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 Form 10-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.
Currently, one of the most significant factors is the ongoing adverse effect of
the COVID-19 pandemic on our business, financial condition, results of
operations, cash flows, operating performance and the effect it has had and may
continue to have on our tenants, the global, national, regional and local
economies and financial markets and the real estate market in general. The
extent of the impact of the COVID-19 pandemic will depend on future
developments, including the duration of the pandemic, current and future
variants, the efficacy and durability of vaccines against the variants and the
potential for increased government restrictions, which continue to be uncertain
at this time but that impact could be material. Moreover, you are cautioned that
the COVID-19 pandemic will heighten many of the risks identified in "Item 1A. -
Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended
December 31, 2020.
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 on Form 10-K for the year ended December 31, 2020. 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 Form 10-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 Form 10-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 six months ended June 30, 2021 and 2020. 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 six months ended June 30, 2021 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 Form 10-K for the year ended December 31, 2020 in "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Note 3 - Summary of Significant Accounting Policies" to the consolidated
financial statements included therein. For the six months ended June 30, 2021,
there were no material changes to these policies.
                                       17
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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" 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.

COVID-19 Pandemic
Our business has been adversely affected by the ongoing COVID-19 pandemic.
Although substantially all our retail tenants are currently open and operating
and previous government restrictions have been lifted, there continue to be
economic conditions and other factors that adversely affect the financial health
of our retail tenants.
In limited circumstances, we have agreed to and may continue to agree to rent
deferrals and abatements for certain of our tenants. We have made the policy
election available to us based on the Financial Accounting Standards Board's
("FASB") guidance for leases during the COVID-19 pandemic, which allows us to
continue recognizing rental revenue for rent deferral agreements and to
recognize rent abatements as a reduction to rental revenue in the period granted
for qualifying deferrals and abatements.
Overall, we have collected approximately 97% of the rent due from our tenants
for the quarter ended June 30, 2021, including 100% from our office tenant,
approximately 93% from our retail tenants, and approximately 98% from our
residential tenants.

Quarter Ended June 30, 2021 Financial Results Summary
Net income for the quarter ended June 30, 2021 was $25,898,000, or $5.05 per
diluted share, compared to $12,331,000, or $2.41 per diluted share in the prior
year's quarter. Net income for the quarter ended June 30, 2021 included
$9,124,000, or $1.78 per diluted share, of income as a result of a net gain on
the sale of a parcel of land in the Bronx, New York ("Bronx Land Parcel").
Funds from operations ("FFO") (non-GAAP) for the quarter ended June 30, 2021 was
$21,133,000, or $4.12 per diluted share, compared to $17,995,000 or $3.51 per
diluted share in the prior year's quarter.
Six Months Ended June 30, 2021 Financial Results Summary
Net income for the six months ended June 30, 2021 was $43,780,000, or $8.55 per
diluted share, compared to $16,903,000, or $3.30 per diluted share in the prior
year's six months. Net income for the six months ended June 30, 2021 included
$9,124,000, or $1.78 per diluted share, of income as a result of a net gain on
the sale of real estate.
Funds from operations ("FFO") (non-GAAP) for the six months ended June 30, 2021
was $46,914,000, or $9.16 per diluted share, compared to $41,739,000 or $8.15
per diluted share in the prior year's six months.
Square Footage, Occupancy and Leasing Activity
As of June 30, 2021, our portfolio was comprised of seven properties aggregating
2,455,000 square feet, of which 2,219,000 square feet was in service and 236,000
square feet (primarily the former Century 21 space at our Rego Park II property
and a portion of the former Sears space at our Rego Park I property) was out of
service for redevelopment. Excluding residential, the in service square feet was
95% occupied as of June 30, 2021. The in service residential square feet was 83%
occupied as of June 30, 2021.

                                       18
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Overview - continued
Sale of Real Estate
On June 4, 2021, we sold the Bronx Land Parcel for $10,000,000. Net proceeds
from the sale were $9,291,000, the financial statement gain was $9,124,000 and
the tax gain was $9,100,000. We do not expect to pay a special dividend related
to this transaction.
Significant Tenant
Bloomberg L.P. ("Bloomberg") accounted for revenue of $57,513,000 and
$53,180,000 for the six months ended June 30, 2021 and 2020, respectively,
representing approximately 53% of our total revenues in each period. 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.



