Edgar Filing: ALEXANDERS INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended:

March 31, 2013

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

For the transition period from:

Commission File Number:

001-6064

ALEXANDER’S, INC.

(Exact name of registrant as specified in its charter)

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

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

(201) 587-8541

(Registrant’s telephone number, including area code)

N/A

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

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. x Yes o No

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

x Large Accelerated Filer

o Accelerated Filer

o Non-Accelerated Filer (Do not check if smaller reporting company)

o Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes x No

As of April 30, 2013, there were 5,105,936 shares of common stock, par value $1 per share, outstanding.

	ALEXANDER’S, INC.

	INDEX

					Page Number
PART I.		Financial Information

	Item 1.		Financial Statements:

			Consolidated Balance Sheets (Unaudited) as of
				March 31, 2013 and December 31, 2012	3

			Consolidated Statements of Income (Unaudited) for the
				Three Months Ended March 31, 2013 and 2012	4

			Consolidated Statements of Comprehensive Income (Unaudited) for the
				Three Months Ended March 31, 2013 and 2012	5

			Consolidated Statements of Changes in Equity (Unaudited) for the
				Three Months Ended March 31, 2013 and 2012	6

			Consolidated Statements of Cash Flows (Unaudited) for the
				Three Months Ended March 31, 2013 and 2012	7

			Notes to Consolidated Financial Statements (Unaudited)		8

			Report of Independent Registered Public Accounting Firm		15

	Item 2.		Management’s Discussion and Analysis of
				Financial Condition and Results of Operations	16

	Item 3.		Quantitative and Qualitative Disclosures about Market Risk		22

	Item 4.		Controls and Procedures		22

PART II.		Other Information

	Item 1.		Legal Proceedings		23

	Item 1A.		Risk Factors		23

	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		23

	Item 3.		Defaults Upon Senior Securities		23

	Item 4.		Mine Safety Disclosures		23

	Item 5.		Other Information		23

	Item 6.		Exhibits		23


Signatures					24

Exhibit Index					25

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except share and per share amounts)

			March 31,		December 31,
ASSETS			2013		2012
Real estate, at cost:
	Land		$	44,971	$	44,971
	Buildings and leasehold improvements			866,038		864,609
	Development and construction in progress			2,432		2,212
		Total		913,441		911,792
Accumulated depreciation and amortization				(166,940)		(160,826)
Real estate, net				746,501		750,966
Cash and cash equivalents				368,508		353,396
Restricted cash				89,476		90,395
Marketable securities				34,460		31,206
Tenant and other receivables, net of allowance for doubtful accounts of $2,294 and $2,219, respectively				2,377		1,953
Receivable arising from the straight-lining of rents				174,643		173,694
Deferred lease and other property costs, net, including unamortized leasing fees to Vornado of
	$39,218 and $39,910, respectively			53,517		54,461
Deferred debt issuance costs, net of accumulated amortization of $17,410 and $16,834, respectively				5,018		5,522
Other assets				10,763		20,217
			$	1,485,263	$	1,481,810


		LIABILITIES AND EQUITY
Mortgages payable			$	1,061,953	$	1,065,916
Amounts due to Vornado				45,623		46,445
Accounts payable and accrued expenses				38,491		33,621
Other liabilities				3,674		3,675
		Total liabilities		1,149,741		1,149,657

Commitments and contingencies

Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares;
	issued and outstanding, none			-		-
Common stock: $1.00 par value per share; authorized, 10,000,000 shares;
	issued, 5,173,450 shares; outstanding, 5,105,936 shares			5,173		5,173
Additional capital				29,352		29,352
Retained earnings				296,912		296,797
Accumulated other comprehensive income				4,460		1,206
				335,897		332,528
Treasury stock: 67,514 shares, at cost				(375)		(375)
		Total equity		335,522		332,153
			$	1,485,263	$	1,481,810

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Amounts in thousands, except share and per share amounts)


