<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended: DECEMBER 31, 2004

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the transition period from ___________________ to _________________________

Commission file number: 001-6064

                                ALEXANDER'S, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                 DELAWARE                                   51-0100517
------------------------------------------          ----------------------------
     (State or other jurisdiction of                       (IRS Employer
      incorporation or organization)                    Identification No.)

  210 ROUTE 4 EAST, PARAMUS, NEW JERSEY                        07652
------------------------------------------          ----------------------------
 (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code (201) 587-8541

           Securities registered pursuant to Section 12(b) of the Act:


<Table>
<Caption>
         Title of each class              Name of each exchange on which registered
         -------------------              -----------------------------------------
<S>                                       <C>
 Common Stock, $1 par value per share               New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: NONE

</Table>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES [X] NO [ ]

The aggregate market value of the voting and non-voting common shares held by
non-affiliates of the registrant, (i.e., by persons other than officers and
directors of Alexander's, Inc.) as of June 30, 2004 was $331,406,000.

As of February 4, 2005, there were 5,013,850 shares of the registrant's common
stock, par value $1 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

PART III: Portions of the Proxy Statement for Annual Meeting of Stockholders to
be held on May 18, 2004

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
           ITEM                                                                                PAGE
           ----                                                                                ----
<S>                                                                                            <C>
PART I.     1.      Business..........................................................          4

            2.      Properties........................................................         13

            3.      Legal Proceedings.................................................         17

            4.      Submission of Matters to a Vote of Security Holders...............         17

                    Executive Officers of the Registrant..............................         18

PART II.    5.      Market for Registrant's Common Equity, Related Stockholder
                    Matters and Issuer Purchases of Equity Securities.................         19

            6.      Selected Financial Data...........................................         20

            7.      Management's Discussion and Analysis of Financial Condition and
                    Results of Operations.............................................         21

           7A.      Quantitative and Qualitative Disclosures About Market Risk........         29

            8.      Financial Statements and Supplementary Data.......................         29

            9.      Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure..........................................         46

           9A.      Controls and Procedures...........................................         46

PART III.  10.      Directors and Executive Officers of the Registrant (1) ...........         48

           11.      Executive Compensation (1)........................................         48

           12.      Security Ownership of Certain Beneficial Owners and Management
                    and Related Stockholder Matters (1)...............................         49

           13.      Certain Relationships and Related Transactions (1)................         49

           14.      Principal Accountant Fees and Services (1)........................         49

PART IV.   15.      Exhibits and Financial Statement Schedules........................         50

SIGNATURES............................................................................         51
</TABLE>

-----------------
(1) These items are omitted in part or in whole because the registrant will file
a definitive Proxy Statement pursuant to Regulation 14A under the Securities
Exchange Act of 1934 for the election of directors with the Securities and
Exchange Commission not later than 120 days after December 31, 2004, which is
incorporated by reference herein. See "Executive Officers of the Registrant" for
information relating to executive officers.

                                      -2-
<PAGE>

                           FORWARD-LOOKING STATEMENTS

      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. The
Company's 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
"believes," "expects," "anticipates," "estimates," "intends," "plans" or other
similar expressions in this Annual Report on Form 10-K. 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.
Factors that might cause such a material difference include, but are not limited
to: (a) national, regional and local economic conditions; (b) the consequences
of any armed conflict involving, or terrorist attack against, the United States;
(c) our ability to secure adequate insurance; (d) local conditions, such as an
oversupply of space or a reduction in demand for real estate in the area; (e)
competition from other available space; (f) whether tenants consider a property
attractive; (g) the financial condition of our tenants, including the extent of
tenant bankruptcies or defaults; (h) whether we are able to pass some or all of
any increased operating costs we incur through to our tenants; (i) how well we
manage our properties; (j) any increase in interest rates; (k) any decreases in
market rental rates; (l) the timing and costs associated with property
development, improvements and rentals; (m) changes in taxation or zoning laws;
(n) government regulations; (o) our failure to continue to qualify as a real
estate investment trust; (p) availability of financing on acceptable terms or at
all; (q) potential liability under environmental or other laws or regulations;
(r) general competitive factors; (s) dependence upon Vornado Realty Trust; and
(t) possible conflicts of interest with Vornado Realty Trust. See "Risk Factors"
for more information about important factors that would cause actual results to
differ materially from the results anticipated by these forward looking
statements.

      The Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 for
these forward-looking statements. You are cautioned not to place undue reliance
on the forward-looking statements, which speak only as of the date of this
Annual Report on Form 10-K or the date of the applicable document incorporated
by reference. All subsequent written and oral forward-looking statements
attributable to the Company or any person acting on its behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

                                      -3-
<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL

      Alexander's, Inc. (the "Company" or "Alexander's") is a real estate
investment trust ("REIT"), incorporated in Delaware, engaged in leasing,
managing, developing and redeveloping properties. Alexander's activities are
conducted through its manager, Vornado Realty Trust ("Vornado").

      Alexander's has six properties in the greater New York City metropolitan
area consisting of:

Operating properties

      (i)   the 731 Lexington Avenue property, a 1,300,000 square foot multi-use
            building which comprises the entire square block bounded by
            Lexington Avenue, East 59th Street, Third Avenue and East 58th
            Street in Manhattan, New York;

      (ii)  the Kings Plaza Regional Shopping Center, located on Flatbush Avenue
            in Brooklyn, New York, which contains 1,098,000 square feet and is
            comprised of a two-level mall containing 470,000 square feet, a
            289,000 square foot department store leased to Sears and another
            anchor department store owned and operated as a Macy's by Federated
            Department Stores, Inc.;

      (iii) the Rego Park I property, located on Queens Boulevard and 63rd Road
            in Queens, New York, which contains a 351,000 square foot building
            that is 100% leased to Sears, Circuit City, Bed Bath & Beyond,
            Marshalls and Old Navy;

      (iv)  the Paramus property, which consists of 30.3 acres of land located
            at the intersection of Routes 4 and 17 in Paramus, New Jersey, which
            is leased to IKEA Property, Inc;

      (v)   the Flushing property, located at Roosevelt Avenue and Main Street
            in Queens, New York, which contains a 177,000 square foot building
            that is currently vacant; and

Property to be developed

      (vi)  the Rego Park II property, which comprises one and one-half square
            blocks of vacant land adjacent to the Rego Park I property.

731 Lexington Avenue

      731 Lexington Avenue contains approximately 885,000 net rentable square
feet of office space, approximately 174,000 net rentable square feet of retail
space (excluding 14,800 square feet of mezzanine space) and approximately
248,000 net saleable square feet of residential space consisting of 105
condominium units (through a taxable REIT subsidiary ("TRS")). Of the
construction budget of $630,000,000 (which excludes $29,000,000 for development
and guarantee fees to Vornado), $489,400,000 has been expended through December
31, 2004 and an additional $23,500,000 has been committed to at December 31,
2004. The remaining construction is expected to be completed by the end of 2005.

      On February 13, 2004, the Company closed a $400,000,000 mortgage financing
on the office space. The loan bears interest at 5.33%, matures in February 2014
and beginning in the third year, provides for principal payments based on a
25-year amortization schedule such that over the remaining eight years of the
loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000
was used to repay the entire amount outstanding under the previously existing
construction loan.

      While the project is nearing completion, there can be no assurance that
the remainder of the project will be completed on time or completed for the
budgeted amount. Any failure to complete the 731 Lexington Avenue project on
time or within budget may adversely affect future cash flows, funds from
operations and financial condition.

                                      -4-
<PAGE>

Significant Tenants

      Bloomberg L.P. and Sears accounted for 36%, and 11% of the Company's
consolidated revenues for the year ended December 31, 2004, and Sears accounted
for 18% and 19% in 2003 and 2002, respectively. No other tenant accounted for
more than 10% of revenues.

Relationship with Vornado Realty Trust

      Vornado owned 33.0% of the common stock of Alexander's, Inc. as of
December 31, 2004. Steven Roth is the Chairman of the Board and Chief Executive
Officer of the Company, the Managing General Partner of Interstate Properties
("Interstate"), a New Jersey general partnership, and the Chairman of the Board
and Chief Executive Officer of Vornado. At December 31, 2004, Mr. Roth,
Interstate and its other two general partners, David Mandelbaum and Russell B.
Wight, Jr. (who are also directors of the Company and trustees of Vornado)
owned, in the aggregate, 27.4% of the outstanding common stock of Alexander's,
Inc., and 10.8% of the outstanding common shares of beneficial interest of
Vornado.

      The Company is managed and its properties are leased by Vornado pursuant
to management, leasing and development agreements. Vornado is a fully-integrated
REIT with significant experience in managing, leasing, developing, and operating
retail and office properties. Further, in conjunction with the Company's 731
Lexington Avenue development project, Vornado has agreed to guarantee to the
construction lender, the lien free, timely completion of the construction of the
project and funding of project costs in excess of a stated budget, if not funded
by the Company (the "Completion Guarantee"). These agreements are more fully
described in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources -
Relationship with Vornado Realty Trust."

      At December 31, 2004, the Company owed Vornado (i) $18,635,000 for
development fees, (ii) $23,748,000 for leasing fees, (iii) $4,894,000 for the
guarantee fee, (iv) $537,000 for interest, and (v) $1,411,000 for management
fees and property management and cleaning fees.

      At December 31, 2004, the Company was indebted to Vornado in the amount of
$124,000,000, comprised of (i) a $95,000,000 note and (ii) $29,000,000 under a
$50,000,000 line of credit (which carries a 1% unused commitment fee). The
current interest rate on the loan and line of credit is 9.00% and resets
quarterly using a 6.00% spread to one-year treasury with a 3.00% floor for
treasuries. The Vornado debt matures on the earlier of January 3, 2006 or the
date the Construction Loan is finally repaid. The Construction Loan matures on
January 3, 2006 subject to two one-year extensions. In addition, any amounts
which may be due under the Completion Guarantee are due at the same time.

ENVIRONMENTAL MATTERS

      In June 1997, the Kings Plaza Regional Shopping Center commissioned an
Environmental Study and Contamination Assessment Site Investigation (the "Phase
II Study") to evaluate and delineate environmental conditions disclosed in a
Phase I study. The results of the Phase II Study indicated the presence of
petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and
groundwater. The Company has delineated the contamination and has developed a
remediation approach, which is ongoing. The New York State Department of
Environmental Conservation ("NYDEC") has approved a portion of the remediation
approach. The Company accrued $2,675,000 in previous years, of which $2,550,000
has been paid as of December 31, 2004, for its estimated obligation with respect
to the cleanup of the site, and which includes costs of (i) remedial
investigation, (ii) feasibility studies, (iii) remedial design, (iv) remedial
action and (v) professional fees. If NYDEC insists on a more extensive
remediation approach, the Company could incur additional obligations.

