<PAGE> 1
EXHIBIT INDEX ON PAGE 43
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
Commission file number: 1-6064
ALEXANDER'S, INC.
-----------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 51-0100517
- -------------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
- ------------------------------------------------ ---------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (201) 587-8541
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
-------------------- -----------------------------------------
Common Stock, $1 par value New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the common stock held by non-affiliates of the
Registrant (based upon the closing price of the stock on the New York Stock
Exchange on February 25, 2000) was approximately $154,554,000.
5,000,850 shares of the Registrant's common stock, par value $1 per share, were
outstanding as of February 25, 2000.
Documents Incorporated by Reference
Part III: Proxy Statement for Annual Meeting of Shareholders to be held May 31,
2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
Item ----
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PART I. 1. Business 3
2. Properties 6
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 10
Executive Officers of the Company 10
PART II. 5. Market for Registrant's Common
Equity and Related Stockholder Matters 11
6. Selected Financial Data 12
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
7A. Quantitative and Qualitative Disclosures about Market Risk 19
8. Financial Statements and Supplementary Data 19
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 19
PART III. 10. Directors and Executive Officers of the Registrant 38 (1)
11. Executive Compensation 38 (1)
12. Security Ownership of Certain
Beneficial Owners and Management 38 (1)
13. Certain Relationships and Related Transactions 38 (1)
PART IV 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K 39
SIGNATURES 40
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</TABLE>
(1) These items are omitted because the Registrant will file a
definitive Proxy Statement pursuant to Regulation 14A involving the
election of directors with the Securities and Exchange Commission
not later than 120 days after December 31, 1999, which is
incorporated by reference.
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PART I
Item 1. Business
GENERAL
Alexander's, Inc. (the "Company") is a real estate investment trust
("REIT") engaged in leasing, managing, developing and redeveloping properties.
Alexander's activities are conducted through its manager, Vornado Realty Trust
("Vornado").
Alexander's has eight properties consisting of:
Operating properties:
(i) the Rego Park I property located on Queens Boulevard and 63rd Road
in Rego Park, Queens, New York, which contains a recently
redeveloped 351,000 square foot building, which is 100% leased to
Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy;
(ii) the Kings Plaza Regional Shopping Center on Flatbush Avenue in
Brooklyn, New York, which contains 1,100,000 square feet is
comprised of a two-level mall containing 477,000 square feet, a
289,000 square foot department store leased to Sears and another
anchor department store owned and operated as a Macy's by
Federated Department Stores, Inc. ("Federated");
(iii) the Fordham Road property located at Fordham Road and the Grand
Concourse in the Bronx, New York, which contains a 303,000 square
foot building currently unoccupied;
(iv) the Flushing property located at Roosevelt Avenue and Main Street
in Flushing, New York, which contains a 177,000 square foot
building currently unoccupied; and
(v) the Third Avenue property located at Third Avenue and 152nd Street
in the Bronx, New York, which contains a 173,000 square foot
building leased to an affiliate of Conway.
Non-operating properties to be developed:
(vi) the Lexington Avenue property which comprises the entire square
block bounded by Lexington Avenue, East 59th Street, Third Avenue
and East 58th Street in Manhattan, New York;
(vii) the Paramus property which consists of 30.3 acres of land located
at the intersection of Routes 4 and 17 in Paramus, New Jersey; and
(viii) the Rego Park II property, which comprises one and one-half square
blocks of vacant land adjacent to the Rego Park I property.
The Company is currently undertaking the excavation and laying the
foundation for its Lexington Avenue property as part of the proposed development
of a large multi-use building. The proposed building is expected to be comprised
of a commercial portion, which may include a combination of retail stores,
offices, hotel space, extended stay residences, residential rentals and parking;
and a residential portion, consisting of condominium units to be sold to the
public. In connection therewith, the Company paid $14,500,000 for 140,000 square
feet of air rights of which $12,200,000 was paid to Vornado (Vornado's cost plus
$243,000 in interest and closing costs). The air rights were contracted for and
paid for in 1999, with closings to take place when the developments which give
rise to the air rights are completed in 2000. The capital required for the
proposed building will be in excess of $400,000,000.
Because a REIT is not permitted to sell condominiums, the air rights
representing the residential portion of the property are being transferred to a
preferred stock affiliate, a corporation in which the Company owns all of the
preferred equity and none of the common equity. The transfer value will be
adjusted once the final size of the residential portion is determined.
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Sears accounted for 22%, 28% and 31% of the Company's consolidated
revenues for the years ended December 31, 1999, 1998 and 1997, respectively.
Caldor, a former tenant, accounted for 22% of the Company's consolidated
revenues in 1997. No other tenant accounted for more than 10% of revenues.
In June 1998, the Company increased its interest in the Kings Plaza Mall
(the "Mall") to 100% by acquiring Federated's 50% interest. The purchase price
was approximately $28,000,000, which was paid in cash, plus the Company agreed
to pay Federated $15,000,000 to renovate its Macy's store in the Mall
($12,103,000 has been paid as of January 31, 2000) and Federated agreed to
certain modifications to the Kings Plaza Operating Agreement. In connection with
the acquisition, the Company completed a $90,000,000 three-year mortgage loan.
The loan is collateralized by the Company's interest in the Kings Plaza Regional
Shopping Center and bears interest at LIBOR plus 1.25% (7.75% at December 31,
1999). In addition to funding the acquisition, the proceeds from the borrowing
were also used to repay $34,900,000 of debt. Further, on August 9, 1999 the
Company increased the availability under this mortgage loan by $30,000,000
($9,935,000 is outstanding as of January 31, 2000) of which $15,000,000 will be
used to partially fund a renovation of the Mall estimated to cost $33,000,000
($9,045,000 has been paid as of January 31, 2000) and $15,000,000 will be used
to pay the liability to Federated noted above. The renovations are expected to
be completed in 2000.
In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. The Company's three
non-operating properties (Lexington Avenue, Paramus, and Rego Park II) are in
various stages of development. As rents commence from portions of the
development properties and from the vacant property(s), the Company expects that
cash flow will become positive.
The Company estimates that the fair market values of its assets are
substantially in excess of their historical cost and that it has additional
borrowing capacity. Alexander's continues to evaluate its needs for capital,
which may be raised through (a) property specific or corporate borrowing, (b)
the sale of securities and (c) asset sales. Although there can be no assurance,
the Company believes that these cash sources will be adequate to fund cash
requirements until its operations generate adequate cash flow.
The Company is a Delaware corporation with its principal executive office
located at Park 80 West, Plaza II, Saddle Brook, New Jersey 07663, telephone
(201) 587-8541.
Relationship with Vornado Realty Trust ("Vornado")
Vornado owns 32% of the Company's Common Stock. The Company is managed
by, and its properties are redeveloped and leased by Vornado, pursuant to
agreements with a one-year term expiring in March of each year which are
automatically renewable.
The annual management fee payable by the Company to Vornado is equal to
the sum of (i) $3,000,000, (ii) 3% of the gross income from the Mall, plus (iii)
6% of development costs with minimum guaranteed fees of $750,000 per annum. The
leasing agreement provides for the Company to pay a fee to Vornado equal to (i)
3% of the gross proceeds, as defined, from the sale of an asset and (ii) in the
event of a lease or sublease of an asset, 3% of lease rent for the first ten
years of a lease term, 2% of lease rent for the eleventh through the twentieth
years of a lease term and 1% of lease rent for the twenty-first through
thirtieth year of a lease term. Subject to the payment of rents by tenants, the
Company owes Vornado $1,756,000 at December 31, 1999. Such amount is payable
annually in an amount not to exceed $2,500,000, until the present value of such
installments (calculated at a discount rate of 9% per annum) equals the amount
that would have been paid had it been paid on September 21, 1993, or at the time
the transactions which gave rise to the Commissions occurred, if later.
As of December 31, 1999, the Company has a loan payable to Vornado
aggregating $95,000,000, including $50,000,000 it borrowed from Vornado on
October 20, 1999. The Company used the proceeds from the additional $50,000,000
loan to fund a portion of the development costs at its Lexington Avenue property
and a portion of the costs to refurbish its Kings Plaza Regional Shopping
Center. The loan, which was scheduled to mature on March 15, 2000, has been
extended to March 15, 2001 and the interest rate has been reset from 14.18% per
annum to 15.72% per annum reflecting an increase in the underlying treasury
rate. The loan is secured by liens on all of the Company's assets and/or pledges
of the stock of subsidiaries owning the assets and/or guarantees of such
subsidiaries and the parent. The liens do not cover the Kings Plaza Regional
Shopping Center and Rego Park I and are subordinate to first mortgages and a
$20,000,000 bank term loan.
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Vornado is a fully integrated REIT with significant experience in the
ownership, development, leasing, operation and management of retail and office
properties.
Steven Roth is Chief Executive Officer and a director of the Company, the
Managing General Partner of Interstate Properties ("Interstate") and Chairman of
the Board and Chief Executive Officer of Vornado. At December 31, 1999,
Interstate and its Partners own 27.3% of the outstanding common stock of the
Company and owns 15.0% of the outstanding common shares of beneficial interest
of Vornado. In addition, Mr. Roth owns 1.8% of the outstanding common shares of
beneficial interest of Vornado. Mr. Roth, Interstate and the other two general
partners of Interstate, David Mandelbaum and Russell B. Wight, Jr. (who are
also directors of the Company and trustees of Vornado) own, in the aggregate,
17.8% of the outstanding common shares of beneficial interest of Vornado.
ENVIRONMENTAL MATTERS
In June 1997, the Kings Plaza Regional Shopping Center (the "Center"),
commissioned an Environmental Study and Contamination Assessment Site
Investigation (the Phase II "Study") to evaluate and delineate environmental
conditions disclosed in a Phase I study. The results of the Study indicate the
presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil
and groundwater. The Company has delineated the contamination and has developed
a remediation approach. The New York State Department of Environmental
Conservation ("NYDEC") has not yet approved the remediation approach. In 1997,
the Center accrued $1,500,000 for its estimated obligation with respect to the
clean up of the site, which includes costs of (i) remedial investigation, (ii)
feasibility study, (iii) remedial design, (iv) remedial action and (v)
professional fees. Based upon revised estimates the Company accrued an
additional $500,000 in the second quarter of 1999 ($727,000 has been paid as of
January 31, 2000). If the NYDEC insists on a more extensive remediation
approach, the Company could incur additional obligations.
The majority of the contamination may have resulted from activities of
third parties; however, the sources of the contamination have not been fully
identified. Although the Company intends to pursue all available remedies
against any potentially responsible third parties, there can be no assurance
that such parties will be identified, or if identified, whether these
potentially responsible third parties will be solvent. In addition, the costs
associated with pursuing any potentially responsible parties may be cost
prohibitive. The Company has not recorded an asset as of December 31, 1999 for
potential recoveries of environmental remediation costs from other parties.
Compliance with applicable provisions of federal, state and local laws
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment have not had, and, although there can be no
assurance, are not expected to have, a material effect on the Company's
financial position, results of operations and cash flows.
COMPETITION
The Company conducts its real estate operations in the New York
metropolitan area, a highly competitive market. The Company's success depends
upon, among other factors, the trends of the national and local economies, the
financial condition and operating results of current and prospective tenants,
the availability and cost of capital, interest rates, construction and
renovation costs, income tax laws, governmental regulations and legislation,
population trends, the market for real estate properties in the New York
metropolitan area, zoning laws and the ability of the Company to lease, sublease
or sell its properties at profitable levels. The Company competes with a large
number of real estate property owners. In addition, although the Company
believes that it will realize significant value from its properties over time,
the Company anticipates that it may take a number of years before all of its
properties generate cash flow at or near anticipated levels. The Company's
success is also subject to its ability to finance its development and to
refinance its debts as they come due.