			Three Months Ended
			March 31,
			2013		2012
REVENUES
	Property rentals		$	34,171	$	33,773
	Expense reimbursements			14,604		13,528
Total revenues				48,775		47,301

EXPENSES
	Operating, including fees to Vornado of $982 and $1,032, respectively			15,554		14,541
	Depreciation and amortization			7,223		7,183
	General and administrative, including management fees to Vornado of
		$595 and $540, respectively		1,073		1,106
Total expenses				23,850		22,830

OPERATING INCOME				24,925		24,471

	Interest and other income, net			385		34
	Interest and debt expense			(11,148)		(11,473)
Income from continuing operations				14,162		13,032
Income from discontinued operations				-		6,392
Net income				14,162		19,424
Net loss attributable to the noncontrolling interest				-		58
Net income attributable to Alexander’s			$	14,162	$	19,482

Income per common share – basic and diluted:
	Income from continuing operations		$	2.77	$	2.55
	Income from discontinued operations, net			-		1.26
	Net income per common share		$	2.77	$	3.81
	Weighted average shares outstanding			5,108,016		5,106,984

Dividends per common share			$	2.75	$	3.75

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Amounts in thousands)


		Three Months Ended
		March 31,
		2013		2012

Net income		$	14,162	$	19,424
Other comprehensive income:
	Change in unrealized net gain on securities available-for-sale		3,254		-
Comprehensive income			17,416		19,424
Less:
	Comprehensive loss attributable to the noncontrolling interest		-		58
Comprehensive income attributable to Alexander's		$	17,416	$	19,482

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
(Amounts in thousands)


								Accumulated
								Other						Non-
	Common Stock			Additional		Retained		Comprehensive		Treasury		Alexander’s		controlling		Total
	Shares	Amount		Capital		Earnings		Income		Stock		Equity		Interest		Equity
Balance, December 31, 2011	5,173	$	5,173	$	31,801	$	322,201	$	-	$	(375)	$	358,800	$	4,445	$	363,245
Net income (loss)	-		-		-		19,482		-		-		19,482		(58)		19,424
Dividends paid	-		-		-		(19,151)		-		-		(19,151)		-		(19,151)
Balance, March 31, 2012	5,173	$	5,173	$	31,801	$	322,532	$	-	$	(375)	$	359,131	$	4,387	$	363,518


Balance, December 31, 2012	5,173	$	5,173	$	29,352	$	296,797	$	1,206	$	(375)	$	332,153	$	-	$	332,153
Net income	-		-		-		14,162		-		-		14,162		-		14,162
Dividends paid	-		-		-		(14,047)		-		-		(14,047)		-		(14,047)
Change in unrealized net gain
on securities available-for-sale	-		-		-		-		3,254		-		3,254		-		3,254
Balance, March 31, 2013	5,173	$	5,173	$	29,352	$	296,912	$	4,460	$	(375)	$	335,522	$	-	$	335,522


See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)

		Three Months Ended
		March 31,
CASH FLOWS FROM OPERATING ACTIVITIES		2013		2012
Net income		$	14,162	$	19,424
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization, including amortization of debt issuance costs		7,821		9,505
	Straight-lining of rental income		(949)		(1,469)
Change in operating assets and liabilities:
	Tenant and other receivables, net		(424)		(677)
	Other assets		9,277		10,481
	Amounts due to Vornado		(822)		(655)
	Accounts payable and accrued expenses		4,488		7,009
	Other liabilities		(1)		-
Net cash provided by operating activities			33,552		43,618

CASH FLOWS FROM INVESTING ACTIVITIES
	Construction in progress and real estate additions		(1,267)		(2,709)
	Restricted cash		919		968
	Proceeds from maturing short-term investments		-		5,000
Net cash (used in) provided by investing activities			(348)		3,259

