• Comparable FFO: $0.52 per share for Q3 2024, down from $0.66 per share in Q3 2023.
• Liquidity: $2.6 billion, including $1 billion in cash.
• Office Leasing: 2.5 million square feet leased year-to-date, with 2.1 million square feet in Manhattan.
• Office Occupancy: 87.5%, expected to increase to 90.8% with new leases.
• Interest Rate on Refinancing: 5% for a $400 million loan on 731 Lexington Avenue.
• Dividend: Expected to be approximately $0.68, similar to last year.

• Warning! GuruFocus has detected 6 Warning Signs with ALX.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alexander's Inc (NYSE:ALX) successfully refinanced a $400 million loan on the Bloomberg Headquarters Tower at a favorable 5% interest rate, saving the company $17 million annually.
• The refinancing was highly successful, being 8 times oversubscribed, indicating strong investor confidence in Alexander's Inc (NYSE:ALX).
• The company has a strong liquidity position with $2.6 billion, including $1 billion in cash, providing a solid financial foundation.
• Alexander's Inc (NYSE:ALX) has a strategic partnership with NYU for a master lease at 770 Broadway, which will help pay off a $700 million loan on the property.
• The company is open to acquisitions, looking for distressed assets at attractive prices, indicating a proactive approach to growth opportunities.

Negative Points

• The financial results for the quarter were down from last year, with comparable FFO as adjusted at $0.52 per share compared to $0.66 per share in the previous year.
• The decrease in financial performance was primarily due to lower NOI from known move-outs and higher net interest expenses.
• The office occupancy rate decreased to 87.5%, down from 89.3% last quarter, primarily due to move-outs at 770 Broadway.
• The company faces challenges in the San Francisco market, with city-wide vacancy rates at 36% and declining rents.
• Despite a strong liquidity position, Alexander's Inc (NYSE:ALX) has a handful of credits that are overleveraged, which do not currently contribute to FFO and have little to no equity value.

Q & A Highlights

Q: Does the leasing activity include the NYU lease, and how does the rent compare to the current rate at 770 Broadway? A: Yes, the leasing activity includes the NYU lease. The upfront prepaid rent is significant, resulting in a lower ongoing rent, but when capitalized, it approximates the current rate of $115 per square foot. The occupancy and rent commencement are expected in January. - Steven Roth, CEO

Q: Can you provide more details on the leasing pipeline at PENN2 and the confidence level in signing leases by year-end? A: The pipeline at PENN2 is robust with several important transactions expected to go to lease in the fourth quarter. We have over 600,000 square feet in negotiation, and we are confident in signing leases by year-end. - Glen Weiss, EVP - Office Leasing

Q: What is the strategy for the Mart in Chicago given the increased leasing but reduced rents? A: The Chicago market is soft, but the Mart is financially strong and unencumbered, giving us strategic flexibility. We will rent opportunistically as attractive deals arise, and we are performing better than other buildings in the market. - Steven Roth, CEO

Q: Are there plans to monetize the remaining half of the preferred equity in the retail JV? A: We have no current plans to monetize the remaining half of the preferred equity. We are in a strong capital position and are happy holding the preferred as it currently exceeds the rate of interest we could earn on short-term debt. - Steven Roth, CEO

Q: How do you view the current office market, and what are the implications for leasing and rent concessions? A: The office market is becoming a landlord's market with no new supply and shrinking vacancies. Demand is strong, particularly for better spaces, leading to rising rents and potentially reduced concessions in the best submarkets. - Steven Roth, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.