Alexander's (ALX) Q2 2024 earnings summary

Executive summary

• Business performance is on plan with month-over-month improvement and strong leasing momentum, especially at PENN 2 and across the portfolio, with over two-thirds of recent vacancies already committed.

• Net income for Q2 2024 was $8.4 million ($1.63 per diluted share), down from $64.1 million ($12.51 per diluted share) in Q2 2023, which included a $54.0 million gain from a land sale.

• FFO for Q2 2024 was $17.0 million ($3.31 per diluted share), compared to $18.2 million ($3.55 per diluted share) in Q2 2023.

• Major transactions include the announced sale of the Uniqlo Fifth Avenue flagship for $360 million and a handshake deal for a long-term master lease at 770 Broadway.

• Bloomberg L.P. accounted for 53% of rental revenues in H1 2024; lease extended to 2040.

Financial highlights

• Second quarter FFO was $0.76 per share, including $0.19 from non-comparable items; comparable FFO as adjusted was $0.57 per share, down from $0.72 per share year-over-year.

• Q2 2024 rental revenues were $53.4 million, nearly flat year-over-year.

• Six-month rental revenues rose to $114.8 million from $106.6 million, driven by IKEA lease modification and Bloomberg lease extension.

• Interest and debt expense increased to $16.2 million in Q2 2024 from $13.2 million in Q2 2023, mainly due to higher rates and cap premium amortization.

• Net gain on sale of real estate in Q2 2023 was $54 million; no such gain in Q2 2024.

Outlook and guidance

• Commitments are in place for about two-thirds of current vacant space, with GAAP earnings from new leases expected to begin in late 2025.

• Management expects cash flow from operations and existing cash to be adequate for the next 12 months, despite higher interest rates and inflation.

• Earnings are projected to increase as new leases commence and interest rates trend down, partially offset by reduced capitalized interest.

• The company expects a tightening of vacancy rates and potential rental rate spikes in prime Midtown Manhattan submarkets through 2025.