Yet Another Value Podcast - Bill Chen's follow up on REITs and $ALX

Episode Date: February 5, 2026

In this episode of Yet Another Value Podcast, host Andrew Walker welcomes back Bill Chen for the fastest return in YAVP history. After running out of time in their last chat, Bill returns to dissect Alexander’s Inc. (ALX), exploring its complex debt restructuring, unique real estate portfolio, and intriguing market valuation. The two dive deep into the Bloomberg HQ lease, the nuances of retail space refinancing, and the strategic implications of Steven Roth’s leadership. They also tackle REIT governance concerns, dividend sustainability, and the mystery behind ALX’s high short interest. Bill closes with thoughts on grocery-anchored REITs, White Stone, and REIT buybacks______________________________________________________________________[00:00:00] Andrew introduces returning guest Bill Chen[00:03:13] Overview of Alexander’s history and assets[00:06:57] Complex debt restructuring of Bloomberg retail space[00:10:04] Debt haircut and strategic implications[00:14:47] Asset breakdown: Bloomberg tower, retail, apartments[00:21:37] Share price vs. underlying asset value[00:23:28] Corporate governance: Roth and Vornado dynamics[00:29:09] Dividend risk and short interest discussion[00:34:37] Bloomberg lease escalators and valuation upside[00:37:10] Update on grocery-anchored REIT landscape[00:41:57] Commentary on REIT share buybacks[00:47:50] Special dividend catalyst: Rego potential saleLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

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The meeting will begin when passenger Fisher is done celebrating. 19 plus Ontario only. Please play responsibly concerned by your gambling or that if someone close, you call 1-8665-3-3-0 or visit comex Ontario.ca. All right, hello. Welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker. Today we have back on my friend Bill Chen. Bill is coming on for the fastest repeat visit in yet another value podcast history. For those of you who listened to the last podcast, it was Bill on.

And I had a really good time. We're just rocking and rolling through different things, talking about all things reeds and real estate and everything. And then we kind of got to my hard stop at the end. And I said, all right, I got a hard stuff. And Bill said, oh, I had seven other things I wanted to talk about. So Bill came on and we mainly talked about Alexander's group. The ticker there was ALX. to see the full disclaimer, not investing device at the end of the podcast.

Mainly talks about that, but kind of bounced around a couple other things in real estate investing as well. And if you enjoyed the last one, I think and expect you will enjoy this one as well. So we'll get there in one second, but first, a word from the sponsors. This podcast is sponsored by AlphaSense. One of the hardest parts of investing is seeing what's shifting before everyone else. For decades, only the largest hedge funds could afford extensive channel research programs to spot inflection points before earnings and stay ahead of consensus. Meanwhile, smaller funds had been forced to cobble together.

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All right. Hello and welcome to the yet another value podcast. I'm your host, Andrew Walker. I'm with me today. I'm happy to have on for the quickest return trip in yet another value podcast history. My friend Bill Chen. Bill, how's it going? Good. Hey, you know, this is the fastest turn around two days, right? The stone hasn't even melted outside. That's really funny. Let me, quick disclaimer, remind everyone, nothing on this podcast is investing in advice. You know, always true. Please see a full disclaimer at the end of the podcast, and there's a legal disclaimer link in the show notes. Bill, look, we were, I had a really good time.

I think people are, I haven't posted yet, but we did a podcast on Tuesday. We ran right onto my hard stop, and we still had a lot of, a lot of things to talk about. And I think you wanted to, you know, this is generally a single-stock-focused podcast. I think you wanted to generally talk a few single stock. So we set up kind of a 30, 45-minute follow-up podcast for today. It is, what, Thursday, January 29th. So figure we do that. And that out the way, I'll just also sit over to you.

You know, what did you want to, what additional stuff did you want to give the people? Yeah, I really want to talk about Alexanders, which, you know, I think we tried last year at some point to talk about Alexander's and then kind of Trump Liberation Day got in the way and we never got around to doing that podcast. But what's really interesting about Alexander's is that there was this. debt restructuring that occur on the 29th of December, I believe. And I ping you right, like on New Year's Eve. I'm like, Andrew, we got to like talk about this. And in essence, for those that don't know, Alexander's is a, it's a poetry to read, you know, got a long colorful history. It's a department store that went bankrupt in the early 90s. And the most famous asset is the Bloomberg Global Headquarter, which has a triple net lease. that won't expire until 2040. So in essence, that asset, that office asset, which is a trophy class A office asset, with that kind of lease duration, essentially,

it's a Bloomberg bond at this moment. It's got almost $200 million of excess cash after the recent debt restructuring some debt paydowns, owns a shopping center out in Queens, own a class A apartment building out in Queens, and then it owns a development site that it's being marketed for sale. So it's got this, like, some of the parts.

And what makes Alexander really interesting is that there was a $300 million loan. So the Bloomberg Tower is, you know, in New York City, they'll do this. They'll split it into an office condo, you know, which has this like, you know, lease that runs to 2040. And on the bottom of the Bloomberg building, there's a retail condo. And there was a $300 million loan that came due in late last year. and it's something that I was tracking, you know, all throughout last year. Alexander had almost half a billion dollars of cash, and they had about a half a billion dollars, you know, off, you know, that maturity that came due.

