Alexander's (ALX) Q2 2024 earnings summary

Executive summary

• Business performance is on plan with month-over-month improvement, driven by robust leasing activity and strong tenant demand, especially in New York City and the Penn District.

• 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.

• Over two-thirds of recent vacancies have commitments, and building utilization is returning to pre-pandemic levels, with tenants expanding and actively seeking space.

• 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

• Earnings from new leases, especially at Penn and other vacancies, are expected to increase in late 2025 as GAAP revenue comes online and interest rates trend down.

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

• Leasing markets in New York remain upbeat, with tightening vacancy rates and rising rents anticipated for Class A properties.

• The company expects continued strong tenant demand for high-quality, amenity-rich properties near transit.