      The Company has concluded that the large majority of the contamination at
the site is historic and the result of past activities of third parties.
Although the Company is pursuing claims against potentially responsible third
parties, and negotiations are ongoing with a former owner of the property, there
can be no assurance as to the extent that the Company will be successful in
obtaining recovery from such parties of the remediation costs incurred. In
addition, the costs associated with further pursuit of responsible parties may
be prohibitive. The Company has not recorded an asset as of December 31, 2004
for possible recoveries of environmental remediation costs from potentially
responsible third parties. On January 31, 2005, the Company received a
settlement of $337,500 from one of the responsible parties.

                                      -5-
<PAGE>

COMPETITION

      The Company conducts its real estate operations in the greater New York
metropolitan area, a highly competitive market. The Company's success depends
upon, among other factors, trends of national and local economies, the financial
condition and operating results of current and prospective tenants, the
availability and cost of capital, interest rates, construction and renovation
costs, taxes, governmental regulations and legislation, population trends,
zoning laws, and the ability of the Company to lease, sublease or sell its
properties, including the condominium units at 731 Lexington Avenue, at
profitable levels. The Company competes with a large number of real estate
property owners and developers. The Company's success is also subject to its
ability to refinance existing debts as they come due and on acceptable terms.

EMPLOYEES

      The Company currently has one salaried corporate employee and 77 property
level employees.

AVAILABLE INFORMATION

      Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, as well
as Reports on Forms 3, 4 and 5 regarding officers, directors, and 10% beneficial
owners of the Company, filed or furnished pursuant to Section 13(a), 15(d) or
16(a) of the Securities Exchange Act of 1934, are available free of charge
through the Company's website (www.alx-inc.com) as soon as reasonably
practicable after they are electronically filed with, or furnished to, the
Securities and Exchange Commission ("SEC"). The Company also has made available,
on the website, copies of the Company's (i) Audit Committee charter, (ii)
Compensation Committee charter, (iii) code of business conduct and ethics and
(iv) corporate governance guidelines. In the event of any changes to these
items, changed copies will be made available on the website.

      Vornado and Interstate filed, on April 11, 2000, the 26th amendment to, a
Form 13D with the SEC indicating that they, as a group own in excess of 51% of
the common stock of the Company. This ownership level makes the Company a
"controlled" company for the purposes of the New York Stock Exchange, Inc.'s
corporate governance Standards (the "NYSE Rules"). This means that the Company
is not required by the NYSE Rules, among other things, to have a majority of the
members of its Board of Directors be independent under the NYSE Rules, to have
all of its members of its Compensation Committee be independent under the NYSE
Rules or to have a Nominating Committee. While the Company has voluntarily
complied with the majority independence requirements, it is under no obligation
to do so and this situation may change at anytime.

EXECUTIVE OFFICE

      The Company is a Delaware corporation. Its principal executive office is
210 Route 4 East, Paramus, New Jersey 07652 and its telephone number is (201)
587-8541.

RISK FACTORS

      Certain risks and other factors may adversely affect the Company's
business and operations including, but not limited to those detailed below. This
section contains forward-looking statements. Please see to the qualifications
and limitations on forward-looking statements on page 3.

REAL ESTATE INVESTMENTS' VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.

THE VALUE OF REAL ESTATE FLUCTUATES DEPENDING ON CONDITIONS IN THE GENERAL
ECONOMY AND THE REAL ESTATE INDUSTRY. THESE CONDITIONS MAY ALSO LIMIT THE
COMPANY'S REVENUES AND AVAILABLE CASH.

      The factors that affect the value of the Company's real estate include:
national, regional and local economic conditions, the consequences of any armed
conflict involving, or terrorist attack against, the United States, the
Company's ability to secure adequate insurance, local conditions, such as an
oversupply of space or a reduction in demand for real estate in the area,
competition from other available space, whether tenants consider a property
attractive, the financial condition of the Company's tenants, including the
extent of tenant bankruptcies or defaults, whether the Company is able to pass
some or all of any increased operating costs it incurs through to tenants, how
well the Company manages its properties, any increases in (i) interest rates,
(ii) real estate taxes and (iii) other expenses, any decreases in market rental
rates, the timing and costs associated with property development, improvements
and rentals, changes in taxation or zoning laws, government regulations, the
Company's failure to continue to qualify as a REIT, availability of financing on
acceptable terms or at all, potential liability under environmental or other
laws or regulations, and general competitive factors.

                                      -6-
<PAGE>

      The rents the Company receives and the occupancy levels at its properties
may decline as a result of adverse changes in any of these factors. Some of the
Company's major expenses and payments, including mortgage payments, real estate
taxes and maintenance costs, generally do not decline when the related rents
decline. If rents decline while costs remain constant, the Company's income and
funds available for the payment of its indebtedness and for distribution to its
security holders will decline.

THE COMPANY DEPENDS ON LEASING SPACE TO TENANTS ON ECONOMICALLY FAVORABLE TERMS
AND COLLECTING RENT FROM ITS TENANTS, SOME OF WHICH MAY NOT BE ABLE TO PAY.

      The Company's financial results depend on leasing space in its properties
to tenants on economically favorable terms. In addition, because substantially
all of its income comes from rentals of real property, the Company's income and
funds available for the payment of its indebtedness and for distribution to
security holders will decrease if a significant number of tenants cannot pay
their rents. If a tenant does not pay its rent, the Company might not be able to
enforce its rights as landlord without delays and might incur substantial legal
costs. For information regarding risks associated with bankruptcy of our
tenants, see " -- Bankruptcy of tenants may decrease the Company's revenues and
available cash." below.

SOME OF THE COMPANY'S TENANTS REPRESENT A SIGNIFICANT PORTION OF ITS REVENUES.
LOSS OF THESE TENANT RELATIONSHIPS OR DETERIORATION IN THE TENANTS' CREDIT
QUALITY COULD ADVERSELY AFFECT RESULTS.

      Bloomberg L.P. and Sears accounted for 36%, and 11% of the Company's
consolidated revenues for the year ended December 31, 2004, and Sears accounted
for 18% and 19% in 2003 and 2002, respectively. If the Company fails to maintain
a relationship with any of its significant tenants or fails to perform its
obligations under agreements with these tenants, or if any of these tenants
fails or becomes unable to perform its obligations under the agreements, the
Company expects that any one or more of these events would adversely affect the
Company's results of operations and financial condition.

BANKRUPTCY OF TENANTS MAY DECREASE THE COMPANY'S REVENUES AND AVAILABLE CASH.

      A number of companies, including some of the Company's tenants, have
declared bankruptcy in recent years, and other tenants may declare bankruptcy or
become insolvent in the future. If a major tenant declares bankruptcy or becomes
insolvent, the property at which it leases space may have lower revenues and
operational difficulties, and, in the case of its shopping centers, the Company
may have difficulty leasing the remainder of the affected property. The
Company's leases generally do not contain restrictions designed to ensure the
creditworthiness of tenants. As a result, the bankruptcy or insolvency of a
major tenant could result in a lower level of funds available for the payment of
its indebtedness and for distribution to security holders.

SOME OF THE COMPANY'S POTENTIAL LOSSES MAY NOT BE COVERED BY INSURANCE.

      The Company carries comprehensive liability and all-risk property
insurance (fire, flood, extended coverage and rental loss insurance) with
respect to its assets but is at risk for financial loss in excess of the
policies' limits. Such a loss could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.

      The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), contain
customary covenants requiring the Company to maintain insurance. There can be no
assurance that the lenders under these instruments will not take the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks and the Company is unable to obtain
coverage if the Terrorism Risk Insurance Act of 2002 is not extended, it may
adversely affect the Company's ability to finance and/or refinance its
properties and businesses.

                                      -7-
<PAGE>

THE COMPANY HAS MADE A SIGNIFICANT INVESTMENT IN ITS 731 LEXINGTON AVENUE
PROPERTY. THE FAILURE TO COMPLETE CONSTRUCTION ON TIME AND WITHIN BUDGET WOULD
ADVERSELY AFFECT THE COMPANY'S RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

      731 Lexington Avenue is a 1.3 million square foot multi-use building. The
building contains approximately 885,000 net rentable square feet of office
space, approximately 174,000 net rentable square feet of retail space, and
approximately 248,000 net saleable square feet of residential space consisting
of condominium units (through a taxable REIT subsidiary ("TRS")). While the
project in nearing completion, there can be no assurance that the remainder of
the project will be completed on time or completed for the budgeted amount. Any
failure to complete the 731 Lexington Avenue property on time or within budget
may adversely affect future cash flows, funds from operations, and financial
condition.

THE COMPANY MAY ACQUIRE OR DEVELOP NEW PROPERTIES, AND THIS MAY CREATE RISKS.

      In addition to the 731 Lexington Avenue property, the Company may acquire
or develop other properties or acquire other real estate companies when it
believes that an acquisition or development is consistent with its business
strategies. It may not, however, succeed in consummating desired acquisitions or
in completing developments, including the 731 Lexington Avenue property, on time
or within budget. The Company also might not succeed in leasing newly developed
or acquired properties, at rents sufficient to cover their costs of acquisition
or development and operations.

THE COMPANY MAY NOT BE PERMITTED TO DISPOSE OF CERTAIN PROPERTIES OR PAY DOWN
THE DEBT ASSOCIATED WITH THOSE PROPERTIES WHEN IT MIGHT OTHERWISE DESIRE TO DO
SO WITHOUT INCURRING ADDITIONAL COSTS.

      As part of an acquisition of a property, the Company may agree with the
seller that it will not dispose of the acquired property or reduce the mortgage
indebtedness on the property for significant periods of time unless it pays
certain of the resulting tax costs of the seller. These agreements could result
in the Company holding on to properties that it would otherwise sell and not
paying down or refinancing indebtedness that it would otherwise pay down or
refinance.

IT MAY BE DIFFICULT TO BUY AND SELL REAL ESTATE QUICKLY, AND TRANSFER
RESTRICTIONS APPLY TO SOME OF THE COMPANY'S MORTGAGED PROPERTIES.