And I was tracking like how, you know, it was actually about $400 million of cash and half a billion dollars of that maturity that came due. And I kept checking, tracking, you know, how are they going to, you know, deal with those two maturities. And so on like the 29th of December, you know, this press lease went out, this AK went out. And they said that on this $300 million deal, it's like one of the most complex debt restructuring that I've seen. They split the $300 million piece into three new trunches. There's an eight tranche, which essentially become $132.5 million, well, you know, $0.44 on the dollar. And then there's, quote, unquote, a new B trunches.

which, you know, doesn't have any, doesn't have any capital in there right now. And then there's a sea trunch that becomes subordinated and it becomes payment in kind. And then subsequent to that, the lender sold the a trunch under $13.5 million dollars back to Alexander. So Alexander's owned that right now. And then the sea trunch, you know, gets, gets subordinated. It's like four and a half percent interest, payment in. Kai. But it's got some very unique features like the A trunch will have a 7% interest rate. The B trunch will have a 13.5% interest rate. And the B trunch is to finance tenant improvement and

leasing costs for this piece of property. And then the C trunch is payment Kai. So there's no cash interest on it. It won't. The maturity extended out for 10 years. So like, Andrew, you're probably thinking, like, you're getting a headache, like, just listening to me. No, I was thinking I've read the 8K probably five times. I've seen, I've seen your chart. So Bill has a visual chart. He sent me explaining it. I now had you walk me through it on the podcast, and I'm still not.

And I feel like I do complicated transactions all the time, and I'm still not quite sure what the heck is going on here. Okay. Like, on an effective basis, the lender basically took a 56% haircut, right? And, and, but I think they essentially retain a hope piece of, of the debt. They didn't want to completely write it down, right? They want to be able to retain some sort of like hope, you know, debt piece. And, um, they saw.

Inch insurance in Carl Lecon's terminology. Yeah, yeah, schmuck insurance. There you go. And, but like, I think they wanted 44% of money back. They got $132.5 million back, right? And then, like, I'd like, I'd like, spent like a whole day, basically spent all New Year's Eve, like thinking about this deal.

And I think it made, like, I think this just, again, demonstrates how true Stephen Roth, the CEO, you know, is of Alexander. Stephen was also CEO of Oneedo. Like, when you look at this transaction, the first, like, this mortgage was non-recourse. The only recourse the only recourse the lender had was to the retail condo portion of this, you know, it's about 130,000 square foot.

at the bottom of Bloomberg building. And like, if you're the lender, like you kind of don't want to be in the real estate business. You want to be a lender, right? And it's got this retail portion does have some challenges. There used to be a Home Depot on the bottom. They vacated. Bloomberg actually has some office space in the retail portion because when you come into Bloomberg on the bottom as you kind of coming into their courtyard, you know, they take some of the video, you know, the TV shows, you know, in that low.

portion. So like what actually happened is Stephen Roth basically was sitting there, you know, with like at this point, you know, like almost $300 million of cash on the balance sheet, basically telling the lender that, hey, take this piece of property back, you know, full close on it. This is like what I imagine what happened in a negotiation table, right? Stephen Rove is like, hey, take this piece of property back. Why don't you go putting another $60 million and try to find the right tenant and lease it up, right? And I think the lender eventually capitulated and basically said, pay us 44 cents on the dollar, give that back.

Let's retain a whole piece, right, which is $167 and a half million that will keep that out there. It's got to exist for 10 years. But if you refinance and the refinance value is below like the par value, right, like it can be forgiven. It's got this like very friendly feature to the landlord, which is us the shareholders of Alexander's. And I'm looking at Andrews's like facial expression

and you're still like, you're still kind of confused. No, no, no. Let me just push back in two places here, right? So you're obviously very focused on this like nitty gritty piece of the retail piece. And I think I would have just two pushbacks. Yeah. Number one, like my history, I've seen some companies. and I won't say names because they're very small,

but I've seen some companies where like, you know, it's a 300 million EV company with 200 million of debt, and the lender settles the debt for 50 cents on the dollars, and shareholders rejoice. And maybe that's the right move. But to me, I look at them like, oh, my God, the lender just gave you just like settled for 50 cents on the dollar. Like, they don't think that loan was getting made whole.

Like, I don't know if the stock is worth anything. So I think that would be number one, like, hey, I understand true negotiations, like you've got a loan, but you've got a lender who like lent to this, as a solo real estate play. It's like, hey, get me out of this for 44 cents on the dollar plus maybe a little opium insurance. So that would be number one.

And then the second piece, which I'll just throw out while in Rimbled is, you know, how much does Alexander's is a $1.2 billion market cap reed? It's got there's debt on it, obviously, but I'm just saying $1.2 billion. It's got that whole office tower for Bloomberg. That's where the majority, like how much, it's cool to do a cleverly structured transaction here. But how much does it really move the needle? Like, I've had things where I've gotten obsessed with something about a company, and then it's gone down in flames, and I was right on the, you know,

I kind of missed the forest for the trees. I was like, right that this one individual tree was great, but guess what, every other tree was on fire? And like, here it's like, hey, should we really be paying attention to this one tiny piece? Sure. So, so, by the, great, great feedback, great pushback. And I think, like, the key takeaway is by buying this, that piece back, right? First of all, let's look at the immediate effect of this transaction.