EMPLOYEES
The Company currently has one corporate employee and 70 property level
employees.
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<PAGE> 6
Item 2. Properties
The following table shows the location, approximate size and leasing status as
of December 31, 1999 of each of the Company's properties.
<TABLE>
<CAPTION>
Approximate Approximate
Area in Leaseable Square Average
Square Feet Feet/ Annualized
("SF") Number of Base Rent Percent
Property Ownership or Acreage Floors Per Sq. Foot Leased
-------- --------- ---------- ------ ------------ ------
OPERATING PROPERTIES
<S> <C> <C> <C> <C> <C>
Rego Park I Owned 4.8 acres 351,000/3 $28.76 100%
Queens Blvd. & (1)
63rd Rd.
Rego Park, New York
Kings Plaza Regional Owned 24.3 acres 766,000/4 29.40 91%
Shopping Center (1)(2)
Flatbush Avenue
Brooklyn, New York
Fordham Road & Owned 92,211 SF 303,000/5 -- --
Grand Concourse
Bronx, New York
Roosevelt Avenue & Leased (3) 44,975 SF 177,000/4 -- --
Main Street
Flushing, New York
Third Avenue &
152nd Street
Bronx, New York Owned 60,451 SF 173,000/4 5.00 100%
----------
1,770,000
==========
DEVELOPMENT PROPERTIES
Square block at East Owned 84,420 SF --
59th Street & (4)
Lexington Avenue
New York, New York
Routes 4 & 17 Owned 30.3 acres --
Paramus, New Jersey (5)
Rego Park II Owned 6.6 acres --
Queens, New York
</TABLE>
<TABLE>
<CAPTION>
Significant Lease
Tenants Square Expiration/
(30,000 square Footage Option
Property feet or more) Leased Expiration
-------- -------------- ------ ----------
<S> <C> <C> <C>
OPERATING PROPERTIES
Rego Park I Sears 195,000 2021
Queens Blvd. & Circuit City 50,000 2021
63rd Rd. Bed Bath & Beyond 46,000 2013
Rego Park, New York Marshalls 39,000 2008/2021
Kings Plaza Regional Sears 289,000 2023/2033
Shopping Center 107 Mall tenants
Flatbush Avenue
Brooklyn, New York
Fordham Road & -- --
Grand Concourse
Bronx, New York
Roosevelt Avenue & -- --
Main Street
Flushing, New York
Third Avenue &
152nd Street
Bronx, New York An affiliate of Conway 173,000 2023
</TABLE>
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(1) Excludes parking garages operated for the benefit of the Company.
(2) Excludes the 339,000 square foot Macy's store, owned and operated by
Federated.
(3) Leased to the Company through January 2027. The Company is obligated to
pay rent to the landlord as follows: $331,000 per year from February 1997
through January 2007, $220,000 per year from February 2007 through
January 2017, and $147,000 per year from February 2017 through January
2027.
(4) The Company razed the existing buildings and is currently undertaking the
excavation and laying the foundation of the site. It is evaluating
development plans for this site which may include a large multi-use
building.
(5) Governmental approvals have been obtained to develop a shopping center at
this site containing approximately 550,000 square feet (see Item 2
"Paramus Property").
Operating Properties:
Rego Park I
The Rego Park I property encompasses the entire block fronting on Queens
Boulevard and bounded by 63rd Road, 62nd Drive, 97th Street and Junction
Boulevard.
The existing 351,000 square foot building was redeveloped in 1996 and is
fully leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old Navy.
In addition, in conjunction with the redevelopment, a multi-level parking
structure was constructed which provides paid parking spaces for approximately
1,200 vehicles.
Kings Plaza Regional Shopping Center
The Kings Plaza Regional Shopping Center (the "Center") contains
approximately 1.1 million square feet and is comprised of a two-level mall (the
"Mall") containing 477,000 square feet and two four-level anchor stores. One of
the anchor stores is owned by the Company and leased to Sears, while the other
anchor store is owned and operated as a Macy's store by Federated. In June 1998,
the Company increased its interest in the Mall to 100% by acquiring Federated's
50% interest. The purchase price was approximately $28,000,000, which was paid
in cash, plus the Company agreed to pay Federated $15,000,000 to renovate its
Macy's store in the Mall and Federated agreed to certain modifications to the
Kings Plaza Operating Agreement. The Center occupies a 24.3-acre site at the
intersection of Flatbush Avenue and Avenue U located in Brooklyn, New York.
Among the Center's features are a marina, a five-level parking structure and an
energy plant that generates all of the Center's electrical power. The Company is
currently renovating the Mall in connection with the overall renovation of the
Center at an estimated cost of $33,000,000 of which $9,045,000 has been expended
as of January 31, 2000. The renovation is expected to be completed in 2000.
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The following table shows lease expirations for the Mall tenants in the
Center for the next ten years, assuming none of the tenants exercise renewal
options:
<TABLE>
<CAPTION>
Percent of Percent of
Approximate Total Lease 1999 Gross
Leased Area in Annualized Annualized Square Annual Base
Square Feet Fixed Rent Fixed Rent Footage Rental
Number of Under Under Under Expiring Represented Represented
Leases Expiring Expiring Leases per by Expiring by Expiring
Year Expiring Leases Leases Square Foot Leases Leases
- ---------- -------- -------------- ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
2000 2 3,901 $ 202,656 $ 51.95 0.95% 1.15%
2001 15 69,142 2,572,737 37.21 16.92% 14.55%
2002 14 26,778 1,577,979 58.93 6.55% 8.92%
2003 8 16,611 860,071 51.78 4.06% 4.86%
2004 4 23,006 908,255 39.48 5.63% 5.14%
2005 4 16,232 500,192 30.82 3.97% 2.83%
2006 15 61,808 1,918,773 31.04 15.12% 10.85%
2007 12 59,301 3,114,608 52.52 14.51% 17.61%
2008 5 5,959 343,613 57.66 1.46% 1.94%
2009 16 78,438 3,753,020 47.85 19.19% 21.22%
</TABLE>
The following table shows the occupancy rate and the average annual rent per
square foot for the Mall stores as of:
<TABLE>
<CAPTION>
Average
Annual Base Rent
Occupancy Rate Per Square Foot
-------------- -------------------
<S> <C> <C>
December 31, 1999 86% $ 43.12
December 31, 1998 90% 40.63
December 31, 1997 86% 38.17
December 31, 1996 84% 37.29
December 31, 1995 88% 31.43
</TABLE>
Fordham Road
The Company owns the Fordham Road property, which is located at the
intersection of Fordham Road and the Grand Concourse in the Bronx, New York. The
property includes a five-floor building containing approximately 303,000 square
feet located in the center of a shopping complex in one of the busiest shopping
areas in the Bronx. This property, which is currently unoccupied, was previously
leased to Caldor. The Company is currently in discussions with several tenants
to re-lease all or portions of this space.
Flushing
The Flushing property is located on Roosevelt Avenue and Main Street in
the downtown, commercial section of Flushing, Queens. Roosevelt Avenue and Main
Street are active shopping districts with many national retailers located in the
area. A subway entrance is located directly in front of the property with bus
service across the street. It comprises a four-floor building containing 177,000
square feet and a parking garage.
This property, which is currently unoccupied, was previously sub-leased
to Caldor (other than the portion currently being used as a parking garage). In
January 1999, Caldor announced that it is closing all of its stores. Caldor
rejected the lease effective March 29, 1999. The Company is currently in
discussions with several tenants to re-lease all or portions of this space.
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<PAGE> 9
Third Avenue
The Company owns the Third Avenue property, a four-floor building and a
small surface parking lot located at the intersection of Third Avenue and 152nd
Street in the Bronx, New York. The store is located in a densely populated
neighborhood. This property is leased to an affiliate of Conway, a New York area
discount retailer.
Development Properties:
Lexington Avenue
The Company owns the Lexington Avenue property which comprises the entire
square block bounded by Lexington Avenue, East 59th Street, Third Avenue and
East 58th Street and is situated in the heart of one of Manhattan's busiest
business and shopping districts with convenient access to several subway and bus
lines. The property is located directly across the street from Bloomingdale's
flagship store and only a few blocks away from both Fifth Avenue and 57th
Street.
The Company is currently undertaking the excavation and laying the
foundation for its Lexington Avenue property as part of the proposed development
of a large multi-use building. The proposed building is expected to be comprised
of a commercial portion, which may include a combination of retail stores,
offices, hotel space, extended stay residences, residential rentals and parking;
and a residential portion, consisting of condominium units to be sold to the
public. In connection therewith, the Company paid $14,500,000 for 140,000 square
feet of air rights of which $12,200,000 was paid to Vornado (Vornado's cost plus
$243,000 in interest and closing costs). The air rights were contracted for and
paid for in 1999, with closings to take place when the developments which give
rise to the air rights are completed in 2000. The capital required for the
proposed building will be in excess of $400,000,000.
Because a REIT is not permitted to sell condominiums, the air rights
representing the residential portion of the property are being transferred to a
preferred stock affiliate, a corporation in which the Company owns all of the
preferred equity and none of the common equity. The transfer value will be
adjusted once the final size of the residential portion is determined.
Paramus
The Company owns 30.3 acres of land located at the intersection of Routes
4 and 17 in Paramus, New Jersey. The Company's property is located directly
across from the Garden State Plaza regional shopping mall, within two miles of
three other regional shopping malls and within 10 miles of New York City.
The Company intends to develop a shopping center of approximately 550,000
square feet on this site. The estimated cost of such development is
approximately $100,000,000. The Company has received municipal approvals on
tentative plans to redevelop the site. No development plans have been finalized.
Rego Park II
The Company owns two land parcels adjacent to the Rego Park I property.
They are the entire square block bounded by the Long Island Expressway, 97th
Street, 62nd Drive and Junction Boulevard and a smaller parcel of approximately
one-half square block at the intersection of 97th Street and the Long Island
Expressway. Both parcels are currently zoned for residential use. Both parcels
are being used for public paid parking. The Company intends to continue to use
these properties for paid parking while it evaluates development options.
Insurance
The Company carries comprehensive liability, fire, flood, extended
coverage and rental loss insurance with respect to its properties with policy
specifications and insured limits customarily carried for similar properties.
Management of the Company believes that the Company's insurance coverage
conforms to industry norms.
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<PAGE> 10
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries is a party to, nor is
their property the subject of, any material pending legal proceeding other than
routine litigation incidental to their businesses. The Company believes that
these legal actions will not be material to the Company's financial condition or
results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1999.
Executive Officers of the Company
The following is a list of the names, ages, principal occupations and
positions with the Company of the executive officers of the Company and the
positions held by such officers during the past five years.
<TABLE>
<CAPTION>
Principal Occupations, Position and Office (current and
during the past five years with the Company unless otherwise
Name Age stated)
- ------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Stephen Mann 62 Chairman of the Board of Directors since March 2,
1995; Interim Chairman of the Board of Directors
from August, 1994 to March 1, 1995; Chairman of the
Clifford Companies since 1990; and, prior thereto,
counsel to Mudge Rose Guthrie Alexander & Ferdon,
attorneys.
Steven Roth 58 Chief Executive Officer of the Company since March
2, 1995; Chairman of the Board and Chief Executive
Officer of Vornado since May 1989; Chairman of
Vornado's Executive Committee of the Board since
April 1988; and the Managing General Partner of
Interstate, an owner of shopping centers and an
investor in securities and partnerships.
Joseph Macnow 54 Vice President and Chief Financial Officer of the
Company since August 1995; Executive Vice President
- Finance and Administration of Vornado since
January 1998 and Vice President and Chief Financial
Officer of Vornado from 1985 to January 1998.