      Real estate investments are relatively difficult to buy and sell quickly.
Therefore, the Company has limited ability to vary its portfolio promptly in
response to changes in economic or other conditions. Some of the Company's
properties are mortgaged to secure payment of indebtedness. If it was unable to
meet its mortgage payments, lenders could foreclose on properties and the
Company could incur losses. In addition, if it wishes to dispose of one or more
of the mortgaged properties, it may not be able to obtain release of the liens
on the mortgaged properties. If a lender forecloses on a mortgaged property or
if a mortgage lien prevents the Company from selling a property or a portion
thereof, funds available for payment of indebtedness and for distribution to
security holders may decline. For information relating to the mortgages on the
Company's properties, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital Resources
-- Debt and Contractual Obligations" and the notes to the consolidated financial
statements in this Annual Report on Form 10-K.

ALL OF THE COMPANY'S PROPERTIES ARE IN THE GREATER NEW YORK CITY METROPOLITAN
AREA AND ARE AFFECTED BY THE ECONOMIC CYCLES AND RISKS INHERENT IN THAT REGION.

      During the years ended December 31, 2004, 2003 and 2002, all of the
Company's revenues came from properties located in the greater New York City
metropolitan area. Like other real estate markets, the real estate market in
this area has experienced economic downturns in the past, and the Company cannot
predict how the current economic conditions will impact this market in both the
short and long term. Further declines in the economy or a decline in the real
estate market in this area could hurt the Company's financial performance and
the value of the Company's properties. The factors affecting economic conditions
in this region include: business layoffs or downsizing, industry slowdowns,
relocations of businesses, changing demographics, increased telecommuting and
use of alternative work places, financial performance and productivity of the
publishing, advertising, financial, technology, retail, insurance and real
estate industries, infrastructure quality, and any oversupply of, or reduced
demand for, real estate.

      It is impossible for the Company to assess the future effects of the
current uncertain trends in the economic and investment climates of the greater
New York City metropolitan region, and more generally of the United States, on
the real estate market in this area. If these conditions persist, they may
adversely affect the Company's businesses and future profitability.

                                      -8-
<PAGE>

THE COMPANY MAY INCUR COSTS IN COMPLYING WITH ENVIRONMENTAL LAWS.

      The Company's operations and properties are subject to various federal,
state and local laws, ordinances and regulations concerning the protection of
the environment, including air and water quality, hazardous substances and
health and safety. Under certain of these environmental laws, a current or
previous owner or operator of real estate may be required to investigate and
cleanup hazardous or toxic substances released at a property. The owner or
operator may also be held liable to a government entity or to third parties for
property damage or personal injuries and for investigation and cleanup costs
incurred by those parties because of the contamination. These laws often impose
liability without regard to whether the owner or operator knew of the release of
the substances or caused the release. The presence of contamination or the
failure to remediate contamination may impair the Company's ability to sell or
lease real estate or to borrow using the real estate as collateral. Other laws
and regulations govern indoor and outdoor air quality, including those that can
require the abatement or removal of materials containing asbestos in the event
of damages, demolition, renovations or remodeling, and also govern emissions of,
and exposure to, asbestos fibers in the air. The maintenance and removal of lead
paint, certain electrical equipment containing polychlorinated biphenyls and
underground storage tanks are also regulated by federal and state laws. The
Company could incur fines for environmental compliance and be held liable for
the costs of remedial action with respect to the foregoing regulated substances
or tanks or related claims arising out of environmental contamination or
exposure at or from its properties.

      Each of the Company's properties has been subjected to varying degrees of
environmental assessment at various times. The environmental assessments did not
reveal any material environmental condition except as noted in the following
paragraph. However, identification of new compliance concerns or undiscovered
areas of contamination, changes in the extent or known scope of contamination,
discovery of additional sites, human exposure to the contamination or changes in
cleanup or compliance requirements could result in significant costs to the
Company.

      In June 1997, the Kings Plaza Regional Shopping Center commissioned the
Phase II Study to evaluate and delineate environmental conditions disclosed in a
Phase I study. The results of the Phase II study indicated the presence of
petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and
groundwater. The Company has delineated the contamination and has developed a
remediation approach, which is ongoing. NYDEC has approved a portion of the
remediation approach. The Company accrued $2,675,000 in previous years, of which
$2,550,000 has been paid as of December 31, 2004, for its estimated obligation
with respect to the cleanup of the site, and which includes costs of (i)
remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv)
remedial action and (v) professional fees. If NYDEC insists on a more extensive
remediation approach, the Company could incur additional obligations. The
Company can make no assurance that it will not incur additional environmental
costs with respect to this property.

REAL ESTATE IS A COMPETITIVE BUSINESS.

      The Company operates in a highly competitive environment. All of its
properties are located in the greater New York City metropolitan area. The
Company competes with a large number of real estate property owners and
developers. Principal factors of competition are the amount of rent charged,
attractiveness of location and quality and breadth of services provided. The
Company's success depends upon, among other factors, trends of national and
local economies, the financial condition and operating results of current and
prospective tenants, the availability and cost of capital, interest rates,
construction and renovation costs, taxes, governmental regulations and
legislation, population trends, zoning laws, and the ability of the Company to
lease, sublease or sell its properties, including the condominium units at the
731 Lexington Avenue property, at profitable levels.

TERRORIST ATTACKS SUCH AS THOSE OF SEPTEMBER 11, 2001, IN NEW YORK CITY, MAY
ADVERSELY AFFECT THE VALUE OF THE COMPANY'S PROPERTIES AND ABILITY TO GENERATE
CASH FLOW.

      All of the Company's properties are located in the greater New York City
metropolitan area. In the aftermath of terrorist attacks, tenants in this area
may choose to relocate their businesses to less populated, lower-profile areas
of the United States that are not as likely to be targets of future terrorist
activity. This would trigger a decrease in the demand for space in these
markets, which could increase vacancies in the Company's properties and force it
to lease its properties on less favorable terms. As a result, the value of the
Company's properties and the level of its revenues could decline materially.

THE COMPANY'S OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE
TO CONFLICTS OF INTEREST.

STEVEN ROTH, VORNADO REALTY TRUST AND INTERSTATE PROPERTIES MAY EXERCISE
SUBSTANTIAL INFLUENCE OVER THE COMPANY. THEY AND SOME OF THE COMPANY'S OTHER
DIRECTORS AND OFFICERS HAVE INTERESTS OR POSITIONS IN OTHER ENTITIES THAT MAY
COMPETE WITH THE COMPANY.

      At December 31, 2004, Interstate and its partners owned approximately
10.8% of the common shares of beneficial interest of Vornado, the Company's
manager, and approximately 27.4% of Alexander's, Inc. common stock. Steven Roth,
David Mandelbaum and Russell B. Wight, Jr. are the partners of Interstate. Mr.
Roth is the Chairman of

                                      -9-
<PAGE>
the Board of Directors and Chief Executive Officer of the Company, the Chairman
of the Board of Trustees and Chief Executive Officer of Vornado and the Managing
General Partner of Interstate. Mr. Wight and Mr. Mandelbaum are both trustees of
Vornado and members of the Company's Board of Directors. In addition, Vornado
manages and leases the real estate assets of Interstate.

      As of December 31, 2004, Vornado owned 33.0% of the Company's outstanding
common stock, in addition to that owned by Interstate and its partners. In
addition to the relationships described in the immediately preceding paragraph,
Michael D. Fascitelli, the President and a trustee of Vornado, is the Company's
President and a member of its Board of Directors. Mr. Richard West is a trustee
of Vornado and a member of the Company's Board of Directors. In addition, Joseph
Macnow, Executive Vice President and Chief Financial Officer, holds the same
positions with Vornado.

      Because of their overlapping interests, Mr. Roth, Interstate Properties
and the other individuals noted in the preceding paragraphs may have substantial
influence over both Vornado and Alexander's, and on the outcome of any matters
submitted to Vornado shareholders or Alexander's stockholders for approval. In
addition, certain decisions concerning the Company's operations or financial
structure may present conflicts of interest among Messrs. Roth, Mandelbaum and
Wight and Interstate and other security holders. Mr. Roth and Interstate may, in
the future, engage in a wide variety of activities in the real estate business
which may result in conflicts of interest with respect to matters affecting
Vornado or the Company, such as which of these entities or persons, if any, may
take advantage of potential business opportunities, the business focus of these
entities, the types of properties and geographic locations in which these
entities make investments, potential competition between business activities
conducted, or sought to be conducted, by Vornado or the Company, competition for
properties and tenants, possible corporate transactions such as acquisitions,
and other strategic decisions affecting the future of these entities.

THERE MAY BE CONFLICTS OF INTEREST BETWEEN VORNADO REALTY TRUST, ITS AFFILIATES
AND THE COMPANY.

      At December 31, 2004, Vornado had loans receivable from the Company of
$124,000,000 at an interest rate of 9.00%. These loans mature on the earlier of
January 3, 2006 or the date that the 731 Lexington Avenue construction loan is
finally repaid. In addition, $21,000,000 was available under the line of credit
with Vornado at December 31, 2004. Vornado also manages, develops and leases the
Company's properties under agreements under which Vornado receives annual fees
and will receive a development fee and guarantee fee for the 731 Lexington
Avenue property. These agreements have one-year terms expiring in March of each
year, except that the 731 Lexington Avenue management and development agreements
have terms lasting until substantial completion of the construction of the 731
Lexington Avenue property, and are all automatically renewable. Because the
Company and Vornado share common senior management and because a majority of the
trustees of Vornado also constitute the majority of the Company's directors, the
terms of the foregoing agreements and any future agreements between the Company
and Vornado and its affiliates may not be comparable to those the Company could
have negotiated with an unaffiliated third party.

      For a description of Interstate's ownership of Vornado and Alexander's,
see " -- Steven Roth, Vornado Realty Trust and Interstate Properties may
exercise substantial influence over the Company. They and some of the Company's
other directors and officers have interests or positions in other entities that
may compete with the Company." above.

THE ORGANIZATIONAL AND FINANCIAL STRUCTURE OF THE COMPANY GIVES RISE TO
OPERATIONAL AND FINANCIAL RISKS.

THE COMPANY DEPENDS ON DIVIDENDS AND DISTRIBUTIONS FROM DIRECT AND INDIRECT
SUBSIDIARIES AND THESE SUBSIDIARIES' CREDITORS ARE ENTITLED TO PAYMENT OF
AMOUNTS PAYABLE TO THEM BY THE SUBSIDIARIES BEFORE THE SUBSIDIARIES MAY PAY ANY
DIVIDENDS OR DISTRIBUTIONS TO THE COMPANY.

