$38.81
$160.50
bear $38.81
base $123.89
bull $160.50
margin of safety $70.00
market price* $233.66
Alexander's, Inc. is a small New York City real estate investment trust that owns a handful of properties: the full-block 731 Lexington Avenue tower in Midtown Manhattan (952,000 square feet of office space, all leased to Bloomberg L.P., plus a 128,000 square foot retail condominium), the Rego Park II shopping center and The Alexander apartment tower (312 units) in Queens, and a ground-leased property in Flushing. Vornado Realty Trust, a related party, manages and leases the properties for fees. There are about 5.14 million diluted shares, and all per-share figures below use that count. What drives the value. Bloomberg is most of the story. It paid $129.3 million in 2025, about 61% of rental revenue, and in May 2024 it extended its leases on about 947,000 square feet at 731 Lexington Avenue from February 2029 to February 2040. That contract is the strongest piece of evidence. It came at a cost: a $32 million leasing commission paid in 2024 and a $113.6 million tenant fund owed to Bloomberg, of which $93.7 million was still unpaid at June 30, 2026. At Rego Park II, Costco, Burlington, Best Buy and Marshalls anchor the center; Kohl's has closed its store but remains obligated on its lease to January 2031. In June 2026 the company announced a 15-year lease with Target for 135,000 square feet at the Rego Park center, taking it to about 99% leased; no rent or opening date has been disclosed. How we measured earnings. We start from operating cash flow and remove working-capital swings and stock compensation, and we deduct only the building spending needed to keep the properties earning. Owner earnings were $11.25 per share in 2025, against $15.93 in 2024 and roughly $15 to $24 in earlier years. Owner earnings are after interest, so to value the properties before their lenders we add back the $48.2 million of interest paid in 2025 and take out the $14.7 million of interest earned on cash (the cash is counted separately). That gives about $91 million, or $17.8 per share, of cash the properties produced before lenders in 2025. We anchor on 2025 alone rather than a longer median because the rent roll changed: The Home Depot's lease at 731 Lexington Avenue ended January 31, 2025 and IKEA left Rego Park I in 2024, so earlier years describe a larger business. Two accounting judgements matter: the 2024 working-capital outflow includes the $32 million commission, which we treat as a one-time cost of securing the lease to 2040; and the unpaid tenant fund is subtracted as a debt-like obligation rather than spread through earnings. The $148 million gain on the May 2026 sale of Rego Park I is not treated as earnings; the cash it brought in is counted on the balance sheet. Growth. Owner earnings fell about 29% in 2025 (about 22% on the before-lenders measure), driven by the Home Depot and IKEA departures, which are now fully reflected. First-half 2026 revenue was $108.1 million, 1.5% above the first half of 2025, so we assume no further decline in year one rather than growth. We credit no growth after that: contractual rent steps under the Bloomberg lease are not quantified in the filings, and the Target lease has no disclosed rent, so neither is in the base case. Management plans about $55 million of capital spending in 2026, against $21 million in 2025, much of it likely tied to re-tenanting Rego Park II; we charge the excess of roughly $35 million against the base case as a one-time cost rather than lowering the earnings level. One item we could not reconcile. The schedule of contractual minimum rents at December 31, 2025 shows $136.3 million for 2026, $129.8 million for 2027, $137.2 million for 2028, only $52.8 million for 2029 and $126.7 million for 2030, with $1,065.6 million thereafter. The filings do not explain the 2029 drop. A rent-free period at the start of the Bloomberg extension (which begins February 2029) is the most likely explanation, but we could not confirm it. All three cases treat about $80 million of 2029 cash rent as not received. The three cases. Business value is what the properties are worth before lenders. Net obligations are about $630 million: roughly $809 million of mortgage debt (after adjusting for the cheap fixed-rate apartment loan and valuing the retail-condominium note at its present value) plus the $93.7 million tenant fund, less about $273 million of cash beyond operating needs. - Base: before-lender cash flow stays near $91 million a year through Bloomberg's February 2040 term, less the 2029 gap and the extra 2026 capital spending. After 2040 the building keeps earning 78% of today's level indefinitely; the reduction reflects