan liability extinguished as the participation interest is considered the reacquisition of our debt. Accordingly, our consolidated balance sheet for the year ended December 31, 2018 has been restated to reclassify $195,708,000 from “Rego Park II loan participation” to “mortgages payable, net of deferred debt issuance costs.” This reclassification had no impact to our consolidated statements of income, comprehensive income or changes in equity for the three and nine months ending September 30, 2018 or our consolidated statement of cash flows for the nine months ending September 30, 2018.

Certain prior year balances have been reclassified in order to conform to the current period presentation. For the three and nine months ended September 30, 2018, “property rentals” of $38,250,000 and $115,109,000, respectively, and “expense reimbursements” of $20,875,000 and $60,149,000, respectively, were grouped into “rental revenues” on our consolidated statements of income in accordance with Accounting Standards Codification (“ASC”) Topic 205 Presentation of Financial Statements.

We operate in ~~one~~1 reportable segment.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)


3.	Recently Issued Accounting Literature

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU~~2014-09”~~ 2016-02”) establishing ~~Accounting Standards Codification (“ASC”)~~ASC Topic ~~606,~~~~Revenue from Contracts with Customers~~ (“842, Leases (“ASC ~~606”~~842”)~~. ASU2014-09,~~, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. We will adopt this standard effective January 1, 2018, with the exception of the components of revenue from leases, which has been deferred until the adoption of the update ASU~~2016-02~~ ~~to ASC Topic 842,~~~~Leases~~~~, on January 1, 2019. We will utilize the modified retrospective method when adopting ASU2014-09,~~ which requires a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We have analyzed our revenue streams and identified the areas that we expect to be impacted by the adoption of this standard. We expect that this standard will have an impact on the classification of reimbursements of real estate taxes and insurance expenses and certain~~non-lease~~ components of revenue (e.g., reimbursements of common area maintenance expenses) from leases on our consolidated statements of income, with no impact on “total revenues” for new leases executed on or after January 1, 2019. We are in the process of completing the evaluation of the overall impact of this standard on our consolidated financial statements, including required informational disclosures for our revenue streams beginning with the first reporting period after adoption.

~~In January 2016, the FASB issued an update (“ASU2016-01”)~~~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ ~~to ASC Topic 825~~~~, Financial Instruments~~~~. ASU2016-01~~ ~~amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU2016-01~~ is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. While the adoption of this standard requires us to continue to measure “marketable securities” at fair value at each reporting date, the changes in fair value will be recognized in current period earnings as opposed to “other comprehensive income (loss).”

~~ALEXANDER’S, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~(UNAUDITED)~~

3.	~~Recently Issued Accounting Literature – continued~~

~~In February 2016, the FASB issued an update ASU2016-02~~ ~~establishing ASC Topic 842,~~~~Leases~~, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU2016-02 requires lessees to apply a ~~dual~~two-method approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record aright-of-use asset and a lease liability for all leases with a term of greater than 12 months. Lease liabilities equal the present value of future lease payments. Right-of-use assets equal the lease liabilities adjusted for accrued rent expense, initial direct costs, lease incentives and prepaid lease payments. Leases with a term of 12 months or less will be accounted for similar to the previously existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under ASC Topic 840, Leases (“ASC 840”). We ~~are currently evaluating~~adopted this standard effective January 1, 2019 using the ~~overall impact~~modified retrospective approach. In transitioning to ASC 842, we elected to use the practical expedient package available to us and did not elect to use hindsight. These elections have been applied consistently to all of ~~the adoption of ASU2016-02~~ on our ~~consolidated financial statements and believe that the standard will more significantly impact the accounting for leases in which we are a lessee. We will be required to record aright-of-use~~ ~~asset and lease liability~~ leases.On January 1, 2019,for our Flushing property ground lease, ~~equal~~which is classified as an operating lease, we recorded a right-of-use asset of $5,058,000 (included in “other assets”) and a lease liability of $5,428,000 (included in “other liabilities”) (see Note 12 - Leases). Under ASC 842, we must assess on an individual lease basis whether it is probable that we will collect the future lease payments. We consider the tenant’s payment history and current credit status when assessing collectability. When collectability is not deemed probable we write-off the tenant’s receivables, including straight-line rent receivable, and limit lease income to cash received. Changes to the ~~present value~~collectability of ~~the remaining minimum lease payments upon adoption of this standard. We also expect that this standard will require us~~our operating leases are recorded as adjustments to ~~allocate total consideration from leases between lease andnon-lease~~ components based on the estimated stand-alone selling prices of the components. The lease components (e.g., base rent) will continue to be recognized on a straight-line basis over the term of the lease and certain~~non-lease~~ ~~components (e.g., reimbursements of common area maintenance expenses) will be accounted for under the new revenue recognition guidance of ASU2014-09.~~ ~~As a result, we expect that this standard will have an impact on the classification of reimbursements of real estate taxes, insurance expenses and common area maintenance expenses~~“rental revenues” on our consolidated statements of ~~income, with no impact on “total revenues” for new leases executed on or after January 1, 2019. ASU2016-02~~ ~~is effective for reporting periods beginning after December 15,~~income.

In August 2018, ~~with early adoption permitted. We will adopt this standard as of January 1, 2019 under the modified retrospective approach and will elect to use the practical expedients provided by this standard.~~

~~In March 2016,~~ the FASB issued an update (“ASU~~2016-09”~~ 2018-13”)~~Improvements~~Disclosure Framework - Changes to ~~Employee Share-Based Payment Accounting~~the Disclosure Requirements for Fair Value Measurement to ASC Topic ~~718,~~~~Compensation~~ – ~~Stock Compensation~~(“820, Fair Value Measurement (“ASC ~~718”~~820”). ASU~~2016-09~~ ~~amends several aspects of~~ 2018-13 modifies the ~~accounting~~disclosure requirements for ~~share-based payment transactions, including the income tax consequences, classification of awards as either equity~~ fair value measurements by removing, modifying, and/or ~~liabilities, and classification on the statement of cash flows.~~adding certain disclosures. ASU~~2016-09~~ was effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. The adoption of this update as of January 1, 2017, did not have any impact on our consolidated financial statements.

~~In August 2016, the FASB issued an update (“ASU2016-15”)~~~~Classification of Certain Cash Receipts and Cash Payments~~ ~~to ASC Topic 230,~~~~Statement of Cash Flows~~~~. ASU2016-15~~ clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of~~zero-coupon~~ debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. ASU~~2016-15~~ 2018-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, ~~2017, with early adoption permitted.~~2019. We elected to early adopt ASU~~2016-15~~ 2018-13 effective January 1, ~~2017.~~2019. The adoption of this update did not have a material impact on our consolidated financial ~~statements.~~

statements and disclosures.

In ~~November 2016,~~October 2018, the FASB issued an update (“ASU~~2016-18”~~ 2018-16”)~~Restricted Cash~~Inclusion of the Secured Overnight Financing Rate (SOFR)Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic ~~230,~~~~Statement~~815, Derivatives and Hedging. ASU 2018-16 expands the list of ~~Cash Flows~~~~. ASU2016-18~~ ~~requires that a statement of cash flows explain the change during the period~~U.S. benchmark interest rates permitted in the ~~total~~application of ~~cash, cash equivalents and amounts generally described~~hedge accounting by adding the OIS rate based on SOFR as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard.an eligible benchmark interest rate. ASU~~2016-18~~ 2018-16 is effective for interim and annual reporting periods in fiscal years beginning after December 15, ~~2017, with early adoption permitted.~~2018. We ~~elected to early adopt ASU2016-18~~adopted this update effective January 1, 2017, with retrospective application to our consolidated statements of cash flows. Accordingly, the consolidated statements of cash flows present a reconciliation of the changes in cash and cash equivalents and restricted cash. Restricted cash primarily consists of cash held in a~~non-interest~~ bearing escrow account in connection with our Rego Park I 100% cash collateralized mortgage, as well as security deposits and other cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

~~ALEXANDER’S, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~(UNAUDITED)~~

3.	~~Recently Issued Accounting Literature – continued~~

~~In February 2017, the FASB issued an update (“ASU2017-05”)~~~~Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets~~ ~~to ASC Subtopic610-20,~~~~Other Income~~ – ~~Gains and Losses from the Derecognition of Nonfinancial Assets~~~~. ASU2017-05~~ clarifies the scope of recently established guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. This update conforms the derecognition guidance on nonfinancial assets with the model for transactions in ASC 606. ASU~~2017-05~~ ~~is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017.~~2019. The adoption of this ~~standard is~~update did not ~~expected to have an impact on our consolidated financial statements.~~

~~In August 2017, the FASB issued an update (“ASU2017-12”)~~~~Targeted Improvements to Accounting for Hedging Activities~~~~to ASC Topic 815,~~~~Derivatives and Hedging~~~~(“ASC 815”). ASU2017-12~~ amends the hedge accounting recognition and presentation requirements in ASC 815. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. ASU~~2017-12~~ ~~is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this standard is not expected to~~ have a material impact on our consolidated financial statements.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)


4.	~~Rego Park II Loan Participation~~ Revenue Recognition

~~On July 28, 2017,~~

Our rental revenues include revenues from the leasing of space to tenants at our properties and revenues from parking and tenant services. We have the following revenue recognition policies:

Lease revenues from the leasing of space to tenants at our properties. Revenues derived from base rent are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements. We commence rental revenue recognition when the underlying asset is available for use by the lessee. In addition, in circumstances where we ~~entered into~~provide a ~~participation~~tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease. Revenues derived from the reimbursement of real estate taxes, insurance expenses and ~~servicing agreement with the lender on our Rego Park II shopping center loan, which matures on November 30, 2018. We paid $200,000,000 to participate~~common area maintenance expenses are generally recognized in the ~~loan~~same period as the related expenses are incurred. As lessor, we have elected to combine the lease components (base and ~~are entitled~~variable rent), non-lease components (reimbursements of common area maintenance expenses) and reimbursement of real estate taxes and insurance expenses from our operating lease agreements and account for the components as a single lease component in accordance with ASC 842.