      Alexander's, Inc. holds substantially all of its properties and assets
through subsidiaries. Alexander's, Inc. therefore depends on cash distributions
and dividends from its subsidiaries for substantially all of its cash flow. The
creditors of each of its direct and indirect subsidiaries are entitled to
payment of that subsidiary's obligations to them, when due and payable, before
that subsidiary may make distributions or dividends to Alexander's, Inc. Thus,
Alexander's, Inc.'s ability to pay its indebtedness and to make dividends to its
security holders depends on its subsidiaries' ability to first satisfy their
obligations to their creditors.

THE COMPANY HAS SUBSTANTIAL INDEBTEDNESS, AND THIS INDEBTEDNESS MAY INCREASE.

      As of December 31, 2004, the Company had approximately $952,528,000 in
total debt outstanding, inclusive of $124,000,000 due to Vornado. Our ratio of
total debt to total enterprise value was 50.1% at December 31, 2004. "Enterprise
value" means the market equity value of Alexander's, Inc. plus debt less cash
and cash equivalents at such date. In addition, the Company has significant debt
service obligations. For the year ended December 31, 2004, the Company's
scheduled cash payments for principal and interest were $64,194,000. In the
future, the Company may incur additional debt, and thus increase the ratio of
total debt to total enterprise value, to finance acquisitions or

                                      -10-
<PAGE>

property developments. The Company may review and modify its debt level from
time to time without notice to or any vote of security holders.

ALEXANDER'S, INC. HAS OUTSTANDING AND EXERCISABLE STOCK APPRECIATION RIGHTS. THE
EXERCISE OF THESE STOCK APPRECIATION RIGHTS MAY IMPACT THE COMPANY'S LIQUIDITY.

      As of December 31, 2004, 850,000 stock appreciation rights ("SARs") were
outstanding and exercisable at a weighted-average exercise price of $71.82. The
agreements for these SARs require that they be settled in cash. Had the holders
of these SARs chosen to exercise their rights as of December 31, 2004, the
Company would have had to pay $121,706,000 in cash. Further appreciation in the
Alexander's, Inc. stock price from the closing stock price of $215.00 at
December 31, 2004 will increase the cash the Company would have to pay upon
exercise and may impact liquidity by requiring the Company to secure additional
borrowings to replace such a cash outflow.

THE COMPANY'S EXISTING FINANCING DOCUMENTS CONTAIN COVENANTS AND RESTRICTIONS
THAT MAY INHIBIT THE COMPANY'S OPERATIONAL AND FINANCIAL FLEXIBILITY AND
RESTRICT OR PROHIBIT THE ABILITY TO MAKE PAYMENTS UPON SECURITIES.

      At December 31, 2004, substantially all of the Company's properties were
pledged to secure obligations under $952,528,000 of existing secured
indebtedness. If the Company were to fail to perform its obligations under
existing indebtedness or become insolvent or were liquidated, secured creditors
would be entitled to payment in full from the proceeds of the sale of the
pledged assets prior to any proceeds being paid to other creditors or to any
holders of the Company's securities. In such an event, it is possible that the
Company would have insufficient assets remaining to make payments to a holder of
the Company's securities. In addition, the existing financing documents contain
restrictive covenants which limit the ability to incur indebtedness, make
prepayments of indebtedness, pay dividends, make investments, engage in
transactions with affiliates, issue or sell capital stock of subsidiaries,
create liens, sell assets, acquire or transfer property and engage in mergers
and acquisitions. These covenants may significantly restrict the Company's
operational and financial flexibility and may restrict its ability to obtain
additional financing or pursue other business activities that may be beneficial.

THE LOSS OF KEY PERSONNEL COULD HARM OPERATIONS.

      The Company is dependent on the efforts of Steven Roth, its Chief
Executive Officer, and Michael D. Fascitelli, its President. While the Company
believes that it could find replacements for these individuals, the loss of
their services could harm operations.

THE COMPANY MIGHT FAIL TO QUALIFY OR REMAIN QUALIFIED AS A REAL ESTATE
INVESTMENT TRUST.

      Although the Company believes that Alexander's, Inc. will remain organized
and will continue to operate so as to qualify as a REIT for federal income tax
purposes, it might fail to remain qualified in this way. Qualification as a REIT
for federal income tax purposes is governed by highly technical and complex
provisions of the Internal Revenue Code for which there are only limited
judicial or administrative interpretations. Qualification as a REIT also depends
on various facts and circumstances that are not entirely within the control of
the Company. In addition, legislation, new regulations, administrative
interpretations or court decisions might significantly change the tax laws with
respect to the requirements for qualification as a REIT or the federal income
tax consequences of qualification as a REIT.

      In order to qualify and maintain its qualification as a REIT for federal
income tax purposes, the Company is required, among other conditions, to
distribute as dividends to its stockholders at least 90% of annual REIT taxable
income. As of December 31, 2004, the Company had reported net operating loss
carryovers ("NOLs") of $49,211,000, which generally would be available to offset
the amount of REIT taxable income that it otherwise would be required to
distribute. However, the NOLs reported on the tax returns are not binding on the
Internal Revenue Service and are subject to adjustment as a result of future
audits. In addition, under Section 382 of the Internal Revenue Code, the ability
to use the Company's NOLs could be limited if, generally, there are significant
changes in the ownership of the Company's outstanding stock. Since its
reorganization as a REIT commencing in 1995, the Company has not paid regular
dividends and does not believe that it will be required to, and may not, pay
regular dividends until the NOLs have been fully utilized.

LIMITS ON CHANGES IN CONTROL MAY DISCOURAGE TAKEOVER ATTEMPTS BENEFICIAL TO
STOCKHOLDERS.

      Provisions in the Company's certificate of incorporation and by laws, as
well as provisions of the Internal Revenue Code and Delaware corporate law, may
delay or prevent a change of control over the Company or a tender offer, even if
such action might be beneficial to stockholders, and limit the stockholders'
opportunity to receive a potential premium for their shares of common stock over
then prevailing market prices.

      Stock Ownership Limit - Primarily to facilitate maintenance of its
qualification as a REIT, the Company's certificate of incorporation generally
prohibits ownership, directly, indirectly or beneficially, by any single
stockholder of more than 9.9% of the outstanding shares of preferred stock of
any series or 4.9% of outstanding common stock.

                                      -11-
<PAGE>

The Board of Directors may waive or modify these ownership limits with respect
to one or more persons if it is satisfied that ownership in excess of these
limits will not jeopardize the Company's status as a REIT for federal income tax
purposes. In addition, the Board of Directors has, subject to certain conditions
and limitations, exempted Vornado and certain of its affiliates from these
ownership limitations. Shares owned in violation of these ownership limits will
be subject to the loss of rights and other restrictions. These ownership limits
may have the effect of inhibiting or impeding a change in control.

THE NUMBER OF SHARES OF ALEXANDER'S, INC. COMMON STOCK AND THE MARKET FOR THOSE
SHARES GIVE RISE TO VARIOUS RISKS.

ALEXANDER'S, INC. HAS OUTSTANDING AND EXERCISABLE OPTIONS TO PURCHASE ITS COMMON
STOCK. THE EXERCISE OF THESE OPTIONS COULD DECREASE THE MARKET PRICE OF THE
SHARES OF COMMON STOCK CURRENTLY OUTSTANDING.

      As of December 31, 2004, 92,000 options were outstanding and exercisable
at a weighted-average exercise price of $70.38. Additionally, 1,745,000 shares
are available for future grant under the terms of the Company's Omnibus Stock
Plan. The Company cannot predict the impact that future exercises of outstanding
options or grants of additional options would have on the market price of its
common stock.

CHANGES IN MARKET CONDITIONS COULD DECREASE THE MARKET PRICE OF THE COMPANY'S
SECURITIES.

      The value of the Company's securities depends on various market
conditions, which may change from time to time. Among the market conditions that
may affect the value of the Company's shares are the following: the extent of
institutional investor interest in Alexander's, Inc., the reputation of REITs
generally and the attractiveness of their equity securities in comparison to
other equity securities, including securities issued by other real estate
companies, and fixed income securities, the Company's NOLs which are generally
available to offset the amount of the REIT taxable income that the Company
otherwise would be required to distribute as dividends, the Company's financial
condition and performance, the Company's ability to complete the Lexington
Avenue development project on a timely basis and for the budgeted amount,
prevailing interest rates, and general financial market conditions.

                                      -12-
<PAGE>
ITEM 2. PROPERTIES

      The following table shows the location, ownership, approximate size and
leasing status of each of the Company's properties as of December 31, 2004.
<TABLE>
<CAPTION>
                                                                                Average
                                                                 Building      Annualized
                                                                  Area/        Base Rent                                 Square
                                                  Land          Number of      Per Square  Percent     Significant       Footage
           Property               Ownership       Area            Floors          Foot     Leased        Tenants         Leased
-------------------------------  -----------  -------------- ---------------- ----------- -------- ------------------- ----------
<S>                              <C>          <C>            <C>              <C>         <C>        <C>                 <C>
 OPERATING PROPERTIES

   731 Lexington Avenue           Owned       84,420 sq. ft.
   Office and Retail                                           1,052,000/31    $   61.08     84.9%     Bloomberg L.P.    697,000
                                                                                                       The Home Depot     83,000(1)
                                                                                                     The Container Store  34,000
                                                                                                     Hennes & Mauritz     27,000
    Residential Condominiums                                    248,000/24
                                                             -------------
                                                              1,300,000/55



   Kings Plaza Regional           Owned           24.3 acres 759,000(2)(3)/       36.31      98.1%          Sears        289,000
     Shopping Center                                                2 and 4                           123 Mall tenants   455,000
     Brooklyn, New York

   Rego Park I                    Owned            4.8 acres    351,000(2)/3      32.18     100.0%           Sears       195,000
     Queens Boulevard and                                                                                 Circuit City    50,000
     63rd Road                                                                                              Bed Bath &    46,000
..    Queens, New York                                                                                           Beyond
                                                                                                             Marshalls    39,000

   Routes 4 and 17                Owned           30.3 acres           N/A,          N/A,   100.0%      IKEA Property,     N/A,
     Paramus, New Jersey                                             Ground        Ground                         Inc.    Ground
                                                                      Lease         Lease                                  Lease

   Roosevelt Avenue and           Leased (4)  44,975 sq. ft.    177,000(2) /4                   0%
     Main Street
     Queens, New York

                                                             ---------------
                                                                   2,587,000
                                                             ===============

PROPERTY TO BE DEVELOPED

     Rego Park II                 Owned             10 acres
     Adjacent to Rego Park I
     Queens, New York

<CAPTION>
                                     Lease
                                   Expiration/
                                      Option
           Property                Expiration
-------------------------------   ------------
<S>                               <C>
 OPERATING PROPERTIES

   731 Lexington Avenue
   Office and Retail                2030/2040
                                    2025/2035
                                         2021
                                         2020
    Residential Condominiums

   Kings Plaza Regional             2023/2033
     Brooklyn, New York              Various

   Rego Park I                      2021/2031
     Queens Boulevard and                2021
     63rd Road                      2013/2021
     Queens, New York

   Routes 4 and 17                  2008/2021
     Paramus, New Jersey

   Roosevelt Avenue and               2041
     Main Street
     Flushing, New York

PROPERTY TO BE DEVELOPED

     Rego Park II
     Adjacent to Rego Park I
     Queens, New York
</TABLE>
--------------------
(1) Excludes 14,800 square feet of the mezzanine space.

