Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results, financial condition, results of operations and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Quarterly Report on Form 10-Q. We also note the following forward-looking statements: in the case of our development project, the estimated completion date, estimated project costs and costs to complete. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For a further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Item 1A - Risk Factors" in our Annual Report on Form 10-K. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly, any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Management's Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three months ended March 31, 2009 and 2008. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Alexander's, Inc. (NYSE: ALX) is a real estate investment trust ("REIT"), incorporated in Delaware, engaged in leasing, managing, developing and redeveloping its properties. All references to "we," "us," "our," or "Company" refer to Alexander's, Inc. and its consolidated subsidiaries. We are managed by, and our properties are leased and developed by, Vornado Realty Trust ("Vornado"). We have seven properties in the greater New York City metropolitan area including the 731 Lexington Avenue property, a 1.3 million square foot multi-use building in Manhattan, and the Kings Plaza Regional Shopping Center located in Brooklyn.

We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, attractiveness of the location, the quality of the property and breadth and quality of the services provided. Our success depends upon, among other factors, trends of national and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.

In the second half of 2007 the residential mortgage and capital markets began showing signs of stress, primarily in the form of escalating default rates on sub-prime mortgages, declining home values and increasing inventory nationwide. In 2008, the "credit crisis" spread to the broader commercial credit and financial markets resulting in illiquidity and volatility in the bond and equity markets. These trends have continued in the first quarter of 2009. We are currently in an economic recession which has negatively affected substantially all businesses, including ours. During the past year, real estate transactions have diminished significantly and capitalization rates have risen. Our real estate portfolio may continue to be affected by declining demand for office and retail space due to bankruptcies, layoffs, downsizing, cost cutting as well as general economic conditions, which would result in lower occupancy rates and effective rents and a corresponding decrease in net income, funds from operations and cash flow. During the quarter ended March 31, 2009, the occupancy rate at Kings Plaza decreased 2.6%. In addition, our allowance for doubtful accounts increased during the first quarter, primarily related to Circuit City, which filed for bankruptcy in 2008 and rejected its lease at Rego Park I in March 2009. It is not possible for us to quantify the impact of the above trends, which may persist for the remainder of 2009 and beyond, on our future financial results.

Stock Appreciation Rights

Stock appreciation rights ("SARs") are granted at 100% of the market price of our common stock on the date of grant. Compensation expense for each SAR is measured by the excess of stock price at the current balance sheet date over the stock price at the previous balance sheet date. If the stock price is lower at the current balance sheet date, previously recognized expense is reversed but not below zero. On March 2, 2009, Steven Roth, the Chairman of our Board of Directors and Chief Executive Officer and Michael Fascitelli, our President, each exercised 150,000 SARs, which were scheduled to expire on March 4, 2009. Mr. Roth and Mr. Fascitelli each received gross proceeds of $11,419,000. As a result of the March 2, 2009 exercises, we reversed $34,275,000 of previously recognized SARs compensation expense in the three months ended March 31, 2009. In the three months ended March 31, 2008, we had accrued $625,000 for SARs expense based on the March 31, 2008 closing stock price of $354.50 at March 31, 2008, compared to $353.25 at December 31, 2007. As of March 31, 2009, there are no SARs outstanding.

Flushing

In February 2009, we sub-leased the Flushing property to a developer for the remainder of our ground lease term.

Rego Park I

On March 10, 2009, we repaid the $78,246,000 outstanding balance of the Rego Park I mortgage loan which was scheduled to mature in June 2009 and simultaneously completed a refinancing in the same amount. The new loan bears interest at 75 basis points, is secured by the property and is 100% cash collateralized. The proceeds of the new loan were placed in a non-interest bearing restricted mortgage escrow account. The loan is pre-payable without penalty after June 2009.

731 Lexington Avenue

On March 25, 2009, Citibank N.A. completed the assignment of its lease aggregating 176,000 square feet to Bloomberg L.P. Bloomberg L.P. now occupies 99% of the office space at the property.

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2008 in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Note 2 - Summary of Significant Accounting Policies" to the consolidated financial statements included therein. There have been no significant changes to those policies during 2009.

Recently Issued Accounting Literature

In December 2007, the Financial Accounting Standard Board ("FASB") issued Statement No. 141R, Business Combinations ("SFAS 141R"). SFAS 141R broadens the guidance of SFAS 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It also broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations; and acquisition related costs will generally be expensed rather than included as part of the basis of the acquisition. SFAS 141R expands required disclosures to improve the ability to evaluate the nature and financial effects of business combinations. SFAS 141R became effective for all transactions entered into, on or after January 1, 2009. The adoption of SFAS 141R on January 1 2009, did not have a material effect on our consolidated financial statements.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interest in Consolidated Financial Statements - An Amendment of ARB No. 51 ("SFAS 160"). SFAS 160 requires a noncontrolling interest in a subsidiary to be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest to be identified in the consolidated financial statements. SFAS 160 also calls for consistency in the manner of reporting changes in the parent's ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. SFAS 160 became effective on January 1, 2009. The adoption of SFAS 160 on January 1, 2009, resulted in (i) the reclassification of our minority interest in consolidated subsidiary to noncontrolling interest in consolidated subsidiary, a component of permanent equity on our consolidated balance sheet and (ii) the reclassification of minority interest expense to net income attributable to the noncontrolling interest on our consolidated statements of operations.