                                       19

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Results of Operations - Three Months Ended June 30, 2021, compared to June 30,
2020
Rental Revenues
Rental revenues were $51,388,000 in the quarter ended June 30, 2021, compared to
$45,478,000 in the prior year's quarter, an increase of $5,910,000. This was
primarily due to (i) $4,247,000 from write-offs in the prior year related to
receivables arising from the straight-lining of rents from certain of our retail
tenants who were put on a cash basis given the probability of collecting the
rent due under the lease agreements, (ii) $1,323,000 of higher revenue from
these retail tenants put on a cash basis and (iii) $1,820,000 from higher
revenue from new tenants, partially offset by (iv) $2,049,000 from retail tenant
vacancies at our 731 Lexington Avenue property.
Operating Expenses
Operating expenses were $23,422,000 in the quarter ended June 30, 2021, compared
to $19,778,000 in the prior year's quarter, an increase of $3,644,000. This was
primarily due to higher operating expenses subject to recovery, including real
estate taxes and common area maintenance.
Depreciation and Amortization
Depreciation and amortization was $8,132,000 in the quarter ended June 30, 2021,
compared to $7,633,000 in the prior year's quarter, an increase of $499,000.
This was primarily due to the acceleration of amortization of the deferred
leasing commission at our Paramus property.
General and Administrative Expenses
General and administrative expenses were $1,823,000 in the quarter ended June
30, 2021, compared to $2,111,000 in the prior year's quarter, a decrease of
$288,000. This was primarily due to lower stock-based compensation expense
related to an initial award of deferred stock units with a fair value of
$150,000 granted to a newly appointed member of our Board of Directors in the
prior year and lower professional fees.
Interest and Other Income, net
Interest and other income, net was $151,000 in the quarter ended June 30, 2021,
compared to $710,000 in the prior year's quarter, a decrease of $559,000. This
was primarily due to $396,000 of lower interest income due to a decrease in
average interest rates and $183,000 of lower dividend income from The Macerich
Company ("Macerich").
Interest and Debt Expense
Interest and debt expense was $5,086,000 in the quarter ended June 30, 2021,
compared to $6,172,000 in the prior year's quarter, a decrease of $1,086,000.
This was primarily due to $1,102,000 of lower interest expense due to a decrease
in LIBOR.
Change in Fair Value of Marketable Securities
Change in fair value of marketable securities was income of $3,698,000 in the
quarter ended June 30, 2021, compared to income of $1,837,000 in the prior
year's quarter, an increase of $1,861,000. This was due to the change in
Macerich's share price during the periods.
Net Gain on Sale of Real Estate
Net gain on sale of real estate was $9,124,000 in the quarter ended June 30,
2021, resulting from the sale of the Bronx Land Parcel.
                                       20
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Results of Operations - Six Months Ended June 30, 2021, compared to June 30,
2020
Rental Revenues
Rental revenues were $107,541,000 in the six months ended June 30, 2021,
compared to $99,588,000 in the prior year's six months, an increase of
$7,953,000. This was primarily due to $4,247,000 from write-offs in the prior
year related to receivables arising from the straight-lining of rents from
certain of our retail tenants who were put on a cash basis and $2,750,000 of
lease termination fee income from a retail tenant at our 731 Lexington Avenue
property.
Operating Expenses
Operating expenses were $47,222,000 in the six months ended June 30, 2021,
compared to $41,531,000 in the prior year's six months, an increase of
$5,691,000. This was primarily due to higher operating expenses subject to
recovery, including real estate taxes and common area maintenance.
Depreciation and Amortization
Depreciation and amortization was $16,674,000 in the six months ended June 30,
2021, compared to $15,542,000 in the prior year's six months, an increase of
$1,132,000. This was primarily due to the acceleration of amortization of the
deferred leasing commission at our Paramus property.
General and Administrative Expenses
General and administrative expenses were $3,366,000 in the six months ended June
30, 2021, compared to $3,562,000 in the prior year's six months, a decrease of
$196,000. This was primarily due to lower stock-based compensation expense
related to an initial award of deferred stock units with a fair value of
$150,000 granted to a newly appointed member of our Board of Directors in the
prior year.
Interest and Other Income, net
Interest and other income, net was $323,000 in the six months ended June 30,
2021, compared to $2,253,000 in the prior year's six months, a decrease of
$1,930,000. This was primarily due to $1,435,000 of lower interest income due to
a decrease in average interest rates and $499,000 of lower dividend income from
Macerich.
Interest and Debt Expense
Interest and debt expense was $10,226,000 in the six months ended June 30, 2021,
compared to $14,745,000 in the prior year's six months, a decrease of
$4,519,000. This was primarily due to $4,659,000 of lower interest expense due
to a decrease in LIBOR.
Change in Fair Value of Marketable Securities
Change in fair value of marketable securities was income of $4,280,000 in the
six months ended June 30, 2021, compared to an expense of $9,558,000 in the
prior year's six months, an increase to income of $13,838,000. This was due to
the change in Macerich's share price during the periods.
Net Gain on Sale of Real Estate
Net gain on sale of real estate was $9,124,000 in the six months ended June 30,
2021, resulting from the sale of the Bronx Land Parcel.
                                       21
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Liquidity and Capital Resources
Cash Flows
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. As a result of the COVID-19 pandemic, in limited circumstances, we
have agreed to and may continue to agree to rent deferrals and abatements for
certain of our tenants. Overall, we have collected approximately 97% of the rent
due from our tenants for the quarter ended June 30, 2021, including 100% from
our office tenant, approximately 93% from our retail tenants, and approximately
98% from our residential tenants. 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.

