Alexander’s, Inc. (ALX) completed a $300 million restructuring of the retail condominium loan on 731 Lexington Avenue in Manhattan, extending the debt horizon to December 23, 2035. The original mortgage was split into a $132.5 million senior A‑Note carrying a 7.00% coupon and a $167.5 million junior C‑Note with a 4.55% coupon, both maturing on the same date.
An affiliate of Alexander’s purchased the senior A‑Note at par and entered into a new B‑Note with the borrower. The B‑Note provides up to $65 million of capital and re‑leasing funds at a 13.5% interest rate, while amounts above $65 million accrue at 7.00%. The B‑Note replaces the prior non‑recourse retail mortgage and adds a ten‑year extension to the debt schedule.
The restructuring was driven by liquidity pressure stemming from a default on the 731 Lexington loan. By converting the debt into a senior and junior tranche and securing the high‑interest B‑Note, Alexander’s aims to stabilize its balance sheet and preserve the value of its concentrated New York City portfolio. The high cost of the B‑Note—13.5% versus the 7.00% on the senior tranche—reflects the market’s assessment of the property’s risk profile and the company’s need for immediate cash to address the default.
Alexander’s has a history of managing and refinancing loans on this property, including a $400 million refinancing of the office portion in October 2024 and a $175 million refinancing of its Rego Park II shopping center in December 2025. The 731 Lexington restructuring is part of a broader effort to manage debt across its five New York City properties, which include the Bloomberg headquarters and other retail assets.
Financially, the company has reported declining net income and FFO in recent quarters, with full‑year 2024 FFO lower than 2023. The high‑interest B‑Note will increase interest expense, potentially compressing future profitability unless the company can generate sufficient cash flow from its portfolio. Management has not issued a new guidance update, but the restructuring signals a cautious approach to leverage amid rising interest rates and inflationary pressures.
The market reacted with a modest uptick in the stock price on the announcement day, indicating that investors viewed the restructuring as a routine debt‑management move rather than a transformative event. Analysts noted that while the extension provides liquidity relief, the elevated cost of the B‑Note could weigh on earnings in the coming years.
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