Significant Tenants

Bloomberg L.P. accounted for approximately 34% and 32% of our consolidated revenues in each of the three months ended March 31, 2009 and 2008, respectively. No other tenant accounted for more than 10% of our consolidated revenues.

Net income attributable to common stockholders for the quarter ended March 31, 2009 was $46,054,000, compared to $15,152,000 for the quarter ended March 31, 2008. Net income attributable to common stockholders for the quarter ended March 31, 2009 includes $34,275,000 for the reversal of a portion of previously recognized SARs compensation expense, compared to $625,000 for an accrual of SARs compensation expense, in the quarter ended March 31, 2008.

Property Rentals

Property rentals were $36,197,000 in the quarter ended March 31, 2009, compared to $36,033,000 in the prior year's quarter, an increase of $164,000.

Expense Reimbursements

Tenant expense reimbursements were $16,893,000 in the quarter ended March 31, 2009, compared to $15,733,000 in the prior year's quarter, an increase of $1,160,000. This increase was primarily due to reimbursements for higher real estate taxes.

Operating Expenses

Operating expenses were $19,035,000 in the quarter ended March 31, 2009, compared to $17,667,000 in the prior year's quarter, an increase of $1,368,000. This increase was primarily due to higher real estate taxes.

General and Administrative Expenses

Excluding $34,275,000 for the reversal of previously recognized SARs compensation expense in the quarter ended March 31, 2009, and $625,000 an accrual of SARs compensation expense in the quarter ended March 31, 2008, general and administrative expenses increased by $1,370,000 from the prior year's quarter. This increase is primarily due to the write-off of previously capitalized costs at our Flushing property.

Interest and Other Income, net

Interest and other income, net was $964,000 in the quarter ended March 31, 2009, compared to $4,416,000 in the prior year's quarter, a decrease of $3,452,000. This decrease resulted primarily from lower average yields on investments, from 3.3% in the quarter ended March 31, 2008 to 0.5% in the quarter ended March 31, 2009.

Interest and Debt Expense

Interest and debt expense was $14,896,000 in the quarter ended March 31, 2009, compared to $15,681,000 in the prior year's quarter, a decrease of $785,000. This decrease was primarily due to the repayment of the Rego Park I mortgage loan on March 10, 2009, and a decrease in interest on leasing commissions due to Vornado as a result of a lower rate in the current period.

Net Loss Attributable to the Noncontrolling Interest

Net loss attributable to the noncontrolling interest represents our venture partner's 75% pro rata share of net loss in our consolidated partially owned entity, the Kings Plaza energy plant joint venture.

Income Tax Expense of the Taxable REIT Subsidiary

Income tax expense was $88,000 in the quarter ended March 31, 2009, compared to $502,000 in the prior year's quarter, a decrease of $414,000. The decrease was due to the liquidation of 731 Residential LLC, our taxable REIT subsidiary, in September 2008.

We anticipate that cash from operations, together with existing cash balances, will be adequate to fund our business operations, recurring capital expenditures, and debt amortization over the next twelve months.

Rego Park II Development Project

We own approximately 6.6 acres of land adjacent to our Rego Park I property in Queens, New York, which comprises the entire square block bounded by the Horace Harding Service Road (of the Long Island Expressway), 97th Street, 62nd Drive and Junction Boulevard. The development at Rego Park II consists of a 600,000 square foot shopping center on four levels and a parking deck containing approximately 1,400 spaces. Construction is expected to be substantially completed by the end of this year and estimated to cost approximately $410,000,000, of which $316,198,000 has been expended as of March 31, 2009. As of March 31, 2009, $195,082,000 was drawn on the $350,000,000 construction loan. The loan has an interest rate of LIBOR plus 1.20% (1.70% at March 31, 2009), and matures in December 2010, with a one-year extension option. The shopping center will be anchored by a 134,000 square foot Century 21 department store, a 138,000 square foot Home Depot and a 132,000 square foot Kohl's.

There can be no assurance that this project will be completed, completed on time, or completed for the budgeted amount.

Insurance

We carry commercial liability with limits of $200,000,000 per location and all risk property insurance for (i) fire, (ii) flood, (iii) rental loss, (iv) extended coverage, and (v) "acts of terrorism," as defined in the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA") of 2007, with respect to our assets, with limits of $1.7 billion per occurrence for all of our properties. To the extent that we incur losses in excess of our insurance coverage, these losses would be borne by us and could be material.