As of June 30, 2021, we had $479,360,000 of liquidity comprised of $469,056,000
of cash and cash equivalents and restricted cash and $10,304,000 of marketable
securities. 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 pay it down. However, there can be no assurance that additional
financing or capital will be available to refinance our debt, or that the terms
will be acceptable or advantageous to us. The challenges posed by the COVID-19
pandemic and the impact on our business and cash flows continue to evolve and
cannot be predicted at this time but that impact could be material.
Consequently, we will continue to evaluate our liquidity and financial position
on an ongoing basis.
Six Months Ended June 30, 2021
Cash and cash equivalents and restricted cash were $469,056,000 as of June 30,
2021, compared to $449,877,000 as of December 31, 2020, an increase of
$19,179,000. This increase resulted from (i) $62,519,000 of net cash provided by
operating activities and (ii) $2,805,000 of net cash provided by investing
activities, partially offset by (iii) $46,145,000 of net cash used in financing
activities.
Net cash provided by operating activities of $62,519,000 was comprised of (i)
net income of $43,780,000, (ii) adjustments for non-cash items of $9,568,000 and
(iii) the net change in operating assets and liabilities of $9,171,000. The
adjustments for non-cash items were comprised of (i) depreciation and
amortization (including amortization of debt issuance costs) of $17,503,000,
(ii) straight-lining of rental income of $5,019,000 and (iii) stock-based
compensation of $450,000, partially offset by (iv) net gain on sale of real
estate of $9,124,000 and (v) the change in fair value of marketable securities
of $4,280,000.
Net cash provided by investing activities was comprised of (i) proceeds from the
sale of real estate of $9,291,000 and (ii) the return of short-term investments
of $3,600,000, partially offset by (iii) construction in progress and real
estate additions of $10,086,000.
Net cash used in financing activities of $46,145,000 was primarily comprised of
dividends paid of $46,100,000.
Six Months Ended June 30, 2020
Cash and cash equivalents and restricted cash were $453,265,000 as of June 30,
2020, compared to $313,977,000 as of December 31, 2019, an increase of
$139,228,000. This increase resulted from (i) $99,541,000 of net cash provided
by financing activities and (ii) $52,756,000 of net cash provided by operating
activities, partially offset by (iii) $13,009,000 of net cash used in investing
activities.
Net cash provided by financing activities of $99,541,000 was primarily comprised
of proceeds from the reduction of our participation in our Rego Park II mortgage
loan of $145,708,000, partially offset by dividends paid of $46,068,000.
Net cash provided by operating activities of $52,756,000 was comprised of (i)
net income of $16,903,000 and (ii) adjustments for non-cash items of
$37,578,000, partially offset by (iii) the net change in operating assets and
liabilities of $1,725,000. The adjustments for non-cash items were comprised of
(i) depreciation and amortization (including amortization of debt issuance
costs) of $17,792,000, (ii) the change in fair value of marketable securities of
$9,558,000, (iii) straight-lining of rental income of $8,820,000, (iv) write-off
of tenant receivables of $1,022,000 and (v) stock based compensation expense of
$600,000, partially offset by (vi) $214,000 of dividends received in stock from
Macerich.

Net cash used in investing activities was comprised of construction in progress and real estate additions of $13,009,000.


