Alexander's Maintains Steady Dividend Amid Real Estate Shifts

Alexander’s, Inc. (NYSE: ALX), a New York-focused real estate investment trust (REIT), has reaffirmed its commitment to income investors by maintaining its quarterly dividend at $4.50 per share, payable on May 30, 2025, to shareholders of record as of May 12, 2025. This marks the 18th consecutive quarter that Alexander’s has sustained this dividend level, a rare feat in an industry where many REITs face pressure to cut payouts amid rising interest rates and economic uncertainty.

Dividend Stability Anchored by Strong Operations

The dividend decision reflects Alexander’s robust financial footing. As of March 31, 2025, the company reported $323.9 million in liquidity, including $16.9 million in cash and $307.0 million available on its revolving credit facility. This ample liquidity, combined with a net debt-to-EBITDA ratio of 3.6x, underscores its ability to weather economic headwinds.

Alexander’s occupancy rates also remain a bright spot. Its leased occupancy hit 95.4% as of Q1 2025, up 140 basis points year-over-year, with industrial spaces performing exceptionally well at 97.3% occupancy. Leasing activity showed resilience too, with 42 improved-property leases signed for 236,800 square feet, generating $5.6 million in annualized base rent.

Market Context: A High-Yield Play in a Volatile Sector

Alexander’s dividend yield of 8.8% (as of May 2025) is significantly higher than the sector average, making it an attractive option for income-focused investors. However, its stock has underperformed broader REIT benchmarks recently, down roughly 5% year-to-date amid concerns about rising interest rates and slower leasing demand.

Key Risks and Considerations

While the dividend appears secure in the near term, challenges loom:
- Interest Rate Sensitivity: Alexander’s is heavily reliant on debt financing, with a significant portion of its loans adjustable-rate. A prolonged period of high rates could squeeze margins.
- Leasing Momentum: The company’s Q1 Funds from Operations (FFO) per share of $0.36 fell slightly from $0.40 in Q1 2024, signaling potential pressure on profitability. Management has narrowed its 2025 FFO guidance to $1.17–$1.23 per share, down from its initial range.
- Concentration Risk: Alexander’s owns just five properties, all in NYC. This geographic and portfolio concentration leaves it vulnerable to local economic downturns or shifts in tenant demand.

Upcoming Catalysts to Watch

Investors should monitor the May 6 conference call hosted by Vornado Realty Trust (NYSE: VNO), Alexander’s manager, for deeper insights into:
- Strategies to offset rising operating costs, including energy and maintenance expenses.
- Progress on its Maui Business Park ground lease, which could boost future FFO.
- Plans to optimize its non-income-producing land holdings, such as the recent sale of 90 acres.

Conclusion: A Reliable Dividend, but Not Without Risks

Alexander’s decision to uphold its dividend at $4.50 per share positions it as a standout income generator, particularly for those willing to tolerate sector-specific risks. With a dividend cover ratio of 2.0—meaning earnings comfortably exceed payouts—the company appears financially capable of maintaining this policy.

However, the narrow FFO guidance and reliance on a concentrated portfolio highlight vulnerabilities. Investors should pair this holding with broader REIT exposure and remain vigilant about macroeconomic trends. For now, the dividend’s stability, paired with an eye-catching yield, makes Alexander’s a compelling, if niche, investment opportunity.

In a sector where consistency is scarce, Alexander’s commitment to its dividend—backed by NYC’s enduring real estate strength—deserves attention from income investors willing to navigate its risks.