QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from: | to |
Commission File Number: |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||
(Address of principal executive offices) | (Zip Code) |
N/A |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☑ | ☐ | Accelerated Filer | |
☐ | Non-Accelerated Filer | Smaller Reporting Company | |
Emerging Growth Company |
Page Number | ||
PART I. | Financial Information | |
Item 1. | Financial Statements: | |
Consolidated Balance Sheets (Unaudited) as of June 30, 2019 and December 31, 2018 | ||
Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018 | ||
Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018 | ||
Consolidated Statements of Changes in Equity (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018 | ||
Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2019 and 2018 | ||
Notes to Consolidated Financial Statements (Unaudited) | ||
Report of Independent Registered Public Accounting Firm | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |
Item 4. | Controls and Procedures | |
PART II. | Other Information | |
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
Exhibit Index | ||
Signatures |
ASSETS | June 30, 2019 | December 31, 2018 | ||||||
Real estate, at cost: | ||||||||
Land | $ | $ | ||||||
Buildings and leasehold improvements | ||||||||
Development and construction in progress | ||||||||
Total | ||||||||
Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
Real estate, net | ||||||||
Cash and cash equivalents | ||||||||
Restricted cash | ||||||||
Marketable securities | ||||||||
Tenant and other receivables | ||||||||
Receivable arising from the straight-lining of rents | ||||||||
Deferred leasing costs, net, including unamortized leasing fees to Vornado of $32,046 and $31,039, respectively | ||||||||
Other assets | ||||||||
$ | $ |
LIABILITIES AND EQUITY | ||||||||
Mortgages payable, net of deferred debt issuance costs | $ | $ | ||||||
Amounts due to Vornado | ||||||||
Accounts payable and accrued expenses | ||||||||
Other liabilities | ||||||||
Total liabilities | ||||||||
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, 5,107,290 shares | ||||||||
Additional capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Treasury stock: 66,160 shares, at cost | ( | ) | ( | ) | ||||
Total equity | ||||||||
$ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
REVENUES | ||||||||||||||||
Rental revenues | $ | $ | $ | $ | ||||||||||||
EXPENSES | ||||||||||||||||
Operating, including fees to Vornado of $1,371, $1,109, $2,620 and $2,275, respectively | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
General and administrative, including management fees to Vornado of $595 and $1,190 in each three and six month period, respectively | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest and other income, net | ||||||||||||||||
Interest and debt expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Change in fair value of marketable securities | ( | ) | ( | ) | ( | ) | ||||||||||
Income from continuing operations | ||||||||||||||||
Loss from discontinued operations (see Note 7) | ( | ) | ||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Income per common share – basic and diluted: | ||||||||||||||||
Income from continuing operations | $ | $ | $ | $ | ||||||||||||
Loss from discontinued operations (see Note 7) | ( | ) | ||||||||||||||
Net income per common share | $ | $ | $ | $ | ||||||||||||
Weighted average shares outstanding |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Change in fair value of interest rate cap | ( | ) | ( | ) | ||||||||||||
Comprehensive income | $ | $ | $ | $ |
Additional Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Equity | |||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||
Balance, March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Dividends paid ($4.50 per common share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Change in fair value of interest rate cap | — | — | — | — | — | ||||||||||||||||||||||
Deferred stock unit grants | — | — | — | — | — | ||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||||||||||
Balance, March 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Dividends paid ($4.50 per common share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Change in fair value of interest rate cap | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Deferred stock unit grants | — | — | — | — | — | ||||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Additional Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Equity | |||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Dividends paid ($9.00 per common share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Change in fair value of interest rate cap | — | — | — | — | — | ||||||||||||||||||||||
Deferred stock unit grants | — | — | — | — | — | ||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||||||||||
Balance, December 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Dividends paid ($9.00 per common share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | ( | ) | — | |||||||||||||||||||||
Change in fair value of interest rate cap | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Deferred stock unit grants | |||||||||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Six Months Ended June 30, | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | 2019 | 2018 | |||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization, including amortization of debt issuance costs | |||||||
Straight-lining of rental income | |||||||
Stock-based compensation | |||||||
Change in fair value of marketable securities | |||||||
Changes in operating assets and liabilities: | |||||||
Tenant and other receivables, net | ( | ) | ( | ) | |||
Other assets | ( | ) | ( | ) | |||
Amounts due to Vornado | ( | ) | |||||
Accounts payable and accrued expenses | ( | ) | ( | ) | |||
Other liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Construction in progress and real estate additions | ( | ) | ( | ) | |||
Repayment of Rego Park II loan participation | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Dividends paid | ( | ) | ( | ) | |||
Debt issuance costs | ( | ) | ( | ) | |||
Debt repayments | ( | ) | |||||
Proceeds from borrowing | |||||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Net decrease in cash and cash equivalents and restricted cash | ( | ) | ( | ) | |||
Cash and cash equivalents and restricted cash at beginning of period | |||||||
Cash and cash equivalents and restricted cash at end of period | $ | $ | |||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | |||||||
