Alexander's, Inc. (ALX) Q1 2011 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2011. Alexander's, Inc. is a Real Estate Investment Trust (REIT) incorporated in Delaware, engaged in leasing, managing, and developing properties in the greater New York City metropolitan area. The Company is managed by Vornado Realty Trust, which also owns approximately 32.4% of Alexander's outstanding common stock. As of the reporting date, there were 5,105,936 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q1 2011 | Q1 2010 |
|---|---|---|
| Total Revenues | $62,872,000 | $58,544,000 |
| Net Income (Attributable to Alexander's) | $18,207,000 | $15,114,000 |
| Diluted EPS | $3.57 | $2.96 |
| Funds from Operations (FFO) | $26,304,000 ($5.15/share) | $22,438,000 ($4.39/share) |
| Operating Cash Flow | $40,547,000 | $24,392,000 |
| Cash and Equivalents | $431,931,000 | $429,519,000 |
| Total Debt (Notes & Mortgages) | $1,242,602,000 | $1,246,411,000 |
| Dividends Paid | $15,318,000 ($3.00/share) | $0 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased by $4.3 million (7.4%) year-over-year. Property rentals rose $3.25 million due to the lease-up of previously vacant space at Kings Plaza and Rego Park I, and new tenants at Rego Park II. Expense reimbursements increased $1.08 million, driven by higher real estate taxes.
- Profitability: Net income increased by $3.09 million. This improvement was aided by the absence of a $1.238 million net loss on early extinguishment of debt that occurred in Q1 2010.
- Expense Trends: Operating expenses increased $2.13 million, primarily due to higher real estate taxes and reimbursable operating expenses. Depreciation and amortization increased $787,000 due to the Rego Park II project coming into service.
- Dividends: The Company paid a quarterly dividend of $3.00 per share in Q1 2011, whereas no dividend was paid in Q1 2010.
Outlook, Risks, and Contingencies
- Liquidity and Debt Maturities: Management anticipates cash from operations and existing balances will fund operations and dividends. However, $495.6 million of debt is scheduled to mature during the remainder of 2011, requiring refinancing or repayment.
- Concentration Risk: Bloomberg L.P. is a significant tenant, accounting for 33% of consolidated revenues in Q1 2011. Loss of this tenant would materially adversely affect results.
- Legal Contingencies:
- Flushing Property: A New York State Court ordered the return of a deposit plus interest and fees ($3.2 million liability recorded) regarding a failed 2002 purchase contract. The Company has appealed, and the judgment is stayed pending the appeal.
- Environmental: An oil spill at Kings Plaza requires remediation estimated at $2.5 million; $500,000 has been paid, with the remainder covered by insurance.
- Market Risk: The Company has exposure to interest rate fluctuations. A 1% increase in variable rates would impact diluted earnings per share by $0.63.
Investor Verification Checklist
- Debt Refinancing: Verify the Company's ability to refinance the $495.6 million in debt maturing in late 2011, specifically the Kings Plaza ($150M) and Paramus ($68M) mortgages.
- Bloomberg Lease Status: Monitor the financial health and lease compliance of Bloomberg L.P., given its 33% revenue concentration.
- Flushing Litigation: Track the status of the appeal regarding the Flushing property deposit judgment to assess potential cash outflows.
- Rego Park II Progress: Confirm the completion and lease-up status of the Rego Park II development, which is driving current depreciation and capital expenditures.