Irwin Goldberg 55 Secretary and Treasurer from June 1999 to present;
Vice President - Chief Financial Officer of Vornado
since January 1998; Partner at Deloitte & Touche LLP
from September 1978 to January 1998
</TABLE>
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<PAGE> 11
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Equity and Related Stockholder Matters
The common stock, par value $1.00 per share, of the Company is traded on
the New York Stock Exchange under the symbol "ALX". Set forth below are the high
and low sales prices for the Company's common stock for each full quarterly
period within the two most recent years:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C> <C>
1st Quarter 1999 $ 78 1/4 $ 66 15/16
2nd Quarter 1999 75 7/8 68
3rd Quarter 1999 84 1/16 70 1/2
4th Quarter 1999 79 1/2 70
</TABLE>
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C> <C>
1st Quarter 1998 $ 95 1/4 $ 86 1/16
2nd Quarter 1998 93 15/16 85 1/2
3rd Quarter 1998 93 1/8 73 3/16
4th Quarter 1998 81 3/16 72 1/8
</TABLE>
As of December 31, 1999, there were approximately 1,800 holders of record
of the Company's common stock. The Company pays dividends only if, as and when
declared by its Board of Directors. No dividends were paid in 1999 and 1998. In
order to qualify as a REIT, the Company generally is required to distribute as a
dividend 95% of its taxable income. At December 31, 1999, the Company had net
operating loss carryovers ("NOL's") of approximately $158,000,000. Under the
Internal Revenue Code of 1986, as amended, the Company's NOL's generally would
be available to offset the amount of the Company's REIT taxable income that
otherwise would be required to be distributed as a dividend to stockholders.
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<PAGE> 12
Item 6. Selected Financial Data
Summary of Selected Financial Data
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating data:
Total revenues $ 64,390 $ 51,663 $ 25,369 $ 21,833 $ 14,761
=========== =========== ========== =========== ============
Income (loss) from continuing
operations $ 5,524(1) $ (6,055)(2) $ 7,466 (3) $ 13,097 (4) $ (7,696)
Income from discontinued
operations -- -- -- 11,602 10,133
----------- ----------- ---------- ----------- ------------
Net income (loss) $ 5,524 $ (6,055) $ 7,466 $ 24,699 $ 2,437
=========== =========== ========== =========== ============
Income (loss) per common share: (5)
Continuing operations $ 1.10 $ (1.21) $ 1.49 $ 2.62 $ (1.54)
Discontinued operations -- -- -- 2.32 2.03
----------- ---------- ---------- ----------- ------------
Net income (loss) per share $ 1.10 $ (1.21) $ 1.49 $ 4.94 $ .49
=========== =========== ========== =========== ============
Balance sheet data:
Total assets $ 366,496 $ 317,043 $ 235,074 $ 211,585 $ 198,541
Real estate 271,805 239,157 191,733 181,005 150,435
Debt 329,161 277,113 208,087 192,347 182,883
Stockholders' equity (deficiency) 12,498 6,974 13,029 5,563 (19,136)
</TABLE>
1. Net of $4,877,000 resulting from the write-off of the asset arising from the
straight-lining of rents primarily due to Caldor's rejection of its Flushing
lease in 1999.
2. Includes the write-off of $15,096,000 resulting from the
razing of the building formerly located at the Company's Lexington Avenue site.
3. Includes a gain of $8,914,000 from the condemnation of a portion of the
Paramus property net of the write-off of the carrying value of the building of
$5,786,000.
4. Includes income from the gain on reversal of the Company's postretirement
healthcare liability of $14,372,000.
5. Income (loss) per share is the same for all years' presented with and without
dilution. For further discussion of income (loss) per share see notes to the
consolidated financial statements.
-12-
<PAGE> 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
The Company had net income of $5,524,000 for the year ended December 31,
1999 as compared to net loss of $6,055,000 in the prior year. Net income for
1999 is net of $4,877,000 resulting from the write-off of the asset arising from
the straight-lining of rents primarily due to Caldor's rejection of its Flushing
lease in 1999. The net loss for 1998 includes the write-off of $15,096,000
resulting from the razing of the building formerly located at the Company's
Lexington Avenue site.
Details of the changes in the components of net income are discussed in
the comparison of the years ended December 31, 1999 and December 31, 1998 below.
RESULTS OF OPERATIONS
Years Ended December 31, 1999 and December 31, 1998
The Company's revenues, which consist of property rentals, tenant expense
reimbursements and equity in income of unconsolidated joint venture (prior to
1999) were $64,390,000 in 1999, compared to $51,663,000 in 1998, an increase of
$12,727,000.
Property rentals were $44,232,000 in 1999, compared to $35,151,000 in
1998, an increase of $9,081,000. This increase resulted from:
<TABLE>
<CAPTION>
Effective
Date
--------------------
<S> <C> <C>
Acquisition of the remaining 50%
interest in the Kings Plaza Mall June 1998 $ 11,130,000
Rent from new tenants Various 1,116,000
Caldor's rejection of its Flushing lease April 1999 (2,532,000)
Closure of parking operations at the Lexington
Avenue property (633,000)
--------------
$ 9,081,000
==============
</TABLE>
Tenant expense reimbursements were $20,158,000 in 1999, compared to
$13,993,000 in 1998, an increase of $6,165,000. This increase resulted primarily
from the acquisition of the remaining 50% interest in the Kings Plaza Mall and
the resulting consolidation of its operations after June 18, 1998.
The decrease in equity in income of unconsolidated joint venture resulted
from the consolidation of the Mall's operations in 1998 as noted above.
Operating expenses were $33,081,000 in 1999, compared to $20,132,000 in
1998, an increase of $12,949,000. Of this increase (i) $9,254,000 primarily
resulted from the acquisition of the remaining 50% interest in the Kings Plaza
Mall and the resulting consolidation of the Mall's operations after June 18,
1998 and (ii) $4,877,000 resulted from the write-off of the asset arising from
the straight-lining of rents primarily due to Caldor's rejection of its Flushing
lease in 1999, partially offset by a decrease in real estate tax, repairs and
maintenance and parking garage expenses.
General and administrative expenses were $3,692,000 in 1999, compared to
$4,079,000 in 1998, a decrease of $387,000 primarily as a result of lower
professional fees.
Depreciation and amortization expense was $5,441,000 in 1999 compared to
$4,289,000 in 1998, an increase of $1,152,000 primarily as a result of the
acquisition of the remaining 50% interest in the Kings Plaza Mall and the
resulting consolidation of its operations after June 18, 1998.
In September 1998, the Company wrote-off $15,096,000 resulting from the
razing of the building formerly located at the Lexington Avenue site.
-13-
<PAGE> 14
Interest and debt expense was $17,647,000 in 1999, compared to
$15,115,000 in 1998, an increase of $2,532,000. This increase resulted primarily
from (i) higher average debt, partially offset by (ii) a decrease in the average
interest rate and (iii) an increase in capitalized interest relating to the
Company's development properties.
Years Ended December 31, 1998 and December 31, 1997
The Company's revenues, which consist of property rentals, tenant expense
reimbursements and equity in income of unconsolidated joint venture were
$51,663,000 in 1998, compared to $25,369,000 in 1997, an increase of
$26,294,000.
Property rentals were $35,151,000 in 1998, compared to $18,455,000 in
1997, an increase of $16,696,000. This increase resulted from:
<TABLE>
<CAPTION>
Effective
Date
------------
<S> <C> <C>
Rent from new tenants:
Kings Plaza Regional Shopping Center October 1997 $ 4,440,000
Rego Park I March and
May 1997 1,391,000
Acquisition of the remaining 50%
interest in the Mall June 1998 4,564,000
Consolidation of Mall
operations previously recorded on
the equity method June 1998 4,564,000
Caldor's rejection of its Fordham
Road lease June 1997 (1,609,000)
Parking lot revenue 2,749,000
Other 597,000
-----------------
$ 16,696,000
=================
</TABLE>
Tenant expense reimbursements were $13,993,000 in 1998, compared to
$2,668,000 in 1997, an increase of $11,325,000. This increase reflects (i)
corresponding increases in operating expenses passed through to tenants as a
result of leases commencing subsequent to March 31, 1997 at the Rego Park I
property, (ii) the commencement of operations of the Sears department store at
the Kings Plaza Regional Shopping Center and (iii) the acquisition of the
remaining 50% interest in the Mall and the resulting consolidation of its
operations after June 18, 1998.
The decreases in equity in income of unconsolidated joint venture
resulted from the consolidation of the Mall's operations as noted above.
Operating expenses were $20,132,000 in 1998, compared to $7,459,000 in
1997, an increase of $12,673,000. This increase resulted primarily from (i) real
estate taxes which previously had been capitalized, being charged to income due
to the commencement of operations of the Sears department store at the Kings
Plaza Regional Shopping Center and (ii) the acquisition of the remaining 50%
interest in the Mall and the resulting consolidation of the Mall's operations
after June 18, 1998, partially offset by (iii) a $667,000 charge to bad debt
expense in the prior year in connection with Caldor's rejection of its Fordham
Road lease.
General and administrative expenses were $4,079,000 in 1998, compared to
$3,933,000 in 1997, an increase of $146,000.
Depreciation and amortization expense increased in 1998, compared to 1997
as a result of the Kings Plaza Mall acquisition in June 1998 and the
commencement of operations at the Kings Plaza Regional Shopping Center in
October 1997.
In September 1998, the Company wrote-off $15,096,000 resulting from the
razing of the building formerly located at its Lexington Avenue site.
-14-
<PAGE> 15
Interest and debt expense was $15,115,000 in 1998, compared to
$13,430,000 in 1997, an increase of $1,685,000. Of this increase $1,215,000
resulted from less interest capitalized in 1998 and $470,000 resulted from
higher average borrowings.
Interest and other income was $993,000 in 1998, compared to $719,000 in
1997, an increase of $274,000. This increase resulted primarily from an increase
in interest income this year due to higher average investments.
In October 1997, Alexander's entered into an agreement, in lieu of
condemnation, with the New Jersey Department of Transportation ("DOT") pursuant
to which the DOT agreed to buy approximately 9 acres from the Company located on
the periphery of its Paramus property for $14,700,000. In connection with this
agreement, the Company recorded a gain of $8,914,000 in the fourth quarter of
1997 which reflects the proceeds net of the write-off of the book value of the
building.
LIQUIDITY AND CAPITAL RESOURCES
In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. The Company's three
non-operating properties (Lexington Avenue, Paramus, and Rego Park II) are in
various stages of development. As rents commence from portions of the
development property(s) and from the vacant property(s), the Company expects
that cash flow will become positive.
In June, 1998, the Company increased its interest in the Kings Plaza Mall
(the "Mall") to 100% by acquiring Federated's 50% interest. The purchase price
was approximately $28,000,000, which was paid in cash, plus the Company agreed
to pay Federated $15,000,000 to renovate its Macy's store in the Mall
($12,103,000 has been paid as of January 31, 2000) and Federated agreed to
certain modifications to the Kings Plaza Operating Agreement. In connection with
the acquisition, the Company completed a $90,000,000 three-year mortgage loan.
The loan is collateralized by the Company's interest in the Kings Plaza Regional
Shopping Center and bears interest at LIBOR plus 1.25% (7.75% at December 31,
1999). In addition to funding the acquisition, the proceeds from the borrowing
were also used to repay $34,900,000 of debt. Further, on August 9, 1999 the
Company increased the availability under this mortgage loan by $30,000,000
($9,935,000 is outstanding as of January 31, 2000) of which $15,000,000 will be
used to partially fund a renovation of the Mall estimated to cost $33,000,000
($9,045,000 has been paid as of January 31, 2000) and $15,000,000 will be used
to pay the liability to Federated noted above. The renovations are expected to
be completed in 2000.