•	Parking revenue arising from the rental of parking spaces at our properties. This income is recognized as the services are transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Tenant services is revenue arising from sub-metered electric, elevator and other services provided to interest of LIBOR plus 1.60% (2.84% as of September 30, 2017). The investment is presented as “Rego Park II loan participation” on our consolidated balance sheet as of September 30, 2017 and interest earnedtenants at their request. This revenue is recognized as ~~“interest and other income, net”~~the services are transferred in ~~our consolidated statements~~accordance with ASC 606.

The following is a summary of ~~income~~revenue sources for the three and nine months ended September 30, ~~2017.~~

2019 and 2018.



	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2019		2018		2019		2018
Lease revenues	$	55,267	$	56,839	$	163,597	$	168,359
Parking revenue	1,366		1,406		4,222		4,121
Tenant services	1,127		880		2,651		2,778
Rental revenues	$	57,760	$	59,125	$	170,470	$	175,258

The components of lease revenues for the three and nine months ended September 30, 2019 are as follows:



(Amounts in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Fixed lease revenues	$	36,025	$	107,657
Variable lease revenues	19,242		55,940
Lease revenues	$	55,267	$	163,597

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)


5.	Related Party Transactions

Vornado

As of September 30, ~~2017,~~2019, Vornado owned 32.4% of our outstanding common stock. We are managed by, and our properties are leased and developed by, Vornado, pursuant to the agreements described below, which expire in March of each year and are automatically renewable.

Management and Development Agreements

We pay Vornado an annual management fee equal to the sum of (i) $2,800,000, (ii) 2% of gross revenue from the Rego Park II shopping center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) ~~$306,000,~~$324,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue. Vornado is also entitled to a development fee equal to 6% of development costs, as defined.

Leasing and Other Agreements

Vornado also provides us with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through the twentieth year of a lease term, and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by tenants. In the event third-party real estate brokers are used, the fees to Vornado increase by 1% and Vornado is responsible for the fees to the third-party real estate brokers.

Vornado is also entitled to a commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000 and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more.

~~Other Agreements~~

We also have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise (i) cleaning, engineering and security services at our 731 Lexington Avenue property and (ii) security services at our Rego Park I and Rego Park II properties and The Alexander apartment tower.

~~ALEXANDER’S, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~(UNAUDITED)~~

5.	~~Related Party Transactions – continued~~

The following is a summary of fees to Vornado under the various agreements discussed above.

Three Months Ended
September 30, Nine Months Ended
September 30,
(Amounts in thousands) 2017 2016 2017 2016
Company management fees
$ 700 $ 700 $ 2,100 $ 2,100
Development fees
- 44 32 163
Leasing fees
3 106 18 7,397
Property management fees and payments for cleaning and security services
1,006 938 2,947 2,969

$ 1,709 $ 1,788 $ 5,097 $ 12,629



	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2019		2018		2019		2018
Company management fees	$	700	$	700	$	2,100	$	2,100
Development fees	—		17		29		26
Leasing fees	1,422		13		4,168		13
Property management, cleaning, engineering and security fees	1,239		1,012		3,683		2,977
	$	3,361	$	1,742	$	9,980	$	5,116

As of September 30, ~~2017,~~2019, the amounts due to Vornado were ~~$24,000~~$3,871,000 for ~~development~~leasing fees; ~~$507,000~~$699,000 for management, property management, cleaning, engineering and security fees; and ~~$2,000~~$68,000 for ~~leasing~~development fees. As of December 31, ~~2016,~~2018, the amounts due to Vornado were ~~$54,000 for development fees; $428,000~~$549,000 for management, property management, cleaning, engineering and security fees; $146,000 for development fees; and ~~$415,000~~$13,000 for leasing fees. In January 2016, we paid an $8,916,000 leasing commission related to the Bloomberg L.P. (“Bloomberg”) lease amendment, of which $7,200,000 was to a third party broker and $1,716,000 was to Vornado. In March 2016, we paid Vornado a development fee of $5,784,000 related to The Alexander apartment tower.

Toys “R” Us, Inc. (“Toys”)

Our affiliate, Vornado, ~~owns~~owned 32.5% of ~~Toys.~~Toys as of December 31, 2018. On February 1, 2019, in connection with the Toys Chapter 11 bankruptcy, the plan of reorganization for Toys was declared effective and Vornado’s ownership in Toys was canceled and Toys’ Board of Directors was dissolved. Joseph Macnow, Vornado’s Executive Vice President and Chief Financial Officer and Wendy A. Silverstein, a member of our Board of Directors, ~~represent~~represented Vornado as members of Toys’ Board of Directors. Also in connection with the Toys ~~leases~~Chapter 11 bankruptcy, Toys rejected its 47,000 square ~~feet of retail space~~foot lease at our Rego Park II shopping center ($~~2,700,000~~2,600,000 of annual revenue)~~. On September 18, 2017, Toys filed for Chapter 11 bankruptcy relief. There are $1,617,000~~ effective June 30, 2018 and possession of ~~unamortized assets on our consolidated balance sheet related~~the space was returned to ~~the Toys lease as of September 30, 2017, including tenant improvements, deferred leasing costs and receivables arising from the straight-lining of rent.~~

us.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)


6.	Marketable Securities

As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, we owned 535,265 common shares of The Macerich Company (“Macerich”) (NYSE: MAC). These shares have an economic cost of $56.05 per share, or $30,000,000 in the aggregate. As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the fair value of these shares was ~~$29,424,000~~$16,909,000 and ~~$37,918,000,~~$23,166,000, respectively, based on Macerich’s closing share price of ~~$54.97~~$31.59 per share and ~~$70.84~~$43.28 per share, respectively. These shares are included in “marketable securities” on our consolidated balance sheets and are classified asavailable-for-sale.Available-for-sale securities are presented at fair value on our consolidated balance sheets and ~~unrealized~~ gains and losses resulting from themark-to-market of these securities are ~~included~~recognized in ~~“other comprehensive (loss) income.”~~

~~ALEXANDER’S, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~(UNAUDITED)~~

current period earnings.


7.	~~Significant Tenant~~ Discontinued Operations

~~Bloomberg accounted~~

In 2012, we sold the Kings Plaza Regional Shopping Center (“Kings Plaza”) and paid real property transfer taxes to New York City in connection with the sale. In 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of Determination to us assessing an additional New York City real property transfer tax amount, including interest.

In 2014, in a case with similar facts, the NYC DOF issued a Notice of Determination to a Vornado joint venture assessing an additional New York City real property transfer tax amount, including interest. In January 2017, a New York City administrative law judge made a determination upholding the Vornado joint venture’s position that such additional real property transfer taxes were not due. On February 16, 2018, the New York City Tax Appeals Tribunal (the “Tribunal”) overturned the January 2017 determination. The Vornado joint venture appealed the Tribunal’s decision to the Appellate Division of the Supreme Court of the State of New York and on April 25, 2019, the Tribunal’s decision was unanimously upheld. On June 20, 2019, the Vornado joint venture filed a motion to reargue the Appellate Division’s decision with the appellate court.

Based on the precedent of the Tribunal’s decision, we accrued an expense for ~~revenue~~the potential additional real property transfer taxes of ~~$78,786,000~~$23,797,000 ($15,874,000 of real property transfer tax and ~~$78,567,000~~$7,923,000 of interest) during the three months ended March 31, 2018. On April 5, 2018, we paid this amount in order to stop the interest from accruing.

As the results related to Kings Plaza were previously classified as discontinued operations, we have classified the expense as “loss from discontinued operations” on our consolidated statement of income for the nine months ended September 30, ~~2017~~2018 in accordance with the provisions of ASC Topic 360, Property, Plant and ~~2016,~~Equipment.


8.	Significant Tenant

Bloomberg L.P. (“Bloomberg”) accounted for revenue of $81,314,000 and $80,024,000 for the nine months ended September 30, 2019 and 2018, respectively, representing approximately 48% and 46% of our total revenues in each ~~period.~~period, respectively. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data.