Cash and cash equivalents at beginning of period | $ | $ | |||||
Restricted cash at beginning of period | |||||||
Cash and cash equivalents and restricted cash at beginning of period | $ | $ | |||||
Cash and cash equivalents at end of period | $ | $ | |||||
Restricted cash at end of period | |||||||
Cash and cash equivalents and restricted cash at end of period | $ | $ | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Cash payments for interest | $ | $ | |||||
NON-CASH TRANSACTIONS | |||||||
Lease liability arising from the recognition of right-of-use asset | $ | $ | |||||
Reclassification of prepaid real estate taxes to construction in progress for property in redevelopment | |||||||
Liability for real estate additions, including $29 for development fees due to Vornado in each period | |||||||
Write-off of fully amortized and/or depreciated assets |
1. | Organization |
2. | Basis of Presentation |
3. | Recently Issued Accounting Literature |
3. | Recently Issued Accounting Literature - continued |
4. | Revenue Recognition |
• | Lease revenues from the leasing of space to tenants at our properties. Revenues derived from base rent are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements. We commence rental revenue recognition when the underlying asset is available for use by the lessee. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease. Revenues derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses are generally recognized in the same period as the related expenses are incurred. As lessor, we have elected to combine the lease components (base and variable rent), non-lease components (reimbursements of common area maintenance expenses) and reimbursement of real estate taxes and insurance expenses from our operating lease agreements and account for the components as a single lease component in accordance with ASC 842. |
• | Parking revenue arising from the rental of parking spaces at our properties. This income is recognized as the services are transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). |
• | Tenant services is revenue arising from sub-metered electric, elevator and other services provided to tenants at their request. This revenue is recognized as the services are transferred in accordance with ASC 606. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Lease revenues | $ | $ | $ | $ | ||||||||||||
Parking revenue | ||||||||||||||||
Tenant services | ||||||||||||||||
Rental revenues | $ | $ | $ | $ |
(Amounts in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Fixed lease revenues | $ | $ | ||||||
Variable lease revenues | ||||||||
Lease revenues | $ | $ |
5. | Related Party Transactions |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Company management fees | $ | $ | $ | $ | ||||||||||||
Development fees | ||||||||||||||||
Leasing fees | ||||||||||||||||
Property management, cleaning, engineering and security fees | ||||||||||||||||
$ | $ | $ | $ |
6. | Marketable Securities |
7. |
8. | Significant Tenant |
9. | Mortgages Payable |
Balance at | ||||||||||||
(Amounts in thousands) | Maturity | Interest Rate at June 30, 2019 | June 30, 2019 | December 31, 2018 | ||||||||
First mortgages secured by: | ||||||||||||
Paramus | Oct. 2021 | $ | $ | |||||||||
731 Lexington Avenue, retail condominium(1) | Aug. 2022 | |||||||||||
731 Lexington Avenue, office condominium(2) | Jun. 2024 | |||||||||||
Rego Park II shopping center(3) | Dec. 2025 | |||||||||||
Total | ||||||||||||
Deferred debt issuance costs, net of accumulated amortization of $11,786 and $9,212, respectively | ( | ) | ( | ) | ||||||||
$ | $ |
(1) | Interest at |
(2) | Interest at |
(3) | Interest at |
10. | Stock-Based Compensation |
11. | Fair Value Measurements |
As of June 30, 2019 | ||||||||||||||||
(Amounts in thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Marketable securities | $ | $ | $ | $ |
As of December 31, 2018 | ||||||||||||||||
(Amounts in thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Marketable securities | $ | $ | $ | $ |
As of June 30, 2019 | As of December 31, 2018 | |||||||||||||||
(Amounts in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Assets: | ||||||||||||||||
Cash equivalents | $ | $ | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||||
Mortgages payable (excluding deferred debt issuance costs, net) | $ | $ | $ | $ |
12. | Leases |
Under ASC 842 | ||||
(Amounts in thousands) | As of June 30, 2019 | |||
For the remainder of 2019 | $ | |||
For the year ending December 31, | ||||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter |
Under ASC 840 | ||||
(Amounts in thousands) | As of December 31, 2018 | |||
For the year ending December 31, | ||||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter |
12. | Leases - continued |
Under ASC 842 | ||||
(Amounts in thousands) | As of June 30, 2019 | |||
For the remainder of 2019 | $ | |||
For the year ending December 31, | ||||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total undiscounted cash flows | ||||
Present value discount | ( | ) | ||
Lease liability as of June 30, 2019 | $ |
Under ASC 840 | ||||
(Amounts in thousands) | As of December 31, 2018 | |||
For the year ending December 31, | ||||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter |
13. | Commitments and Contingencies |
13. | Commitments and Contingencies - continued |
14. | Earnings Per Share |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in thousands, except share and per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Income from continuing operations | $ | $ | $ | $ | ||||||||||||
Loss from discontinued operations (see Note 7) | ( | ) | ||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Weighted average shares outstanding – basic and diluted | ||||||||||||||||
Income from continuing operations | $ | $ | $ | $ | ||||||||||||
Loss from discontinued operations (see Note 7) | ( | ) | ||||||||||||||
Net income per common share – basic and diluted | $ | $ | $ | $ |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
(Amounts in thousands, except share and per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 11,283 | $ | 17,570 | $ | 29,148 | $ | 7,870 | |||||||||
Depreciation and amortization of real property | 7,744 | 8,568 | 15,448 | 16,719 | |||||||||||||
Change in fair value of marketable securities | 5,278 | (433 | ) | 5,240 | 4,737 | ||||||||||||
FFO (non-GAAP) | $ | 24,305 | $ | 25,705 | $ | 49,836 | $ | 29,326 | |||||||||
FFO per diluted share (non-GAAP) | $ | 4.75 | $ | 5.02 | $ | 9.74 | $ | 5.73 | |||||||||