They save $17.2 million in the interest expense a year, right? And that directly impacts FFO. Now, like, Andrew, you probably could argue and say, well, Bill, like, if they just, like, gave the whole thing back, right? They would have, like, have to put in $132.5 million, right? So I'll walk through the whole piece, right? I think that there's what they accomplishes. that there is some strategic value in that since Bloomberg, you know, does lease a portion of that space, even though it's called the retail condo, Bloomberg, the tenant, do, you know, do lease a

portion of the space that where Bloomberg probably pays $5 to $6 million to that retail combo. So I think there is some strategic value in just, like, retaining that space so that you are one single, you know, Bloomberg is a single tenant. Alexander is a single landlord that, you know, so it's a one-to-one relationship. So Bloomberg isn't dealing with two separate tenants, two separate landlords down the row. I think there's strategic value in that. I think by paying $132 million, like if you kind of do the math, I mean, that is an effective yield of, you know, 13, 14%, on, you know, 17.2 over $132 million, right?

So I think the third part is, what could they do with that? I think that the reason is at $300 million, Alexander could have spent the money to try to track a tenant, et cetera. And maybe they just fill it where the net operating income on that retail portion is $20 million. So you spend a ton of money, spent a ton of, you know, spent all this effort to try to lease it up, right? And maybe there's like $3 million of income. incremental cash flow, netting, you know, $17 million a year interest expense to the lender.

So by doing this deal, I think that what Alexander could do is they could spend incrementally $65 million in leasing commission and tenant improvement. And they could potentially affect a $30 million swing, right? So now they control this piece. So they could essentially create $30 million incremental FFO on $200 million. spend. So like in the real estate space, if you could earn that kind of 15% unlever, you know, return them, and that's a tremendous use of capital. And now you also control the retail portion. You're not yet like you're a single landlord to Bloomberg. I think that would be really, really good when Bloomberg, like, I know 2040 is a long way out, but I think that if you have

as good a tenant as Bloomberg, you want to be a single landlord to Bloomberg down the road. So I think there's a lot of, you know, it makes a ton of sense to, you know, to, you As you and I are talking, Alex stock is 240, 250 per share. Why don't we just do a quick, this is nice because there's like five assets here. Why don't we just do a quick sum of the parts so people kind of understand how you're thinking about this and why you're so excited. And again, I think one of the interesting things is, as you'll show during some of the parts, the majority is this single lease office building, great location, great tenant in New York City. you know, hopefully by 2040, New York City is fully recovered from the pandemic, from whatever's happening right now. So why don't we just kind of do with some of the parts so we can talk about

that piece of it as well? Sure, absolutely. So there's only a few assets. Let's just talk about the Bloomberg Office Tower, right? So Bloomberg Office Tower is at today, you know, today in 2026 it pays $78.7 million in Trouble Net lease. This means that, you know, Alexander, like we as a or not on the hook for any increases and, you know, that's truly a pass-through. And there's really nice escalators. In 2028, that's going to step up to $88.3 million. So we're like in this in-between period. And so on today's rent, if you say it's Bloomberg, this, you know, this is almost as

good as, like, U.S. Treasury from a credit perspective, 6% cap rate, right? Which may sound kind of like a low cap rate, but if you factor in the credit and, you, And the duration, the fact that it's a lease that runs into 2040, I got that at like $1.3.1 billion. And that is just for the office portion. And since they brought back this space, let's say that the Bloomberg retail portion is just worth $132 million.

It's what people pay for. It's what Alexander pay for to buy the debt. It's just worth what the debt value is today. And then, you know, you got the, there's a, there is an apartment building out in Queens called the Alexander, which, like, by the way, Alexander doesn't break down a lot of the, you know, doesn't actually give you the specific N.O.I for assets outside of Bloomberg office. The Bloomberg office has a very long, you know, lease that they filed publicly,

and you can go look at it. So we're a lot more certain on the N.O.I of the Bloomberg office. Now, Alexander, you know, my estimate is that it does $8 million in NOI. And at a 5% cap rate, you know, that's a fairly new Class A, you know, apartment building. A 5% cap rate, that's 160 million. And then there's Regal Part 2, which is a pretty large-sized shopping center in Queens. So there's Regal 1 and Regal 2. And Regal 2 is over 600 million square foot.

And what's interesting is that Regal 1 has always kind of had an old Sears box. They bought in IKEA. and it looks like, you know, Rigo 1 was going to, you know, do well. And then IKEA went, you know, decided not to break that lease, you know, pay them. And what Alexander did in the last kind of year with you is decided, hey, Rigo 1 doesn't make sense as a retail asset. So they decided to, you know, vacate all retail one, Rigo 1, move all the tenants over to retail. Regal 2. And what's really nice is that you've taken out competition.