(2) Excludes parking garages.

(3) Excludes the 339,000 square foot Macy's store, owned and operated by
Federated Department Stores, Inc. ("Federated").

(4) Leased to the Company through January 2027. The rent under the lease is as
follows: $331,000 per year from February 1997 through January 2007, $220,000 per
year from February 2007 through January 2017, and $147,000 per year from
February 2017 through January 2027.

For details of encumbrances-see descriptions of properties which follows.

                                      -13-
<PAGE>

Operating Properties

731 Lexington Avenue

      The 731 Lexington Avenue property which comprises the entire square block
bounded by Lexington Avenue, East 59th Street, Third Avenue and East 58th Street
and is situated in the heart of one of Manhattan's busiest business and shopping
districts, with convenient access to several subway and bus lines. The property
is located directly across the street from Bloomingdale's flagship store and
only a few blocks away from Fifth Avenue and 57th Street.

      731 Lexington Avenue is a 1.3 million square foot multi-use building. The
building contains approximately 885,000 net rentable square feet of office
space, approximately 174,000 net rentable square feet of retail space and
approximately 248,000 net saleable square feet of residential space consisting
of 105 condominium units (through a taxable REIT subsidiary ("TRS")). Of the
construction budget of $630,000,000 (which excludes $29,000,000 for development
and guarantee fees to Vornado), $489,400,000 has been expended through December
31, 2004 and an additional $23,500,000 has been committed to at December 31,
2004. The remaining construction is expected to be completed by the end of 2005.

      At December 31, 2004, the Company has leased 697,000 square feet of office
space to Bloomberg L.P. and 144,000 square feet of retail space to, among
others, The Home Depot (excluding 14,800 square feet of the mezzanine also
leased to The Home Depot), Hennes & Mauritz and The Container Store. On January
25, 2005, the Company leased an additional 176,000 square feet of office space
to Citibank N.A. As a result, 100% of the property's 885,000 square feet of
office space has been leased.

      The residential space is comprised of 105 condominium units. The original
offering plan filed for these units, as amended for price increases through
December 31, 2004, would produce an aggregate sale price of approximately
$500,000,000 (reflecting the value of existing contracts and the offering price
for the remaining units). As of December 31, 2004, the Company has received
deposits of $64,060,000 on sales of the condominium units.

      On January 24, 2005, the condominium offering plan was declared effective
by the State of New York at which time 83 units were under sales contract.
Accordingly, the Company will recognize approximately $38,000,000 of income
after taxes in 2005 from these sales for the units under contract. In the first
quarter of 2005, $32,000,000 of this income will be recognized using the
percentage of completion method.

      On February 13, 2004, the Company closed a $400,000,000 mortgage financing
on the office space. The loan bears interest at 5.33%, matures in February 2014
and beginning in the third year, provides for principal payments based on a
25-year amortization schedule such that over the remaining eight years of the
loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000
was used to repay the entire amount outstanding under the previously existing
Construction Loan.

      The Construction Loan was modified on February 13, 2004, so that the
remaining availability was $237,000,000, which was approximately the amount
estimated to complete the 731 Lexington Avenue project at the closing date (not
including the development and guarantee fees to Vornado). The interest rate on
the Construction Loan of LIBOR plus 2.5% (4.92% at December 31, 2004) and the
maturity date of January 2006, with two one-year extensions, were not changed.
The collateral for the Construction Loan is the same except that the office
space has been removed from the lien. Further, the Construction Loan permits the
release of the retail space for a payment of $15 million and requires all
proceeds from the sale of the residential condominium units to be applied to the
Construction Loan balance until it is finally repaid. Vornado has agreed to
guarantee to the construction lender, the lien free, timely completion of the
construction of 731 Lexington Avenue and funding of project costs in excess of a
stated loan budget, if not funded by the Company. If Vornado should advance any
funds under the Completion Guarantee in excess of $21,000,000, which was the
amount available at December 31, 2004 under the line of credit with Vornado,
interest on those advances would be at 15% per annum.

      While the project is nearing completion, there can be no assurance that
the remainder of the project will be completed on time or completed for the
budgeted amount. Any failure to complete the 731 Lexington Avenue project on
time or within budget may adversely affect future cash flows, funds from
operations and financial condition.

Kings Plaza Regional Shopping Center

      The Kings Plaza Regional Shopping Center (the "Center") contains 1,098,000
square feet and is comprised of a two-level mall (the "Mall") containing 470,000
square feet and two four-level anchor stores. One of the anchor stores is owned
by the Company and leased to Sears, while the other anchor store is owned and
operated as a Macy's store by Federated. The Center occupies a 24.3 acre site at
the intersection of Flatbush Avenue and Avenue U in Brooklyn,

                                      -14-
<PAGE>

New York. Among the Center's features are a marina, a five-level parking garage
and an energy plant that generates all of the Center's electrical power. The
Company completed renovations of the interior of the Mall in 2001 and the
exterior of the Mall in 2002.

      The Company plans to construct a two-story freestanding building adjacent
to the Mall of approximately 200,000 square feet. The first story of
approximately 120,000 square feet will be operated as a Lowe's Home Improvement
Warehouse ("Lowe's"). The Lowe's lease is expected to commence in 2006. The cost
of the project will be approximately $21 million, net of the Lowe's
reimbursement and before reimbursement, if any, from the second story tenant(s).
The Company's plans may change and these can be no assurance that this project
will be completed, completed on time or completed for the budgeted amount.

      The following table sets forth lease expirations for the Mall tenants in
the Center for the next ten years, assuming none of the tenants exercise renewal
options.

<TABLE>
<CAPTION>
                                          Annual Fixed Rent of Expiring
                                                    Leases                                  Percent of
           Number of   Square Feet of     -----------------------------     Percent of      2004 Gross
            Leases        Expiring                          Per Square     Total Leased     Annual Base
Year       Expiring        Leases            Total            Feet          Square Feet       Rentals
----       ---------   --------------     -----------       -----------    ------------     -----------
<S>        <C>         <C>                <C>               <C>            <C>              <C>
2005          9             43,300        $   634,203         $14.65            9.5%            2.8%
2006         16             87,947          2,734,485          31.09           19.4%           12.1%
2007         15             48,326          2,569,830          53.18           10.6%           11.4%
2008          9             15,791          1,052,015          66.62            3.5%            4.7%
2009         16             69,144          4,089,639          59.15           15.2%           18.1%
2010          9             21,464          1,422,347          66.27            4.7%            6.3%
2011         12             38,265          2,208,055          57.70            8.4%            9.8%
2012         13             49,330          2,464,465          49.96           10.9%           10.9%
2013         13             39,440          2,441,125          61.89            8.7%           10.8%
2014          7             31,133          1,967,954          63.21            6.9%            8.7%
2015          3              7,457            446,109          59.82            1.6%            2.0%
2016          1              2,950            118,000          40.00            0.6%            0.5%
</TABLE>

      The following table sets forth the occupancy rate and the average annual
rent per square foot for the Mall stores for each of the past five years.

<TABLE>
<CAPTION>
                                                 Average
                                             Annual Base Rent
As of December 31,    Occupancy Rate          Per Square Foot
------------------    --------------         ----------------
<S>                   <C>                    <C>
       2004                97%                 $  49.65
       2003                98%                    47.95
       2002                97%                    45.59
       2001                96%                    45.97
       2000                91%                    44.66
</TABLE>

      The Center is encumbered by a first mortgage loan with a balance of
$213,699,000 at December 31, 2004. The loan matures in June 2011 and bears
interest at 7.46%.

Rego Park I

      The Rego Park I property, located in Queens, New York, encompasses the
entire block fronting on Queens Boulevard and bounded by 63rd Road, 62nd Drive,
97th Street and Junction Boulevard. The existing 351,000 square foot building
was redeveloped in 1996 and is fully leased to Sears, Circuit City, Bed Bath &
Beyond, Marshalls and Old Navy. In conjunction with the redevelopment, a
multi-level parking structure was constructed to provide paid parking spaces for
approximately 1,200 vehicles.

      The property is encumbered by a first mortgage loan with a balance of
$81,661,000 at December 31, 2004. The loan matures in June 2009 and bears
interest at 7.25%.

                                      -15-
<PAGE>

Paramus

      The Company owns 30.3 acres of land located at the intersection of Routes
4 and 17 in Paramus, New Jersey. The Company's property is located directly
across from the Garden State Plaza regional shopping mall and is within two
miles of three other regional shopping malls and ten miles of New York City.
This land is leased to IKEA Property, Inc. The lease has a 40-year term with a
purchase option at the end of the twentieth year for $75,000,000. Further, the
Company has a $68,000,000 interest only, non-recourse mortgage loan on the
property from a third party lender. The fixed interest rate on the debt is 5.92%
with interest payable monthly until maturity in October 2011. The triple-net
rent each year is the sum of $700,000 plus the amount of debt service on the
mortgage loan. If the purchase option is not exercised at the end of the
twentieth year, the triple-net rent for the last 20 years must include debt
service sufficient to fully amortize $68,000,000 over the remaining 20-year
lease term.

Flushing

      The Flushing property is located on Roosevelt Avenue and Main Street in
the downtown, commercial section of Flushing, Queens, New York. Roosevelt Avenue
and Main Street are active shopping districts and there are many national
retailers located in the area. A subway entrance is located directly in front of
the property with bus service across the street. The property comprises a vacant
four-floor building containing 177,000 square feet and a parking garage.

      The Company is currently in negotiations with various retailers to lease
all or a portion of the property.

Property to Be Developed

Rego Park II

      The Company owns two land parcels containing approximately 10 acres
adjacent to its Rego Park I property in Queens, New York. One parcel comprises
the entire square block bounded by the Horace Harding Service Road, 97th Street,
62nd Drive and Junction Boulevard. The other is a parcel of approximately
one-half square block at the intersection of Junction Boulevard and the Horace
Harding Service Road. Both parcels are zoned for residential use, while
commercial uses are permitted as-of-right only on the smaller parcel. Each
parcel is currently being used for paid public parking.