On June 28, 2019, we entered into a lease agreement with Bloomberg for an additional 49,000 square feet at our 731 Lexington Avenue property.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

8.
9.	Mortgages Payable

The following is a summary of our outstanding mortgages payable as of September 30, 2019 and December 31, 2018. We may refinance our maturing debt as it comes due or choose to repay it.



			Balance at
(Amounts in thousands)	Maturity	Interest Rate at September 30, 2019	September 30, 2019			December 31, 2018
First mortgages secured by:
Paramus	Oct. 2021	4.72%	$	68,000		$	68,000
731 Lexington Avenue, retail condominium⁽¹⁾	Aug. 2022	3.47%	350,000			350,000
731 Lexington Avenue, office condominium⁽²⁾	Jun. 2024	2.93%	500,000			500,000
Rego Park II shopping center⁽³⁾	Dec. 2025	3.39%	56,836			56,836
Total			974,836			974,836
Deferred debt issuance costs, net of accumulated amortization of $13,074 and $9,212, respectively			(5,163		)	(9,010		)
			$	969,673		$	965,826


(1)	Interest at LIBOR plus 1.40%. Maturity date represents the extended maturity based on our conditional right to extend.


(2)	Interest at LIBOR plus 0.90%. Maturity date represents the extended maturity based on our unilateral right to extend.


(3)	Interest at LIBOR plus 1.35%. The amount of this loan is net of our $195,708 loan participation (see Note 2 - Basis of Presentation).


10.	Stock-Based Compensation

We account for stock-based compensation in accordance with ASC ~~718.~~Topic 718, Compensation – Stock Compensation. Our 2016 Omnibus Stock Plan (the “Plan”) provides for grants of incentive andnon-qualified stock options, restricted stock, stock appreciation rights, deferred stock units (“DSUs”) and performance shares, as defined, to the directors, officers and employees of the Company and Vornado.

In May ~~18, 2017,~~2019, we granted each of the members of our Board of Directors ~~183~~193 DSUs with a grant date fair value of $56,250 per grant, or $394,000 in the aggregate. The DSUs entitle the holders to receive shares of the Company’s common stock without the payment of any consideration. The DSUs vested immediately and accordingly, were expensed on the date of grant, but the shares of common stock underlying the DSUs are not deliverable to the grantee until the grantee is no longer serving on the Company’s Board of Directors. As of September 30, ~~2017,~~2019, there were ~~8,692~~ 11,408DSUs outstanding and ~~497,095~~ 494,379shares were available for future grant under the Plan.

9.	~~Mortgages Payable~~

~~On June 1, 2017, we completed a $500,000,000 refinancing of the office portion of 731 Lexington Avenue. The interest-only loan is at LIBOR plus 0.90% and matures in June 2020, with fourone-year~~ extension options. In connection therewith, we purchased an interest rate cap with a notional amount of $500,000,000 that caps LIBOR at a rate of 6.0%. The property was previously encumbered by a $300,000,000 interest-only mortgage at LIBOR plus 0.95% which was scheduled to mature in March 2021.

~~The following is a summary of our outstanding mortgages payable as of September 30, 2017 and December 31, 2016.~~

      Balance at
(Amounts in thousands)    Maturity⁽¹⁾        Interest Rate at
September 30, 2017     September 30,
2017        December 31,
2016
First mortgages secured by:

Rego Park I shopping center (100% cashcollateralized)⁽²⁾
   Mar. 2018    0.35% $ 78,246    $ 78,246
Paramus
   Oct. 2018    2.90% 68,000    68,000
Rego Park II shopping center⁽³⁾
   Nov. 2018    3.09% 257,147    259,901
731 Lexington Avenue, retail space⁽⁴⁾
   Aug. 2022    2.63% 350,000    350,000
731 Lexington Avenue, office space⁽⁵⁾
   Jun. 2024    2.14% 500,000    300,000




Total
1,253,393    1,056,147
Deferred debt issuance costs, net of accumulatedamortization of $4,995 and $6,824 respectively
      (13,324)    (3,788)




      $ 1,240,069    $ 1,052,359

~~(1)~~

~~Represents the extended maturity where we have the unilateral right to extend.~~

~~(2)~~

~~Extended in March 2016 for two years.~~

~~(3)~~

~~Interest at LIBOR plus 1.85%. See page 10 for details of our Rego Park II loan participation.~~

~~(4)~~

~~Interest at LIBOR plus 1.40%.~~

~~(5)~~

~~Interest at LIBOR plus 0.90%.~~

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

~~10.~~
11.	Fair Value Measurements

ASC 820~~Fair Value Measurements and Disclosures~~ defines fair value and establishes a framework for measuring fair value. ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.

Financial Assets and Liabilities Measured at Fair Value

Financial assets measured at fair value on our consolidated balance sheets as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, consist of marketable securities, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018. There were no financial liabilities measured at fair value as of September 30, ~~2017~~2019 and December 31, ~~2016.~~

As of September 30, 2017
(Amounts in thousands)       Total             Level 1             Level 2             Level 3
Marketable securities
$ 29,424 $     29,424 $           -   $           -

As of December 31, 2016
(Amounts in thousands) Total Level 1 Level 2 Level 3
Marketable securities
$ 37,918 $     37,918 $ -   $ -

2018.

As of September 30, 2019
(Amounts in thousands) Total Level 1 Level 2 Level 3
Marketable securities $ 16,909
$ 16,909
$ —
$ —

As of December 31, 2018
(Amounts in thousands) Total Level 1 Level 2 Level 3
Marketable securities $ 23,166
$ 23,166
$ —
$ —

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include ~~the Rego Park II loan participation,~~cash equivalents and mortgages payable. Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities and are classified as Level 1. The fair value of our mortgages payable ~~and cash equivalents. The fair values of the Rego Park II loan participation and mortgages payable are~~is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist, and ~~are~~is classified as Level 2. ~~Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities and is classified as Level 1.~~ The table below summarizes the carrying amounts and fair ~~value~~values of these financial instruments as of September 30, ~~2017~~2019 and December 31, ~~2016.~~

As of September 30, 2017 As of December 31, 2016
(Amounts in thousands)     Carrying
Amount     Fair
Value     Carrying
Amount     Fair
Value
Assets:

Rego Park II loan participation
$ 199,275 $ 199,275 $ - $ -
Cash equivalents
246,541 246,541 256,370 256,370

$ 445,816 $ 445,816 $ 256,370 $ 256,370

Liabilities:

Mortgages payable (excluding deferred debt issuance costs)
$ 1,253,393 $ 1,241,000 $ 1,056,147 $ 1,045,000

2018.



	As of September 30, 2019				As of December 31, 2018
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets:
Cash equivalents	$	270,062	$	270,062	$	173,858	$	173,858
Liabilities:
Mortgages payable (excluding deferred debt issuance costs, net)	$	974,836	$	973,000	$	974,836	$	969,000

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

~~11.~~
12.	Leases

As Lessor

We lease space to tenants under operating leases in an office building and in retail centers. The rental terms range from approximately 5 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 may also provide for the payment by the lessee of additional rents based on a percentage of their sales. We also lease residential space at The Alexander apartment tower with 1 or 2 year lease terms. We have elected to account for lease revenues (including fixed and variable rent) and the reimbursement of common area maintenance expenses as a single lease component presented as “rental revenues” in our consolidated statements of income.

Future undiscounted cash flows under our non-cancelable operating leases are as follows:



	Under ASC 842
(Amounts in thousands)	As of September 30, 2019
For the remainder of 2019	$	34,563
For the year ending December 31,
2020	139,268
2021	131,505
2022	123,894
2023	125,257
2024	133,429
Thereafter	613,983



	Under ASC 840
(Amounts in thousands)	As of December 31, 2018
For the year ending December 31,
2019	$	138,784
2020	131,647
2021	120,450
2022	111,532
2023	111,962
Thereafter	671,111

These amounts do not include reimbursements or additional rents based on a percentage of retail tenants’ sales.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)


12.	Leases - continued

As Lessee

We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and has 1 10-year extension option. On January 1, 2019, we recorded a right-of-use asset and lease liability related to this ground lease equal to the present value of the remaining minimum lease payments. As of September 30, 2019, the right-of-use asset of $4,663,000 and the lease liability of $4,993,000, are included in “other assets” and “other liabilities,” respectively, on our consolidated balance sheet. The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental borrowing rate (“IBR”) for the property of 4.53%. We initially consider the general economic environment and factor in various financing and asset specific adjustments so that the IBR is appropriate to the intended use of the underlying lease. As we did not elect to apply hindsight, the lease term assumption determined under ASC 840 was carried forward and applied in calculating our lease liability recorded under ASC 842.