The Company estimates that capital expenditure requirements for the
development of its Paramus property will approximate $100,000,000.
The Company is currently undertaking the excavation and laying the
foundation for its Lexington Avenue property as part of the proposed development
of a large multi-use building. The proposed building is expected to be comprised
of a commercial portion, which may include a combination of retail stores,
offices, hotel space, extended stay residences, residential rentals and parking;
and a residential portion, consisting of condominium units to be sold to the
public. In connection therewith, the Company paid $14,500,000 for 140,000 square
feet of air rights of which $12,200,000 was paid to Vornado (Vornado's cost plus
$243,000 in interest and closing costs). The air rights were contracted for and
paid for in 1999, with closings to take place when the developments which give
rise to the air rights are completed in 2000. The capital required for the
proposed building will be in excess of $400,000,000.
Because a REIT is not permitted to sell condominiums, the air rights
representing the residential portion of the property are being transferred to a
preferred stock affiliate, a corporation in which the Company owns all of the
preferred equity and none of the common equity. The transfer value will be
adjusted once the final size of the residential portion is determined.
In the first quarter of 1999, Caldor closed all of its stores. Caldor
previously sub-leased its Flushing store from the Company. Caldor rejected the
Flushing lease effective March 29, 1999. The annual base rent under the lease
was $2,963,000.
On May 12, 1999, the Company, through a newly formed wholly-owned
subsidiary, completed an $82,000,000 refinancing of its subsidiary's Rego Park I
property and repaid the then existing $75,000,000 debt on the property from the
proceeds of the new loan. The new 10-year debt, which is an obligation of the
subsidiary, matures in May 2009 and bears interest at 7.25%.
-15-
<PAGE> 16
The Company's $21,485,000 loan collateralized by a mortgage on its
Fordham Road property, which was scheduled to mature on February 24, 2000, has
been extended 60 days in connection with negotiations to extend the loan for an
additional three-years. The existing loan bears interest at LIBOR plus 4.25%
(10.73% at December 31, 1999). Beginning in 1998, all cash flow of the property
after debt service further amortizes the loan. There has been no further
amortization through December 31, 1999. Under the terms of the proposed
extension, interest accrues at LIBOR plus 1.50% in the first two years and
LIBOR plus 1.75% in year three. Interest will be payable at LIBOR for the
entire term. Interest accrued but not paid will be added to the outstanding
principal balance. The net carrying value of the Fordham Road property is
$4,602,000 at December 31, 1999.
As of December 31, 1999, the Company has a loan payable to Vornado
aggregating $95,000,000, including $50,000,000 it borrowed from Vornado on
October 20, 1999. The Company used the proceeds from the additional $50,000,000
loan to fund a portion of the development costs at its Lexington Avenue property
and a portion of the costs to refurbish its Kings Plaza Regional Shopping
Center. The loan, which was scheduled to mature on March 15, 2000, has been
extended to March 15, 2001 and the interest rate has been reset from 14.18% per
annum to 15.72% per annum reflecting an increase in the underlying treasury
rate. The loan is secured by liens on all of the Company's assets and/or pledges
of the stock of subsidiaries owning the assets and/or guarantees of such
subsidiaries and the parent. The liens do not cover the Kings Plaza Regional
Shopping Center and Rego Park I and are subordinate to first mortgages and a
$20,000,000 bank term loan.
A summary of maturities of debt at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
2000 21,485,000
2001 210,676,000
2002 --
2003 15,000,000
2004 339,000
---------------
$ 247,500,000
===============
</TABLE>
The Company estimates that the fair market values of its assets are
substantially in excess of their historical cost and that it has additional
borrowing capacity. Alexander's continues to evaluate its needs for capital
which may be raised through (a) property specific or corporate borrowing, (b)
the sale of securities and (c) asset sales. Although there can be no assurance,
the Company believes that these cash sources will be adequate to fund cash
requirements until its operations generate adequate cash flow.
CASH FLOWS
Year Ended December 31, 1999
Cash provided by operating activities of $9,765,000 was comprised of
income after adjustments for non-cash items of $8,921,000, net of the change in
operating assets and liabilities of $4,680,000. The adjustments for non-cash
items are comprised of depreciation and amortization of $7,460,000 and the
effect of straight-lining of rental income of $1,461,000.
Net cash used in investing activities of $47,601,000 was primarily
comprised of (i) the escrowing of cash from the proceeds from the Kings Plaza
Regional Shopping Center which is restricted as to its use ($13,601,000), net of
the release of cash from escrow for the condemnation of a portion of the Paramus
property ($2,318,000) and (ii) capital expenditures of $36,318,000.
Net cash provided by financing activities of $48,526,000 was comprised of
(i) proceeds from the issuance of debt of $137,676,000, offset by (ii)
repayments of debt of $85,628,000 and (iii) debt issuance costs of $3,522,000.
Year Ended December 31, 1998
Cash provided by operating activities of $5,461,000 was comprised of
income after adjustments for non-cash items of $10,327,000, net of the change in
operating assets and liabilities of $4,866,000. The adjustments for non-cash
items are comprised of (i) the write-off of the carrying value of the Lexington
Avenue building and related development costs of $15,096,000 and (ii)
depreciation and amortization of $5,715,000, offset by (iii) the effect of
straight-lining of rental income of $4,429,000.
Net cash used in investing activities of $40,217,000 was primarily
comprised of (i) $28,000,000 for the
-16-
<PAGE> 17
acquisition of the remaining 50% interest in the Kings Plaza Mall, (ii) the
escrowing of cash from the condemnation of a portion of the Paramus property
($2,318,000) and cash from the proceeds from the Kings Plaza Regional Shopping
Center loan ($5,212,000) which is restricted as to its use and (iii) capital
expenditures of $19,387,000, partially offset by (iv) proceeds from the
condemnation of a portion of the Paramus property of $14,700,000.
Net cash provided by financing activities of $47,428,000 was comprised of
(i) proceeds from the issuance of debt on the Kings Plaza Regional Center of
$90,000,000, offset by (ii) repayments of debt of $39,236,000 and (iii) debt
issuance costs of $3,336,000.
Year Ended December 31, 1997
Cash used in operating activities of $1,454,000 was comprised of: (i) a
net loss from operations of $1,448,000 (net income of $7,466,000 less the net
gain from the Paramus condemnation of $8,914,000), (ii) a net change in
operating assets and liabilities of $2,353,000 and (iii) the payment of
liabilities of discontinued operations of $326,000, partially offset by (iv)
adjustments for non-cash items of $2,673,000. The adjustments for non-cash items
are comprised of depreciation and amortization of $4,494,000, partially offset
by the effect of straight-lining of rental income of $1,821,000.
Net cash used in investing activities of $16,877,000 was comprised of
additions to real estate of $20,625,000, offset by the use of restricted cash of
$3,748,000.
Net cash provided by financing activities of $15,542,000 was comprised of
proceeds from the issuance of debt (net of deferred debt expense) of
$16,468,000, offset by $926,000 of debt repayments.
-17-
<PAGE> 18
Funds from Operations for the Years Ended December 31, 1999 and 1998
Funds from operations were $9,896,000 in the year ended December 31,
1999, an increase of $2,222,000 over the prior year. The following table
reconciles funds from operations and net (loss) income:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Net income (loss) $ 5,524,000 $ (6,055,000)
Depreciation and amortization of
real property 5,441,000 4,289,000
Straight-lining of property rentals
for rent escalations (3,740,000) (4,102,000)
Write-off of the asset arising from the
straight-lining of rents 4,877,000 --
Leasing fees paid in excess
of expense recognized (2,206,000) (1,994,000)
Write-off of the carrying value of the
Lexington Avenue buildings
and related development costs -- 15,096,000
Proportionate share of adjustments
to equity in income of previously
unconsolidated joint venture to
arrive at funds from operations -- 440,000
----------------- -----------------
$ 9,896,000 $ 7,674,000
================= =================
</TABLE>
Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs, which is
disclosed in the Consolidated Statements of Cash Flows for the applicable
periods. There are no material legal or functional restrictions on the use of
funds from operations. Funds from operations should not be considered as an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity. Management
considers funds from operations a relevant supplemental measure of operating
performance because it provides a basis for comparison among REITs; however,
funds from operations may not be comparable to similarly titled measures
reported by other REITs since the Company's method of calculating funds from
operations is different from that used by NAREIT. Funds from operations, as
defined by NAREIT, represents net income before depreciation and amortization,
extraordinary items and gains or losses on sales of real estate. Funds from
operations as disclosed above has been modified to adjust for the effect of
straight-lining of property rentals for rent escalations and leasing fee
expenses. Below are the cash flows provided by (used in) operating, investing
and financing activities:
<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
<S> <C> <C>
Operating activities $ 9,765,000 $ 5,461,000
Investing activities $ (47,601,000) $ (40,217,000)
Financing activities $ 48,526,000 $ 47,428,000
</TABLE>
-18-
<PAGE> 19
Year 2000 Issues
The Company is managed by Vornado. Vornado has advised the Company that
it has completed its Year 2000 remediation plan, which addressed all mission
critical systems. Vornado is not aware of any adverse effects of Year 2000
issues including the inability of a significant vendor to provide services to
the Company.
Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
Because the Company does not currently utilize derivatives or engage in hedging
activities, management does not anticipate that implementation of this statement
will have a material effect on the Company's financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101). SAB 101 provides clarification in
applying generally accepted accounting principles to revenue recognition in
financial statements including contingent rentals under leases. Management does
not anticipate that implementation of SAB 101 will have a material effect on the
Companies financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
At December 31, 1999, the Company had $132,161,000 of variable rate debt
at a weighted average interest rate of 8.43% and $197,000,000 of fixed rate debt
bearing interest at a weighted average interest rate of 10.58%. A one percent
increase in the base used to determine the interest rate of the variable rate
debt would result in a $1,322,000 decrease in the Company's annual net income
($.26 per basic and diluted share).
Item 8. Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
Index to Financial Statements
Page
Number
-------
<S> <C>
Independent Auditors' Report 20
Consolidated Balance Sheets at December 31, 1999 and 1998 21
Consolidated Statements of Operations for the
Years Ended December 31, 1999, 1998 and 1997 23
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1999, 1998 and 1997 24
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1999, 1998 and 1997 25
Notes to Consolidated Financial Statements 26
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
-19-
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
of Alexander's, Inc.
