Author Topic: ALX - Alexander's  (Read 9556 times)

KJP

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Re: ALX - Alexander's
« Reply #60 on: August 03, 2020, 07:12:18 AM »
how do you reconcile that with

This which appears in the 10-K 3 times

Quote
Our mortgage loans are non-recourse to us and contain customary covenants requiring us to maintain insurance. 

and the most recent 10Q explicitly says the mortgage in question is non-recourse.

You can look at the mortgage itself to confirm it's non-recourse.  It's here:  https://www.sec.gov/Archives/edgar/data/3499/000000349915000025/exhibit103.htm

See Section 13.1 on page 114.

ALX may have provided a limited guaranty related to interest hedging.  See Sections 9.15(4), 10.13 and Exhibit K.

To the extent someone believes ALX's is liable beyond the guaranty in Exhibit K, which provision of the mortgage document creates that liability?

EDIT:  Under 9.15(4), even the interest guarantee is optional.  The agreement contemplates at various points other circumstances in which ALX might provide a guarantee.  Has that happened?
« Last Edit: August 03, 2020, 07:21:40 AM by KJP »


KJP

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Re: ALX - Alexander's
« Reply #61 on: August 03, 2020, 07:13:28 AM »
I've found that ALX goes to the edge of the playing field with some disclosures like this.

So the reconciliation is like this. The mortgage itself is not specifically marked "recourse" but the loan to the sub is guaranteed by the parent. So the mortgage itself is non-recourse, but it really isn't.

Can you provide a link to the document in which ALX guarantees the principal of the loan?  I have not seen it.

BG2008

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Re: ALX - Alexander's
« Reply #62 on: August 03, 2020, 08:16:20 AM »
Whether the mortgage is recourse or non-recourse, what is most important is what ALX will have the highest probability of doing.  It seems like they will pay off some of the debt.  Dividing office and retail into 2 different condos has been a trend that I have seen in the last 10-20 years.  Maybe it existing even before that, but I wasn't really paying that much attention.  There is probably some real synergistic value in owning both the basement and ground floor of a building in addition to the 50 stories of office towers above it even if they have been divided up into 2 separate office and retail condos.  So, it is probably the best course to pay off some of the debt as they come due and own the entire structure.

NYC RE can be quite interesting.  You can own the ground (ground lease), structure (building), and the interior (WeWork) and in various different flavors.  Ultimately, everything is kind of all attached together and there is value to owning the whole piece.  Although, I would've loved for my wise grandparents to have entered into a 99 year ground lease and left me with the ground of the Rockfeller Center.  What are the tenants going to do?  Move all the buildings or agree to a ground lease increase?  Btw, in 2006/2007, we were actually toying with the idea of representing the owners of the ground lease of Rockfeller Center.  Back then, interest rates were 5-6%.  So the annuity stream was like a 5% cap rate and you can underwrite to a 2% escalator to a 7% long term return.  I have been thinking about how well you would've done had you bought that from interest rates being where it is today.  We didn't represent the sellers because they did not want to retain us on an exclusive basis. 

rb

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Re: ALX - Alexander's
« Reply #63 on: August 03, 2020, 04:40:25 PM »
Sorry for the delay in posting. Lots of meetings today.

I have to apologize to my fellow board members. After going through the mortgage doc again, it is clearly non-recourse. There is no Chinese bank either on the mortgage, I was either thinking of an earlier mortgage on the property or of a completely different mortgage altogether. Clearly not about this one.

thepupil

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Re: ALX - Alexander's
« Reply #64 on: August 03, 2020, 05:03:38 PM »
Sorry for the delay in posting. Lots of meetings today.

I have to apologize to my fellow board members. After going through the mortgage doc again, it is clearly non-recourse. There is no Chinese bank either on the mortgage, I was either thinking of an earlier mortgage on the property or of a completely different mortgage altogether. Clearly not about this one.

No worries at all! Appreciate everyone digging in deep on this one! We should know before too long what will happen with 731 retail.

BG2008

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Re: ALX - Alexander's
« Reply #65 on: August 03, 2020, 05:52:29 PM »
I will make a huuuge wager that they will pay somewhere in the neighborhood of $100-150mm to reduce the leverage.  I'm telling you huuuge wager!  $1 to be exact.