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



	Under ASC 842
(Amounts in thousands)	As of September 30, 2019
For the remainder of 2019	$	200
For the year ending December 31,
2020	800
2021	800
2022	800
2023	800
2024	800
Thereafter	1,600
Total undiscounted cash flows	5,800
Present value discount	(807		)
Lease liability as of September 30, 2019	$	4,993



	Under ASC 840
(Amounts in thousands)	As of December 31, 2018
For the year ending December 31,
2019	$	800
2020	800
2021	800
2022	800
2023	800
Thereafter	2,467

We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-line basis. Rent expense was $186,000 and $559,000 in each three and nine month period ended September 30, 2019 and 2018, respectively. Cash paid for rent expense was $200,000 and $600,000 in each three and nine month period ended September 30, 2019 and 2018, respectively.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)


13.	Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, andall-risk property and rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, withsub-limits for certain perils such as floods and earthquakes on each of our properties.

Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. Coverage for acts of terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For NBCR acts, FNSIC is responsible for a ~~$293,000~~$323,000 deductible and ~~17%~~19% of the balance of a covered loss, and the Federal government is responsible for the remaining ~~83%~~81% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC.

We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of ~~terrorism.~~terrorism or other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.

Our mortgage loans arenon-recourse to us and contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

~~Tenant Matters~~

~~On April 4, 2017, Sears closed its 195,000 square foot store it leases from us at our Rego Park I property. Annual revenue~~

Paramus

In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option in 2021 for $75,000,000. The property is ~~approximately $10,337,000, under~~encumbered by a ~~lease~~$68,000,000 interest-only mortgage loan, with a fixed rate of 4.72%, which ~~expires~~matures in ~~March~~October 2021. The annual triple-net rent is the sum of ~~2021. In its 2016 annual report~~$700,000 plus the amount of interest on ~~Form10-K,~~ ~~Sears indicated that substantial doubt exists related to its ability to continue as a going concern. There~~the mortgage loan. If the purchase option is ~~a straight-line rent receivable~~exercised, we will receive net cash proceeds of approximately ~~$4,160,000~~$7,000,000 and ~~unamortized deferred leasing costs~~recognize a gain on sale of land of approximately ~~$437,000 on our consolidated balance sheet as of September 30, 2017 which we will continue~~$60,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years would include debt service sufficient to ~~assess for recoverability.~~

On September 19, 2017, the bankruptcy court approved the terms of an order stipulation between Le Cirque, a restaurant operator which leases 13,000 square feet at our 731 Lexington Avenue property (approximately $1,200,000 of annual revenue), and the Company which terminates the lease on January 5, 2018 (original lease expiration was May of 2021). As a result, we began accelerating depreciation and amortization of approximately $2,780,000 of tenant improvements and deferred leasing costsfully amortize $68,000,000 over the ~~new~~remaining 20-year lease term, of which approximately $280,000 was recognized in the quarter ended September 30, 2017 and approximately $2,370,000 and $130,000 will be recognized in the quarters ending December 31, 2017 and March 31, 2018, respectively.

term.

Rego Park I Litigation

In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado and us (and certain of our subsidiaries) with regard to ~~space~~the 195,000 square foot store that Sears ~~leases~~leased at our Rego Park I property alleging that the defendants are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) ~~two~~2 fires in February 2014 that caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than ~~$4 million~~$4,000,000 and future damages it estimated would not be less than ~~$25 million.~~$25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears. We intend to defend the remaining claim vigorously. The amount or range of reasonably possible losses, if any, is not expected to be greater than $650,000.

~~ALEXANDER’S, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~(UNAUDITED)~~

~~11.~~

~~Commitments and Contingencies – continued~~

~~Paramus~~

~~In 2001, we leased 30.3 acres~~

On April 4, 2017, Sears closed its store at Rego Park I ($10,300,000 of ~~land located~~annual revenue). On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief and rejected its lease resulting in ~~Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate~~an automatic stay of ~~2.90%, which matures on October 5, 2018. The annualtriple-net~~ rent is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a gain on sale of land of approximately $60,000,000. If the purchase option is not exercised, the~~triple-net~~ ~~rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining20-year~~ ~~lease term.~~

this case.

Letters of Credit

Approximately ~~$1,474,000~~$1,030,000 of standby letters of credit were issued and outstanding as of September 30, ~~2017.~~

2019.

Other

In October 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of Determination to us assessing an additional $22,490,000 of transfer taxes (including interest and penalties as of September 30, 2017) in connection with the sale of Kings Plaza Regional Shopping Center in November 2012. We believe that the NYC DOF’s claim is without merit and intend to vigorously contest this assessment. We have determined that the likelihood of a loss related to this issue is not probable and, after consultation with legal counsel, that the outcome of this assessment is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

There are various other legal actions against us in the ordinary course of business. In our opinion, the outcome of such matters in the aggregate will not have a material effect on our financial position, results of operations or cash flows.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~12.~~
14.	Earnings Per Share

The following table sets forth the computation of basic and diluted income per share. Basic income per share is determined using the weighted average shares of common stock outstanding during the period. Diluted income per share is determined using the weighted average shares of common stock outstanding during the period, and assumes all potentially dilutive securities were converted into common shares at the earliest date possible. There were no0 potentially dilutive securities outstanding during the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(Amounts in thousands, except share and per share amounts) 2017 2016 2017 2016
Net income
$ 20,299 $ 21,036 $ 62,626 $ 64,822

Weighted average shares outstanding – basic and diluted
5,115,982 5,114,701 5,115,339 5,113,877

Net income per common share – basic and diluted
$ 3.97 $ 4.11 $ 12.24 $ 12.68

2018.

Three Months Ended September 30, Nine Months Ended September 30,
(Amounts in thousands, except share and per share amounts) 2019 2018 2019 2018
Income from continuing operations $ 16,493
$ 15,003
$ 45,641
$ 46,670
Loss from discontinued operations (see Note 7) —
—
—
(23,797 )
Net income $ 16,493
$ 15,003
$ 45,641
$ 22,873

Weighted average shares outstanding – basic and diluted 5,118,698
5,117,347
5,118,030
5,116,667

Income from continuing operations $ 3.22
$ 2.93
$ 8.92
$ 9.12
Loss from discontinued operations (see Note 7) —
—
—
(4.65 )
Net income per common share – basic and diluted $ 3.22
$ 2.93
$ 8.92
$ 4.47

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Alexander’s, Inc.

~~Paramus, New Jersey~~

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Alexander’s, Inc. and subsidiaries (the “Company”) as of September 30, ~~2017, and~~2019, the related consolidated statements of income, ~~and~~ comprehensive income and changes in equity for the ~~three~~three-month and ~~nine month~~nine-month periods ended September 30, ~~2017~~2019 and ~~2016, and changes in equity~~2018, and cash flows for the ~~nine month~~nine-month periods ended September 30, ~~2017~~2019 and ~~2016. These~~2018, and the related notes (collectively referred to as the “interim financial information”). Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial ~~statements are~~information for it to be in conformity with accounting principles generally accepted in the ~~responsibility~~United States of ~~the Company’s management.~~

America.

We ~~conducted our reviews~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of the Company as of December 31, 2018, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 11, 2019, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our review in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States),~~PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Alexander’s, Inc. and subsidiaries as of December 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended (not presented herein); and in our report dated February 13, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2016 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

October ~~30, 2017~~

28, 2019


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this Quarterly Report 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. They involve risks, uncertainties and assumptions. Our 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” or other similar expressions in this Quarterly Report on Form10-Q. 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. For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A – Risk Factors” in our Annual Report onForm 10-K for the year ended December 31, ~~2016.~~2018. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly, any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our consolidated financial statements for the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us 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 results of operations for the three and nine months ended September 30, ~~2017~~2019 are not necessarily indicative of the operating results for the full year.

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form10-K for the year ended December 31, ~~2016~~2018 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 2 – Summary of Significant Accounting Policies” to the consolidated financial statements included therein. ~~There have been~~For the nine months ended September 30, 2019, there were no ~~significant~~material changes to these policies, ~~during 2017.~~

other than the adoption of Accounting Standards Update 2016-02, described in “Part I - Financial Information, Item 1 - Financial Statements, Note 3 - Recently Issued Accounting Literature” of this Quarterly Report on Form 10-Q.

Overview

Alexander’s, Inc. (NYSE: ALX) is a real estate investment trust (“REIT”), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to “we,” “us,” “our,” ~~“Company,”~~“Company” and “Alexander’s”, refer to Alexander’s, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust (“Vornado”) (NYSE: VNO). We have seven properties in the greater New York City metropolitan area.

We compete with a large number of property owners and developers. Our success depends upon, among other factors, trends of the world, national and local economies, the financial condition and operating results of current and prospective tenants and customers, the availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population trends, zoning laws, and our ability to lease, sublease or sell our properties, at profitable levels. Our success is also subject to our ability to refinance existing debt on acceptable terms as it comes due.

Quarter Ended September 30, ~~2017~~2019 Financial Results Summary

Net income for the quarter ended September 30, ~~2017~~2019 was ~~$20,299,000,~~$16,493,000, or ~~$3.97~~$3.22 per diluted share, compared to ~~$21,036,000,~~$15,003,000, or ~~$4.11~~$2.93 per diluted share in the prior year’s quarter.

