Alexander's Inc. Reports Q1 2025 Financial Results with Decreased Net Income and Rental Revenues

Alexander's Inc. (NYSE: ALX) reported its financial results for the first quarter of 2025, revealing a net income of $12.3 million, or $2.40 per diluted share, down from $16.1 million, or $3.14 per diluted share, in the same period last year. The company's rental revenues also decreased to $54.9 million from $61.4 million, primarily due to lower straight-line rental revenue following the expiration of leases with major tenants, including Home Depot and IKEA. The decline in rental income was partially offset by increased payments received for previously written-off tenant receivables and higher straight-line rental revenue from Bloomberg's lease extension.

Total expenses for the quarter were $35.8 million, slightly down from $36.2 million in the prior year. Operating expenses increased to $25.6 million, primarily due to higher real estate taxes, while depreciation and amortization expenses decreased to $8.6 million. Interest and debt expenses saw a significant reduction to $10.8 million, down from $16.2 million, attributed to lower interest rates and a reduction in the outstanding debt balance. Funds from operations (FFO), a key performance metric for real estate investment trusts, fell to $20.8 million, or $4.06 per diluted share, compared to $25.5 million, or $4.98 per diluted share, in the previous year.

In terms of operational metrics, Alexander's portfolio consists of five properties totaling 2.45 million square feet, with a commercial occupancy rate of 94.7% and a residential occupancy rate of 93.9% as of March 31, 2025. The company has been actively managing its tenant relationships, with Bloomberg L.P. accounting for approximately 59% of rental revenues in the latest quarter. The expiration of Home Depot's lease at the 731 Lexington Avenue property, which generated about $15 million annually, has prompted the company to explore new leasing opportunities and potential redevelopment of the vacated space.

Strategically, Alexander's extended its lease agreement with Bloomberg for an additional eleven years, securing a significant revenue stream. The company also made a $32 million leasing commission payment related to this extension. However, the expiration of IKEA's lease at Rego Park I has led to a reevaluation of that property, with plans for potential sale or redevelopment. As of March 31, 2025, Alexander's had $377.6 million in cash and cash equivalents, a decrease from $393.8 million at the end of 2024, reflecting cash used in financing and investing activities.

Looking ahead, Alexander's management expressed cautious optimism regarding its financial outlook, emphasizing the importance of maintaining occupancy levels and managing operating costs amid fluctuating market conditions. The company anticipates that its existing cash balances, along with cash flow from operations, will be sufficient to meet its operational needs, including debt service and dividends to shareholders. However, management acknowledged the potential impact of interest rate fluctuations and inflation on future performance.