Our debt instruments, consisting of mortgage loans secured by our properties (which are generally non-recourse to us), contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for the purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance and/or refinance our properties.

Rental income from our properties is our principal source of operating cash flow. Our property rental income is dependent on a number of factors including the occupancy level and rental rates of our properties, as well as our tenants' ability to pay their rents. Our properties provide us with a relatively consistent stream of cash flow that enables us to pay our operating expenses, non-development capital improvements and interest expense. Other sources of liquidity to fund our cash requirements include our existing cash, proceeds from debt financings, including mortgage or construction loans secured by our properties and proceeds from asset sales.

Three Months Ended March 31, 2009

Cash and cash equivalents were $426,265,000 at March 31, 2009, compared to $515,940,000 at December 31, 2008, a decrease of $89,675,000. This decrease resulted from $105,702,000 of net cash used in investing activities, partially offset by $10,265,000 of net cash provided by financing activities and $5,762,000 of net cash provided by operating activities.

Net cash provided by operating activities of $5,762,000 was comprised of net income of $46,002,000, partially offset by adjustments for non-cash items of $28,559,000 and the net change in operating assets and liabilities of $11,681,000. The adjustments for non-cash items were comprised of (i) a reversal of the liability for SARs compensation expense of $34,275,000 and (ii) straight-lining of rental income of $2,579,000, partially offset by (iii) depreciation and amortization of $6,411,000 and (iv) other non-cash adjustments of $1,884,000, primarily due to a $1,407,000 write-off of previously capitalized costs at our Flushing property. The net change in operating assets and liabilities of $11,681,000 included a $22,838,000 payment for SARs compensation expense.

Net cash used in investing activities of $105,702,000 was primarily comprised of restricted cash of $83,931,000, primarily related to the fully cash-collateralized mortgage at Rego Park I, and capital expenditures of $21,771,000, primarily related to the development of our Rego Park II project.

Net cash provided by financing activities of $10,265,000 was primarily comprised of borrowings under the construction loan to fund expenditures at our Rego Park II project. Financing activities also include the $78,246,000 refinancing of the Rego Park I mortgage loan.

Three Months Ended March 31, 2008

Cash and cash equivalents were $576,530,000 at March 31, 2008, compared to $560,231,000 at December 31, 2007, an increase of $16,299,000. This increase resulted from $24,738,000 of net cash provided by operating activities and $22,331,000 of net cash provided by financing activities, partially offset by $30,770,000 of net cash used in investing activities.

Net cash provided by operating activities of $24,738,000 was comprised of (i) net income of $14,885,000, (ii) the net change in operating assets and liabilities of $6,041,000 and (iii) adjustments for non-cash items of $3,812,000. The adjustments for non-cash items were primarily comprised of depreciation and amortization of $6,263,000, partially offset by $3,076,000 for the straight-lining of rental income.

Net cash used in investing activities of $30,770,000 was primarily comprised of capital expenditures of $27,239,000, primarily related to the development of our Rego Park II project.

Net cash provided by financing activities of $22,331,000 was primarily comprised of $25,875,000 of borrowings under the construction loan to fund expenditures at our Rego Park II project, partially offset by repayments of borrowings of $3,685,000.

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income or loss determined in accordance with Generally Accepted Accounting Principles ("GAAP"), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

FFO and FFO per diluted share are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO and FFO per diluted share should be evaluated along with GAAP net income and income per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating activities, investing activities and financing activities, in evaluating the operating performance of equity REITs. Management believes that FFO and FFO per diluted share are helpful to investors as supplemental performance measures because these measures exclude the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, these non-GAAP measures can facilitate comparisons of operating performance between periods and among other equity REITs.

FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as disclosed in our Statements of Cash Flows. FFO should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity.

FFO attributable to common stockholders for the Quarters Ended March 31, 2009 and 2008

FFO attributable to common stockholders for the quarter ended March 31, 2009 was $51,643,000, or $10.12 per diluted share, compared to $20,353,000, or $4.00 per diluted share, for the quarter ended March 31, 2008. FFO attributable to common stockholders for the quarter ended March 31, 2009 includes $34,275,000, or $6.72 per diluted share, for the reversal of previously recognized SARs compensation expense, compared to $625,000, or $0.12 per diluted share, for an accrual of SARs compensation expense in the quarter ended March 31, 2008.

The following table reconciles our net income to FFO:

                                                         Three Months Ended March 31,
(Amounts in thousands, except share and per share
amounts)                                                   2009               2008

Net income attributable to Alexander's                 $       46,054     $       15,152
Depreciation and amortization of real property                  5,589              5,201
FFO attributable to common stockholders                $       51,643     $       20,353

FFO attributable to common stockholders per diluted
share                                                  $        10.12     $         4.00

Weighted average shares used in computing diluted
FFO per share                                               5,102,826          5,092,973