Funds from operations (“FFO”) (non-GAAP) for the quarter ended September 30, ~~2016. Funds from operations (“FFO”) for the quarter ended September 30, 2017~~2019 was ~~$28,598,000,~~$25,208,000, or ~~$5.59~~$4.92 per diluted share, compared to ~~$28,949,000,~~$23,945,000 or ~~$5.66~~$4.68 per diluted share ~~for~~in the ~~quarter ended September 30, 2016.~~

prior year’s quarter.

Nine Months Ended September 30, ~~2017~~2019 Financial Results Summary

Net income for the nine months ended September 30, ~~2017~~2019 was ~~$62,626,000,~~$45,641,000, or ~~$12.24~~$8.92 per diluted share, compared to ~~$64,822,000,~~$22,873,000 or ~~$12.68~~$4.47 per diluted share ~~for~~in the prior year’s nine months ended September 30, 2016. FFO for the nine months ended September 30, 2017 was $86,846,000, or $16.98 per diluted share, compared to $90,198,000, or $17.64 per diluted share for the nine months ended September 30, 2016. Net income and FFO for the nine months ended September 30, 2016 included rental income of $2,257,000, or $0.44 per diluted share, resulting from a tenant lease termination at our Rego Park II property in September 2016.months. Net income for the nine months ended September 30, ~~2016 also~~2018 included ~~additional depreciation and amortization of tenant improvements and deferred leasing costs of $1,077,000,~~$23,797,000, or ~~$0.21~~$4.65 per diluted share, ~~related~~of expense for potential additional New York City real property transfer taxes on the 2012 sale of Kings Plaza Regional Shopping Center (“Kings Plaza”).

FFO (non-GAAP) for the nine months ended September 30, 2019 was $75,044,000, or $14.66 per diluted share, compared to ~~this lease termination.~~

$53,271,000, or $10.41 per diluted share in the prior year’s nine months. FFO (non-GAAP) for the nine months ended September 30, 2018 included $23,797,000, or $4.65 per diluted share, of expense for the Kings Plaza transfer taxes.

Square Footage, Occupancy and Leasing Activity

As of September 30, ~~2017,~~2019, our portfolio was comprised of seven properties aggregating ~~2,437,000~~2,449,000 square feet, ~~and~~of which 2,254,000 square feet was ~~99.3% occupied.~~

~~Tenant Matters~~

~~On April 4, 2017, Sears closed its~~in service and 195,000 square ~~foot store it leases from us~~feet (the former Sears space at our Rego Park I ~~property. Annual revenue is approximately $10,337,000, under a lease which expires~~property) was out of service due to redevelopment. The in ~~March of 2021. In its 2016 annual report on Form10-K,~~ Sears indicated that substantial doubt exists related to its ability to continue as a going concern. There is a straight-line rent receivable of approximately $4,160,000 and unamortized deferred leasing costs of approximately $437,000 on our consolidated balance sheetservice square feet was 99.5% occupied as of September 30, ~~2017 which we will continue to assess for recoverability.~~

2019.

On September ~~18, 2017, Toys R Us (“Toys”), which leases 47,000~~23, 2019, we entered into a 10-year lease agreement with IKEA for 112,500 square feet ~~of retail space~~ at our Rego Park III shopping center, ~~($2,700,000~~replacing a significant portion of ~~annual revenue) filed for Chapter 11 bankruptcy relief. There are $1,617,000~~the space formerly occupied by Sears. IKEA has the option to terminate this lease after the fifth year of unamortized assets on our consolidated balance sheet related to the Toys lease as of September 30, 2017, including tenant improvements, deferred leasing costs and receivables arising from the straight-lining of rent.

On September 19, 2017, the bankruptcy court approved the terms of an order stipulation between Le Cirque, a restaurant operator which leases 13,000 square feet at our 731 Lexington Avenue property (approximately $1,200,000 of annual revenue), and the Company which terminates the lease on January 5, 2018 (original lease expiration was May of 2021). As a result, we began accelerating depreciation and amortization of approximately $2,780,000 of tenant improvements and deferred leasing costs over the new lease term of which approximately $280,000 was recognized in the quarter ended September 30, 2017 and approximately $2,370,000 and $130,000 will be recognized in the quarters ending December 31, 2017 and March 31, 2018, respectively.

~~Overview – continued~~

~~Rego Park II Loan Participation~~

~~On July 28, 2017, we entered into a participation and servicing agreement with the lender on our Rego Park II shopping center loan, which matures on November 30, 2018. We paid $200,000,000~~subject to ~~participate in the loan and are entitled~~payment to ~~interest of LIBOR plus 1.60% (2.84% as of September 30, 2017).~~

~~Financing~~

~~On June 1, 2017, we completed a $500,000,000 refinancing~~us of the ~~office portion~~lesser of ~~731 Lexington Avenue. The interest-only loan is at LIBOR plus 0.90% and matures in June 2020, with fourone-year~~ ~~extension options. In connection therewith, we purchased an interest rate cap with a notional~~$10,000,000 or the amount of ~~$500,000,000 that caps LIBOR at a rate of 6.0%. The property was previously encumbered by a $300,000,000 interest-only mortgage at LIBOR plus 0.95% which was scheduled to mature in March 2021.~~

rent due under the remaining term.

Significant Tenant

Bloomberg L.P. (“Bloomberg”) accounted for revenue of ~~$78,786,000~~$81,314,000 and ~~$78,567,000~~$80,024,000 for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, representing approximately 48% and 46% of our total revenues in each ~~period.~~period, respectively. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data.

On June 28, 2019, we entered into a lease agreement with Bloomberg for an additional 49,000 square feet at our 731 Lexington Avenue property.

Results of Operations – Three Months Ended September 30, ~~2017,~~2019, compared to September 30, ~~2016~~

~~Property Rentals~~

~~Property rentals~~2018

Rental Revenues

Rental revenues were ~~$37,970,000~~$57,760,000 in the quarter ended September 30, ~~2017,~~2019, compared to ~~$37,598,000~~$59,125,000 in the prior year’s quarter, a decrease of $1,365,000. This decrease was primarily due to the Sears vacancy effective October 2018 at our Rego Park I property.

Operating Expenses

Operating expenses were $23,389,000 in the quarter ended September 30, 2019, compared to $26,419,000 in the prior year’s quarter, a decrease of $3,030,000. This decrease was primarily due to bad debt expense in the prior year’s quarter of $3,540,000, primarily due to the Sears lease termination.

Depreciation and Amortization

Depreciation and amortization was $7,831,000 in the quarter ended September 30, 2019, compared to $8,225,000 in the prior year’s quarter, a decrease of $394,000. This decrease was primarily due to acceleration of amortization in the prior year’s quarter related to the Sears lease termination.

General and Administrative Expenses

General and administrative expenses were $1,333,000 in the quarter ended September 30, 2019, compared to $1,126,000 in the prior year’s quarter, an increase of ~~$372,000.~~$207,000. This increase was primarily due to higher ~~rental~~professional fees.

Interest and Other Income, net

Interest and other income, ~~from The Alexander apartment tower, which~~net was ~~placed in service in phases beginning July 2015 and leased up to stabilization in September 2016.~~

~~Expense Reimbursements~~

~~Tenant expense reimbursements were $20,124,000~~$2,075,000 in the quarter ended September 30, ~~2017,~~2019, compared to ~~$19,522,000 in the prior year’s quarter, an increase of $602,000. This increase was primarily due to higher reimbursable real estate taxes and higher reimbursable operating expenses.~~

~~Operating Expenses~~

~~Operating expenses were $21,272,000 in the quarter ended September 30, 2017, compared to $21,714,000~~$3,813,000 in the prior year’s quarter, a decrease of ~~$442,000.~~$1,738,000. This decrease was primarily due to ~~(i)~~$990,000 of lower ~~bad~~interest income due to a decrease in average investment balances and $668,000 of lower interest income due to a decrease in average interest rates.

Interest and Debt Expense

Interest and debt expense ~~of $539,000 and (ii) lower marketing expenses for The Alexander apartment tower of $330,000, partially offset by (iii) higher real estate taxes of $402,000.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization~~ was ~~$8,430,000~~$9,772,000 in the quarter ended September 30, ~~2017,~~2019, compared to ~~$8,045,000~~$11,341,000 in the prior year’s quarter, ~~an increase~~a decrease of ~~$385,000.~~$1,569,000. This ~~increase~~decrease was primarily due to ~~additional depreciation~~$1,692,000 of lower interest expense from our Rego Park II shopping center loan (on December 12, 2018, we refinanced this $252,544,000 mortgage loan and ~~amortization~~GAAP required that our $195,708,000 loan participation be treated as an extinguishment of ~~tenant improvements and deferred leasing costs related to Le Cirque’s lease termination agreement at our 731 Lexington Avenue property~~debt).