CASH FLOWS FROM FINANCING ACTIVITIES
	Dividends paid		(14,047)		(19,151)
	Debt repayments		(3,963)		(3,698)
	Debt issuance costs		(82)		(395)
Net cash used in financing activities			(18,092)		(23,244)

Net increase in cash and cash equivalents			15,112		23,633
Cash and cash equivalents at beginning of period			353,396		506,619
Cash and cash equivalents at end of period		$	368,508	$	530,252

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash payments for interest	$	10,472	$	12,258

NON-CASH TRANSACTIONS
	Change in unrealized net gain on securities available-for-sale	$	3,254	$	-
	Non-cash additions to real estate included in accounts payable and accrued expenses		603		1,806
	Write-off of fully amortized and depreciated assets		-		624

See notes to consolidated financial statements (unaudited).

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization

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

2. Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Alexander’s and its consolidated subsidiaries. All intercompany amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified in order to conform to current year presentation.

We currently operate in one business segment.

3. Recently Issued Accounting Literature

In February 2013, the Financial Accounting Standards Board issued Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU No. 2013-02”). ASU No. 2013-02 requires additional disclosures regarding significant reclassifications out of each component of accumulated other comprehensive income, including the effect on the respective line items of net income for amounts that are required to be reclassified into net income in their entirety and cross-references to other disclosures providing additional information for amounts that are not required to be reclassified into net income in their entirety. The adoption of this update on January 1, 2013, did not have any impact on our consolidated financial statements.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

4. Relationship with Vornado

At March 31, 2013, Vornado owned 32.4% of our outstanding common stock. We are managed by, and our properties are leased and developed by, Vornado, pursuant to the agreements described below which expire in March of each year and are automatically renewable.

Management and Development Agreements

We pay Vornado an annual management fee equal to the sum of (i) $2,800,000, (ii) 2% of gross revenue from the Rego Park II shopping center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) $264,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.

In addition, Vornado is entitled to a development fee of 6% of development costs, as defined.

Leasing Agreements

Vornado also provides us with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through the twentieth year of a lease term, and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by tenants. In the event third-party real estate brokers are used, the fees to Vornado increase by 1% and Vornado is responsible for the fees to the third-party real estate brokers. Vornado is also entitled to a commission upon the sale of any of our assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000 and 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable in annual installments in an amount not to exceed $4,000,000, with interest on the unpaid balance at one-year LIBOR plus 1.0% (1.84% at March 31, 2013).

Other Agreements

We also have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise (i) cleaning, engineering and security services at our Lexington Avenue property and (ii) security services at our Rego Park I and Rego Park II properties, for an annual fee equal to the cost of such services plus 6%.

The following is a summary of fees to Vornado under the various agreements discussed above, and includes $732,000 of property management and leasing fees in the three months ended March 31, 2012, related to the Kings Plaza Regional Shopping Center (“Kings Plaza”), which was sold in November 2012 (see Note 6 – Discontinued Operations).

		Three Months Ended
		March 31,
(Amounts in thousands)		2013		2012
Company management fees		$	700	$	750
Development fees			-		188
Leasing fees			386		623
Property management fees and payments for cleaning, engineering
	and security services		877		1,267
		$	1,963	$	2,828

At March 31, 2013, we owed Vornado $45,189,000 for leasing fees and $434,000 for management, property management and cleaning fees.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

5. Marketable Securities

As of March 31, 2013, we own 535,265 common shares of The Macerich Company (NYSE: MAC) (“Macerich”), which were received in connection with the sale of Kings Plaza to Macerich. These shares have an economic cost of $56.05 per share, or $30,000,000 in the aggregate. As of March 31, 2013, these shares have a fair value of $34,460,000, based on Macerich’s closing share price of $64.38 per share. These shares are included in “marketable securities” on our consolidated balance sheets and are classified as available-for-sale. Available-for-sale securities are presented at fair value. Unrealized gains and losses resulting from the mark-to-market of these securities are included in “other comprehensive income.” The three months ended March 31, 2013 includes a $3,254,000 unrealized gain from the mark-to-market of these securities.