Weighted average shares used in computing FFO per diluted share | 5,118,030 | 5,116,657 | 5,117,690 | 5,116,321 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
2019 | 2018 | |||||||||||||||
(Amounts in thousands, except per share amounts) | June 30, Balance | Weighted Average Interest Rate | Effect of 1% Change in Base Rates | December 31, Balance | Weighted Average Interest Rate | |||||||||||
Variable Rate | $ | 906,836 | 3.53% | $ | 9,068 | $ | 906,836 | 3.55% | ||||||||
Fixed Rate | 68,000 | 4.72% | — | 68,000 | 4.72% | |||||||||||
$ | 974,836 | 3.61% | $ | 9,068 | $ | 974,836 | 3.64% | |||||||||
Total effect on diluted earnings per share | $ | 1.77 |
Item 4. | Controls and Procedures |
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit No. | |||
- | Letter regarding unaudited interim financial information | ||
- | Rule 13a-14 (a) Certification of the Chief Executive Officer | ||
- | Rule 13a-14 (a) Certification of the Chief Financial Officer | ||
- | Section 1350 Certification of the Chief Executive Officer | ||
- | Section 1350 Certification of the Chief Financial Officer | ||
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101.DEF | - | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | - | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | - | XBRL Taxonomy Extension Presentation Linkbase Document | |
ALEXANDER’S, INC. | ||
(Registrant) | ||
Date: July 29, 2019 | By: | /s/ Matthew Iocco |
Matthew Iocco | ||
Chief Financial Officer (duly authorized officer and principal financial and accounting officer) |
1. | I have reviewed this Quarterly Report on Form 10‑Q of Alexander’s, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure control and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
July 29, 2019 | |
/s/ Steven Roth | |
Steven Roth | |
Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10‑Q of Alexander’s, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure control and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
July 29, 2019 | |
/s/ Matthew Iocco | |
Matthew Iocco | |
Chief Financial Officer |
July 29, 2019 | /s/ Steven Roth | |
Name: | Steven Roth | |
Title: | Chairman of the Board and Chief Executive Officer |
July 29, 2019 | /s/ Matthew Iocco | |
Name: | Matthew Iocco | |
Title: | Chief Financial Officer |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Unamortized leasing fees to Vornado | $ 32,046 | $ 31,039 |
Preferred stock: par value per share (in usd per share) | $ 1.00 | $ 1.00 |
Preferred stock: authorized shares | 3,000,000 | 3,000,000 |
Preferred stock: issued shares | 0 | 0 |
Preferred stock: outstanding shares | 0 | 0 |
Common stock: par value per share (in usd per share) | $ 1.00 | $ 1.00 |
Common stock: authorized shares | 10,000,000 | 10,000,000 |
Common stock: issued shares | 5,173,450 | 5,173,450 |
Common stock: outstanding shares | 5,107,290 | 5,107,290 |
Treasury stock: shares | 66,160 | 66,160 |
Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Fees to Vornado | $ 1,317 | $ 1,109 | $ 2,620 | $ 2,275 |
Management fees to Vornado | $ 595 | $ 595 | $ 1,190 | $ 1,190 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
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Jun. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 11,283 | $ 17,570 | $ 29,148 | $ 7,870 |
Other comprehensive income (loss): | ||||
Change in fair value of interest rate cap | 19 | (52) | 32 | (4) |
Comprehensive income | $ 11,302 | $ 17,518 | $ 29,180 | $ 7,866 |
Consolidated Statements of Changes in Equity (Unaudited) - Parenthetical - $ / shares |
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Jun. 30, 2019 |
Jun. 30, 2018 |
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Statement of Stockholders' Equity [Abstract] | ||||
Dividends per common share (in usd per share) | $ 4.5 | $ 4.5 | $ 9 | $ 9 |
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
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Jun. 30, 2019 |
Jun. 30, 2018 |
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Liability for real estate additions due to Vornado | $ 791 | $ 209 |
Development fees | Vornado | ||
Liability for real estate additions due to Vornado | $ 29 | $ 29 |
Organization |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 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). We have seven properties in the greater New York City metropolitan area.
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Basis of Presentation |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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, 2018, 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 and six months ended June 30, 2019 are not necessarily indicative of the operating results for the full year. Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2018, we determined that the $195,708,000 participation in our Rego Park II shopping center mortgage loan was incorrectly classified as an asset, presented as “Rego Park II loan participation,” instead of as a reduction to “mortgages payable, net of deferred debt issuance costs” on our consolidated balance sheet as of December 31, 2018. On December 12, 2018, we refinanced this mortgage loan and the interest rate on the existing loan participation was adjusted to equal the interest rate on the refinanced loan. Consequently, we should have considered $195,708,000 of the Rego Park II shopping center mortgage loan liability extinguished as the participation interest is considered the reacquisition of our debt. Accordingly, our consolidated balance sheet for the year ended December 31, 2018 has been restated to reclassify $195,708,000 from “Rego Park II loan participation” to “mortgages payable, net of deferred debt issuance costs.” This reclassification had no impact to our consolidated statements of income, comprehensive income or changes in equity for the three and six months ending June 30, 2018 or our consolidated statement of cash flows for the six months ending June 30, 2018. Certain prior year balances have been reclassified in order to conform to the current period presentation. For the three and six months ended June 30, 2018, “property rentals” of $38,618,000 and $76,859,000, respectively, and “expense reimbursements” of $19,635,000 and $39,274,000, respectively, were grouped into “rental revenues” on our consolidated statement of income in accordance with Accounting Standards Codification (“ASC”) Topic 205 Presentation of Financial Statements. We operate in one reportable segment.