Change in ~~September 2017.~~

~~General and Administrative Expenses~~

~~General and administrative expenses were $1,228,000~~Fair Value of Marketable Securities

Change in fair value of marketable securities was an expense of $1,017,000 in the quarter ended September 30, ~~2017, compared to $1,225,000~~2019, resulting from The Macerich Company’s (“Macerich”) closing share prices of $31.59 and $33.49 as of September 30, 2019 and June 30, 2019, respectively, on 535,265 shares owned. Change in fair value of marketable securities was an expense of $824,000 in the prior year’s quarter, ~~an increase~~resulting from Macerich’s closing share prices of ~~$3,000.~~

~~Interest~~$55.29 and ~~Other Income, net~~

~~Interest and other income, net was $2,081,000 in the quarter ended~~$56.83 as of September 30, 2017, compared to $522,000 in the prior year’s quarter, an increase of $1,559,000. This increase was primarily due to higher interest income of $1,538,000 of which $899,000 was from higher average interest rates2018 and ~~$640,000 was from higher average investment balances.~~

~~Interest and Debt Expense~~

~~Interest and debt expense was $8,940,000 in the quarter ended September~~June 30, 2017, compared to $5,615,000 in the prior year’s quarter, an increase of $3,325,000. This increase was primarily due to additional interest expense of (i) $1,507,000 due to higher average LIBOR, (ii) $1,198,000 resulting from the refinancing of the office portion of 731 Lexington Avenue2018, respectively, on ~~June 1, 2017 for $500,000,000 at LIBOR plus 0.90% (previously a $300,000,000 loan at LIBOR plus 0.95%) and (iii) $642,000 of higher amortization of debt issuance costs.~~

~~Income Taxes~~

~~Income tax expense was $6,000 in the quarter ended September 30, 2017, compared to $7,000 in the prior year’s quarter.~~

535,265 shares owned.

Results of Operations – Nine Months Ended September 30, ~~2017,~~2019, compared to September 30, ~~2016~~

~~Property Rentals~~

~~Property rentals~~2018

Rental Revenues

Rental revenues were ~~$114,507,000~~$170,470,000 in the nine months ended September 30, ~~2017,~~2019, compared to ~~$113,129,000~~$175,258,000 in the prior year’s nine months, a decrease of $4,788,000. This decrease was primarily due to the Sears vacancy effective October 2018 at our Rego Park I property.

Operating Expenses

Operating expenses were $66,905,000 in the nine months ended September 30, 2019, compared to $70,207,000 in the prior year’s nine months, a decrease of $3,302,000. This decrease was primarily due to bad debt expense in the prior year’s nine months of $4,335,000, primarily due to the Sears lease termination.

Depreciation and Amortization

Depreciation and amortization was $23,528,000 in the nine months ended September 30, 2019, compared to $25,208,000 in the prior year’s nine months, a decrease of $1,680,000. This decrease was primarily due to acceleration of depreciation and amortization in the prior year’s nine months related to the Toys lease termination.

General and Administrative Expenses

General and administrative expenses were $4,471,000 in the nine months ended September 30, 2019, compared to $4,078,000 in the prior year’s nine months, an increase of ~~$1,378,000.~~$393,000. This increase was primarily due to higher ~~rental~~professional fees.

Interest and Other Income, net

Interest and other income, ~~of $3,763,000 from The Alexander apartment tower, which~~net was placed in service in phases beginning July 2015 and leased up to stabilization in September 2016, partially offset by income of $2,257,000 in the prior year’s nine months resulting from a tenant lease termination at our Rego Park II property in June 2016.

~~Expense Reimbursements~~

~~Tenant expense reimbursements were $58,006,000~~$6,428,000 in the nine months ended September 30, ~~2017,~~2019, compared to ~~$56,554,000 in the prior year’s nine months, an increase of $1,452,000. This increase was primarily due to higher reimbursable real estate taxes and higher reimbursable operating expenses.~~

~~Operating Expenses~~

Operating expenses were $62,937,000 in the nine months ended September 30, 2017, compared to $60,702,000 in the prior year’s nine months, an increase of $2,235,000. This increase was primarily due to (i) higher real estate taxes of $2,723,000 and (ii) higher reimbursable operating expenses of $555,000, partially offset by (iii) lower marketing costs for The Alexander apartment tower of $1,007,000 and (iv) lower bad debt expense of $270,000.

~~Depreciation and Amortization~~

~~Depreciation and amortization was $24,613,000 in the nine months ended September 30, 2017, compared to $25,745,000~~$8,581,000 in the prior year’s nine months, a decrease of ~~$1,132,000.~~$2,153,000. This decrease was primarily due to ~~additional depreciation and amortization~~$4,017,000 of ~~tenant improvements and deferred leasing costs~~lower interest income due to a decrease in average investment balances, partially offset by $1,600,000 of ~~$1,077,000~~expense in the prior year’s nine months ~~related~~from a litigation settlement and $456,000 of higher interest income due to ~~a tenant lease termination at our Rego Park II property~~an increase in ~~June 2016.~~

~~General~~average interest rates.

Interest and ~~Administrative Expenses~~

~~General~~Debt Expense

Interest and ~~administrative expenses were $4,080,000~~debt expense was $30,096,000 in the nine months ended September 30, ~~2017,~~2019, compared to ~~$4,285,000~~$32,115,000 in the prior year’s nine months, a decrease of ~~$205,000.~~$2,019,000. This decrease was primarily due to $5,276,000 of lower ~~directors’ fees~~interest expense from our Rego Park II shopping center loan (on December 12, 2018, we refinanced this $252,544,000 mortgage loan and ~~stock-based compensation~~GAAP required that our $195,708,000 loan participation be treated as an extinguishment of debt), partially offset by $3,089,000 of higher interest expense ~~as a result~~resulting from an increase in average interest rates.

Change in Fair Value of ~~having one less member on our Board~~Marketable Securities

Change in fair value of ~~Directors than in the prior year’s nine months.~~

~~Interest and Other Income, net~~

~~Interest and other income, net~~marketable securities was ~~$4,105,000~~an expense of $6,257,000 in the nine months ended September 30, ~~2017, compared to $2,388,000~~2019, resulting from Macerich’s closing share prices of $31.59 and $43.28 as of September 30, 2019 and December 31, 2018, respectively, on 535,265 shares owned. Change in fair value of marketable securities was an expense of $5,561,000 in the prior year’s nine months, ~~an increase~~resulting from Macerich’s closing share prices of ~~$1,717,000. This increase~~$55.29 and $65.68 as of September 30, 2018 and December 31, 2017, respectively, on 535,265 shares owned.

Loss from Discontinued Operations

Loss from discontinued operations was primarily due to higher interest income of $2,130,000 of which $1,530,000 was from higher average interest rates and $616,000 was from higher average investment balances, partially offset by income of $367,000 included in the prior year’s nine months from a cost reimbursement settlement with a retail tenant at our 731 Lexington Avenue property.

~~Interest and Debt Expense~~

~~Interest and debt expense was $22,355,000~~$23,797,000 in the nine months ended September 30, ~~2017, compared to $16,476,000 in the prior year’s nine months, an increase of $5,879,000. This increase~~2018. The loss was ~~primarily~~ due to an expense for potential additional ~~interest expense of (i) $3,890,000 due to higher average LIBOR, (ii) $1,479,000 resulting~~real property transfer taxes from the ~~refinancing~~2012 sale of ~~the office portion of 731 Lexington Avenue on June~~Kings Plaza. See “Part I - Financial Information, Item 1 ~~2017 for $500,000,000 at LIBOR plus 0.90% (previously a $300,000,000 loan at LIBOR plus 0.95%) and (iii) $511,000 of higher amortization of debt issuance costs.~~

~~Income Taxes~~

~~Income tax expense was $7,000 in the nine months ended September 30, 2017, compared to $41,000 in the prior year’s nine months.~~

- Financial Statements, Note 7 - Discontinued Operations.”

Liquidity and Capital Resources

Cash Flows

~~Property rental income~~

Rental revenue is our primary source of cash flow and is dependent on a number of factors, including the occupancy level and rental rates of our properties, as well as our tenants’ ability to pay their rents. Our properties provide us with a relatively consistent stream of cash flow that enables us to pay our operating expenses, interest expense, recurring capital expenditures and cash dividends to stockholders. Other sources of liquidity to fund cash requirements include our existing cash, proceeds from financings, including mortgage or construction loans secured by our properties and proceeds from asset sales. We anticipate that cash flows from continuing operations over the next twelve months, together with existing cash balances, will be adequate to fund our business operations, cash dividends to stockholders, debt amortization and capital expenditures.

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

Nine Months Ended September 30, ~~2017~~

2019

Cash and cash equivalents and restricted cash were ~~$364,514,000~~$313,777,000 as of September 30, ~~2017,~~2019, compared to ~~$374,678,000~~$289,495,000 as of December 31, ~~2016, a decrease~~2018, an increase of ~~$10,164,000.~~$24,282,000. This ~~decrease~~increase resulted from (i) ~~$202,430,000~~$99,953,000 of net cash provided by operating activities, partially offset by (ii) $69,105,000 of net cash used in financing activities and (iii) $6,566,000 of net cash used in investing ~~activities, partially offset by (ii) $120,056,000 of net cash provided by financing activities and (iii) $72,210,000 of net cash provided by operating~~ activities.

Net cash used in investing activities of $202,430,000 was primarily comprised of the Rego Park II loan participation payment of $200,000,000 and construction in progress and real estate additions of $3,155,000.