You kind of had about a million square foot or retail space in this area, you know, in Jackson Boulevard and Queens, right? And now Regal 1, you essentially remove 3 over 330,000 square foot of retail space. That's competition that immediately just went away. And they moved over a couple tenants. Marshall was in Burlington. And, you know, I suspect that Reyes, go to has, you know, my estimate is that they're doing about with the new tenants,

they moved over, 26 million of NOI, and again, at a six cap. By the way, this is probably one of the highest rent per square foot for kind of these big box spaces. There's a Costco downstairs, which is a, it's a fist fight. Like, on the weekends, if you go there. That's where I've never been, but that's where I'm pretty sure when I instacred the Costco and get the artissory chicken. And my wife's been really into the Costco cheesecakes, the little.

mini cheesecakes, they're very good if you want, if you want to try them. I'm contributing to that NLA in a very, very small way is where I'm going. Yeah. And, you know, that's a busy shopping center that now just got, you know, like Burlington Marshalls and a DSW. Like those are kind of like the tenants that in this new age of retail where they have like very viable long-term strategies, right? Costco, Burlington Marshalls.

And then so Regal 2, you know, I think that's worth $4333 million. Now, Regal 1 as a development site, I think it's worth between $100 to $200 million. And what's really interesting is it's five acres. It sits directly above a subway station. And the best, the easiest cop is a few years ago they sold a site called Regal 3, which is probably about 0.4.5 miles away from Regal 1. It's further away from the subway station. It's next to a big, busy interstate, I-495.

It's an irregular shape. It's three acres. That sold for $71 million. So on the low end, if you just say three-acre versus five-acre, you know, 100, you know, but the Regal 1 is a better location directly on top. It's also more of a, you know, like a square or rectangle. It's easier to build. And I suspect that, I estimate that they could build a million to a million seven is kind of like, you know, just, just if you look at the density around the area, what you could build on Queens Boulevard.

And this is an area that we have a lot of experience in. There's, there's like a history there of, you know, like small, single-story retail being knocked down to, you know, to be, like, converted into 12, 15-story resi that are, like, built directly. way to the curb lock. So that's kind of the walkthrough is that if you add everything up and use the midpoint of Rigo 1 of like 150 million, you get about $2.2 billion, you know, $2.2 billion. And then the debt, you have to make some adjustment because they use the cash to pay down, you know, the debt 132 million. They also paid off $25 million of debt on that shopping center. So, you know, there's $669 million of debt. And then there's, you know, still $19. million dollars of cash. And the equity value is about 1.75, 1.74, 1.75 billion.

Share is a 5.13.13, 340 today. And the way that we just, yeah. How much of that, so just rounded up to 400, right? It's 240 right now, 400 of now. How much of that is Bloomberg Tower versus everything else? Well, if you just take the Bloomberg, just the office portion and the cash, that's essentially your market cap. And I can't remember because I have. haven't looked. There's no, there's no, there's no debt against the Bloomberg Tower. Like you're not, no, no, that would be like net off the debt. Net of the debt against the two. Yeah, yeah, yeah. So you, your contention would be Alexander, you get the Bloomberg Tower, this great building, great credit, great tenant and the cash. You're paying for that at today's

price. And then you get everything else. The retail piece of the Bloomberg space that they did some interesting things with, Rigo 1, we go to all this, you get everything else for free. Yeah, yeah. Let me go to the other interesting thing about Alexander's group. And if you want at the end, I know, because you've sent me some stories, I know you've done some, like, on the ground work with Rego and seeing, that might be a little data at this point, but like C&S tenants are opening stuff. But you get that in a second. I do just want to ask, like, I think when a lot of people look at Alexander's, right,

the first thing that jumps up to them is, hey, you mentioned Steve Roth. Bernato owns a third of the stock, right? So I think a lot of people look at this and say, hey, I'm buying into a controlled, basically a controlled publicly traded subsidiary. of Renato. And, you know, I think the history of REITs that have, I don't want to say this is externally managed, but I think the history of REITs that are controlled externally managed, the capital allocation isn't great, right?

And I think a lot of, I think the most obvious pushback, if you said death of New York, cool, yes, that is a pushback. But I think the most obvious pushback would be like, hey, yes, it looks cheap, but you need to slap some type of corporate governance discount on this because Bernado is going to take them under. or Vernado is not going to do great things with that cash. Basically, Vernado is going to do something that benefits them versus Alexander Minority Shareholder. So how would you kind of think about just the whole Vernado of all?

Yeah, so I think that, you know, that's something that like we thought about immediately, right? And then, like, we actually dug into it. So, so too many things is that is the ownership, right? So if you look at Stephen Roth, you know, Russell B. White and David Mendelbaum, right? they own, I mean, they own way more. You know, they own way more. They own 40, almost 46% of Alexander's versus, you know, what they own, you know, they own about those three, those same three individuals own about 10.3% of Vornado, right? So totally different, like, ownership.

