Alexander's was a New York area department store chain which was rich in real estate, but long suffering as a retail operation. Alexander's is now a real estate business with a small, static collection of wonderful assets:

• Bloomberg Tower/ One Beacon Court mixed-use development at 59th Street and Lexington Avenue, NY
• Kings Plaza Regional Shopping Center, Brooklyn, NY
• Rego Park Shopping Center, Queens, NY
• Ikea Property, Paramus, NJ

Please see page 22 for the full property table.

The development of the 59th Street property – a full square block on the Upper East Side of Manhattan – has been a long, wonderful adventure. It is situated where Manhattan's Plaza District meets the Silk Stocking District, blocks from the best hotels in the world and, of course, directly across the street from Bloomingdale's. This 814 foot tower is now topped out, curtain wall is nearly complete and tenants Bloomberg, Home Depot and H&M are doing fit-out.


On behalf of Alexander's, we did some things right here.

• We had the patience to hold this great site for years until the New York market recovered. I think we got the timing right.

   
• David and Mike made a great 700,000 square foot anchor lease with Bloomberg. (13)
• We were able to internally finance the cost of this project (about $650 million of hard and soft costs without land) without diluting shareholders by selling stock or taking in partners. We generated the needed capital by leasing and financing Paramus, refinancing Kings Plaza, and the debt from a Hypo Bank construction loan arranged by Wendy Silverstein, our capital markets queen.
• Alexander's hired Vornado as a for-fee developer, again without suffering any dilution. (14)
• We engaged Cesar Pelli as design architect. (15) Creating a "great building" rather than a "developer's building" has paid off in spades.
• The building's grand gesture is an 11,000 square foot, open-to-the-sky, mid-block courtyard – an off street refuge available for both vehicles and pedestrians that serves as the entrance for residential tenants and Bloomberg. This six-story high, oval-shaped space is unique and quite wonderful from a design perspective, and quite wonderfully profitable too. (16)
• With a full block in Bloomingdale's country, the retail value was obvious. We discarded the idea of building a multi-story interior mall and chose instead to have all stores


(13) Luck is important. In the middle of negotiations for what was then a 400,000 square foot lease, Bloomberg, whose business is growing like wildfire, insisted we eliminate the planned hotel component so we could expand their space to 700,000 square feet. What a great trade – 300,000 square feet more Bloomberg credit versus a hotel that we would have built into a deteriorating market. Luck is important.
(14) With the accomplished Mel Blum as President of our development division, Vornado has a world-class development capability. Ditto for Eli Zamek in charge of our high-rise construction.
(15) With a huge contribution from the very talented Rafael Pelli.
(16) In essence, we transferred 66,000 square feet of space worth, say, $600 per square foot from low mid-block up to the very top of the building where it has a value of over $2,000 per square foot – a fair trade indeed.