      The Company is considering the development of two projects at its Rego
Park II property. One project is a mixed-use, three-level development containing
approximately 600,000 square feet of retail space, a multi-level parking garage
and up to 450,000 square feet of residential space. This project is subject to
governmental approvals including rezoning of the larger parcel. The current
plans for the other parcel may consist of up to 80,000 square feet of retail. It
is anticipated that neither of these projects will commence prior to 2006. There
can be no assurance that these projects will be completed, completed on time or
completed for the budgeted amount.

Other Encumbrances

      At December 31, 2004, the Company was indebted to Vornado in the amount of
$124,000,000, comprised of (i) a $95,000,000 note and (ii) $29,000,000 under a
$50,000,000 line of credit. The loans are collateralized by, among other things,
a pledge given by the Company of its interests in the entities holding (a) the
Lexington Avenue property, (b) the Flushing property and (c) the Rego Park II
property.

Insurance

      The Company carries comprehensive liability and all-risk property
insurance (fire, flood, extended coverage and rental loss insurance) with
respect to its assets, but is at risk for financial loss in excess of the
policies' limits. Such a loss could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.

                                      -16-
<PAGE>

      The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), contain
customary covenants requiring the Company to maintain insurance. There can be no
assurance that the lenders under these instruments will not take the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks and the Company is unable to obtain
coverage if the Terrorism Risk Insurance Act of 2002 is not extended, it may
adversely affect the Company's ability to finance and/or refinance its
properties and businesses.

ITEM 3. LEGAL PROCEEDINGS

      Neither the Company nor any of its subsidiaries is a party to, nor is
their property the subject of, any material pending legal proceeding other than
routine litigation incidental to their businesses. The Company believes that
these legal actions will not be material to the Company's financial condition or
results of operations.

      For discussion concerning environmental matters, see "Item 1. Business --
Environmental Matters".

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 2004.

                                      -17-
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

      The following is a list of the names, ages, principal occupations and
positions with the Company of the executive officers of the Company and the
positions held by such officers during the past five years.

<TABLE>
<CAPTION>
                                    PRINCIPAL OCCUPATIONS AND OFFICES (CURRENT AND DURING THE PAST FIVE YEARS WITH THE COMPANY
      NAME                AGE                                    UNLESS OTHERWISE STATED)
      ----                ---       ------------------------------------------------------------------------------------------
<S>                       <C>       <C>
Steven Roth                63       Chairman of the Board of Directors since May 2004 and Chief Executive Officer since March
                                    1995; Chairman of the Board and Chief Executive Officer of Vornado Realty Trust since May 1989;
                                    Chairman of Vornado Realty Trust's Executive Committee of the Board since April 1980; and a
                                    trustee of Vornado Realty Trust since 1979; and Managing General Partner of Interstate
                                    Properties.

Michael D. Fascitelli      48       President since August 2000; Director of the Company and President and trustee of Vornado
                                    Realty Trust since December 1996; Partner at Goldman Sachs & Co., in charge of its real estate
                                    practice, from December 1992 to December 1996; and, prior thereto, Vice President at Goldman
                                    Sachs & Co.

Stephen Mann               69       Chief Operating Officer since May 2004; Chairman of the Board of Directors from March 1995 to
                                    May 2004; Interim Chairman of the Board of Directors from August 1994 to March 1995; Chief
                                    Executive Officer of Prescott Funding Company since January 2003; and Chairman of the Clifford
                                    Companies from 1990 to January 2003.

Joseph Macnow              59       Executive Vice President and Chief Financial Officer since June 2002; Executive Vice President
                                    - Finance and Administration from March 2001 to June 2002; Vice President and Chief Financial
                                    Officer from August 1995 to March 2001; Executive Vice President - Finance and Administration
                                    of Vornado Realty Trust since January 1998 and Chief Financial Officer of Vornado Realty Trust
                                    since March 2001; and Vice President and Chief Financial Officer of Vornado Realty Trust from
                                    1985 to January 1998.
</TABLE>

                                      -18-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

      The Company's common stock is listed on the New York Stock Exchange under
the symbol "ALX." The transfer agent and registrar for the common stock is
Wachovia Bank, N.A. Set forth below are the high and low sales prices for the
shares of common stock for each full quarterly period within the two most recent
years.

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                             -------------------------------------------------------
                                       2004                           2003
                             -----------------------       -------------------------
QUARTER                        HIGH           LOW             HIGH            LOW
-------                      ---------     ---------       ---------       ---------
<S>                          <C>           <C>             <C>             <C>
First......................  $  162.45     $  124.91       $   66.98       $   61.40
Second.....................     172.00        146.00           86.90           63.75
Third......................     203.50        164.00          106.50           83.20
Fourth.....................     230.05        195.00          126.00          102.50
</TABLE>

      As of February 4, 2005, there were approximately 1,100 holders of record
of the Company's common stock. The Company pays dividends only if, as and when
declared by its Board of Directors. No dividends were paid in 2004 and 2003. In
order to qualify as a real estate investment trust, the Company generally is
required to distribute 90% of its taxable income as a dividend. At December 31,
2004, the Company had net operating loss carryovers ("NOLs") of approximately
$49,211,000. Under the Internal Revenue Code of 1986, as amended, the Company's
NOLs generally would be available to offset the amount of the Company's taxable
income (excluding income from taxable REIT subsidiaries) that otherwise would be
required to be distributed as a dividend to stockholders.

                                      -19-
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

      The following table sets forth selected financial and operating data. This
data should be read in conjunction with the consolidated financial statements
and notes thereto and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this Annual Report on Form 10-K. This
data may not be comparable to, or indicative of, future operating results.

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                --------------------------------------------------------------------------------
(amounts in thousands, except per share data)       2004              2003              2002            2001            2000
                                                ------------      ------------      ------------    ------------    ------------
<S>                                             <C>               <C>               <C>             <C>             <C>
Total revenues ..............................   $    148,895      $     87,162      $     76,800    $     67,792    $     62,696
                                                ============      ============      ============    ============    ============

(Loss) income from continuing operations ....   $    (37,331)(1)  $    (18,948)(1)  $     12,400    $      7,414    $      4,425
Gain on sale of real estate .................          3,862                --                --          19,026              --
Income from discontinued operations .........             --             1,206            11,184             946             772
                                                ------------      ------------      ------------    ------------    ------------
Net (loss) income ...........................   $    (33,469)     $    (17,742)     $     23,584    $     27,386    $      5,197
                                                ============      ============      ============    ============    ============

Net (loss) income per common share
(basic and diluted):
   (Loss) income from continuing operations .   $      (7.45)     $      (3.79)     $       2.48    $       1.48    $       0.89
   Gain on sale of real estate ..............           0.77                --                --            3.81              --
   Income from discontinued operations ......             --              0.24              2.24            0.19            0.15
                                                ------------      ------------      ------------    ------------    ------------
   Net (loss) income ........................   $      (6.68)     $      (3.55)     $       4.72    $       5.48    $       1.04
                                                ============      ============      ============    ============    ============

Balance sheet data:
   Total assets .............................   $  1,244,801      $    920,996      $    664,912    $    583,339    $    403,305
   Real estate, net .........................        881,079           763,802           542,975         377,961         343,612
   Debt .....................................        952,528           731,485           543,807         515,831         367,788
   Stockholders' equity .....................         18,368            50,923            68,665          45,081          17,695
</TABLE>

--------------------------
(1) Includes accruals of $76,789 and $44,917 in 2004 and 2003, respectively, for
compensation expense for stock appreciation rights due to increases in the
Company's stock price.

                                      -20-
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

      The Company is a real estate investment trust ("REIT") engaged in leasing,
managing, developing and redeveloping properties. Alexander's activities are
conducted through its manager, Vornado Realty Trust ("Vornado"). Alexander's has
six properties in the greater New York City metropolitan area including the 731
Lexington Avenue property, a 1,300,000 square foot multi-use building in
Manhattan, and the Kings Plaza Regional Shopping Center located in Brooklyn.

      The Company competes with a large number of real estate property owners
and developers. The Company success depends upon, among other factors, trends of
national and local economies, the financial condition and operating results of
current and prospective tenants, the availability and cost of capital, interest
rates, construction and renovation costs, taxes, governmental regulations and
legislation, population trends, zoning laws, and the ability of the Company to
lease, sublease or sell its properties, including the condominium units at 731
Lexington Avenue, at profitable levels. The Company's success is also subject to
its ability to refinance existing debts as they come due and on acceptable
terms.

      In 2004, the Company continued to phase-in components of its 731 Lexington
Avenue property in to operations; as a result revenues, expenses and cash flow
provided from operating activities increased substantially over the previous
year. See "Results of Operations and Liquidity and Capital Resources" for
further details.

CRITICAL ACCOUNTING POLICIES

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management 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. Set forth below is a summary of the accounting policies that
management believes are critical to the preparation of the Company's
consolidated financial statements. This summary should be read in conjunction
with the more complete discussion of the Company's accounting policies included
in Note 2 to the consolidated financial statements included in this Annual
Report on Form 10-K.

      Real Estate - Real estate is carried at cost, net of accumulated
depreciation and amortization. Depreciation is provided on a straight-line basis
over the assets' estimated useful lives, which range from seven to 50 years.
Betterments, significant renewals and certain costs directly related to the
acquisition, improvement and leasing of real estate are capitalized. Maintenance
and repairs are charged to operations as incurred. As real estate is undergoing
development activities, all property operating expenses, including interest
expense, are capitalized to the cost of the real property to the extent that
management believes such costs are recoverable through the value of the
property. The recognition of depreciation expense requires estimates by
management of the useful life of each property and improvement, as well as an
allocation of the costs associated with a property, including capitalized costs,
to its various components. If the Company does not allocate these costs
appropriately or incorrectly estimates the useful lives of its real estate,
depreciation expense could be misstated.

      As construction of the 731 Lexington Avenue property progresses and as
components of the building are placed into service, the Company is no longer
capitalizing property operating expenses, including interest expense, and
beginning to expense these items, as well as depreciation, for those components.
The office and retail components of the building will be fully placed in service
by March 31, 2005.

      The Company's properties are reviewed for impairment if events or
circumstances change, indicating that the carrying amount of the property may
not be recoverable. In such an event, a comparison is made of the current and
projected operating cash flows of each such property into the foreseeable future
on an undiscounted basis to the carrying amount of the property. The carrying
amount of an asset would be adjusted, if necessary, to reflect an impairment in
the value of the asset. If the Company incorrectly estimates undiscounted cash
flows, impairment charges may be different. The impact of such estimates in
connection with future impairment analyses could be material to the Company's
consolidated financial statements.