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Recently Issued Accounting Literature |
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Jun. 30, 2019 | |||||
Accounting Changes and Error Corrections [Abstract] | |||||
Recently Issued Accounting Literature | Recently Issued Accounting Literature In February 2016, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2016-02”) establishing ASC Topic 842, Leases (“ASC 842”), as amended by subsequent ASUs on the topic, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a two-method approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability equal to the present value of future minimum lease payments, less adjustments to the right-of-use asset for accrued rent expense, initial direct costs and prepaid lease payments for all leases with a term greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to the previously existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under ASC Topic 840, Leases (“ASC 840”). We adopted this standard effective January 1, 2019 using the modified retrospective approach. In transitioning to ASC 842, we elected to use the practical expedient package available to us and did not elect to use hindsight. These elections have been applied consistently to all of our leases. On January 1, 2019, for our Flushing property ground lease, which is classified as an operating lease, we recorded a right-of-use asset of $5,058,000 (included in “other assets”) and a lease liability of $5,428,000 (included in “other liabilities”) (see Note 12 - Leases).
In August 2018, the FASB issued an update (“ASU 2018-13”) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”). ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. We elected to early adopt ASU 2018-13 effective January 1, 2019. The adoption of this update did not have a material impact on our consolidated financial statements and disclosures. In October 2018, the FASB issued an update (“ASU 2018-16”) Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic 815, Derivatives and Hedging. ASU 2018-16 expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on SOFR as an eligible benchmark interest rate. ASU 2018-16 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We adopted this update effective January 1, 2019. The adoption of this update did not have a material impact on our consolidated financial statements.
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Our rental revenues include revenues from the leasing of space to tenants at our properties and revenues from parking and tenant services. We have the following revenue recognition policies:
The following is a summary of revenue sources for the three and six months ended June 30, 2019 and 2018.
The components of lease revenues for the three and six months ended June 30, 2019 are as follows:
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions Vornado As of June 30, 2019, 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) $324,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue. Vornado is also entitled to a development fee equal to 6% of development costs, as defined. Leasing and Other 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. We also have agreements with Building Maintenance Services, a wholly owned subsidiary of Vornado, to supervise (i) cleaning, engineering and security services at our 731 Lexington Avenue property and (ii) security services at our Rego Park I and Rego Park II properties and The Alexander apartment tower. The following is a summary of fees to Vornado under the various agreements discussed above.
As of June 30, 2019, the amounts due to Vornado were $2,448,000 for leasing fees; $793,000 for management, property management, cleaning, engineering and security fees; and $175,000 for development fees. As of December 31, 2018, the amounts due to Vornado were $549,000 for management, property management, cleaning, engineering and security fees; $146,000 for development fees; and $13,000 for leasing fees. Toys “R” Us, Inc. (“Toys”) |
Marketable Securities |
6 Months Ended |
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Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable Securities As of June 30, 2019 and December 31, 2018, we owned 535,265 common shares of The Macerich Company (“Macerich”) (NYSE: MAC). These shares have an economic cost of $56.05 per share, or $30,000,000 in the aggregate. As of June 30, 2019 and December 31, 2018, the fair value of these shares was $17,926,000 and $23,166,000, respectively, based on Macerich’s closing share price of $33.49 per share and $43.28 per share, respectively. 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 on our consolidated balance sheets and gains and losses resulting from the mark-to-market of these securities are recognized in current period earnings.
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Discontinued Operations |
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Jun. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations In 2012, we sold the Kings Plaza Regional Shopping Center (“Kings Plaza”) and paid real property transfer taxes to New York City in connection with the sale. In 2015, the New York City Department of Finance (“NYC DOF”) issued a Notice of Determination to us assessing an additional New York City real property transfer tax amount, including interest. In 2014, in a case with similar facts, the NYC DOF issued a Notice of Determination to a Vornado joint venture assessing an additional New York City real property transfer tax amount, including interest. In January 2017, a New York City administrative law judge made a determination upholding the Vornado joint venture’s position that such additional real property transfer taxes were not due. On February 16, 2018, the New York City Tax Appeals Tribunal (the “Tribunal”) overturned the January 2017 determination. The Vornado joint venture appealed the Tribunal’s decision to the Appellate Division of the Supreme Court of the State of New York and on April 25, 2019, the Tribunal’s decision was unanimously upheld. On June 20, 2019, the Vornado joint venture filed a motion to reargue the Appellate Division’s decision with the appellate court. Based on the precedent of the Tribunal’s decision, we accrued an expense for the potential additional real property transfer taxes of $23,797,000 ($15,874,000 of real property transfer tax and $7,923,000 of interest) during the three months ended March 31, 2018. On April 5, 2018, we paid this amount in order to stop the interest from accruing. As the results related to Kings Plaza were previously classified as discontinued operations, we have classified the expense as “loss from discontinued operations” on our consolidated statement of income for the six months ended June 30, 2018 in accordance with the provisions of ASC Topic 360, Property, Plant and Equipment.