Saddle Brook, New Jersey
We have audited the accompanying consolidated balance sheets of Alexander's,
Inc. and Subsidiaries (the "Company") as of December 31, 1999 and 1998 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedules listed in the index at
Item 14(a)(2). These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1999, and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
March 8, 2000
(March 23, 2000 as to note 4)
-20-
<PAGE> 21
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
December 31,
------------------------------------
1999 1998
------------ ------------
<S> <C> <C>
ASSETS:
Real estate, at cost:
Land $ 83,957 $ 83,957
Buildings, leaseholds and leasehold improvements 155,899 149,054
Capitalized expenses and development costs 87,148 57,675
------------ ------------
Total 327,004 290,686
Less accumulated depreciation and amortization (55,199) (51,529)
------------ -------------
Real estate, net 271,805 239,157
Cash and cash equivalents 26,053 15,363
Restricted cash 20,685 9,402
Accounts receivable, net of allowance for doubtful accounts
of $314 and $841 in 1999 and 1998 3,353 3,303
Receivable arising from the straight-lining of rents, net 11,575 13,036
Deferred lease and other property costs 24,788 27,921
Deferred debt expense 4,206 2,693
Other assets 4,031 6,168
------------ ------------
TOTAL ASSETS $ 366,496 $ 317,043
============ ============
</TABLE>
See notes to consolidated financial statements
-21-
<PAGE> 22
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
December 31,
----------------------------------
1999 1998
------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Debt (including $95,000 and $45,000 due to Vornado Realty Trust in 1999 and 1998) $ 329,161 $ 277,113
Amounts due to Vornado Realty Trust and its affiliate 3,821 5,840
Accounts payable and accrued expenses 10,804 10,113
Other liabilities 10,212 17,003
------------- -------------
TOTAL LIABILITIES 353,998 310,069
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock: no par value; authorized, 3,000,000 shares;
issued, none
Common stock: $1.00 par value per share; authorized, 10,000,000 shares;
issued, 5,173,450 shares 5,174 5,174
Additional capital 24,843 24,843
Deficiency (16,559) (22,083)
------------- -------------
13,458 7,934
Less treasury shares, 172,600 shares at cost (960) (960)
------------- -------------
Total stockholders' equity 12,498 6,974
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 366,496 $ 317,043
============= =============
</TABLE>
See notes to consolidated financial statements
-22-
<PAGE> 23
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
1999 1998 1997
------------ ------------------ ---------------
<S> <C> <C> <C>
Revenues:
Property rentals $ 44,232 $ 35,151 $ 18,455
Expense reimbursements 20,158 13,993 2,668
Equity in income of unconsolidated joint venture -- 2,519 4,246
----------- ----------- -----------
Total revenues 64,390 51,663 25,369
----------- ----------- -----------
Expenses:
Operating (including management fee of $1,342, $1,060 and $840
to Vornado) 33,081 20,132 7,459
General and administrative (including management
fee of $2,160 to Vornado in each year) 3,692 4,079 3,933
Depreciation and amortization 5,441 4,289 2,714
----------- ----------- -----------
Total expenses 42,214 28,500 14,106
----------- ----------- -----------
Operating income 22,176 23,163 11,263
Interest and debt expense (including interest on loan
from Vornado) (17,647) (15,115) (13,430)
Interest and other income, net 995 993 719
Write-off resulting from the razing of the
building formerly located at the Company's
Lexington Avenue site -- (15,096) --
Net gain from condemnation proceedings -- -- 8,914
----------- ----------- --------------
NET INCOME (LOSS) $ 5,524 $ (6,055) $ 7,466
=========== =========== ===========
Net income (loss) per share (basic and diluted): $ 1.10 $ (1.21) $ 1.49
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
-23-
<PAGE> 24
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Additional Treasury Stockholders'
Stock Capital Deficiency Stock Equity
----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 5,174 $ 24,843 $ (23,494) $ (960) $ 5,563
Net income -- -- 7,466 -- 7,466
----------- ----------- ------------- ----------- ------------
Balance, December 31, 1997 5,174 24,843 (16,028) (960) 13,029
Net loss -- -- (6,055) -- (6,055)
----------- ----------- ------------- ----------- ------------
Balance, December 31, 1998 5,174 24,843 (22,083) (960) 6,974
Net income -- -- 5,524 -- 5,524
----------- ----------- ------------- ----------- ------------
Balance, December 31, 1999 $ 5,174 $ 24,843 $ (16,559) $ (960) $ 12,498
=========== =========== ============= =========== ============
</TABLE>
See notes to consolidated financial statements.
-24-
<PAGE> 25
ALEXANDER'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,524 $ (6,055) $ 7,466
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization (including debt
issuance costs) 7,460 5,715 4,494
Straight-lining of rental income, net (3,416) (4,429) (1,821)
Write-off of the asset arising from the straight-lining of rents 4,877 -- --
Write-off resulting from the razing of the building
formerly located at the Company's Lexington Avenue site -- 15,096 --
Net gain from condemnation proceedings -- -- (8,914)
Change in assets and liabilities:
Accounts receivable (50) (1,935) (863)
Distributions (less than) in excess of equity in income
of unconsolidated joint venture -- (386) 2,002
Amounts due to Vornado Realty Trust and its affiliate (2,019) (1,048) (1,905)
Accounts payable and accrued expenses 691 1,313 (73)
Other (3,302) (2,810) (1,840)
-------------- -------------- --------------
Net cash provided by (used in) operating activities 9,765 5,461 (1,454)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (36,318) (19,387) (20,625)
Cash restricted for construction financing (13,601) (5,212) 3,203
Cash made available (restricted) for operating liabilities 2,318 (2,318) 545
Acquisition of Kings Plaza Mall, net of liabilities of $1,905 -- (28,000) --
Collection of condemnation proceeds -- 14,700 --
-------------- -------------- --------------
Net cash used in investing activities (47,601) (40,217) (16,877)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt 137,676 90,000 16,667
Debt repayments (85,628) (39,236) (926)
Deferred debt expense (3,522) (3,336) (199)
-------------- -------------- --------------
Net cash provided by financing activities 48,526 47,428 15,542
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents 10,690 12,672 (2,789)
Cash and cash equivalents at the beginning of the
year 15,363 2,691 5,480
-------------- -------------- --------------
Cash and cash equivalents at the end of the year $ 26,053 $ 15,363 $ 2,691
============== ============== ==============
SUPPLEMENTAL INFORMATION
Cash payments for interest $ 24,990 $ 21,553 $ 20,729
============== ============== ==============
Capitalized interest $ 9,352 $ 7,864 $ 9,079
============== ============== ==============
</TABLE>
1998 amounts exclude an increase in real estate of $14,400 and debt of
$15,000 and a reduction in minority interest of $600 as a result of the Company
acquiring a partnership interest.
See notes to consolidated financial statements.
-25-
<PAGE> 26
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BUSINESS
Alexander's Inc. (the "Company") is a real estate investment trust
("REIT") engaged in leasing, managing, developing and redeveloping properties.
Alexander's activities are conducted through its manager, Vornado Realty Trust
("Vornado").
In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. The Company's three
non-operating properties (Lexington Avenue, Paramus, and Rego Park II) are in
various stages of development. As rents commence from portions of the
development properties and from the vacant property(s), the Company expects that
cash flow will become positive.
The Company estimates that the fair market values of its assets are
substantially in excess of their historical cost, and that it has additional
borrowing capacity. Alexander's continues to evaluate its needs for capital,
which may be raised through (a) property specific or corporate borrowing, (b)
the sale of securities and (c) asset sales. Although there can be no assurance,
the Company believes that these cash sources will be adequate to fund cash
requirements until its operations generate adequate cash flow.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -- The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated. Certain reclassifications to
prior year amounts have been made to conform with the current year's
presentation. The Company currently operates in one business segment.
The consolidated financial statements are prepared in conformity with
generally accepted accounting principles. Management has 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 financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Cash and Cash Equivalents -- The Company includes in cash and cash
equivalents both cash and short-term highly liquid investments purchased with
original maturities of three months or less. Cash and cash equivalents does not
include cash restricted for construction financing and operating liabilities
which is disclosed separately.
-26-
<PAGE> 27
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Fair Value of Financial Instruments - All financial instruments of the
Company are reflected in the accompanying Consolidated Balance Sheets at amounts
which, in management's estimation, based upon an interpretation of available
market information and valuation methodologies (including discounted cash flow
analyses with regard to fixed rate debt) are considered appropriate, and
reasonably approximate their fair values. Such fair value estimates are not
necessarily indicative of the amounts that would be realized upon disposition of
the Company's financial instruments.
Real Estate and Other Property - Real estate and other property is
carried at cost, net of accumulated depreciation. Depreciation is provided on
buildings and improvements on a straight-line basis over their estimated useful
lives ranging from four years to forty years. When real estate and other
property is undergoing development activities, all property operating expenses,
including interest expense, are capitalized to the cost of the real property to
the extent that management believes such costs are recoverable through the value
of the property.
The Company's properties are reviewed for impairment if events or changes
in circumstances indicate that the carrying amount of the property may not be
recoverable. In such an event, a comparison is made of the current and projected
operating cash flows of each such property into the foreseeable future on an
undiscounted basis, to the carrying amount of such property. Such carrying
amount would be adjusted, if necessary, to reflect an impairment in the value of
the asset.
Deferred Lease Expense - The Company capitalizes the costs incurred in
connection with obtaining long-term leases. Deferred lease expense is amortized
on the straight-line method over the initial terms of the leases.
Deferred Finance and Debt Expense - The Company capitalizes the costs
incurred in connection with obtaining short-term or long-term debt or
refinancing existing debt. These costs are amortized on the straight-line method
over the initial terms of the debt, which approximates the interest method.
Leases - All leases are operating leases whereby rents and reimbursements
of operating expenses are recorded as real estate operating revenue. The
straight-line basis is used to recognize rents under leases entered into which
provide for varying rents over the lease terms.
Income Taxes - The Company operates in a manner intended to enable it to
continue to qualify as a real estate investment trust ("REIT") under sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code").
Under the Code, the Company's net operating loss ("NOL") carryovers generally
would be available to offset the amount of the Company's REIT taxable income
that otherwise would be required to be distributed as a dividend to its
stockholders.
The Company has reported NOL carryovers for federal tax purposes of
approximately $158,000,000 at December 31, 1999, expiring from 2005 to 2012. The
Company also has investment tax and targeted jobs tax credits of approximately
$3,000,000 expiring in 2002 through 2005.
The net basis in the Company's assets and liabilities for tax purposes is
approximately $80,000,000 lower than the amount reported for financial statement
purposes.
Amounts Per Share - Basic income (loss) per share excludes any dilutive
effects of options, warrants and convertible securities. Options outstanding
were not dilutive in any period.
Stock Options - The Company accounts for stock-based compensation using
the intrinsic value method. Under the intrinsic value method compensation cost
is measured as the excess, if any, of the quoted market price of the Company's
stock at the date of grant over the exercise price of the option granted.
Compensation cost for stock
-27-
<PAGE> 28
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
options, if any, is recognized ratably over the vesting period. The Company's
policy is to grant options with an exercise price equal to the quoted market
price of the Company's stock on the grant date. Accordingly, no compensation
cost has been recognized for the Company's stock option plans.
3. ACQUISITION OF KINGS PLAZA MALL AND RELATED FINANCING TRANSACTIONS
In June 1998, the Company increased its interest in the Kings Plaza Mall
(the "Mall") to 100% by acquiring Federated Department Store's ("Federated") 50%
interest. The purchase price was approximately $28,000,000, which was paid in
cash, plus the Company agreed to pay Federated $15,000,000 to renovate its
Macy's store in the Mall ($12,103,000 has been paid as of January 31, 2000) and
Federated agreed to certain modifications to the Kings Plaza Operating
Agreement. Prior to June 18, 1998, the Company owned a 50% interest in the Mall
and had accounted for this investment under the equity method. The acquisition
was recorded under the purchase method of accounting. The purchase cost was
allocated to the acquired assets and assumed liabilities based on the fair value
as of the closing date.
In connection with the acquisition, the Company completed a $90,000,000
three-year mortgage loan. The loan is collateralized by the Company's interest
in the Kings Plaza Regional Shopping Center and bears interest at LIBOR plus
1.25% (7.75% at December 31, 1999). In addition to funding the acquisition, the
proceeds from the borrowing were also used to repay $34,900,000 of debt.
Further, on August 9, 1999 the Company increased the availability under this
mortgage by $30,000,000 ($9,935,000 is outstanding as of January 31, 2000) of
which $15,000,000 will be used to partially fund a renovation of the Mall
estimated to cost $33,000,000 ($9,045,000 has been paid as of January 31, 2000)
and $15,000,000 will be used to pay the liability to Federated noted above. The
renovations are expected to be completed in 2000.
Set forth below is the unaudited pro forma condensed consolidated
operating data for the Company for the years ended December 31,
1998 and 1997 as if the acquisition of the Kings Plaza Mall and the related
financing transactions had occurred on January 1, 1997.
