• Comparable FFO: $2.26 per share for the year, down from 2023 due to lower NOI and higher net interest expense.
• Fourth-Quarter Comparable FFO: $0.61 per share, compared to $0.63 per share in Q4 2023.
• Office Leasing Activity: 3.4 million square feet leased in 2024, with 2.65 million square feet in New York office at $104 starting rents.
• Office Occupancy: Year-end occupancy at 88.8%, increasing to 92.1% with the master lease at 770 Broadway.
• Lease Termination Income: Recognized from a 304,000 square foot lease with WeWork on behalf of Amazon.
• Interest Expense: Lower than projected due to short-term rates coming down.
• Retail Leasing Activity: 25 retail leases totaling 187,000 square feet completed.
• Debt Repayment: $450 million unsecured bonds repaid at maturity.
• Upcoming Cash Generation: Transactions expected to generate an additional $1 billion in new cash.

• Warning! GuruFocus has detected 4 Warning Signs with ALX.

Release Date: February 11, 2025

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

Positive Points

• Alexander's Inc (NYSE:ALX) successfully renewed the 947,000 square foot Bloomberg office lease at 731 Lexington Avenue, extending the expiry to 2040.
• The company is strategically relocating tenants from Rego 1 to Rego 2, creating a fully vacant space at Rego 1 for potential sale or development.
• Alexander's Inc (NYSE:ALX) is exploring the potential of its 5-acre parcel at Rego 1, which is considered more valuable as land than its current use.
• The company is actively working on refinancing and asset sales, which are expected to generate an additional $1 billion in cash.
• Alexander's Inc (NYSE:ALX) is part of a robust leasing pipeline, with significant activity and negotiations underway across its portfolio.

Negative Points

• The company's stock is perceived to undervalue its assets, indicating a potential disconnect between market perception and asset value.
• There is a high level of capital expenditure required for tenant inducements and space turnover, impacting cash flow.
• The cost of new building developments in New York is high, with construction costs and interest rates making new supply challenging.
• Alexander's Inc (NYSE:ALX) faces competition from sublease spaces in areas like Hudson Yards, which could impact leasing dynamics.
• The company is dealing with the complexities of managing and potentially selling or developing older assets like Rego 1.

Q & A Highlights

Q: Can you provide more details on the timing and competitive dynamics for PENN 2, and why you raised the yield? A: Glen Weiss, Executive Vice President - Office Leasing, Co-Head of Real Estate, explained that PENN 2 is highly competitive, with only five buildings in Manhattan offering blocks of 500,000 square feet or more. They have a lease out for 330,000 square feet and are negotiating with another large tenant. Rents have been raised across the building due to strong demand.

Q: How much in new dispositions do you anticipate, and will they focus on retail or non-core office? A: Steven Roth, Chairman and CEO, stated that the $700 million debt paydown at 770 Broadway and $200 million from refinancing 1535 Broadway will contribute to the $1 billion in new cash. He did not specify the focus of new dispositions.

Q: Can you elaborate on the expectation for a rent spike and its impact on growth in 2026 and 2027? A: Steven Roth highlighted that limited availability and no new supply create a landlord's market, leading to expected rent increases. Michael Franco, President and CFO, added that significant earnings growth is anticipated by 2027 due to positive mark-to-market and leasing activities at PENN 1 and PENN 2.

Q: What are your thoughts on Alexander's Inc. being undervalued, and what actions might you take? A: Steven Roth believes Alexander's assets are substantially undervalued compared to its stock price. He mentioned the potential value of the Rego 1 site as land and the possibility of enhancing Alexander's value without merging it into Vornado.

Q: Are tenants coming to you earlier to renew space due to limited availability, and have concessions dropped off? A: Glen Weiss noted that demand is robust, with tenants expanding and renewing leases early. While concessions haven't decreased yet, rents have increased, and concessions are expected to drop as the market tightens.

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