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Significant Tenant |
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Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Significant Tenant | Significant Tenant Bloomberg L.P. (“Bloomberg”) accounted for revenue of $53,676,000 and $52,672,000 for the six months ended June 30, 2019 and 2018, respectively, representing approximately 48% and 45% of our total revenues in each period, 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 be unable to fulfill its obligations under its lease, it would adversely affect our results of operations and financial condition. In order to assist us in our continuing assessment of Bloomberg’s creditworthiness, we receive certain confidential financial information and metrics from Bloomberg. In addition, we access and evaluate financial information regarding Bloomberg from other private sources, as well as publicly available data. On June 28, 2019, we entered into a lease agreement with Bloomberg for an additional 49,000 square feet at our 731 Lexington Avenue property.
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Mortgages Payable |
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Mortgages Payable | Mortgages Payable The following is a summary of our outstanding mortgages payable as of June 30, 2019 and December 31, 2018. We may refinance our maturing debt as it comes due or choose to repay it.
(3) Interest at LIBOR plus 1.35%. The amount of this loan is net of our $195,708 loan participation (see Note 2 - Basis of Presentation).
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Stock-Based Compensation |
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Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. Our 2016 Omnibus Stock Plan (the “Plan”) provides for grants of incentive and non-qualified stock options, restricted stock, stock appreciation rights, deferred stock units (“DSUs”) and performance shares, as defined, to the directors, officers and employees of the Company and Vornado. In May 2019, we granted each of the members of our Board of Directors 193 DSUs with a grant date fair value of $56,250 per grant, or $394,000 in the aggregate. The DSUs entitle the holders to receive shares of the Company’s common stock without the payment of any consideration. The DSUs vested immediately and accordingly, were expensed on the date of grant, but the shares of common stock underlying the DSUs are not deliverable to the grantee until the grantee is no longer serving on the Company’s Board of Directors. As of June 30, 2019, there were 11,408 DSUs outstanding and 494,379 shares were available for future grant under the Plan.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements ASC 820 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 as of June 30, 2019 and December 31, 2018, consist of marketable securities, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of June 30, 2019 and December 31, 2018. There were no financial liabilities measured at fair value as of June 30, 2019 and December 31, 2018.
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 and mortgages payable. Cash equivalents are carried at cost, which approximates fair value due to their short-term maturities and are classified as Level 1. 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, and is classified as Level 2. The table below summarizes the carrying amounts and fair values of these financial instruments as of June 30, 2019 and December 31, 2018.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases As Lessor We lease space to tenants under operating leases in an office building and in retail centers. The rental terms range from approximately 5 to 25 years. The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs. Retail leases may also provide for the payment by the lessee of additional rents based on a percentage of their sales. We also lease residential space at The Alexander apartment tower with 1 or 2 year lease terms. We have elected to account for lease revenues (including fixed and variable rent) and the reimbursement of common area maintenance expenses as a single lease component presented as “rental revenues” in our consolidated statements of income. Future undiscounted cash flows under our non-cancelable operating leases are as follows:
These amounts do not include reimbursements or additional rents based on a percentage of retail tenants’ sales.
As Lessee We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and has one 10-year extension option. On January 1, 2019, we recorded a right-of-use asset and lease liability related to this ground lease equal to the present value of the remaining minimum lease payments. As of June 30, 2019, the right-of-use asset of $4,796,000 and the lease liability of $5,139,000, are included in “other assets” and “other liabilities,” respectively, on our consolidated balance sheet. The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental borrowing rate (“IBR”) for the property of 4.20%. We initially consider the general economic environment and factor in various financing and asset specific adjustments so that the IBR is appropriate to the intended use of the underlying lease. As we did not elect to apply hindsight, the lease term assumption determined under ASC 840 was carried forward and applied in calculating our lease liability recorded under ASC 842. Future lease payments under this operating lease, excluding the extension option, are as follows:
We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-line basis. Rent expense was $187,000 and $373,000 in each three and six month period ended June 30, 2019 and 2018, respectively. Cash paid for rent expense was $200,000 and $400,000 in each three and six month period ended June 30, 2019 and 2018, respectively.
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Leases | Leases As Lessor We lease space to tenants under operating leases in an office building and in retail centers. The rental terms range from approximately 5 to 25 years. The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs. Retail leases may also provide for the payment by the lessee of additional rents based on a percentage of their sales. We also lease residential space at The Alexander apartment tower with 1 or 2 year lease terms. We have elected to account for lease revenues (including fixed and variable rent) and the reimbursement of common area maintenance expenses as a single lease component presented as “rental revenues” in our consolidated statements of income. Future undiscounted cash flows under our non-cancelable operating leases are as follows:
These amounts do not include reimbursements or additional rents based on a percentage of retail tenants’ sales.