6. Discontinued Operations

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 360, Property, Plant and Equipment, we have reclassified the revenues and expenses of Kings Plaza, which was sold in November 2012, to “income from discontinued operations” for all periods on our consolidated statements of income. The table below sets forth the results of operations of Kings Plaza for the three months ended March 31, 2012.

		Three Months
		Ended March 31,
(Amounts in thousands)			2013		2012
Total revenues		$	-	$	16,359
Total expenses⁽¹⁾			-		9,967
Income from discontinued operations		$	-	$	6,392
___________________
(1)	Includes $445 of fees to Vornado.

7. Significant Tenants

Bloomberg L.P. (“Bloomberg”) accounted for $21,802,000 and $21,222,000, representing 45% of our total revenues in each of the three-month periods ended March 31, 2013 and 2012, respectively. No other tenant accounted for more than 10% of our total revenues. If we were to lose Bloomberg as a tenant, or if Bloomberg were to fail or become unable to perform its obligations under its lease, it would adversely affect our results of operations and financial condition. We receive and evaluate certain confidential financial information and metrics from Bloomberg on a semi-annual basis. In addition, we access and evaluate financial information regarding Bloomberg from private sources, as well as publicly available data.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

8. Mortgages Payable

The following is a summary of our outstanding mortgages payable. We may refinance our maturing debt as it comes due or choose to repay it at maturity.

						Balance at
				Interest Rate at		March 31,		December 31,
(Amounts in thousands)			Maturity	March 31, 2013		2013		2012
First mortgages secured by:
	731 Lexington Avenue, office space		Feb. 2014	5.33	%	$	324,130	$	327,425
	Rego Park I shopping center (100% cash
		collateralized)	Mar. 2015	0.40	%		78,246		78,246
	731 Lexington Avenue, retail space⁽¹⁾		Jul. 2015	4.93	%		320,000		320,000
	Paramus		Oct. 2018	2.90	%		68,000		68,000
	Rego Park II shopping center⁽²⁾		Nov. 2018	2.05	%		271,577		272,245
						$	1,061,953	$	1,065,916

(1)	In the event of a substantial casualty, as defined, up to $75,000 of this loan may become recourse to us.
(2)	This loan bears interest at LIBOR plus 1.85%.

9. Fair Value Measurements

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

Financial Assets and Liabilities Measured at Fair Value

Financial assets measured at fair value on our consolidated balance sheets at March 31, 2013 and December 31, 2012, consist solely of marketable securities, which is presented in the table below, based on its level in the fair value hierarchy. There were no financial liabilities measured at fair value at March 31, 2013 and December 31, 2012.

		As of March 31, 2013
(Amounts in thousands)		Total		Level 1		Level 2		Level 3
	Marketable securities	$	34,460	$	34,460	$	-	$	-

		As of December 31, 2012
(Amounts in thousands)		Total		Level 1		Level 2		Level 3
	Marketable securities	$	31,206	$	31,206	$	-	$	-

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

9. Fair Value Measurements – continued

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents, mortgages payable and leasing commissions due to Vornado. Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities. The fair value of our mortgages payable is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. The leasing commissions due to Vornado are carried at cost plus interest at variable rates, which approximate fair value. The fair value of cash equivalents (primarily U.S. Treasury bills and money market funds) is classified as Level 1 and the fair value of mortgages payable and leasing commissions due to Vornado is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of March 31, 2013 and December 31, 2012.