what retaining Bloomberg cost this time (the commission, the tenant fund and the 2029 gap together are about $220 million). The evidence for persistence is that the company owns the full-block site, Bloomberg has occupied it throughout our ten-year record and extended nearly five years early. Business value is about $1,266 million; less $630 million owed leaves about $636 million, or $123.89 per share. - Bear: no lapsing lease is replaced, so cash rent follows the contractual minimum schedule, which runs about $12 million a year below today's level from 2031. Rego Park II suffers a retail downturn like 2020, when revenue fell 12% in a year, costing about $18 million a year in 2027 to 2029. The $400 million office mortgage at 731 Lexington Avenue (5.04%, due October 2028) is refinanced into the weak 2029 rent year at 7%, the rate on the senior note in the company's own restructured retail loan, which adds about $50 million to what is owed. Bloomberg leaves in 2040; after two years of near-vacancy the building is re-let at about 55% of today's cash flow. Business value is about $879 million against about $680 million owed, leaving about $199 million, or $38.81 per share. In 2029 this case's cash flow falls below its interest bill for one year, which cash on hand can carry. - Bull: as base, plus the Target lease and the higher first-half 2026 revenue run-rate lifting before-lender cash flow to about $97 million, and 90% of today's cash flow continuing after 2040 on a Bloomberg renewal. Business value is about $1,454 million against the same $630 million owed, leaving about $825 million, or $160.50 per share. Debt. Mortgages total about $835 million at face. Maturities: $94 million on the apartment tower at 2.63% in November 2027; $400 million on the office condominium at 5.04% in October 2028 (prepayable without penalty from October 2026); $175 million on Rego Park II at SOFR plus 2% (5.72% at year-end 2025) in December 2030, which includes a cash-sweep trigger from December 2028 if the former Kohl's space is not fully re-leased; and a $167.5 million retail-condominium note that accrues 4.55% interest without cash payment and is due December 2035. That note is forgiven to the extent the retail condominium's sale or refinancing proceeds fall short, so we may be overstating what shareholders owe; we credit no forgiveness because we cannot value the retail space. Margin of safety price. We are fairly confident in the earnings level for the next thirteen years because most of it rests on one signed lease with a creditworthy tenant. The worst plausible outcome is Bloomberg's credit weakening or Bloomberg leaving in 2040 into a weak Manhattan office market, combined with refinancing the October 2028 loan at a high rate just as 2029 rent dips; the structure would survive that, because the loans are property-level and non-recourse, the company owns the land, and it holds about $273 million of surplus cash, but shareholders would be left with little, as the bear case shows. The things we are most likely to be wrong about are the cause of the 2029 rent gap, what 731 Lexington Avenue earns after 2040, and the cost of the 2028 refinancing; if all three go against our estimate the shares are worth roughly $40, and if they go modestly the other way roughly $125 to $160. During the holding period, the business generates roughly $11 to $12 per share a year after interest, though the current $18 annual dividend runs ahead of that and is partly funded from cash. The price assumes a holding period of about five years and a sustainable payout of around $11 a year; on those assumptions, from $70 the base case implies roughly a 20% annual return, and the bear case implies a modest loss once dividends are counted. The margin-of-safety price is $70 per share. What changed since our previous analysis. The previous figures were base $136.57, bear $19.92 and bull $161.49. The base is lower mainly because management now plans about $55 million of capital spending in 2026, which we charge as a one-time cost. The bear is higher because we now credit the fully owned Midtown block with re-letting after Bloomberg's term rather than letting its earnings run off, while adding a retail downturn at Rego Park II. The bull is little changed: the Target lease announced in June 2026 offsets the extra spending. What would make this wrong. Loss of Bloomberg's credit or its lease, an explanation for the 2029 dip showing a longer shortfall, refinancing of the October 2028 loan at a much higher cost, or capital spending running well above $21 million a year after 2026. Upside comes from the Target lease, rent steps in the Bloomberg lease and any forgiveness of the retail-condominium note.