Alexander's (ALX) Q4 2024 earnings summary

Executive summary

• Leasing momentum accelerated in 2024, with 3.4 million sq ft leased, including 2.65 million sq ft of New York office at $104 starting rents and strong mark-to-markets.

• Major transactions included the Uniqlo sale at 666 Fifth Avenue at a record $20,000 per sq ft and the upcoming NYU master lease at 770 Broadway, which will relieve $700 million of debt and eliminate 500,000 sq ft of vacancy.

• PENN 2 is nearing a 300,000 sq ft lease, with expectations to be 80% leased by year-end and rents above underwriting, driving a yield increase to 10.2%.

• The company repaid $450 million in unsecured bonds and expects $1 billion in new cash from refinancing, asset sales, and the NYU lease.

• Q4 2024 net income was $12.3 million ($2.39 per diluted share), down from $16.3 million ($3.17 per diluted share) in Q4 2023; full-year 2024 net income was $43.4 million ($8.46 per diluted share), compared to $102.4 million ($19.97 per diluted share) in 2023, which included a $54.0 million gain from a property sale.

Financial highlights

• Comparable FFO was $2.26 per share for 2024, down from 2023 due to known move-outs and higher net interest expense, but better than anticipated due to accelerated leasing and lease termination income.

• Q4 comparable FFO was $0.61 per share, down from $0.63 in Q4 2023, mainly due to higher interest expense and lower NOI, partially offset by lease termination income and lower G&A.

• FAD was $1.75 per share in 2024, the lowest in 25 years, reflecting high capital intensity and leasing costs, but management expects this to be the cycle bottom.

• Q4 2024 FFO was $20.8 million ($4.06 per diluted share), down from $25.6 million ($4.99 per diluted share) in Q4 2023; full-year 2024 FFO was $78.0 million ($15.19 per diluted share), slightly lower than $81.1 million ($15.80 per diluted share) in 2023.

• Full-year 2024 revenues were $226.4 million, up slightly from $225.0 million in 2023.

Outlook and guidance

• 2025 FFO is expected to be slightly lower than 2024 due to the absence of 2024's lease termination income.

• Significant earnings growth is projected for 2027 as PENN 2 and other assets lease up and positive mark-to-market flows through.

• Management expects rents to rise aggressively in New York, with potential for PENN 2 rents to increase from $100 to $125 per sq ft or higher as the market tightens.