So, you know, show me the incentives and they'll show you, like, the results. I would say that you are more aligned being a shareholder. of Alexanders, then you are being a shareholder of Vornado. And I'll work through, so Stephen Roth, you know, CEO both reads. His total comp, his total comp in the last three years is almost $40 million at Vornado. And it's literally like, I mean, the total comp is like about a million dollars at Alexander's over three years, right? But you say, okay, like, it, like, you have to adjust it for size, right?

because, you know, Vornado is a much bigger, a bigger rate. So if you do what market, market cap, you know, like, weighted, it's still a factor. Like, he's still getting paid 10 times as much at Vornado after you adjust for the difference in market cap, right? Well, I think that the other thing is, and I haven't looked at his Vernator contract, but you basically mentioned, right? Like, let's say he's making $15 million a year at Vernado. Yeah.

You can correct me if I'm wrong. He owns directly what, like, $1,500. $150, $200 million of Alexander stock, right? So his ownership here, not only is 150 to 200, that's whatever he's getting paid at Alexander, it's also significantly dwarfs his salary at Bernato. So, like, you would, I don't know, you know, it is always tough because a salary is 100% to you. And when you, even if you have a lot of ownership, like everything is kind of like dilutes down to you, but he owns a heck of a lot of stock.

And I think he might own as much Alexander's stock as he does, Vernado stock. So, like, I think he's quite equity aligned here, but you can tell me if I'm wrong company. No, I think you're totally thinking about this the right way, right? And the other thing is that, let me just see you with Stagric. So Alexander's pays $18 per share in dividends, and this is a $240 stock. So, and he owns about $669,000 shares. So just on his dividend, just on Alexander's dividend, he's getting $12 million a year versus, like, you know, like, like, hundreds of thousands in annual comp at Alexander's.

I would just, I would say that like, there's clear evidence that Stephen Roth and, you know, the two other major shareholders, like, they are way more aligned with, you know, maximizing, you know, shareholder interests at Alexander and Vornado. And then there is, so what makes this reed kind of under the radar is they don't host their own earnings calls. They don't actually give you supplemented.

They don't break down all this detail. I'm able to like arrive at, all of this because one, I'm a local. I, you know, I've seen all these assets in person. And I can kind of, like, triangulate a lot of the stats, right? Like, yeah, you really have to, like, you know, do some work here. And, and, and so, like, you kind of have to go to the Borneo earnings call to actually, like, have them, like, occasionally get a couple questions about Alexander's. And then if you look at, so 2025 last year, you know, what's really interesting is that people ask, hey, are you going to fold

Alexander's into Vornado? And they said, look, we're never going to make both sides happy. The Vornado shareholders are probably not going to be happy, and the Alexander shareholders is probably not going to be happy because you're going to have a, you know, what is the right intrinsic value? What's the right nav? And

so Stephen Roloff, you know, have floated the idea that he's going to sell every single asset aside from the Bloomberg Tower. And if you kind of think about this, you got, you're, so, So he's actually come out and told you, like, the plant, right? The plant, and there's a history of asset sales. You know, like there's as long history.

It's a department store that went bankrupt in the 92. They own this whole city block in New York City on Lex and, like, you know, 60th. And they build a bloomer tower. But since then, they sold a shopping center to Mace Ridge in 2012 or 2013 for $750 million and paid out a huge, you know, $122 special dividend back then. They sold Regal 3, and Regal 1 is out in the market, and there's a little footnote that says that they're under advanced negotiation to sell that asset to a buyer, right? Like, what's really interesting about Alexander is that, like, there's, I feel like it's one of those reasons where if you're playing very, if you're paying very, very close attention, like, like, you're, you can actually see, like, really read the tea leaves. And there's just been a ton of, you know, back and forth on the Vornado earnings call on, on,

what they're going to do. And I think they've said loud and clear that they're not going to do, they're not going to do a take under. And then based on the ownership and how Stephen Roll is compensated at Vornado versus Alexander, I would say any action is more likely to favor Alexander rather than Vornado. No, that's great. Last question. I know you've talked about this.

This is a stock with, and I mean, we can talk. The tough thing about Alexander's is there's five properties here. One of them dwarfs the value of the other ones. Like you do hope they sell one of the Rigo's, big dividends, everything. But it's not like there's crazy amount to talk about. This is a stock with a pretty decent short interest, right? Like I'm just looking at Bloomberg. It says, I don't even know if this is right now, 42% of the float, which might be,

because so much is owned by Vernado and Roth and stuff. So it says 42% of the float is short. And 42% is short, you know, we're getting into squeezy territory at that point. So what is, what are the shorts kind of seem? When you pitch this, aside from my very obvious dumb, dumb pushback of corporate governance, like, what do you, what do people say or what do you hear when people are talking about a downside scenario here or what the shorts are seeing? Yeah, I mean, that's something I've been spending a lot of time in particularly the last past month,

but also in the past year trying to understand. And I can't really find a good answer. I would say that last year, in the beginning of last year, you probably had more of a valid argument about a short thesis. One is, so they don't fully cover the dividend right now. And with this recent debt restructuring, they could probably cover about 90% of the dividend right now. But like, we've done an analysis where in 2028, there's a big $10 million step up in the Bloomberg lease. it will go to 88.3, and then if they could get any lease up benefits, you know, we estimate that the Bloomberg retail,