Net cash provided by financing activities of $120,056,000 was primarily comprised of (i) $500,000,000 of proceeds from the refinancing of the office portion of 731 Lexington Avenue, partially offset by (ii) debt repayments of $302,754,000 (primarily the repayment of the former loan on the office portion of 731 Lexington Avenue) and (iii) dividends paid of $65,218,000.

Net cash provided by operating activities of ~~$72,210,000~~$99,953,000 was comprised of (i) net income of ~~$62,626,000,~~$45,641,000, (ii) adjustments fornon-cash items of ~~$30,666,000~~$36,002,000 and (iii) the net change in operating assets and liabilities of ~~$21,082,000.~~$18,310,000. The adjustments fornon-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of ~~$27,049,000,~~$27,401,000, (ii) the change in fair value of marketable securities of $6,257,000, (iii) straight-lining of rental income of ~~$3,223,000~~$1,950,000 and ~~(iii)~~(iv) stock-based compensation expense of $394,000.

~~Liquidity~~

Net cash used in financing activities was primarily comprised of dividends paid of $69,090,000.

Net cash used in investing activities was comprised of construction in progress and ~~Capital Resources – continued~~

real estate additions of $6,566,000.

Nine Months Ended September 30, ~~2016~~

2018

Cash and cash equivalents and restricted cash were ~~$349,179,000~~$309,247,000 as of September 30, ~~2016,~~2018, compared to ~~$344,656,000~~$393,279,000 as of December 31, ~~2015, an increase~~2017, a decrease of ~~$4,523,000.~~$84,032,000. This ~~increase~~decrease resulted from (i) ~~$81,898,000 of net cash provided by operating activities, partially offset by (ii) $63,934,000~~$150,471,000 of net cash used in financing activities and ~~(iii) $13,441,000~~(ii) $214,000 of net cash used in investing activities, partially offset by (iii) $66,653,000 of net cash provided by operating activities.

Net cash used in financing activities of $150,471,000 was primarily comprised of debt repayments of $81,214,000 (primarily the refinancing and subsequent repayment of the mortgage loan on our Rego Park I shopping center) and dividends paid of $69,072,000.

Net cash used in investing activities of $214,000 was comprised of construction in progress and real estate additions of $2,514,000, partially offset by principal repayment proceeds from the Rego Park II loan participation of $2,300,000.

Net cash provided by operating activities of ~~$81,898,000~~$66,653,000 was comprised of (i) net income of ~~$64,822,000,~~$22,873,000, (ii) adjustments fornon-cash items of ~~$29,710,000~~$40,867,000 and (iii) the net change in operating assets and liabilities of ~~$12,634,000.~~$2,913,000. The adjustments fornon-cash items were comprised of (i) depreciation and amortization (including amortization of debt issuance costs) of ~~$27,666,000,~~$29,323,000, (ii) the change in fair value of marketable securities of $5,561,000, (iii) straight-lining of rental income of ~~$1,594,000~~$5,589,000 and ~~(iii)~~(iv) stock-based compensation expense of ~~$450,000.~~

~~Net cash used in financing activities of $63,934,000 was primarily comprised of dividends paid of $61,363,000.~~

Net cash used in investing activities of $13,441,000 was comprised of construction in progress and real estate additions primarily due to The Alexander apartment tower, including the payment of a development fee to Vornado of $5,784,000.

$394,000.

Commitments and Contingencies

Insurance

Liquidity and Capital Resources - continued

~~Liquidity~~

Paramus

In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan, with a fixed rate of 4.72%, which matures in October 2021. The annual triple-net rent is the sum of $700,000 plus the amount of interest on the mortgage loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and ~~Capital Resources – continued~~

recognize a gain on sale of land of approximately $60,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.

Rego Park I Litigation

In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado and us (and certain of our subsidiaries) with regard to ~~space~~the 195,000 square foot store that Sears ~~leases~~leased at our Rego Park I property alleging that the defendants are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) two fires in February 2014 that caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than ~~$4 million~~$4,000,000 and future damages it estimated would not be less than ~~$25 million.~~$25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears. We intend to defend the remaining claim vigorously. The amount or range of reasonably possible losses, if any, is not expected to be greater than $650,000.

~~Paramus~~

~~In 2001, we leased 30.3 acres~~ On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief and rejected its lease resulting in an automatic stay of ~~land located~~this case.

Tenant Matters

On April 13, 2019, Kohl’s closed its 133,000 square foot store at our Rego Park II shopping center. Kohl’s plans to sublease its store and remains obligated to us under its lease which expires in Paramus, New Jersey to IKEA Property, Inc. The lease has a purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 2.90%, which matures on October 5, 2018. The annual~~triple-net~~ rent is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a gain on sale of land of approximately $60,000,000. If the purchase option is not exercised, the~~triple-net~~ ~~rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining20-year~~ ~~lease term.~~

January 2031.

Letters of Credit

Approximately ~~$1,474,000~~$1,030,000 of standby letters of credit were issued and outstanding as of September 30, ~~2017.~~

2019.

Other

Funds from Operations (“FFO”)

(non-GAAP)

FFO is computed in accordance with the December 2018 restated definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of ~~depreciated~~depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified~~non-cash~~ items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. A reconciliation of our net income to FFO is provided below.

In accordance with the NAREIT December 2018 restated definition of FFO, we have elected to exclude the mark-to-market adjustments of marketable securities from the calculation of FFO. Our FFO for the ~~Three~~three and ~~Nine Months Ended~~nine months ended September 30, ~~2017~~2018 has been adjusted to exclude $824,000, or $0.16 per diluted share, and ~~2016~~

$5,561,000, or $1.09 per diluted share, of expense, respectively, from the change in fair value of marketable securities previously reported.

FFO (non-GAAP) for the three and nine months ended September 30, 2019 and 2018

FFO (non-GAAP) for the quarter ended September 30, ~~2017~~2019 was ~~$28,598,000,~~$25,208,000, or ~~$5.59~~$4.92 per diluted share, compared to ~~$28,949,000,~~$23,945,000, or ~~$5.66~~$4.68 per diluted share ~~for~~in the prior year’s quarter.

FFO (non-GAAP) for the nine months ended September 30, ~~2017~~2019 was ~~$86,846,000,~~$75,044,000, or ~~$16.98~~$14.66 per diluted share, compared to ~~$90,198,000,~~$53,271,000, or ~~$17.64~~$10.41 per diluted share ~~for~~in the prior year’s nine months.

FFO (non-GAAP) for the nine months ended September 30, 2018 included $23,797,000, or $4.65 per diluted share, of expense for potential additional New York City real property transfer taxes on the 2012 sale of Kings Plaza.

The following table reconciles our net income to ~~FFO:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(Amounts in thousands, except share and per share amounts) 2017 2016 2017 2016
Net income
$ 20,299 $ 21,036 $ 62,626 $ 64,822
Depreciation and amortization of real property
8,299 7,913 24,220 25,376

FFO
$ 28,598 $ 28,949 $ 86,846 $ 90,198

FFO per diluted share
$ 5.59 $ 5.66 $ 16.98 $ 17.64

Weighted average shares used in computing FFO per diluted share
5,115,982 5,114,701 5,115,339 5,113,877

FFO (non-GAAP):



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Amounts in thousands, except share and per share amounts)	2019		2018		2019		2018
Net income	$	16,493	$	15,003	$	45,641	$	22,873
Depreciation and amortization of real property	7,698		8,118		23,146		24,837
Change in fair value of marketable securities	1,017		824		6,257		5,561
FFO (non-GAAP)	$	25,208	$	23,945	$	75,044	$	53,271

FFO per diluted share (non-GAAP)	$	4.92	$	4.68	$	14.66	$	10.41

Weighted average shares used in computing FFO per diluted share	5,118,698		5,117,347		5,118,030		5,116,667


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates is summarized in the table below.

2017    2016
(Amounts in thousands, except per share amounts) September 30,
    Balance        Weighted
Average
Interest Rate Effect of 1%
Change in
  Base Rates      December 31,
Balance    Weighted
Average
Interest Rate
Variable Rate
$    1,107,147    2.52% $    11,071    $    909,901    2.08%
Fixed Rate
   146,246    1.54%    -       146,246    1.54%







$    1,253,393    2.40% $    11,071    $    1,056,147    2.01%








Total effect on diluted earnings per share
      $    2.16



	2019					2018
(Amounts in thousands, except per share amounts)	September 30, Balance		Weighted Average Interest Rate	Effect of 1% Change in Base Rates		December 31, Balance		Weighted Average Interest Rate
Variable Rate	$	906,836	3.17%	$	9,068	$	906,836	3.55%
Fixed Rate	68,000		4.72%	—		68,000		4.72%
	$	974,836	3.28%	$	9,068	$	974,836	3.64%

Total effect on diluted earnings per share				$	1.77

As of September 30, ~~2017,~~2019, we have an interest rate cap with a notional amount of $500,000,000 that caps LIBOR at a rate of 6.0%.