			As of March 31, 2013				As of December 31, 2012
			Carrying		Fair		Carrying		Fair
(Amounts in thousands)			Amount		Value		Amount		Value
Assets:
	Cash equivalents	$	328,678	$	328,678	$	289,054	$	289,054

Liabilities:
	Mortgages payable	$	1,061,953	$	1,106,000	$	1,065,916	$	1,097,000
	Leasing commissions (included in Amounts due to Vornado)		45,189		45,000		45,803		46,000
		$	1,107,142	$	1,151,000	$	1,111,719	$	1,143,000

10. Commitments and Contingencies

Insurance

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

Fifty Ninth Street Insurance Company, LLC (“FNSIC”), our wholly owned consolidated subsidiary, acts as a direct insurer for coverage for acts of terrorism, including nuclear, biological, chemical and radiological (“NBCR”) acts, as defined by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA”). Coverage for acts of terrorism (including NBCR acts) is up to $1.7 billion per occurrence. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies with no exposure to FNSIC. For NBCR acts, FNSIC is responsible for a $275,000 deductible and 15% of the balance of a covered loss and the Federal government is responsible for the remaining 85% of a covered loss. We are ultimately responsible for any loss borne by FNSIC.

There can be no assurance that we will be able to maintain similar levels of insurance coverage in the future in amounts and on terms that are commercially reasonable. We are responsible for deductibles and losses in excess of our insurance coverage, which could be material.

Our mortgage loans are non-recourse to us, except for $75,000,000 of the $320,000,000 mortgage on our 731 Lexington Avenue property, in the event of a substantial casualty, as defined. Our mortgage loans contain customary covenants requiring us to maintain insurance. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance our properties.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

10. Commitments and Contingencies – continued

Flushing Property

In 2002, Flushing Expo, Inc. (“Expo”) agreed to purchase the stock of the entity which owns the Flushing property from us (“Purchase of the Property”) and gave us a non-refundable deposit of $1,875,000. Pursuant to a stipulation of settlement, we settled the action Expo brought against us regarding the Purchase of the Property and in June 2011, deposited the settlement amount with the Court, in exchange for which we received a stipulation of discontinuance, with prejudice, as well as general releases. In November 2011, Expo filed another action, this time against our tenant at the Flushing property asserting, among other things, that such tenant interfered with Expo’s Purchase of the Property from us and sought $50,000,000 in damages from our tenant, who sought indemnification from us for such amount. In August 2012, the Court entered judgment denying Expo’s claim for damages. Expo filed a motion to re-argue the decision, which the Court denied on December 7, 2012. Expo has appealed the Court’s August 2012 decision. We believe, after consultation with counsel, that the amount or range of reasonably possible losses, if any, cannot be estimated.

Paramus

In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has a 40-year term with a purchase option in 2021 for $75,000,000. The property is encumbered by a $68,000,000 interest-only mortgage loan with a fixed rate of 2.90%, which matures in October 2018. The annual triple-net rent is the sum of $700,000 plus the amount of debt service on the mortgage loan. If the purchase option is exercised, we will receive net cash proceeds of approximately $7,000,000 and recognize a gain on sale of land of approximately $60,000,000. If the purchase option is not exercised, the triple-net rent for the last 20 years would include debt service sufficient to fully amortize $68,000,000 over the remaining 20-year lease term.

Letters of Credit

Approximately $4,058,000 of standby letters of credit were outstanding as of March 31, 2013.

Other

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

11. Rego Park II Apartment Tower

We are currently evaluating plans to construct an apartment tower containing approximately 300 units aggregating 250,000 square feet, above our Rego Park II shopping center. The funding required for the proposed development will be approximately $100,000,000 to $120,000,000. There can be no assurance that the project will commence, or if commenced, be completed on schedule or within budget.

ALEXANDER’S, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

12. Earnings Per Share

The following table sets forth the computation of basic and diluted income per share, including a reconciliation of net income and the number of shares used in computing basic and diluted income per share. Basic income per share is determined using the weighted average shares of common stock (including deferred stock units) outstanding during the period. Diluted income per share is determined using the weighted average shares of common stock (including deferred stock units) outstanding during the period, and assumes all potentially dilutive securities were converted into common shares at the earliest date possible. There were no potentially dilutive securities outstanding during the three months ended March 31, 2013 and 2012.