As Lessee We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and has one 10-year extension option. On January 1, 2019, we recorded a right-of-use asset and lease liability related to this ground lease equal to the present value of the remaining minimum lease payments. As of June 30, 2019, the right-of-use asset of $4,796,000 and the lease liability of $5,139,000, are included in “other assets” and “other liabilities,” respectively, on our consolidated balance sheet. The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental borrowing rate (“IBR”) for the property of 4.20%. We initially consider the general economic environment and factor in various financing and asset specific adjustments so that the IBR is appropriate to the intended use of the underlying lease. As we did not elect to apply hindsight, the lease term assumption determined under ASC 840 was carried forward and applied in calculating our lease liability recorded under ASC 842. Future lease payments under this operating lease, excluding the extension option, are as follows:
We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-line basis. Rent expense was $187,000 and $373,000 in each three and six month period ended June 30, 2019 and 2018, respectively. Cash paid for rent expense was $200,000 and $400,000 in each three and six month period ended June 30, 2019 and 2018, respectively.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||
Commitments and Contingencies | Commitments and Contingencies Insurance We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, and all-risk property and rental value insurance coverage with limits of $1.7 billion per occurrence, including coverage for acts of terrorism, 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, which expires in December 2020. Coverage for acts of terrorism (including NBCR acts) is up to $1.7 billion per occurrence and in the aggregate. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to FNSIC. For NBCR acts, FNSIC is responsible for a $323,000 deductible and 19% of the balance of a covered loss, and the Federal government is responsible for the remaining 81% of a covered loss. We are ultimately responsible for any loss incurred by FNSIC. We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism or other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material. Our mortgage loans are non-recourse to us and contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties. Paramus In 2001, we leased 30.3 acres of land located in Paramus, New Jersey to IKEA Property, Inc. The lease has 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 4.72%, which matures in October 2021. The annual triple-net rent is the sum of $700,000 plus the amount of interest 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. Rego Park I Litigation In June 2014, Sears Roebuck and Co. (“Sears”) filed a lawsuit in the Supreme Court of the State of New York against Vornado and us (and certain of our subsidiaries) with regard to the 195,000 square foot store that Sears leased at our Rego Park I property alleging that the defendants are liable for harm that Sears has suffered as a result of (a) water intrusions into the premises, (b) two fires in February 2014 that caused damages to those premises, and (c) alleged violations of the Americans with Disabilities Act in the premises’ parking garage. Sears asserted various causes of actions for damages and sought to compel compliance with landlord’s obligations to repair the premises and to provide security, and to compel us to abate a nuisance that Sears claims was a cause of the water intrusions into its premises. In addition to injunctive relief, Sears sought, among other things, damages of not less than $4,000,000 and future damages it estimated would not be less than $25,000,000. In March 2016, Sears withdrew its claim for future damages leaving a remaining claim for property damages, which we estimate to be approximately $650,000 based on information provided by Sears. We intend to defend the remaining claim vigorously. The amount or range of reasonably possible losses, if any, is not expected to be greater than $650,000. On April 4, 2017, Sears closed its store at Rego Park I ($10,300,000 of annual revenue). On October 15, 2018, Sears filed for Chapter 11 bankruptcy relief and rejected its lease resulting in an automatic stay of this case.
Tenant Matter On April 13, 2019, Kohl’s closed its 133,000 square foot store at our Rego Park II shopping center. Kohl’s plans to sublease its store and remains obligated to us under its lease which expires in January 2031. Letters of Credit Approximately $1,030,000 of standby letters of credit were issued and outstanding as of June 30, 2019. 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 position, results of operations or cash flows.
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the computation of basic and diluted income per share. Basic income per share is determined using the weighted average shares of common stock outstanding during the period. Diluted income per share is determined using the weighted average shares of common stock 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 and six months ended June 30, 2019 and 2018.
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Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
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, 2018, 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 and six months ended June 30, 2019 are not necessarily indicative of the operating results for the full year. Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2018, we determined that the $195,708,000 participation in our Rego Park II shopping center mortgage loan was incorrectly classified as an asset, presented as “Rego Park II loan participation,” instead of as a reduction to “mortgages payable, net of deferred debt issuance costs” on our consolidated balance sheet as of December 31, 2018. On December 12, 2018, we refinanced this mortgage loan and the interest rate on the existing loan participation was adjusted to equal the interest rate on the refinanced loan. Consequently, we should have considered $195,708,000 of the Rego Park II shopping center mortgage loan liability extinguished as the participation interest is considered the reacquisition of our debt. Accordingly, our consolidated balance sheet for the year ended December 31, 2018 has been restated to reclassify $195,708,000 from “Rego Park II loan participation” to “mortgages payable, net of deferred debt issuance costs.” This reclassification had no impact to our consolidated statements of income, comprehensive income or changes in equity for the three and six months ending June 30, 2018 or our consolidated statement of cash flows for the six months ending June 30, 2018. Certain prior year balances have been reclassified in order to conform to the current period presentation. For the three and six months ended June 30, 2018, “property rentals” of $38,618,000 and $76,859,000, respectively, and “expense reimbursements” of $19,635,000 and $39,274,000, respectively, were grouped into “rental revenues” on our consolidated statement of income in accordance with Accounting Standards Codification (“ASC”) Topic 205 Presentation of Financial Statements. We operate in one reportable segment.
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Recently Issued Accounting Literature | In February 2016, the Financial Accounting Standards Board (“FASB”) issued an update (“ASU 2016-02”) establishing ASC Topic 842, Leases (“ASC 842”), as amended by subsequent ASUs on the topic, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a two-method approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability equal to the present value of future minimum lease payments, less adjustments to the right-of-use asset for accrued rent expense, initial direct costs and prepaid lease payments for all leases with a term greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to the previously existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The accounting applied by the lessor is largely unchanged from that applied under ASC Topic 840, Leases (“ASC 840”). We adopted this standard effective January 1, 2019 using the modified retrospective approach. In transitioning to ASC 842, we elected to use the practical expedient package available to us and did not elect to use hindsight. These elections have been applied consistently to all of our leases. On January 1, 2019, for our Flushing property ground lease, which is classified as an operating lease, we recorded a right-of-use asset of $5,058,000 (included in “other assets”) and a lease liability of $5,428,000 (included in “other liabilities”) (see Note 12 - Leases).