if they probably leased it up, they could add $12 million of N.I, right? So, but, like, even if they don't, they're not successful with Bloomberg retail, just getting that $10 million step up in the lease, you know, you get very close to 100% coverage. And we also calculate, like, what is a shortage? And I think part of the short pieces is that I think there's a big bet that they're going to cut the dividend,

got cut it eminently. And this is something that I could never understand, right? I did the math. They're probably, the shortfall right now is probably about $10 million a year. And this is where there's, there's only one cell site analyst who covered this name. And, you know, interesting enough, after the debt restructuring, I looked at the Southside report, he's still got a $47 million annual cash, you know, interest expense in calculating FFO. So you're only going to use cash interest expense. But in reality, they just say $17 million. So it's, there's a $15 million delta in the South Side report, you know, interest expense versus like what I, what I calculated, which would be $32 million. So there's a delta 47 to $32 in interest expense going forward. There's people,

I think, I think whoever is shorting this is probably shorting it based on there's an eminent, you know, dividend cut, which like Stephen Roth have basically said he's not going to. He's got asset sale. He's got potentially $150 million, you know, $100, $220 million of asset sale, which they'll pay out the bulk of it in special dividends, but they'll probably still retain, you know, $60, $65 million off that. So that will actually ask their cash pile that they currently have. And so the second part is, I think last year, there were half a billion dollars of debt that mature in the second half of last year. And I think that made for a better short thesis, right? So both of the two

loans that combined for half a billion, they've been restructure and they've been refied. You know, the other property, they pay down 25 million dollars of debt and it's been extended for another five years. So like the next step maturity is like two or three years out. It's on the apartment building. They can easily finance that. The debt financing for an apartment building is very, very easy.

So like what I don't get is there's just like no logical good, you know, short thesis anymore. And that's why I was so aggressively buying, unlike New Year's Eve, you know, we bought this, you know, allocation up to like 13% of portfolio. And I think a lot of it's just like recognizing that, hey, they extracted a ton of value from the lender. The shorts, you know, are wrong. And so my best understanding is that on Goldman Sachs Marquis, there's, this is like one of those stock that's, like, heavily recommended as a short candidate. And, you know, Andrew, to, like, you know, what we've been, like, maybe you've been noticing this. I think the market is kind of becoming a bit of a kind of like thematic, like, long, short pair tray. You know,

this is probably being, you know, lump into, this is, this is like my theory, right? It's probably being lumped into you. You want a short office. You want a short mom, die. You want a short New York City. It's been a running theme of people who pay attention to factors for, I would the past two, two, three years. So I guess what you're saying is like, look, this got put into a office bucket factor. So it just gets office bucket. Sure. But let me ask one more question here, just to step back a bit. You know, Bloomberg, the lease runs through 2040. And the reason it runs through 2040 is, I think in March of 2024, I was just trying to go back to my notes. They extended it for another 11 years, right? It was going to end in 20209. They extended to

2040. I don't remember seeing what the pricing on the extension was or anything. Do you know anything about what the pricing on the extension? Yeah, so the pricing is very interesting. They essentially created, I don't know the right time is Colorado, Shrattle, but there's like a low end and a high end. So depending on, it's paid to Class A New York City rent because I think at the time they want to get that extension, but they couldn't agree on the rent that they pay. But in 2030, when that lease reset, so let's just like kind of benchmark, right, you're getting $78.7 million, we're getting $78.7 million dollar is triple net NOI today. In 2030, the minimum, the lowest that rent could be is 85.7. The highest it could be is actually, is actually 104. Right?

So, so, like, what I really like about this is, you know, someone may say, well, Bill, it's worse like $3.40. Yeah, I collect like, you know, almost like, I collect $18 of dividend, but like, you know, it's 240. Like, it's like, it could potentially be like almost 360 and, and I'm buying it a 240 to. Like, why is that interesting? I think that if you look at the automatic escalators in the Bloomberg lease, that's what makes it really, really interesting. is that there is a scenario in 2030 if class A rent in New York City for office, you know, is robust. Like this could, the NOI on the Blumenthal could be $104 million as high. But like it will definitely be higher.

It will definitely, it will be at least, you know, call like $7 million higher than it is today. It would be at least 10% higher, right? That would be the absolute minimum. But it could be, it could actually be, you know, call it like $25, $26 million. higher than it is today. And then there's another escalator in 2035. I think the market truly on the values, like the, you know, this contractual triple net lease with Bloomberg.

Perfect. Perfect. Let's see. We got, I think we've covered a good bit of Alexander's. Again, it's a pretty simple idea. I think people like it. They can reach out to you. And I don't think it's crazy hard to diligence.