		Three Months Ended
		March 31,
(Amounts in thousands, except share and per share amounts)		2013		2012
	Income from continuing operations	$	14,162	$	13,032
	Income from discontinued operations, net of income attributable to the noncontrolling interest		-		6,450
	Net income attributable to common stockholders – basic and diluted	$	14,162	$	19,482

	Weighted average shares outstanding – basic and diluted		5,108,016		5,106,984

	Income from continuing operations	$	2.77	$	2.55
	Income from discontinued operations, net		-		1.26
	Net income per common share – basic and diluted	$	2.77	$	3.81

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Alexander’s, Inc.

Paramus, New Jersey

We have reviewed the accompanying consolidated balance sheet of Alexander’s, Inc. and subsidiaries (the “Company”) as of March 31, 2013, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2013 and 2012. These interim financial statements are the responsibility of the Company’s management.

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

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Alexander’s, Inc. and subsidiaries as of December 31, 2012, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2013, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2012 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey
May 6, 2013

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

Certain statements contained in this Quarterly Report constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results, financial condition, results of operations and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A - Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2012. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly, any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our consolidated financial statements for the three months ended March 31, 2013 and 2012. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain prior year balances have been reclassified in order to conform to current year presentation.

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2012 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 2 – Summary of Significant Accounting Policies” to the consolidated financial statements included therein. There have been no significant changes to these policies during 2013.

Overview

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

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

Quarter Ended March 31, 2013 Financial Results Summary

Net income attributable to common stockholders for the quarter ended March 31, 2013 was $14,162,000, or $2.77 per diluted share, compared to $19,482,000, or $3.81 per diluted share for the quarter ended March 31, 2012. Net income from continuing operations was $14,162,000, or $2.77 per diluted share for the quarter ended March 31, 2013, compared to $13,032,000, or $2.55 per diluted share for the quarter ended March 31, 2012.

Funds from operations attributable to common stockholders (“FFO”) for the quarter ended March 31, 2013 was $21,339,000, or $4.18 per diluted share, compared to $28,030,000, or $5.49 per diluted share for prior year’s quarter. The quarter ended March 31, 2012 includes FFO of $7,867,000, or $1.54 per diluted share related to discontinued operations.

Leasing Activity, Square Footage and Occupancy

As of March 31, 2013 and December 31, 2012, our portfolio was comprised of six properties aggregating 2,179,000 square feet that had occupancy rates of 99.2% and 99.1%, respectively. In the three months ended March 31, 2013 we leased 2,328 square feet at our Rego Park II shopping center, at an average initial rent of $94.41 per square foot for a 10-year lease term.

Significant Tenants

Recently Issued Accounting Literature

Results of Operations – Three Months Ended March 31, 2013 compared to March 31, 2012

Property Rentals

Property rentals were $34,171,000 in the quarter ended March 31, 2013, compared to $33,773,000 in the prior year’s quarter, an increase of $398,000.

Expense Reimbursements

Tenant expense reimbursements were $14,604,000 in the quarter ended March 31, 2013, compared to $13,528,000 in the prior year’s quarter, an increase of $1,076,000. This increase was primarily due to higher real estate taxes, partially offset by lower reimbursable operating expenses.

Operating Expenses

Operating expenses were $15,554,000 in the quarter ended March 31, 2013, compared to $14,541,000 in the prior year’s quarter, an increase of $1,013,000. This increase was comprised of higher real estate taxes of $1,577,000, partially offset by lower reimbursable operating expenses of $254,000 and lower non-reimbursable operating expenses of $310,000 (primarily bad debt expense).

Depreciation and Amortization

Depreciation and amortization was $7,223,000 in the quarter ended March 31, 2013, compared to $7,183,000 in the prior year’s quarter, an increase of $40,000.

General and Administrative Expenses

General and administrative expenses were $1,073,000 in the quarter ended March 31, 2013, compared to $1,106,000 in the prior year’s quarter, a decrease of $33,000.