Fair Value of Debt

The fair value of our mortgages payable is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the estimated fair value of our mortgages payable was ~~$1,241,000,000~~$973,000,000 and ~~$1,045,000,000,~~$969,000,000, respectively. Our fair value estimates, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.


Item 4.	Controls and Procedures

(a) Disclosure Controls and Procedures: Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting during the fiscal quarter to which this Quarterly Report on Form10-Q relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II.	OTHER INFORMATION


Item 1.	Legal Proceedings

We are from time to time involved in legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters in the aggregate will not have a material effect on our financial condition, results of operations or cash flows.

For a discussion of the litigation concerning our Rego Park I property, see “Part I – Financial Information, Item 1 – Financial Statements, Note 1113 – Commitments and Contingencies.”


Item 1A.	Risk Factors

There have been no material changes in our “Risk Factors” as previously disclosed in our Annual Report on Form10-K for the year ended December 31, ~~2016.~~

2018.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.	Defaults Upon Senior Securities

None.


Item 4.	Mine Safety Disclosures

Not applicable.


Item 5.	Other Information

None.


Item 6.	Exhibits

Exhibits required by Item 601 of RegulationS-K are filed herewith and are listed in the attached Exhibit Index.

EXHIBIT INDEX



Exhibit No.
15.1	-	Letter regarding unaudited interim financial information

~~10.1~~	31.1	-	Loan Agreement, dated as of June 1, 2017, between 731 Office One LLC, as Borrower, and Deutsche Bank AG, New York Branch and Citigroup Global Markets Realty Corp. collectively, as Lender*

~~10.2~~		-	~~Participation and Servicing Agreement for Loan and Security Agreement, dated July 28, 2017, between Bank of China, New York Branch, individually as Lender, InitialA-1~~ ~~Holder and as the Agent for the Holders, and Alexander’s of Rego Park II Participating Lender LLC, individually as InitialA-2~~ ~~Holder~~

~~15.1~~		-	~~Letter regarding unaudited interim financial information~~

~~31.1~~		-	Rule13a-14 (a) Certification of the Chief Executive Officer

~~31.2~~		-
31.2	-	Rule13a-14 (a) Certification of the Chief Financial Officer

~~32.1~~		-
32.1	-	Section 1350 Certification of the Chief Executive Officer

~~32.2~~		-
32.2	-	Section 1350 Certification of the Chief Financial Officer

101.INS	-	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
		~~XBRL Instance Document~~

101.SCH		-	XBRL Taxonomy Extension Schema Document

101.CAL		-	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		-	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		-	XBRL Taxonomy Extension Label Linkbase Document

101.PRE		-	XBRL Taxonomy Extension Presentation Linkbase Document

*	~~Incorporated by reference from Form10-Q~~ ~~filed on July 31, 2017.~~

SIGNATURES

Pursuant to the requirements 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.~~
			~~(Registrant)~~

~~Date: October 30, 2017~~		~~By:~~ALEXANDER’S, INC.
		~~/s/ Matthew Iocco~~ (Registrant)
			~~Matthew Iocco~~

Date: October 28, 2019	By:	/s/ Matthew Iocco
		Matthew Iocco
		Chief Financial Officer (duly authorized officer and
			principal financial and accounting officer)


ASSETS	September 30, 2017				December 31, 2016
Real estate, at cost:
Land		$	44,971		$	44,971
Buildings and leasehold improvements			988,261			985,800
Development and construction in progress			3,276			2,780

Total			1,036,508			1,033,551
Accumulated depreciation and amortization			(273,898	)		(252,737	)

Real estate, net			762,610			780,814
Cash and cash equivalents			280,010			288,926
Restricted cash			84,504			85,752
Rego Park II loan participation			199,275			-
Marketable securities			29,424			37,918
Tenant and other receivables, net of allowance for doubtful accounts of $1,476 and $1,473, respectively			4,003			3,056
Receivable arising from the straight-lining of rents			175,787			179,010
Deferred leasing costs, net, including unamortized leasing fees to Vornado of $34,251 and $36,960, respectively			44,951			48,387
Other assets			41,493			27,367

		$	1,622,057		$	1,451,230


LIABILITIES AND EQUITY
Mortgages payable, net of deferred debt issuance costs		$	1,240,069		$	1,052,359
Amounts due to Vornado			533			897
Accounts payable and accrued expenses			36,461			42,200
Other liabilities			2,908			2,929

Total liabilities			1,279,971			1,098,385


Commitments and contingencies

Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued and outstanding, none			-			-
Common stock: $1.00 par value per share; authorized, 10,000,000 shares; issued, 5,173,450 shares; outstanding, 5,107,290 and, 5,106,196 shares, respectively			5,173			5,173
Additional capital			31,577			31,189
Retained earnings			306,403			308,995
Accumulated other comprehensive (loss) income			(699	)		7,862

			342,454			353,219
Treasury stock: 66,160 shares and 67,254 shares respectively, at cost			(368	)		(374	)

Total equity			342,086			352,845

		$	1,622,057		$	1,451,230


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
REVENUES
Property rentals	$	37,970		$	37,598		$	114,507		$	113,129
Expense reimbursements		20,124			19,522			58,006			56,554

Total revenues		58,094			57,120			172,513			169,683


EXPENSES
Operating, including fees to Vornado of $1,146, $1,082, $3,365 and $3,389, respectively		21,272			21,714			62,937			60,702
Depreciation and amortization		8,430			8,045			24,613			25,745
General and administrative, including management fees to Vornado of $595 and $1,785 in each three and nine month period, respectively		1,228			1,225			4,080			4,285

Total expenses		30,930			30,984			91,630			90,732


OPERATING INCOME		27,164			26,136			80,883			78,951

Interest and other income, net		2,081			522			4,105			2,388
Interest and debt expense		(8,940	)		(5,615	)		(22,355	)		(16,476	)

Income before income taxes		20,305			21,043			62,633			64,863
Income tax expense		(6	)		(7	)		(7	)		(41	)

Net income	$	20,299		$	21,036		$	62,626		$	64,822


Net income per common share – basic and diluted	$	3.97		$	4.11		$	12.24		$	12.68


Weighted average shares outstanding – basic and diluted		5,115,982			5,114,701			5,115,339			5,113,877


Dividends per common share	$	4.25		$	4.00		$	12.75		$	12.00


													Accumulated Other Comprehensive Income (Loss)
	Common Stock					Additional Capital			Retained Earnings								Treasury Stock				Total Equity
	Shares		Amount			Additional Capital			Retained Earnings								Treasury Stock				Total Equity
Balance, December 31, 2015		5,173		$	5,173	$	30,739			$	304,340			$	13,002			$	(374	)		$	352,880
Net income		-			-		-				64,822				-				-				64,822
Dividends paid		-			-		-				(61,363	)			-				-				(61,363)
Change in unrealized net gain on available-for-sale securities		-			-		-				-				96				-				96
Change in value of interest rate cap		-			-		-				-				80				-				80
Deferred stock unit grants		-			-		450				-				-				-				450

Balance, September 30, 2016		5,173		$	5,173	$	31,189			$	307,799			$	13,178			$	(374	)		$	356,965


Balance, December 31, 2016		5,173		$	5,173	$	31,189			$	308,995			$	7,862			$	(374	)		$	352,845
Net income		-			-		-				62,626				-				-				62,626
Dividends paid		-			-		-				(65,218	)			-				-				(65,218)
Change in unrealized net gain or loss on available-for-sale securities		-			-		-				-				(8,494	)			-				(8,494)
Change in value of interest rate cap		-			-		-				-				(67	)			-				(67)
Deferred stock unit grants		-			-		394				-				-				-				394
Other		-			-		(6	)			-				-				6				-

Balance, September 30, 2017		5,173		$	5,173	$	31,577			$	306,403			$	(699	)		$	(368	)		$	342,086


				Balance at
(Amounts in thousands)	Maturity⁽¹⁾		Interest Rate at September 30, 2017	September 30, 2017		December 31, 2016
First mortgages secured by:
Rego Park I shopping center (100% cashcollateralized)⁽²⁾		Mar. 2018	0.35%	$	78,246	$	78,246
Paramus		Oct. 2018	2.90%		68,000		68,000
Rego Park II shopping center⁽³⁾		Nov. 2018	3.09%		257,147		259,901
731 Lexington Avenue, retail space⁽⁴⁾		Aug. 2022	2.63%		350,000		350,000
731 Lexington Avenue, office space⁽⁵⁾		Jun. 2024	2.14%		500,000		300,000

Total					1,253,393		1,056,147
Deferred debt issuance costs, net of accumulatedamortization of $4,995 and $6,824 respectively					(13,324)		(3,788)

				$	1,240,069	$	1,052,359


		As of September 30, 2017
(Amounts in thousands)		Total		Level 1		Level 2			Level 3
Marketable securities	$		29,424	$	29,424		$	-		$	-


		As of December 31, 2016
(Amounts in thousands)		Total		Level 1		Level 2			Level 3
Marketable securities	$		37,918	$	37,918		$	-		$	-