In August 2018, the FASB issued an update (“ASU 2018-13”) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”). ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. We elected to early adopt ASU 2018-13 effective January 1, 2019. The adoption of this update did not have a material impact on our consolidated financial statements and disclosures. In October 2018, the FASB issued an update (“ASU 2018-16”) Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic 815, Derivatives and Hedging. ASU 2018-16 expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on SOFR as an eligible benchmark interest rate. ASU 2018-16 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We adopted this update effective January 1, 2019. The adoption of this update did not have a material impact on our consolidated financial statements.
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Revenue Recognition | Our rental revenues include revenues from the leasing of space to tenants at our properties and revenues from parking and tenant services. We have the following revenue recognition policies:
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Marketable Securities | Available-for-sale securities are presented at fair value on our consolidated balance sheets and gains and losses resulting from the mark-to-market of these securities are recognized in current period earnings. | ||||||||||||
Fair Value Measurement | ASC 820 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.
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Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following is a summary of revenue sources for the three and six months ended June 30, 2019 and 2018.
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Components of Lease Revenue | The components of lease revenues for the three and six months ended June 30, 2019 are as follows:
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Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fees to Vornado | The following is a summary of fees to Vornado under the various agreements discussed above.
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Mortgages Payable (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Mortgages Payable | The following is a summary of our outstanding mortgages payable as of June 30, 2019 and December 31, 2018. We may refinance our maturing debt as it comes due or choose to repay it.
(3) Interest at LIBOR plus 1.35%. The amount of this loan is net of our $195,708 loan participation (see Note 2 - Basis of Presentation).
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value | Financial assets measured at fair value on our consolidated balance sheets as of June 30, 2019 and December 31, 2018, consist of marketable securities, which are presented in the table below based on their level in the fair value hierarchy, and an interest rate cap, which fair value was insignificant as of June 30, 2019 and December 31, 2018. There were no financial liabilities measured at fair value as of June 30, 2019 and December 31, 2018.
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Financial Assets and Liabilities Not Measured at Fair Value | The table below summarizes the carrying amounts and fair values of these financial instruments as of June 30, 2019 and December 31, 2018.
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessor, Operating Lease, Payments to be Received, Maturity | Future undiscounted cash flows under our non-cancelable operating leases are as follows:
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Schedule of Future Minimum Rental Payments Receivable for Operating Leases |
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Lessee, Operating Lease, Liability, Maturity | Future lease payments under this operating lease, excluding the extension option, are as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases |
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Earnings Per Share (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted income per share. Basic income per share is determined using the weighted average shares of common stock outstanding during the period. Diluted income per share is determined using the weighted average shares of common stock 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 and six months ended June 30, 2019 and 2018.
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Organization - Additional Information (Detail) |
Jun. 30, 2019
property
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Operating Property | |
Real Estate Properties [Line Items] | |
Number of properties in greater New York City metropolitan area (property) | 7 |
Basis of Presentation - Additional Information (Detail) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2018
USD ($)
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Jun. 30, 2019
USD ($)
segment
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Jun. 30, 2018
USD ($)
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Dec. 31, 2018
USD ($)
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Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Decrease to mortgages payable, net of deferred debt issuance costs | $ (968,386) | $ (965,826) | ||
Number of reportable segments | segment | 1 | |||
Previously Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Rego Park II Loan Participation | 195,708 | |||
Restatement Adjustment | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Property rentals | $ 38,618 | $ 76,859 | ||
Expense reimbursements | $ 19,635 | $ 39,274 | ||
Restatement to reclassify Rego Park II as a reduction to mortgage payable, net of deferred debt issuance costs | Restatement Adjustment | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Decrease to mortgages payable, net of deferred debt issuance costs | $ 195,708 |
Recently Issued Accounting Literature - Additional Information (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use asset | $ 4,796 | |
Lease liability | $ 5,139 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use asset | $ 5,058 | |
Lease liability | $ 5,428 |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Disaggregation of Revenue [Line Items] | ||||