Interest and Other Income, net

Interest and other income, net was $385,000 in the quarter ended March 31, 2013, compared to $34,000 in the prior year’s quarter, an increase of $351,000. This increase was primarily due to dividend income on Macerich common shares in the current year’s quarter.

Interest and Debt Expense

Interest and debt expense was $11,148,000 in the quarter ended March 31, 2013, compared to $11,473,000 in the prior year’s quarter, a decrease of $325,000. This decrease was primarily due to savings of $189,000 from lower average rates and $148,000 from lower average outstanding debt balances.

Income from Discontinued Operations

Income from discontinued operations was $6,392,000 in the quarter ended March 31,2012 and represents the net income from the Kings Plaza Regional Shopping Center (“Kings Plaza”), which was sold in November 2012.

Net Loss Attributable to the Noncontrolling Interest

Net loss attributable to the noncontrolling interest was $58,000 in the quarter ended March 31, 2012, and represents our venture partner’s 75% pro rata share of the net loss from the Kings Plaza energy plant joint venture, which was sold together with Kings Plaza in November 2012.

Liquidity and Capital Resources

Cash Flows

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

We have no debt maturing in 2013. In 2014, $324,130,000 of our outstanding debt is scheduled to mature. We may refinance our outstanding debt as it comes due or choose to repay it at maturity.

Development Project

Three Months Ended March 31, 2013

Cash and cash equivalents were $368,508,000 at March 31, 2013, compared to $353,396,000 at December 31, 2012, an increase of $15,112,000. This increase resulted from $33,552,000 of net cash provided by operating activities, partially offset by $18,092,000 of net cash used in financing activities and $348,000 of net cash used in investing activities.

Net cash provided by operating activities of $33,552,000 was comprised of net income of $14,162,000, the net change in operating assets and liabilities of $12,518,000 and adjustments for non-cash items of $6,872,000. The net change in operating assets and liabilities was primarily due to amortization of prepaid real estate taxes of $8,478,000. The adjustments for non-cash items were comprised of depreciation and amortization of $7,821,000, partially offset by straight-lining of rental income of $949,000.

Net cash used in investing activities of $348,000 was comprised of capital expenditures of $1,267,000 (primarily Rego Park II), partially offset by a decrease in restricted cash of $919,000.

Net cash used in financing activities of $18,092,000 was primarily comprised of dividends paid on common stock of $14,047,000 and debt repayments of $3,963,000.

Three Months Ended March 31, 2012

Cash and cash equivalents were $530,252,000 at March 31, 2012, compared to $506,619,000 at December 31, 2011, an increase of $23,633,000. This increase resulted from $43,618,000 of net cash provided by operating activities, $3,259,000 of net cash provided by investing activities, partially offset by $23,244,000 of net cash used in financing activities.

Net cash provided by operating activities was $43,618,000, of which $13,151,000 was related to discontinued operations. Net cash provided by operating activities was comprised of net income of $19,424,000, the net change in operating assets and liabilities of $16,158,000 and adjustments for non-cash items of $8,036,000. The net change in operating assets and liabilities was primarily due to amortization of prepaid real estate taxes of $9,990,000 and higher prepaid rents from tenants of $7,744,000. The adjustments for non-cash items were comprised of depreciation and amortization of $9,505,000, partially offset by straight-lining of rental income of $1,469,000.

Net cash provided by investing activities of $3,259,000 was comprised of (i) proceeds from maturing short-term investments of $5,000,000 and (ii) a decrease in restricted cash of $968,000, partially offset by (iii) capital expenditures of $2,709,000 (primarily Rego Park II).

Net cash used in financing activities of $23,244,000 was primarily comprised of dividends paid on common stock of $19,151,000 and debt repayments of $3,698,000.

Liquidity and Capital Resources – continued

Commitments and Contingencies

Insurance

Flushing Property

Paramus

Letters of Credit

Approximately $4,058,000 of standby letters of credit were outstanding as of March 31, 2013.