      Allowance for Doubtful Accounts - The Company periodically evaluates the
collectibility of amounts due from tenants and maintains an allowance for
doubtful accounts for estimated losses resulting from the inability of tenants
to make required payments under the lease agreements. The Company also maintains
an allowance for receivables

                                      -21-
<PAGE>

arising from the straight-lining of rents. This receivable arises from earnings
recognized in excess of amounts currently due under the lease agreements.
Management exercises judgment in establishing these allowances and considers
payment history and current credit status in developing these estimates.

      Revenue Recognition - The Company has the following revenue sources and
revenue recognition policies:

      Base rent (revenue arising from tenant leases) - These rents are
recognized over the non-cancelable term of the related leases on a straight-line
basis, which includes the effects of rent steps and free rent abatements under
the leases.

      Percentage Rents (revenue arising from retail tenant leases that is
contingent upon the sales of tenants exceeding defined thresholds) - These rents
are recognized in accordance with Staff Accounting Bulletin No. 104, Revenue
Recognition, which states that this contingent revenue is only to be recognized
after the contingency has been removed (i.e., the sales threshold has been
achieved).

      Expense Reimbursements (revenue arising from tenant leases which provide
for the recovery of all or a portion of the operating expenses and real estate
taxes of the respective properties) - This revenue is accrued in the same
periods as the expenses are incurred.

      Condominium Sales (income arising from the sales of condominium units at
the Lexington Avenue property) - Income on deposits received for sales of
condominium units has been deferred in accordance with the deposit method of
SFAS No. 66, Accounting for Sales of Real Estate.

      The Company assesses, among other things, the collectibility of revenue
before recognition. If the Company incorrectly assesses collectibility of
revenue, net earnings and assets could be misstated.

      Income Taxes - The Company operates in a manner intended to enable it to
continue to qualify as a real estate investment trust ("REIT") under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code").
Under the Code, the Company's net operating loss carryovers ("NOLs") generally
would be available to offset the amount of the Company's REIT taxable income
that would otherwise be required to be distributed as dividends to its
stockholders.

      The Company has elected to treat its wholly owned subsidiary, 731
Residential LLC ("Residential"), as a taxable REIT subsidiary ("TRS"). A TRS is
subject to income tax at regular corporate tax rates. The Company's NOLs will
not be available to offset taxable income of Residential. Residential owns the
assets comprising the residential condominium units at the Company's 731
Lexington Avenue property. Residential paid no income taxes in the years ended
December 31, 2004, 2003 and 2002. TRS deferred income taxes, where applicable,
are accounted for in accordance with SFAS 109 "Accounting For Income Taxes"
using the asset and liability method. Under this method, deferred income taxes
are recognized for temporary differences between the financial reporting basis
of assets and liabilities and their respective tax basis and for operating loss
and tax credit carryforwards based on enacted tax rates expected to be in effect
when such amounts are realized or settled. However, deferred tax assets are
recognized only to the extent that it is more likely than not that they will be
realized based on consideration of available evidence, including tax planning
strategies and other factors.

      Stock Appreciation Rights - SARs are granted at 100% of the market price
of the Company's common stock on the date of grant. SARs vest ratably, becoming
fully vested 36 months after grant, and generate compensation expense measured
by the excess of the stock price over the exercise price at the balance sheet
date. On subsequent balance sheet dates, if the stock price falls, the
previously recognized expense is reversed, but not below zero.

      Recently Issued Accounting Literature - On December 16, 2004, the FASB
issued SFAS No. 153: Exchanges of Nonmonetary Assets - An Amendment of APB
Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. Further, the amendments eliminate the narrow exception
for nonmonetary exchanges of similar productive assets and replace it with a
broader exception for exchanges of nonmonetary assets that do not have
"commercial substance." SFAS No. 153 is effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. The Company
does not believe the adoption of SFAS No. 153 will have a material effect on the
Company's consolidated financial statements.

      On December 16, 2004, the FASB issued SFAS No. 123: (Revised 2004) -
Share-Based Payment ("SFAS No. 123R"). SFAS 123R replaces SFAS No. 123, using
the prospective method, and supersedes APB Opinion No. 25: Accounting for Stock
Issued to Employees. SFAS No. 123R requires that the compensation cost relating
to share-based payment transactions be recognized in financial statements and be
measured based on the fair value of the equity or liability instruments issued.
SFAS No. 123R is effective as of the first interim or annual reporting period
that begins after June 15, 2005. The Company does not believe that the adoption
of SFAS No. 123R will have a material effect on the Company's consolidated
financial statements.

                                      -22-
<PAGE>

RESULTS OF OPERATIONS

Years Ended December 31, 2004 and December 31, 2003

      The Company had a net loss of $33,469,000 for the year ended December 31,
2004, compared to a net loss of $17,742,000 in the prior year. The net loss for
2004 includes (i) an accrual of $76,789,000 for compensation expense for stock
appreciation rights ("SARs"), (ii) expense of $3,050,000 from the write-off of
unamortized deferred debt expense in connection with the reduction of the
principal amount of the construction loan for the 731 Lexington Avenue project,
and (iii) income of $3,862,000 from the sale of land in White Plains, New York.
The net loss for 2003 includes (i) an accrual of $44,917,000 for SARs, (ii)
$1,289,000 resulting from the recognition as income of the non-refundable
deposit from the planned sale of the Flushing property of $1,875,000, net of
$586,000 for costs associated with this transaction, and (iii) income from
discontinued operations of $1,206,000 representing the reversal of previously
accrued contingent liabilities.

      Property rentals were $110,541,000 in 2004, compared to $56,785,000 in
2003, an increase of $53,756,000. The following table details the increase by
property:

<TABLE>
<CAPTION>
        TENANT               DELIVERY DATE             INCREASE
---------------------        -------------         ----------------
<S>                          <C>                   <C>
731 Lexington Avenue;
 Bloomberg L.P.                  Various            $    40,771,000
 The Home Depot               Mar. 29, 2004               6,086,000
 Hennes & Mauritz              May 15, 2004               3,622,000
  Other tenants                  Various                  2,687,000
                                                   ----------------
                                                         53,166,000
Other properties                                            590,000
                                                   ----------------
                                                   $     53,756,000
                                                   ================
</TABLE>

      Tenant expense reimbursements were $38,354,000 in 2004, compared to
$30,377,000 in 2003, an increase of $7,977,000. This increase was largely due to
reimbursements from Bloomberg L.P.

      Operating expenses were $47,615,000 in 2004, compared to $37,984,000 in
2003, an increase of $9,631,000. This increase resulted primarily from operating
expenses at 731 Lexington Avenue of $9,435,000.

      General and administrative expenses were $81,285,000 in 2004, compared to
$48,921,000 in 2003, an increase of $32,364,000. This primarily resulted from
the increase in the accrual for SARs compensation expense.

      Depreciation and amortization expense was $15,527,000 in 2004, compared to
$7,497,000 in 2003, an increase of $8,030,000. This increase was due to
depreciation on the space delivered to tenants at 731 Lexington Avenue, as noted
above.

      Interest and other income, net was $1,571,000 in 2004, compared to
$1,983,000 in 2003, a decrease of $412,000. This decrease was due to $1,289,000
recognized in 2003 representing a non-refundable deposit from the planned sale
of the Flushing property, offset by an increase in interest income from higher
average cash balances in 2004.

      Interest and debt expense was $40,320,000 in 2004, compared to $13,691,000
in 2003, an increase of $26,629,000. This increase resulted from (i) lower
amounts of capitalized interest in the current year because of placing portions
of 731 Lexington Avenue in service (interest of $25,087,000 has been capitalized
in 2004, as compared to $37,516,000 in 2003) and (ii) an increase in average
debt outstanding of $266,853,000, primarily due to the 731 Lexington Avenue
office financing of $400,000,000, partially offset by a decline in average
interest rates of 0.83%.

Years Ended December 31, 2003 and December 31, 2002

      Property rentals were $56,785,000 in 2003, compared to $50,630,000 in
2002, an increase of $6,155,000. This increase resulted primarily from
recognizing rent of $5,081,000 from the lease with Bloomberg L.P., which took
possession of 87% of the 695,000 square feet under the lease on November 15,
2003.

                                      -23-
<PAGE>

      Tenant expense reimbursements were $30,377,000 in 2003, compared to
$26,170,000 in 2002, an increase of $4,207,000. The increase was largely due to
higher reimbursements as real estate taxes, insurance and repairs and
maintenance also increased.

      Operating expenses were $37,984,000 in 2003, compared to $33,042,000 in
2002, an increase of $4,942,000. Of this increase, (i) $1,541,000 resulted
primarily from higher fuel costs for the utility plant at the Company's Kings
Plaza Regional Shopping Center and (ii) $373,000 resulted from bad debt expense
this year as compared to a bad debt recovery in the prior year. The balance of
the increase was due to higher real estate taxes, insurance and repairs and
maintenance, which were billed to tenants.

      General and administrative expenses were $48,921,000 in 2003, compared to
$3,980,000 in 2002, an increase of $44,941,000. This increase resulted from an
accrual of $44,917,000 of compensation expense for SARs based on the Company's
closing stock price of $124.66 at December 31, 2003. There was no SARs
compensation expense in 2002.

      Depreciation and amortization expense was $7,497,000 in 2003, compared to
$6,668,000 in 2002, an increase of $829,000. The increase was largely due to
depreciation commencing on November 15, 2003 for space delivered to Bloomberg
L.P.

      Interest and other income, net was $1,983,000 in 2003, compared to
$2,178,000 in 2002, a decrease of $195,000. This decrease is largely
attributable to lower average cash balances in 2003 due to greater expenditures
for the Lexington Avenue project and lower yields on cash investments primarily
offset by $1,289,000 resulting from the recognition as income of the
non-refundable deposit from the planned sale of the Flushing property of
$1,875,000, net of $586,000 for costs associated with this transaction. Also,
2002 results include a non-recurring gain of $169,000 resulting from the sale of
air rights.

      Interest and debt expense was $13,691,000 in 2003, compared to $22,888,000
in 2002, a decrease of $9,197,000. This decrease primarily resulted from (i)
higher capitalized interest in 2003 for the Lexington Avenue property (interest
of $37,516,000 was capitalized in 2003, as compared to $23,788,000 in 2002) and
(ii) a decrease in average interest rates from 8.23% to 7.47%, partially offset
by (iii) an increase in average debt of $94,991,000.