                                       22
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Liquidity and Capital Resources - continued
Commitments and Contingencies
Insurance
We maintain general liability insurance with limits of $300,000,000 per
occurrence and per property, of which the first $30,000,000 includes
communicable disease coverage, and all-risk property and rental value insurance
coverage with limits of $1.7 billion per occurrence, including coverage for acts
of terrorism, with sub-limits for certain perils such as floods and earthquakes
on each of our properties and excluding communicable disease coverage.
Fifty Ninth Street Insurance Company, LLC ("FNSIC"), our wholly owned
consolidated subsidiary, acts as a direct insurer for coverage for acts of
terrorism, including nuclear, biological, chemical and radiological ("NBCR")
acts, as defined by the Terrorism Risk Insurance Act of 2002, as amended to date
and which has been extended through December 2027. Coverage for acts of
terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the
aggregate. Coverage for acts of terrorism (excluding NBCR acts) is fully
reinsured by third party insurance companies and the Federal government with no
exposure to FNSIC. For NBCR acts, FNSIC is responsible for a $275,000 deductible
and 20% of the balance of a covered loss, and the Federal government is
responsible for the remaining 80% of a covered loss. We are ultimately
responsible for any loss incurred by FNSIC.
We continue to monitor the state of the insurance market and the scope and costs
of coverage for acts of terrorism or other events. However, we cannot anticipate
what coverage will be available on commercially reasonable terms in the future.
We are responsible for uninsured losses and for deductibles and losses in excess
of our insurance coverage, which could be material.
Our mortgage loans are non-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.
Paramus
In 2001, we leased 30.3 acres of land in Paramus, New Jersey to IKEA Property,
Inc ("IKEA"). The lease contains a fixed-price purchase option granting IKEA the
right to purchase the property in October 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 on October 4, 2021. The annual triple-net rent is the sum
of $700,000 plus the amount of interest on the mortgage loan. On May 13, 2021,
IKEA exercised its purchase option. We anticipate closing the sale in the fourth
quarter of 2021 and expect to receive net cash proceeds of approximately
$4,000,000 after repayment of the mortgage loan and closing costs. We expect to
recognize a financial statement gain of approximately $60,000,000 and a tax gain
of approximately $63,000,000. We do not expect to pay a special dividend related
to this transaction.
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 the 195,000 square foot store that Sears 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 $4,000,000
and future damages it estimated would not be less than $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. On October 15, 2018, Sears filed for
Chapter 11 bankruptcy relief resulting in an automatic stay of this case.
Letters of Credit
Approximately $960,000 of standby letters of credit were issued and outstanding
as of June 30, 2021.
Other
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.
                                       23
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Funds from Operations ("FFO") (non-GAAP)



FFO is computed in accordance with the definition adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT"). NAREIT defines FFO as GAAP net income or loss adjusted to exclude
net gains from sales of certain real estate assets, real estate impairment
losses, depreciation and amortization expense from real estate assets and other
specified 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.
FFO (non-GAAP) for the three and six months ended June 30, 2021 and 2020
FFO (non-GAAP) for the quarter ended June 30, 2021 was $21,133,000, or $4.12 per
diluted share, compared to $17,995,000, or $3.51 per diluted share in the prior
year's quarter.
FFO (non-GAAP) for the six months ended June 30, 2021 was $46,914,000, or $9.16
per diluted share, compared to $41,739,000, or $8.15 per diluted share in the
prior year's six months.
The following table reconciles our net income to FFO (non-GAAP):
                                                                      Three Months Ended                            Six Months Ended
                                                                           June 30,                                     June 30,
(Amounts in thousands, except share and per share
amounts)                                                        2021                       2020                 2021                 2020
Net income                                                 $    25,898

$ 12,331 $ 43,780 $ 16,903 Depreciation and amortization of real property

                   8,057                      7,501               16,538               15,278
Net gain on sale of real estate                                 (9,124)                         -               (9,124)                   -
Change in fair value of marketable securities                   (3,698)                    (1,837)              (4,280)               9,558
FFO (non-GAAP)                                             $    21,133

$ 17,995 $ 46,914 $ 41,739



FFO per diluted share (non-GAAP)                           $      4.12

$ 3.51 $ 9.16 $ 8.15



Weighted average shares used in computing FFO per
diluted share                                                5,123,255                  5,120,548            5,122,733            5,119,623



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