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma For The Year Ended December 31
---------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Revenues $ 63,309 $ 51,476
=============== ===============
Net (loss) income $ (2,859) $ 10,157
=============== ===============
Net (loss) income per share - basic and diluted $ (.57) $ 2.03
=============== ===============
</TABLE>
Summary financial information for the Kings Plaza Mall prior to the acquisition
is as follows:
<TABLE>
<CAPTION>
For The Period From
January 1, 1998 Year Ended
to June 17, 1998 December 31, 1997
---------------- ------------------
<S> <C> <C>
Operating revenue $ 14,085,000 $ 30,203,000
------------------ ------------------
Operating costs 8,481,000 19,040,000
Depreciation and amortization 715,000 1,418,000
Interest expense 283,000 710,000
------------------ ------------------
9,479,000 21,168,000
------------------ ------------------
Operating income $ 4,606,000 $ 9,035,000
================== ==================
Assets $ 31,000,000 $33,400,000
================== ==================
Liabilities $ 12,300,000 $15,200,000
================== ==================
</TABLE>
-28-
<PAGE> 29
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. DEBT
Debt comprises:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1999 1998
-------------------- ---------------------
<S> <C> <C>
Term loan to Vornado (1) $ 95,000,000 $ 45,000,000
Term loan to bank (1) 20,000,000 20,000,000
First mortgage loan, secured by
the Company's Kings Plaza
Regional Shopping Center (2) 95,676,000 90,000,000
First mortgage loan secured by the Company's
Rego Park I Shopping Center (3) 82,000,000 --
First mortgage loan, secured by the
Company's Fordham Road property (4) 21,485,000 22,113,000
Secured note (5) 15,000,000 15,000,000
Construction loan, secured by the
Company's Rego Park I property (3) -- 75,000,000
First mortgage loan, secured by
Company's Paramus property -- 10,000,000
------------------ ------------------
$ 329,161,000 $ 277,113,000
================== ==================
</TABLE>
(1) On October 20, 1999, the Company increased its loan from Vornado by
$50,000,000. The Company used the proceeds from the additional loan to
fund a portion of the development costs at its Lexington Avenue property
and a portion of the costs to refurbish its Kings Plaza Regional Shopping
Center. The term loans which were scheduled to mature on March 15, 2000,
have been extended to March 15, 2001. The interest rate on the Vornado
loan has been reset from 14.18% to 15.72% reflecting an increase in the
underlying treasury rate. The interest rate on the bank loan was reset
from a fixed rate of 7.10% to a floating rate of LIBOR plus 1.85% (7.67%
at December 31, 1999). The loans are secured by liens on all of the
Company's assets and/or pledges of the stock of subsidiaries owning the
assets and/or guarantees of such subsidiaries and the parent. The liens
do not cover the Kings Plaza Regional Shopping Center and Rego Park I and
are subordinate to first mortgages. The Vornado lien is subordinate to
the bank's. The Vornado loan is prepayable quarterly without penalty.
Under the terms of the loans, no dividends can be paid unless required to
maintain Real Estate Investment Trust ("REIT") status.
-29-
<PAGE> 30
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(2) The Company's mortgage loan, which is an obligation of a wholly-owned
subsidiary, matures on June 1, 2001 and is secured by a mortgage on the
Kings Plaza Regional Shopping Center and guaranteed by the Company. The
loan bears interests at LIBOR plus 1.25% (7.75% at December 31, 1999).
(3) The Company's $75,000,000 loan, collateralized by a mortgage on its Rego
Park I property, was paid off on May 12, 1999, when the Company, through
a newly formed wholly-owned subsidiary, completed an $82,000,000
refinancing of its subsidiary's Rego Park I property. The new 10-year
debt, which is an obligation of the subsidiary, matures in May 2009 and
bears interest at 7.25%. Amortization of principal begins in July 2004 on
a 30-year schedule.
(4) The Company's $21,485,000 loan collateralized by a mortgage on its
Fordham Road property, which was scheduled to mature on February 24,
2000, has been extended 60 days in connection with negotiations to
extend the loan for an additional three-years. The existing loan bears
interest at LIBOR plus 4.25% (10.73% at December 31, 1999). Beginning in
1998, all cash flow of the property after debt service further
amortizes the loan. There has been no further amortization through
December 31, 1999. Under the terms of the proposed extension, interest
accrues at LIBOR plus 1.50% in the first two years and LIBOR plus 1.75%
in year three. Interest will be payable at LIBOR for the entire term.
Interest accrued but not paid will be added to the outstanding principal
balance. The net carrying value of the Fordham Road property is
$4,602,000 at December 31, 1999.
(5) The note is secured by a third mortgage on the Lexington Avenue property.
The note bears annual interest at Prime plus 1% (9.50% at December 31,
1999) and is prepayable without penalty.
A summary of maturities of debt at December 31, 1999, is as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
2000 21,485,000
2001 210,676,000
2002 --
2003 15,000,000
2004 339,000
---------------
$ 247,500,000
===============
</TABLE>
All of the Company's debt is secured by mortgages and/or pledges of the
stock of subsidiaries holding the properties. The net carrying value of real
estate collateralizing the debt amounted to $271,805,000 at December 31, 1999.
-30-
<PAGE> 31
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. LEASES
As Lessor
The Company leases properties to tenants. The rental terms for the
properties leased range from 10 years to approximately 34 years. The leases
provide for the payment of fixed base rentals payable monthly in advance and for
the payment by the lessees of additional rents based on a percentage of the
tenants' sales as well as reimbursements of real estate taxes, insurance and
maintenance.
Future base rental revenue under these noncancellable operating leases is
as follows:
<TABLE>
<CAPTION>
Year Ending Total
December 31, Amounts
----------------------- -----------------------
<S> <C>
2000 $ 31,782,000
2001 29,870,000
2002 28,717,000
2003 29,251,000
2004 29,187,000
Thereafter 317,426,000
</TABLE>
Included in operating expenses for the year ended December 31, 1999 is
$4,877,000 resulting from the write-off of the asset arising from the
straight-lining of rents primarily as a result of Caldor's rejection of its
Flushing lease in 1999.
Sears accounted for 22%, 28% and 31% of the Company's consolidated
revenues for the years ended December 31, 1999, 1998, and 1997, respectively.
Caldor, a former tenant, accounted for 22% of the Company's consolidated
revenues in 1997. No other tenant accounted for more than 10% of revenues
-31-
<PAGE> 32
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
As Lessee
The Company is a tenant under a long-term leases. Future minimum lease
payments under the operating leases are as follows:
<TABLE>
<CAPTION>
Year Ending Total
December 31, Amounts
----------------------- ---------------------
<S> <C>
2000 $ 416,000
2001 416,000
2002 416,000
2003 416,000
2004 416,000
Thereafter 5,679,000
</TABLE>
Rent expense was $416,000, $376,000 and $331,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
6. RELATED PARTY TRANSACTIONS
Steven Roth is Chief Executive Officer and a Director of the Company, the
Managing General Partner of Interstate Properties ("Interstate") and Chairman
of the Board and Chief Executive Officer of Vornado. At December 31, 1999,
Interstate and its Partners own 27.3% of the outstanding common stock of the
Company and owns 15.0% of the outstanding common shares of beneficial interest
of Vornado. In addition, Mr. Roth owns 1.8% of the outstanding common shares of
beneficial interest of Vornado. Mr. Roth, Interstate and the other two general
partners of Interstate, David Mandelbaum and Russell B. Wight, Jr. (who are
also directors of the Company and trustees of Vornado) own, in the aggregate,
17.8% of the outstanding common shares of beneficial interest of Vornado.
Vornado owns 32% of the outstanding common stock of the Company.
The Company is managed by and its properties are redeveloped and leased
by Vornado, pursuant to agreements with a one-year term expiring in March of
each year which are automatically renewable.
The annual management fee payable by the Company to Vornado is equal to
the sum of (i) $3,000,000, (ii) 3% of the gross income from the Kings Plaza
Mall, plus (iii) 6% of development costs with minimum guaranteed fees of
$750,000 per annum. The leasing agreement provides for the Company to pay a fee
to Vornado equal to (i) 3% of the gross proceeds, as defined, from the sale of
an asset, and (ii) in the event of a lease or sublease of an asset, 3% of lease
rent for the first ten years of a lease term, 2% of lease rent for the eleventh
through the twentieth years of a lease term and 1% of lease rent for the
twenty-first through thirtieth year of a lease term. Subject to the payment of
rents by tenants, the Company owes Vornado $1,756,000 at December 31, 1999. Such
amount is payable annually in an amount not to exceed $2,500,000, until the
present value of such installments (calculated at a discount rate of 9% per
annum) equals the amount that would have been paid had it been paid on September
21, 1993, or at the time the transactions which gave rise to the Commissions
occurred, if later.
-32-
<PAGE> 33
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company owes Vornado $95,000,000, the subordinated tranche of a
$115,000,000 secured financing. The Company incurred interest on the loan of
$7,857,000, $6,486,000 and $7,214,000 for the years ended December 31, 1999,
1998 and 1997, of which $5,171,000, $4,008,000 and $4,851,000 was capitalized.
7. COMMITMENTS AND CONTINGENCIES
The Company let a contract for $20,000,000 to undertake the excavation,
clearing and preparation of the Lexington Avenue property for the development of
a large multi-use building. As of January 31, 2000, $5,700,000 has been paid.
In June 1997, the Kings Plaza Regional Shopping Center (the "Center"),
commissioned an Environmental Study and Contamination Assessment Site
Investigation (the Phase II "Study") to evaluate and delineate environmental
conditions disclosed in a Phase I study. The results of the Study indicate the
presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil
and groundwater. The Company has delineated the contamination and has developed
a remediation approach. The New York State Department of Environmental
Conservation ("NYDEC") has not yet approved the finalization of the approach. In
1997, the Center accrued $1,500,000 for its estimated obligation with respect to
the clean up of the site, which includes costs of (i) remedial investigation,
(ii) feasibility study, (iii) remedial design, (iv) remedial action and (v)
professional fees. Based upon revised estimates the Company accrued an
additional $500,000 in the second quarter of 1999 ($727,000 has been paid as of
January 31, 2000). If the NYDEC insists on a more extensive remediation
approach, the Company could incur additional obligations.
The majority of the contamination may have resulted from activities of
third parties; however, the sources of the contamination have not been fully
identified. Although the Company intends to pursue all available remedies
against any potentially responsible third parties, there can be no assurance
that such parties will be identified, or if identified, whether these
potentially responsible third parties will be solvent. In addition, the costs
associated with pursuing any potentially responsible parties may be cost
prohibitive. The Company has not recorded an asset as of December 31, 1999 for
potential recoveries of environmental remediation costs from other parties.
Letters of Credit
Approximately $900,000 in standby letters of credit were issued at
December 31, 1999.
8. STOCK OPTION PLAN
Under the Omnibus Stock Plan (the "Plan"), approved by the Company's
stockholders on May 22, 1996, directors, officers, key employees, employees of
Vornado Realty Trust and any other person or entity as designated by the Omnibus
Stock Plan Committee are eligible to be granted incentive share options and
non-qualified options to purchase common shares. Options granted are at prices
equal to 100% of the market price of the Company's shares at the date of grant,
vest on a graduated basis, becoming fully vested 60 months after grant and
expire ten years after grant. The Plan also provides for the award of Stock
Appreciation Rights, Performance Shares and Restricted Stock, as defined, none
of which have been awarded as of December 31, 1999.