Other

Funds from Operations (“FFO”)

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

FFO Attributable to Common Stockholders for the Quarters Ended March 31, 2013 and 2012

FFO attributable to common stockholders for the quarter ended March 31, 2013 was $21,339,000, or $4.18 per diluted share, compared to $28,030,000, or $5.49 per diluted share for prior year’s quarter. The quarter ended March 31, 2012 includes FFO of $7,867,000, or $1.54 per diluted share related to discontinued operations.

The following table reconciles our net income to FFO:

	Three Months Ended
	March 31,
(Amounts in thousands, except share and per share amounts)	2013		2012
Net income attributable to Alexander’s	$	14,162	$	19,482
Depreciation and amortization of real property		7,177		8,548
FFO attributable to common stockholders	$	21,339	$	28,030

FFO attributable to common stockholders per diluted share	$	4.18	$	5.49

Weighted average shares used in computing FFO per diluted share		5,108,016		5,106,984

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

		2013					2012
				Weighted	Effect of 1%				Weighted
		March 31,		Average	Change in		December 31,		Average
(Amounts in thousands, except per share amounts)		Balance		Interest Rate	Base Rates		Balance		Interest Rate
Variable Rate (including $45,189 and $45,803
	due to Vornado, respectively)	$	316,766	2.02%	$	3,168	$	318,048	2.07%
Fixed Rate			790,376	4.47%		-		793,671	4.48%
		$	1,107,142		$	3,168	$	1,111,719

Total effect on diluted earnings per share					$	0.62

The fair value of our consolidated debt is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. As of March 31, 2013 and December 31, 2012, the estimated fair value of our consolidated debt was $1,151,000,000 and $1,143,000,000, respectively. Our fair value estimates, which are made at the end of the reporting period, may be different from the amounts that may ultimately be realized upon the disposition of our financial instruments.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures: Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting: There have not been any changes in our internal control over financial reporting during the fiscal quarter to which this Quarterly Report on Form 10-Q relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes in our “Risk Factors” as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ALEXANDER’S, INC.
		(Registrant)




Date: May 6, 2013	By:	/s/ Joseph Macnow
		Joseph Macnow, Executive Vice President and Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

		EXHIBIT INDEX
Exhibit
No.
10.1	**		-	Agreement, dated February 27, 2013, between Michael D. Fascitelli and Alexander’s, Inc. Incorporated herein by reference from Exhibit 99.1 to the registrant’s Current Report on Form 8-K, filed on February 28, 2013	*

10.2	**		-	Waiver and Release, dated February 27, 2013, between Michael D. Fascitelli and Alexander’s, Inc. Incorporated herein by reference from Exhibit 99.2 to the registrant’s Current Report on Form 8-K, filed on February 28, 2013	*

10.3			-	Second Omnibus Loan Modification and Extension Agreement, dated March 8, 2013, by and between Alexander’s Rego Shopping Center, Inc., as Borrower and U.S. Bank National Association, as Lender

10.4			-	Second Mortgage Modification Agreement, dated March 8, 2013, by and between Alexander’s Rego Shopping Center, Inc., as Mortgator and U.S. Bank National Association, as Mortgagee

15.1			-	Letter regarding unaudited interim financial information

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

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

32.1			-	Section 1350 Certification of the Chief Executive Officer

32.2			-	Section 1350 Certification of the Chief Financial Officer

101.INS			-	XBRL Instance Document

101.SCH			-	XBRL Taxonomy Extension Schema

101.CAL			-	XBRL Taxonomy Extension Calculation Linkbase

101.DEF			-	XBRL Taxonomy Extension Definition Linkbase

101.LAB			-	XBRL Taxonomy Extension Label Linkbase

101.PRE			-	XBRL Taxonomy Extension Presentation Linkbase
				___________________
			*	Incorporated by reference.
			**	Management contract or compensatory agreement.