I'm thinking about, got about five minutes. I know when we hung up yesterday. day or two days ago, there were a bunch of stuff you want to talk about. And you and I were catching up before this call and that we were rolling through one thing after that. So I just want to tell us to over you. Anything else we should be thinking about or anything else you wanted to kind of chat about in the last few minutes? Yeah, but I think, I think like we were like, you know, a little time constraint last time when we were talking. I, you know, I just want to add like, I think last year when I was on podcast, I've mentioned like gross anchor shopping center

reads as like a theme, right? And we, we, we, we, we, we, we, we, we, we, we, we, we, we, We've been very, very bullish. And then I think any time you see Blackstone start buying an asset class, which they historically has not been very active in, it's worth like paying attention to you. And I've noticed this about a decade ago when Blackstone started buying out warehouses. And they were just going around the country buying up, you know, any four million square foot of warehouses portfolios.

So in our portfolio, Blackstone bought Retail Opportunity and Investment Corp in late 20, I believe it was 24. Last year, they bought, I was in the Baldwin, they're both grocery anchor shop and setters. So like two years in a row. And then I think that, you know, the third one, the last remaining kind of sub-3 billion dollar enterprise value, grocery anchor shop and setter is a reek called White Stone Reat.

And I think people should pay attention. There's a, trains around 14 bucks today. There's a 1520 private equity bid on that portfolio. which is way, you know, it's just like way low balls, like the actual value. If you use the cap rate that they pay for RIC and Alexander Baldwin, it gets you into probably like, you know, somewhere between like $20, $21 a share. And they recently just got over $50 million of litigation assets. You know, that was like a hidden asset.

So that got converted into cash. And that was that allow them to like deliver their, their balance sheet by a half a turner EBITR roughly. And they've been very, very steadily growing their NOI by about 4% a year. Like if you go read a lot of the, there's been a couple, it's been targeted by activists. There's a really colorful history. But if you look at the actual performances from 22 when they outset the former CEO till now, it, like what they've done is they take it leverage down from 10 times net debt to EBITDA to

right now, probably mid-6, is kind of my best guess. They've, like, clean up, you know, they clean up a lot of these litigation assets. They've done a pretty good job in capital recycling. But if you read all the activist report, like they're super negative. And then the last thing I want to say is that this as, this portfolio actually has one of the highest, you know, household income within a one mile radius of, like, all the public traded rates out there. That's like not a well-known, that's not a well-known fact. And I think this makes it a very ideal takeout candidate for either Blackstone or KKR or like any of the big, you know, grocery anchor shopping center reads like Regency or KMCO.

And like there's another SunBelt Focus recall, Grocer Anchor Shopping Center Recall in Ventrust. Like that will make it a per like a great target because it's both SunBell Focus, they'll probably buy in a higher portfolio. and then immediately that invent trust becomes a $5 billion, you know, grocery anchor shop and set a reed. So I think, I think like, you know, if we wind up getting, you know, three years in a row, get a grocery anchor shop and center, get an requirement, that would be hilarious, right? But like that, I think once they bought out this one, there really aren't any sub-3 billion dollar grosser anchor shopping center reed left anymore.

And I think this is the last remaining one, but it's extremely high quality. That was something that I wish, you know, we kind of like talked about last time. But like, I think the other thing is, is on the share buyback, Andrew last time, I think like one other lasting thought is, you know, in a moment you said, okay, you know, the lack of share by back, Camden. And I kind of like went back and thought about it. What, you know, what I couldn't really figure out at the moment was early in the first half of 2025, like they weren't trading at the cap rate, at the valuation that, you know, versus the. the back half. The back half, they traded a lot cheaper. And that's when they in Q3 bought back $50 million. So it be really interesting to pay attention to what Camden, you know, how much they buy back in the fourth quarter. And we should be able to see that in the next, you know, the coming,

you know, coming weeks. It'd be really interesting. Like if they up that to $100 million or $150 million, like I would love to see $150 million buyback in Q4 because we were buying aggressively in Q4 Camden shares. At one point, it kind of like got up to that, you know, kind of almost like approaching 7% cap rate. I'm glad you mentioned. I'm glad you mentioned share by, because I did have one thing, like I left on the cutting room floor from the first one that I went from by, you know, put Camden aside. I did notice a lot of companies that, you know, as we mentioned in people should go listen to the first podcast, all this sort of stuff. I assume every listener listens to every second of every episode three times. So we certainly don't need to refer them. They've already listened

to the first one three times. But, you know, as we mentioned in the first podcast, the past two years, three years, whatever we're going to call it was not, it was generally not kind for the REIT sector, right? Like, reads kind of just like stumble on effect. A lot of REITs, and one that pops to mind that I've looked at several times before, but I don't have a position in so there's your full disclosure, but like park hotels, right? Yeah. Park hotels spun off from Hilton 10 years ago at this point. And they've always argued, we are undervalued. Look at what our hotels are worth on the private market. We are undervalued.

And in 2022, 2022, 2023, 2004, and I could slightly be mixing up the dates, they were leaning in to the share repurchases, right? They were saying, hey, we think our nav is 25. We trade for 10. We're going to destroy the share account. And they bought back a lot of shares. And today, I mean, their shares are at pretty much all-time lows. You know, like, I mean, that's not being facetious.

at the depths of COVID, I'm looking at this, March 31st, 2020, the stock traded for $8 per share. Today, it trades for $10.93 per share. So we're not far off like literal COVID lows where people are like, no. And it seems to me that the company has stopped share buybacks. And I chose part because they're an extreme example, one that I followed, one where I do kind of think they are right. Luxury hotels, I think the private market is a lot higher than where the public market is. But, you know, one way you attack that private market bid is you buy back, buy back, buy back, buy back, buy back. And then you sell assets and buy that more and then you sell the whole company.