-33-
<PAGE> 34
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
If compensation cost for Plan awards had been determined based on fair
value at the grant dates, net income and income per share would have been
reduced to the pro forma amounts below, for the years ended December 31, 1999,
1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- ---------------------------- --------------------------
<S> <C> <C> <C>
Net income (loss):
As reported $ 5,524,000 $ (6,055,000) $ 7,466,000
Pro forma $ (1,414,000) $ (8,009,000) $ 5,512,000
Net income (loss) per share
applicable to common
shareholders:
As reported $ 1.10 $ (1.21) $ 1.49
Pro forma $ (.28) $ (1.60) $ 1.10
</TABLE>
The fair value of each option grant is estimated on the date of grant
using an option-pricing model with the following weighted-average assumptions
used for grants in the period ended December 31, 1999 (no options were granted
in the years ended December 31, 1998 and 1997):
<TABLE>
<CAPTION>
<S> <C>
Expected Volatility 38%
Expected Life 10 years
Risk-free interest rate 6.45%
Expected dividend yield 0%
</TABLE>
A summary of the Plan's status, and changes during the years ended
December 31, 1999 and 1998, are presented below:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
--------------------------------------- ------------------------------------
Weighted-
Weighted-Average Average
Shares Exercise Price Shares Exercise Price
-------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Outstanding at January 1 350,000 $ 73.88 350,000 $ 73.88
Granted 605,000 70.38 -- --
Exercised -- -- -- --
-------------- --------------- ----------- -------------
Outstanding at December 31 955,000 $ 71.66 350,000 $ 73.88
============== =============== =========== =============
Weighted-average fair value of options
granted (per option) $ 40.81 $ --
============== ===========
</TABLE>
The following table summarizes information about options outstanding
under the Plan at December 31, 1999:
<TABLE>
<CAPTION>
<S> <C>
Options outstanding:
Number outstanding at December 31, 1999 955,000
Weighted-average remaining contractual life 8.4 Years
Weighted-average exercise price $ 71.66
Options exercisable:
Number exercisable at December 31, 1999 210,000
Weighted-average exercise price $ 73.88
Shares available for future grant at December 31, 1999 were 595,000.
</TABLE>
-34-
<PAGE> 35
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted
income (loss) per share:
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Numerator:
Income (loss) from continuing operations $ 5,524,000 $ (6,055,000) $ 7,466,000
=============== ================ ===============
Denominator:
Denominator for basic income (loss) per share -
weighted average shares 5,000,850 5,000,850 5,000,850
Effect of dilutive securities:
Employee stock options 22,072 -- 8,302
--------------- --------------- ---------------
Denominator for diluted income (loss) per share -
adjusted weighted average shares and
assumed conversions 5,022,922 5,000,850 5,009,152
=============== =============== ==============
Basic and diluted income (loss) per share $ 1.10 $ (1.21) $ 1.49
========== ========= =======
</TABLE>
-35-
<PAGE> 36
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
10. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
(amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
-------------------------------------------- ----------------------------------------------
Quarter Ended Quarter Ended
-------------------------------------------- ----------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $16,623 $16,037 $ 15,947 $15,783 $8,007 $9,473 $ 16,201 $17,982
======= ======= ======== ======= ====== ====== ======== =======
Net income (loss) $ 1,475 $ 2,336 $ 1,635 $ 78 (3) $ 922 $1,116 $(11,942)(2) $ 3,849
======= ======= ======== ======= ====== ====== ======== =======
Income (loss) per common share
(basic and diluted) (1) $ .29 $ .47 $ .32 $ .02 $ .18 $ .22 $ (2.39) $ .77
======= ======= ======== ======= ====== ====== ======= =======
</TABLE>
(1) The total for the year may differ from the sum of the quarters as a result
of weighting.
(2) In September 1998, the Company wrote-off $15,096,000 resulting from the
razing of the building formerly located at the Lexington Avenue site.
(3) Net of $4,877,000 resulting from the write-off of the asset arising from the
straight-lining of rents, primarily due to Caldor's rejection of its Flushing
lease in 1999, of which $1,877,000 was recognized in the fourth quarter of 1999.
-36-
<PAGE> 37
ALEXANDER'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
11. SUBSEQUENT EVENT
The Company is currently undertaking the excavation and laying the
foundation for its Lexington Avenue property as part of the proposed development
of a large multi-use building. The proposed building is expected to be comprised
of a commercial portion, which may include a combination of retail stores,
offices, hotel space, extended stay residences, residential rentals and parking;
and a residential portion, consisting of condominium units to be sold to the
public. In connection therewith, the Company paid $14,500,000 for 140,000 square
feet of air rights of which $12,200,000 was paid to Vornado (Vornado's cost plus
$243,000 in interest and closing costs). The air rights were contracted for and
paid for in 1999, with closings to take place when the developments which give
rise to the air rights are completed in 2000. The capital required for the
proposed building will be in excess of $400,000,000.
Because a REIT is not permitted to sell condominiums, the air rights
representing the residential portion of the property are being transferred to a
preferred stock affiliate, a corporation in which the Company owns all of the
preferred equity and none of the common equity. The transfer value will be
adjusted once the final size of the residential portion is determined.
-37-
<PAGE> 38
PART III
Item 10. Directors and Executive Officers of the Registrant
Information relating to directors and executive officers of the Company
will be contained in a definitive Proxy Statement involving the election of
directors which the Company will file with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, not later than 120 days after December 31, 1999, and such
information is incorporated herein by reference. Information relating to
Executive Officers of the Registrant appears on page 10 of this Annual Report on
Form 10-K.
Item 11. Executive Compensation
Information relating to executive compensation will be contained in the
Proxy Statement referred to above in Item 10, "Directors and Executive Officers
of the Registrant", and such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information relating to security ownership of certain beneficial owners
and management will be contained in the Proxy Statement referred to in Item 10,
"Directors and Executive Officers of the Registrant", and such information is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information relating to certain relationships and related transactions
will be contained in the Proxy Statement referred to in Item 10, "Directors and
Executive Officers of the Registrant", and such information is incorporated
herein by reference.
-38-
<PAGE> 39
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of this Report
1. The consolidated financial statements are set forth in Item
8 of this Annual Report on Form 10-K.
2. Financial Statement Schedules.
The following financial statement schedules should be read in conjunction
with the financial statements included in item 8 of this Annual Report on Form
10-K.
<TABLE>
<CAPTION>
Pages in this
Annual Report
on Form 10-K
-------------
Schedule III - Real Estate and Accumulated Depreciation 41
<S> <C>
</TABLE>
All other consolidated financial schedules are omitted because they are
inapplicable, not required, or the information is included elsewhere in the
consolidated financial statements or the notes thereto.
3. Exhibits
See Exhibit Index on page 43
(b) Reports on Form 8-K
During the last quarter of the period covered by this Annual Report on
Form 10-K, no reports on Form 8-K were filed.
-39-
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ALEXANDER'S, INC.
By: /s/ Joseph Macnow
----------------------------------
Joseph Macnow, Vice President,
Chief Financial Officer
Date: March 7, 2000
----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ ----
<S> <C> <C>
/s/ Steven Roth Chief Executive Officer and Director March 7, 2000
- --------------------------
Steven Roth (Principal Executive Officer)
/s/ Thomas R. DiBenedetto Director March 7, 2000
- --------------------------
Thomas R. DiBenedetto
/s/ Michael D. Fascitelli Director March 7, 2000
- --------------------------
Michael D. Fascitelli
/s/ David Mandelbaum Director March 7, 2000
- ------------------------
David Mandelbaum
/s/ Stephen Mann Director March 7, 2000
- --------------------------
Stephen Mann
/s/ Arthur I. Sonnenblick Director March 7, 2000
- --------------------------
Arthur I. Sonnenblick
/s/ Neil Underberg Director March 7, 2000
- ------------------------
Neil Underberg
/s/ Richard West Director March 7, 2000
- --------------------------
Richard West
/s/ Russell B. Wight, Jr. Director March 7, 2000
- --------------------------
Russell B. Wight, Jr.
</TABLE>
-40-
<PAGE> 41
ALEXANDER'S, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(amounts in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Amount
Initial at which
Cost to Carried at
Company (2) Close of Period-
Building, Cost Buildings,
Leaseholds Capitalized Leasehold
and Leasehold Subsequent to and Leaseholds
Description Encumbrances Land Improvements Acquisition(3) Land Improvements
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial Property:
New York City,
New York:
Fordham Rd. $ 21,485 $ 2,301 $ 9,258 -- $ 2,301 $ 9,258
Third Avenue -- 1,201 4,437 -- 1,201 4,437
Rego Park I 82,000 1,647 8,953 $ 57,314 1,647 66,267
Rego Park II -- 3,906 1,467 433 3,906 1,566
Flushing -- -- 1,660 -- -- 1,660
Lexington Ave. 15,000 14,432 12,355 94,338 48,379 --
Flatbush Ave.
and Avenue U 95,676 497 9,542 85,351 24,483 70,907
------ ------- ---------- ---------- ------- ----------
Total New York 214,161 23,984 47,672 237,436 81,917 154,095
New Jersey - Paramus -- 1,441 -- 10,444 1,441 --
Other Properties -- 599 1,804 3,624 599 1,804
------- ---------- ---------- ------- ----------
Other secured debt 115,000 (1)
-------
TOTAL $ 329,161 $26,024 $ 49,476 $ 251,504 $83,957 $ 155,899
========== ======= ========== ========== ========= ===============
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Column F Column G Column H Column I Column J
- ------------------------------------------------------------------------------------------------------------------------------------
Capitalized
Expenses Accumulated Life on Which
and Pre- Depreciation Latest Income
development and Date of Date Statement is
Description Costs Total(3) Amortization Construction Acquired (2) Computed
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial Property:
New York City,
New York:
Fordham Rd. -- $ 11,559 $ 6,957 1933 1992 4-40 years
Third Avenue -- 5,638 3,156 1928 1992 13 years
Rego Park I -- 67,914 13,936 1959 1992 6-40 years
Rego Park II $ 334 5,806 1,456 1965 1992 5-39 years
Flushing -- 1,660 1,660 1975(4) 1992 10-22 years
Lexington Ave. 72,746 121,125 -- -- 1992 --
Flatbush Ave.
and Avenue U -- 95,390 26,228 1970 1992 10-40 years
--------- --------- ---------
Total New York 73,080 309,092 53,393
New Jersey - Paramus 10,444 11,885 -- -- 1992 --
Other Properties 3,624 6,027 1,806 Various 1992 7-25 years
--------- --------- ---------
Other secured debt
TOTAL $ 87,148 $ 327,004 $ 55,199
========= ========= =========
</TABLE>
(1) The loans, which were scheduled to mature in March 2000, have been extended
to March 2001. The loans are secured by liens on all of the Company's assets
and/or pledges of the stock of subsidiaries owning the assets and/or guarantees
of such subsidiaries and the parent, except for the Kings Plaza Regional
Shopping Center and Rego Park I. These liens are subordinate to first mortgages.
(2) Initial cost is as of May 15, 1992 (the date on which the Company commenced
real estate operations) unless acquired subsequent to that date. See Column J.
(3) The net basis in the Company's assets and liabilities for tax purposes is
approximately $80,000,000 lower than the amount reported for financial statement
purposes.
(4) Date represents lease acquisition date.
41
<PAGE> 42
ALEXANDER'S, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(amounts in thousands)
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
REAL ESTATE:
Balance at beginning of period $ 290,686 $ 216,346
Additions during the period:
Buildings, leaseholds and
leasehold improvements 6,846 18,072
Acquisition of remaining 50% interest in the
Kings Plaza Mall (the "Acquisition") -- 29,905
Reclassification of 50% investment of joint venture
due to the Acquisition -- 29,498
Capitalized expenses and development costs 29,472 15,715
-------------- --------------
327,004 309,536
Less: Write-off of the Lexington Avenue buildings -- (18,850)
-------------- --------------
Balance at end of period $ 327,004 $ 290,686
============== ==============
ACCUMULATED DEPRECIATION:
Balance at beginning of period $ 51,529 $ 35,224
Reclassification of 50% investment of joint venture
due to the Acquisition -- 16,955
Additions charged to operating
expenses 3,670 3,104
-------------- --------------
55,199 55,283
Less: Write-off of the Lexington Avenue buildings -- (3,754)
-------------- --------------
Balance at end of period $ 55,199 $ 51,529
============== ==============
</TABLE>
-42-
<PAGE> 43
Index to Exhibits
The following is a list of all exhibits filed as part of this
Report:
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C> <C>
3(i) Certificate of Incorporation, as amended. Incorporated herein by reference *
from Exhibit 3.0 to the Registrant's Current Report on Form 8-K dated
September 21, 1993.