Lease revenues | $ 53,834 | $ 55,906 | $ 108,330 | $ 111,520 |
Rental revenues | 55,932 | 58,253 | 112,710 | 116,133 |
Parking revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 1,361 | 1,408 | 2,856 | 2,715 |
Tenant services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 737 | $ 939 | $ 1,524 | $ 1,898 |
Revenue Recognition - Components of Lease Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||||
Fixed lease revenues | $ 35,903 | $ 71,632 | ||
Variable lease revenues | 17,931 | 36,698 | ||
Lease revenues | $ 53,834 | $ 55,906 | $ 108,330 | $ 111,520 |
Related Party Transactions - Summary of Fees to Vornado (Detail) - Vornado - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Related Party Transaction [Line Items] | ||||
Fees to related party | $ 4,019 | $ 1,641 | $ 6,619 | $ 3,374 |
Company management fees | ||||
Related Party Transaction [Line Items] | ||||
Fees to related party | 700 | 700 | 1,400 | 1,400 |
Development fees | ||||
Related Party Transaction [Line Items] | ||||
Fees to related party | 5 | 2 | 29 | 9 |
Leasing fees | ||||
Related Party Transaction [Line Items] | ||||
Fees to related party | 2,017 | 0 | 2,746 | 0 |
Property management, cleaning, engineering and security fees | ||||
Related Party Transaction [Line Items] | ||||
Fees to related party | $ 1,297 | $ 939 | $ 2,444 | $ 1,965 |
Marketable Securities - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Investment Holdings [Line Items] | ||
Fair value | $ 17,926 | $ 23,166 |
Macerich Interest | ||
Investment Holdings [Line Items] | ||
Macerich common shares (shares) | 535,265 | 535,265 |
Economic basis per share (in usd per share) | $ 56.05 | |
Economic cost | $ 30,000 | |
Fair value | $ 17,926 | $ 23,166 |
Closing share price (in usd per share) | $ 33.49 | $ 43.28 |
Discontinued Operations - Narrative (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Discontinued Operations and Disposal Groups [Abstract] | |
Total real property transfer tax | $ 23,797 |
Additional real property transfer tax expense | 15,874 |
Real property transfer tax interest | $ 7,923 |
Significant Tenant - Additional Information (Detail) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 28, 2019
ft²
|
|
Real Estate Properties [Line Items] | |||||
Rental revenues | $ 55,932 | $ 58,253 | $ 112,710 | $ 116,133 | |
Customer Concentration Risk | Revenue | |||||
Real Estate Properties [Line Items] | |||||
Percentage of minimum revenue threshold contributed by one tenant | 10.00% | ||||
Bloomberg | Customer Concentration Risk | Revenue | |||||
Real Estate Properties [Line Items] | |||||
Percentage rent contributed by tenant | 48.00% | 45.00% | |||
Real Estate | Bloomberg | Customer Concentration Risk | Revenue | |||||
Real Estate Properties [Line Items] | |||||
Rental revenues | $ 53,676 | $ 52,672 | |||
731 Lexington Avenue | Bloomberg | |||||
Real Estate Properties [Line Items] | |||||
Area of property (in sqft.) | ft² | 49,000 |
Stock-Based Compensation - Additional Information (Detail) - Director - USD ($) |
1 Months Ended | |
---|---|---|
May 31, 2019 |
Jun. 30, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Non option equity instruments granted per director (in shares) | 193 | |
Non option equity instruments grant date fair value per grant | $ 56,250 | |
Non option equity instruments grant date fair value total | $ 394,000 | |
Non option equity instruments, outstanding, number (in shares) | 11,408 | |
Shares available for future grant under the plan (in shares) | 494,379 |
Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value (Detail) - Marketable securities - Recurring - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 17,926 | $ 23,166 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 17,926 | 23,166 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 0 | $ 0 |
Fair Value Measurements - Financial Assets and Liabilities Not Measured at Fair Value (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Carrying Amount | ||
Assets: | ||
Cash equivalents | $ 248,850 | $ 173,858 |
Liabilities: | ||
Mortgages payable (excluding deferred debt issuance costs, net) | 974,836 | 974,836 |
Fair Value | Level 1 | ||
Assets: | ||
Cash equivalents | 248,850 | 173,858 |
Fair Value | Level 2 | ||
Liabilities: | ||
Mortgages payable (excluding deferred debt issuance costs, net) | $ 972,000 | $ 969,000 |
Leases - Future Base Rental Revenue for Topic 842 (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
For the remainder of 2019 | $ 69,688 |
2020 | 135,749 |
2021 | 126,736 |
2022 | 119,393 |
2023 | 120,756 |
2024 | 128,928 |
Thereafter | $ 586,226 |
Leases - Future Base Rental Revenue for Topic 840 (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 138,784 |
2020 | 131,647 |
2021 | 120,450 |
2022 | 111,532 |
2023 | 111,962 |
Thereafter | $ 671,111 |
Leases - Future Lease Payments Under Operating Lease for Topic 842 (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
For the remainder of 2019 | $ 400 |
2020 | 800 |
2021 | 800 |
2022 | 800 |
2023 | 800 |
2024 | 800 |
Thereafter | 1,600 |
Total undiscounted cash flows | 6,000 |
Present value discount | (861) |
Lease liability as of June 30, 2019 | $ 5,139 |
Leases - Future Lease Payments Under Operating Lease for Topic 840 (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 800 |
2020 | 800 |
2021 | 800 |
2022 | 800 |
2023 | 800 |
Thereafter | $ 2,467 |
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||
Income from continuing operations | $ 11,283 | $ 17,570 | $ 29,148 | $ 31,667 |
Loss from discontinued operations (see Note 7) | 0 | 0 | 0 | (23,797) |
Net income | $ 11,283 | $ 17,570 | $ 29,148 | $ 7,870 |
Weighted average shares outstanding - basic and diluted (in shares) | 5,118,030 | 5,116,657 | 5,117,690 | 5,116,321 |
Income from continuing operations - basic and diluted (in usd per share) | $ 2.20 | $ 3.43 | $ 5.70 | $ 6.19 |
Loss from discontinuing operations (see Note 7) - basic and diluted (in usd per share) | 0 | 0 | 0 | (4.65) |
Net income per common share - basic and diluted (in usd per share) | $ 2.20 | $ 3.43 | $ 5.70 | $ 1.54 |
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