And they stopped. And I think there's a lot of others that stopped. So I just wanted to get your like kind of thoughts on the overall share by vaccine right now. Yeah. I mean, I think that, you know, I was like very aware of S.L. Green kind of did something similar where they were buying back a ton of shares. And then they. And your voice, Steve Roth, I remember in 2018 when S.

Steve Roth published a letter and he was like, look, do the math on what we can make on one good development. and we're better off investing in one good development versus share re purchases. Now, I would counter his argument with, hey, you're assuming that the development is good and let me refer you to X, Y, and Z, overspend developments that have poor IRAs. But yes, please, I'm sorry, interrupt you. No, but, you know, Andrew, I think maybe the better signal is like, it's very, it's very, from a signal perspective, right? It's very difficult for a lot of these reads to do share buybacks because, like, what

What I constantly hear about is that, like, they manage their cost of debt, the cost of debt, right? If you go look at what a lot of these large rates could issue debt at, it's about, it's below 5%, right? And that is because there's such low leverage. And I think a lot of the debt issuance, you know, the rating agents, they see them do a lot of share buybacks. They'll put a negative, you know, watch or rating on that. And that's something that they're very, very conscious about. So I think the best way to actually look at it is when you actually do see a lot of these week buyback shares, like treat that as a signal because it's like the hurdle for them to do buybacks is pretty high, right? That when you do see them to actually engage in it, like that, that's a signal telling you, hey, like this is management, this is a conservative management like buyback shares telling you that, hey, now they're willing to stick the neck out and do the buyback.

right. It's interesting you say that because I generally agree with you and especially a few years ago I would have agreed with you. But now I've like seen several of them go through the share repurchase exercise to no to no result, right? Like look at PK. They were buying back at 15 and now the stock's 11 and they've stopped the buyback. And I look at that. I'm like, hey, you know, why didn't work? They're leaning back now. Like has things changed? And I've seen it through a few of them. Yeah, I think like there's, I mean, this is basically what happened to Pliya, right? Pliah was very aggressive with share buyback. And then it's just like, they kept buying back shares.

They reduced the cap. Now, Pliah have to issue a lot of shares because of COVID. And then they subsequently bought it back. And I remember like the Delta and the issuance price and the share buyback price, right? And it just kind of like got to a point where they did a ton of buybacks after COVID. it. And it did not really improve. And then eventually they just kind of said, hey, we're going to sell the whole thing. And, and then, like, but I think by that point, like, every shareholder has been, like, burnt and have, like, a miserable experience that they're like, okay, like, we don't

trust you anymore. And then, and then that's, like, when, when, like, you actually should, like, get them off, right? So, so I think, I think there is, there's, I think it's easy sometimes, like when it trades at a 10, 15% discount to say, hey, buy back share, buy back shares. Right. But like, I think what it truly trades at, like, when it gets so cheap that even the re-management team is like, we can't, we can't sit on our hand and like not buy back shares. We have to buy back some shares. I think that truly becomes like a real signal.

And I'll be watching out to Camden. No, I'll be watching out for Camdenmark and all these guys to see like what, you know, what price they paid and the the amount of capital that they deploy. Thanks, so, so. All right, Bill, this would be great. I actually had like four follow-on questions we go to, but I'm just, we talked on Tuesday. We talk now, and I've got to follow up with you on one thing after we hang up.

But yeah, this has been great, man. We will, yeah, we'll chat soon. Yeah, you know, maybe Andrew, before we lock and we log off, like anyone who's looking to track Alexander's, I would just say, like, you know, the next thing to watch out for, would just be, you know, any sorts of news on the sale, Regal 1, because that would be like a very, very definitive catalyst where- And they dividend it out, right? Or special-evitating.

They have to because by root rules, they have to dividend out 90% of the profit. The cost faces on that property is about $50 million. And if they sell, you know, if they sell it for $150, I mean, they're going to have to pay out something like $90 million, you know, roughly. These are rough numbers of like special dividend. And that's 7, 8% of the market. cap. It's going to be a bit. I just don't know why anyone want to short this company. It's truly one of those, you know, very, very bizarre. And by the way, Andrew, the short-float interest is about 10 or 11 percent.

I mean, I don't think that 50 percent numbers is correct, but this is a very kind of, it's a wide-bid-ass spread. It's not the most liquid stock. So it's just a very weird setup to have like not the most liquid, you know, wide-bit-ass spread, 11 percent of flow. and then like this potential special dividend on the way. Like, I just, you know, I haven't done a lot of event-driven in the special situations. This is like one that like really got like my, you know, got my brain working. Yep. Well, the retail loan broke my brain.

So it got my brain working as well. Hey, this has been great. Bill Chen, we'll wrap it up here. And we will talk soon. Yep, we'll do. A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast.

Please do your own work and consult a financial advisor. Thanks.