3(ii) By-laws, as amended. Incorporated herein by reference from Exhibit 3.1 *
to the Registrants Form 10-Q for the quarter ended September 30, 1996.
10(i)(A)(1) Agreement, dated as of December 4, 1985, among Seven *
Thirty One Limited Partnership ("731 Limited
Partnership"), Alexander's Department Stores of
Lexington Avenue, Inc., the Company, Emanuel Gruss,
Riane Gruss and Elizabeth Goldberg (collectively, the
"Partners"). Incorporated herein by reference from
Exhibit 10(i)(F)(1) to the
Registrant's Form 10-K for the fiscal year ended July 26, 1986.
10(i)(A)(2) Amended and Restated Agreement of Limited Partnership *
in the 731 Limited Partnership, dated as of August 21,
1986, among the Partners. Incorporated herein by
reference from Exhibit 1 to the Registrant's
Current Report on Form 8-K, dated August 21, 1986.
10(i)(A)(3) Third Amendment to Amended and Restated Agreement of *
Limited Partnership dated December 30, 1994, among the
Partners. Incorporated herein by reference from Exhibit
10(i)(A)(3) to the Registrant's Form 10-K for the
fiscal year ended December 31, 1994.
10(i)(B)(1) Promissory Note Modification Agreement, dated October 4, 1993, between *
Alexander's Department Stores of New Jersey, Inc. and New York Life
Insurance Company ("New York Life"). Incorporated herein by reference
from Exhibit 10(i)(3)(a) to the Registrant's Form 10-K for the Transition
Period August 1, 1993 to December 31, 1993.
10(i)(B)(2) Mortgage Modification Agreement, dated October 4, 1993, by Alexander's *
Department Stores of New Jersey, Inc. and New York Life Incorporated
herein by reference from Exhibit 10(i)(E)(3)(a) to the Registrant's
Form 10-K for the Transition Period August 1, 1993 to December 31, 1993.
10(i)(C) Credit Agreement, dated March 15, 1995, among the *
Company and Vornado Lending Corp. Incorporated herein
by reference from Exhibit 10(i)(C) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1994.
10(i)(D) Credit Agreement, dated March 15, 1995, among the *
Company and First Union Bank, National Association.
Incorporated herein by reference from Exhibit 10(i)(D)
to the Registrant's Form 10-K for the fiscal
year ended December 31, 1994.
</TABLE>
- -----------------------------------
* Incorporated by reference
-43-
<PAGE> 44
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C> <C>
10(i)(E) Building Loan Agreement, dated as of March 29, 1995, *
among the Company, Union Bank of Switzerland ("UBS")
(New York Branch), as Lender, and UBS (New York
Branch), as Agent. Incorporated by reference from
Exhibit 10(i)(E) to the Registrant's Form 10-K for
the fiscal year ended December 31, 1994.
10(i)(F) Project Loan Agreement, dated as of March 29,1995, *
among the Company, UBS (New York Branch), as Lender,
and UBS (New York Branch), as Agent. Incorporated
herein by reference from Exhibit 10(i)(F) to the
Registrant's Form 10-K for the fiscal year ended December 31, 1994.
10(i)(G)(1) Real Estate Retention Agreement dated as of July 20, *
1992, between Vornado Realty Trust and Keen Realty
Consultants, Inc., each as special real estate
consultants, and the Company. Incorporated herein by
reference from Exhibit 10(i)(O) to the Registrant's
Form 10-K for the fiscal year ended July 25, 1992.
10(i)(G)(2) Extension Agreement to the Real Estate Retention *
Agreement, dated as of February 6, 1995, between the
Company and Vornado Realty Trust. Incorporated herein
by reference from Exhibit 10(i)(G)(2) to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1994.
10(i)(H) Management and Development Agreement, dated as of *
February 6, 1995, between Vornado Realty Trust and the
Company, on behalf of itself and each subsidiary listed
therein. Incorporated herein by reference from Exhibit
10.1 to the Registrant's Current Report on Form 8-K dated
February 6, 1995.
10(i)(I) Commitment letter, dated as of February 6, 1995, *
between Vornado Realty Trust and the Company.
Incorporated herein by reference from Exhibit 10.3 to
the Registrant's Current Report on Form 8-K dated
February 6, 1995.
10(ii)(A)(1) Agreement of Lease, dated April 22, 1966, between S&E *
Realty Company and Alexander's Department Stores of
Valley Stream, Inc. Incorporated herein by reference
from Exhibit 13N to the Registrant's Registration Statement
on Form S-1 (Registration No. 2-29780).
10(ii)(A)(2) Guarantee, dated April 22, 1966, of the Lease described *
as Exhibit 10(ii)(A)(1) above by Alexander's Department
Stores, Inc. Incorporated herein by reference from
Exhibit 13N(1) to the Registrant's Registration Statement
on Form S-1 (Registration No. 2-29780).
10(ii)(A)(3) Agreement of Lease for Rego Park, Queens, New York, between *
Alexander's, Inc. and Sears Roebuck & Co. Incorporated herein by
reference from Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1994.
- -----------------------------------
* Incorporated by reference
</TABLE>
-44-
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C> <C>
10(ii)(A)(4)(a) Lease for Roosevelt Avenue, Flushing, New York, dated *
as of December 1, 1992, between the Company, as
landlord, and Caldor, as tenant. Incorporated herein by
reference from Exhibit 10(ii)(E)(7) to the Registrant's Form
10-K for the fiscal year ended July 25, 1992.
10(ii)(A)(4)(b) First Amendment to Sublease for Roosevelt Avenue, *
Flushing, New York, dated as of February 22, 1995
between the Company, as sublandlord, and Caldor, as
tenant. Incorporated herein by reference from Exhibit
10(ii)(A)(8)(b) to the Registrant's Form 10-K for the
fiscal year ended December 31, 1994.
10(ii)(A)(5) Lease Agreement, dated March 1, 1993 by and between the *
Company and Alex Third Avenue Acquisition Associates.
Incorporated by reference from Exhibit 10(ii)(F) to the
Registrant's Form 10-K for the fiscal year ended July 31, 1993.
10(ii)(A)(6) Agreement of Lease for Rego Park, Queens, New York, *
between the Company and Marshalls of Richfield, MN.,
Inc., dated as of March 1, 1995. Incorporated herein by
reference from Exhibit 10(ii)(A)(12)(a) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1994.
10(ii)(A)(7) Guaranty, dated March 1, 1995, of the Lease described *
in Exhibit 10(ii)(A)(12)(a) above by the Company.
Incorporated herein by reference from Exhibit
10(ii)(A)(12)(b) to the Registrant's Form 10-K for the
fiscal year ended December 31, 1994.
10(iii)(B) Employment Agreement, dated February 9, 1995, between *
the Company and Stephen Mann. Incorporated herein by
reference from Exhibit 10(iii)(B) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1994.
12 Consolidated Ratios of Earnings to Fixed Charges and Combined Fixed
Charges and Preferred Stock Dividend Requirements.
</TABLE>
- -----------------------------------
* Incorporated by reference
-45-
<PAGE> 46
EXHIBIT NO. DOCUMENT
- ------------ -------------------------------
13 Not applicable.
16 Not applicable.
18 Not applicable.
19 Not applicable.
21 Subsidiaries of Registrant.
22 Not applicable.
23 Consent by Deloitte & Touche LLP.
25 Not applicable.
27 Financial Data Schedule.
29 Not applicable.
-46-
<PAGE> 1
EXHIBIT 12
ALEXANDER'S, INC.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
(amounts in thousands except ratios)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing operations
before reversal of deferred taxes $ 5,524 $ (6,055) $ 7,466 $ 13,097 $ (9,102)
Fixed charges (1) 17,786 16,651 13,749 14,464 13,607
----------- ----------- ----------- ----------- -----------
Income from continuing operation
before income taxes and fixed charges $ 23,310 $ 10,596 $ 21,215 $ 27,561 $ 4,505
=========== =========== =========== =========== ===========
Fixed charges:
Interest and debt expense $ 17,647 $ 16,541 $ 13,639 $ 14,299 $ 13,442
1/3 of rent expense - interest factor 139 110 110 165 165
----------- ----------- ----------- ----------- -----------
17,786 16,651 13,749 14,464 13,607
Capitalized interest 9,352 7,864 9,079 8,552 6,575
----------- ----------- ----------- ----------- -----------
$ 27,138 $ 24,515 $ 22,828 $ 23,016 $ 20,182
=========== =========== =========== =========== ===========
Ratio of earnings to fixed charges -- -- -- 1.20 --
Deficiency in earnings available to cover
fixed charges $ (3,828) $ (13,919) $ (1,613) -- $ (15,677)
=========== ============ =========== ===========
</TABLE>
Notes:
(1) For purposes of this calculation, earnings before fixed charges
consist of earnings plus fixed charges. Fixed charges consist of
interest expense on all indebtedness (including amortization of
debt issuance costs) from continuing operations and the portion of
operating lease rental expense that is representative of the
interest factor (deemed to be one-third of operating lease
rentals).
<PAGE> 1
EXHIBIT 21
ALEXANDER'S, INC.
SUBSIDIARIES OF REGISTRANT
Alexander's of Brooklyn, Inc.
Alexander's of Fordham Road, Inc.
Alexander's Rego Park Center, Inc.
Alexander's of Rego Park, Inc.
Alexander's of Rego Park II, Inc.
Alexander's of Rego Park III, Inc.
Alexander's of Third Avenue, Inc.
Alexander's of Flushing, Inc.
Alexander's Department Stores of New Jersey, Inc.
Alexander's Department Stores of Lexington Avenue, Inc.
Alexander's Department Stores of Brooklyn, Inc.
U & F Realty Corp.
ADMO Realty Corp.
Ownreal Inc.
Sakraf Wine & Liquor Store, Inc.
Alexander's Personnel Providers, Inc.
Alexander's Kings Plaza Center, Inc.
Kings Plaza Corp. N.Y.
Alexander's Rego Shopping Center Inc.
Seven Thirty One Limited Partnership
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation in Amendment No. 3 to Registration Statement No.
33-62779 on Form S-3 of our report dated March 8, 2000 (March 23, 2000 as to
note 4), appearing in this Annual Report on Form 10-K of Alexander's, Inc. for
the year ended December 31, 1999.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
March 23, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANYS
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRITY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 26,053
<SECURITIES> 0
<RECEIVABLES> 3,667
<ALLOWANCES> (341)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 327,004
<DEPRECIATION> (55,199)
<TOTAL-ASSETS> 366,469
<CURRENT-LIABILITIES> 0
<BONDS> 329,161
0
0
<COMMON> 5,174
<OTHER-SE> 7,324
<TOTAL-LIABILITY-AND-EQUITY> 366,496
<SALES> 0
<TOTAL-REVENUES> 64,390
<CGS> 0
<TOTAL-COSTS> 42,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 527
<INTEREST-EXPENSE> 17,647
<INCOME-PRETAX> 5,524
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,524
<EPS-BASIC> 1.10
<EPS-DILUTED> 1.10
</TABLE>