RELATIONSHIP WITH VORNADO REALTY TRUST

      The Company is managed, and its properties are leased and developed, by
Vornado pursuant to agreements with one-year terms, expiring in March of each
year, which are automatically renewable except for the 731 Lexington Avenue
property which provides for a term lasting until substantial completion of the
development of the property.

Management Agreements

      The annual fee payable to Vornado for management of the Company is equal
to the sum of (i) $3,000,000 and, (ii) 3% of gross income from the Kings Plaza
Regional Shopping Center, and (iii) 6% of development costs with minimum
guaranteed fees of $750,000 per annum.

Leasing Agreements

      Vornado also provides all leasing services for the Company for a fee of 3%
of rent for the first ten years of a lease term, 2% of rent for the eleventh
through the twentieth year of a lease term, and 1% of rent for the twenty-first
through thirtieth year of a lease term, subject to the payment of rents by
tenants. In the event of the sale of an asset, the fee is 3% of the gross
proceeds, as defined. Such amounts are payable annually in an amount not to
exceed $2,500,000, until the present value of such installments, calculated at a
discount rate of 9% per annum, equals the amount that would have been paid had
they been paid at the time the transactions which gave rise to the commissions
occurred. Pursuant to the leasing agreement, in the event third party real
estate brokers are used, the fees to Vornado increase by 1% and Vornado is
responsible for the fees to the third party real estate brokers, except in
connection with the Bloomberg L.P. lease, where the tenant paid the third party
broker directly.

731 Lexington Avenue Fees

      Pursuant to management agreements discussed above, Vornado is entitled to
a development fee for the construction of the Company's 731 Lexington Avenue
project, estimated to be $26,300,000 payable on the earlier of January 3, 2006
or the date of payment in full of the construction loan encumbering the
property. Further, Vornado has agreed to guarantee to the construction lender,
the lien free, timely completion of the construction of the 731 Lexington Avenue
project and funding of project costs in excess of a stated budget, if not funded
by the Company (the "Completion Guarantee"). The fee payable by the Company to
Vornado for the Completion Guarantee is 1% of

                                      -24-
<PAGE>

construction costs, as defined. This fee is estimated to be $6,300,000 and is
due at the same time that the development fee is due. In addition, if Vornado
should advance any funds under the Completion Guarantee in excess of
$21,000,000, which was the amount available at December 31, 2004 under the line
of credit with Vornado (see "Debt and Contractual Obligations"), interest on
those advances would be at 15% per annum.

      On May 27, 2004, Alexander's entered into an agreement with Vornado under
which it provides property management services at 731 Lexington Avenue for an
annual fee of $0.50 per square foot of the tenant-occupied office and retail
space. Further, the Company entered into an agreement with Building Maintenance
Services ("BMS"), a wholly-owned subsidiary of Vornado, to supervise the
cleaning, engineering and security at the 731 Lexington Avenue property for an
annual fee of 6% of costs for such services. In addition, in October 2004, the
Company entered into an agreement with BMS to provide the same services at the
Kings Plaza Regional Shopping Center. These agreements were negotiated and
approved on behalf of the Company by a committee of directors of the Company
unaffiliated with Vornado.

      At December 31, 2004, the Company owed Vornado (i) $18,635,000 for
development fees, (ii) $23,748,000 for leasing fees, (iii) $4,894,000 for the
guarantee fee, (iv) $537,000 for interest, and (v) $1,411,000 for management
fees and property management and cleaning fees.

      The following table shows the amounts incurred under the management,
leasing and development agreements.

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                         -------------------------------------------
(amounts in thousands)                                     2004              2003            2002
                                                         ---------         ---------       ---------
<S>                                                      <C>               <C>             <C>
Company management fees...........................       $   3,000         $   3,000       $   3,000
Development fee, guarantee fee and rent for
  development office..............................           5,955            10,292          10,769
Leasing fees......................................          12,156            17,919           3,056
Property management fees and payments for
  cleaning, engineering and security services.....           2,481               887             602
                                                         ---------         ---------       ---------
                                                         $  23,592         $  32,098       $  17,427
                                                         =========         =========       =========
</TABLE>

      At December 31, 2004, in addition to the fees and costs described above,
the Company was indebted to Vornado in the amount of $124,000,000 (see " - Debt
and Contractual Obligations").

      In July 2002, Alexander's Tower LLC, a wholly owned subsidiary of the
Company, purchased 28,821 square feet of air rights from a joint venture
developing a property at Lexington Avenue and 30th Street in Manhattan, and
owned by Vornado and an unrelated third party (the "30th Street Venture") for a
purchase price of $3,459,000 ($120 per square foot). The Company purchased these
air rights in order to increase the amount of square footage that it could
develop for the residential portion of its Lexington Avenue project to the
maximum amount permitted for residential use by the New York City zoning code.
The 30th Street Venture also identified third party buyers for an additional
28,111 square feet of air rights which it owned. These third party buyers
desired to use the air rights for the development of two projects located in
upper Manhattan in the general area of 86th Street. However, the air rights held
by the 30th Street Venture could not be transferred to the applicable sites
because they were not within the required geographical limited radius nor were
they in the same Community Board District as the 30th Street Venture. The 30th
Street Venture asked the Company to sell 28,111 square feet of its existing air
rights to these third party buyers, who could use them; the 30th Street Venture
would replace them with 28,111 square feet of the 30th Street Venture's air
rights. In October 2002, the Company purchased 28,111 square feet of air rights
from the 30th Street Venture in two transactions for an aggregate purchase price
of $3,058,000 (an average of $109 per square foot). The Company then sold an
equal amount of air rights it previously owned at the Lexington Avenue project
to the third party buyers for a sales price of $3,339,000, resulting in a gain
of $169,000. This gain is included in "Interest and other income, net" in the
Company's 2002 consolidated statement of operations.

LIQUIDITY AND CAPITAL RESOURCES

      The Company anticipates that cash from operations over the next twelve
months, together with existing cash balances, will be adequate to fund its
business operations, recurring capital expenditures, and debt amortization.
Capital requirements for the completion of the 731 Lexington Avenue project
(currently estimated to be $150,000,000) may be funded from either existing
cash, proceeds from the sale of condominium units, additional borrowings and/or
the Company's construction loan.

                                      -25-
<PAGE>

Development Projects

      731 LEXINGTON AVENUE

      As of December 31, 2004, the Company has received deposits of $64,060,000
on sales of the condominium units in the building. On January 24, 2005, the
condominium offering plan was declared effective by the State of New York at
which time 83 units were under sales contract. The Company expects to close on
these sales during 2005. Net proceeds after income taxes from these sales will
be approximately $310,000,000 (including the deposits received).

      KINGS PLAZA

      The Company plans to construct a two-story freestanding building adjacent
to the Mall of approximately 200,000 square feet. The first story of
approximately 120,000 square feet will be operated as a Lowe's Home Improvement
Warehouse ("Lowe's"). The Lowe's lease is expected to commence in 2006. The cost
of the project will be approximately $21 million, net of the Lowe's
reimbursement and before reimbursement, if any, from the second story tenant(s).
There can be no assurance that this project will be completed, completed on time
or completed for the budgeted amount.

Insurance

      The Company carries comprehensive liability and all-risk property
insurance (fire, flood, extended coverage and rental loss insurance) with
respect to its assets but is at risk for financial loss in excess of the
policies' limits. Such a loss could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.

      The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), contain
customary covenants requiring the Company to maintain insurance. There can be no
assurance that the lenders under these instruments will not take the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks and the Company is unable to obtain
coverage if the Terrorism Risk Insurance Act of 2002 is not extended, it may
adversely affect the Company's ability to finance and/or refinance its
properties and businesses.

      Debt and Contractual Obligations

      Below is a summary of the Company's properties and their encumbrances at
December 31, 2004:

<TABLE>
<CAPTION>
                                                                     INTEREST
(amounts in thousands except interest rates)       BALANCE             RATE            MATURITY
                                                ---------------      --------          ---------
<S>                                             <C>                  <C>               <C>
Lexington Avenue Office ...............         $       400,000         5.33%          Feb. 2014
Lexington Avenue Construction..........                  65,168         4.92%          Jan. 2006
Kings Plaza............................                 213,699         7.46%          June 2011
Rego Park I............................                  81,661         7.25%          June 2009
Paramus................................                  68,000         5.92%          Oct. 2011
Rego Park II (raw land)................                      --          N/A              N/A
Flushing (leasehold interest)..........                      --          N/A              N/A
Loans with Vornado(1)..................                 124,000         9.00%          Jan. 2006
                                                ---------------
                                                $       952,528
                                                ===============
</TABLE>

------------------------
(1) At December 31, 2004, the Company was indebted to Vornado in the amount of
$124,000, comprised of (i) a $95,000 note and (ii) $29,000 under a $50,000 line
of credit (which carries a 1% unused commitment fee). The current interest rate
on the loan and line of credit is 9.00% and resets quarterly using a 6.00%
spread to one-year treasury with a 3% floor for treasuries. On July 3, 2002, in
conjunction with the original closing of the Construction Loan, the maturity of
the Vornado debt was extended to the earlier of January 3, 2006 or the date the
Construction Loan is finally repaid. This loan bears interest at a variable
rate. The rate shown is as of December 31, 2004.

                                      -26-
<PAGE>

Below is a summary of the Company's contractual obligations at December 31,
2004.

<TABLE>
<CAPTION>
                                                             Less than       One to        Three to      More than
           (amounts in thousands)                Total        One Year     Two Years      Five Years    Five Years
                                              ----------     ---------     ---------      ----------    ----------
<S>                                           <C>            <C>           <C>            <C>           <C>
Contractual obligations
  Long-term debt obligations.............     $1,428,641     $ 240,798     $ 108,867       $ 195,732    $  883,244
  Operating lease obligations............          5,679           416           731             638         3,894
  Purchase obligations, primarily
     construction commitments............         23,500        23,500(1)         --              --            --
  Other obligations......................        174,455       124,207(2)     34,000(3)        5,000        11,248
                                              ----------     ---------     ---------       ---------    ----------
                                              $1,632,275     $ 388,921     $ 143,598       $ 201,370    $  898,386
                                              ==========     =========     =========       =========    ==========

Commitments
  Standby letters of credit............       $    4,130     $   4,130     $      --       $      --    $       --
                                              ==========     =========     =========       =========    ==========
</TABLE>

--------------------------
(1) The construction budget for the Lexington Avenue project is $630,000 (which
excludes $29,000 of development and guarantee fees to Vornado) of which $489,400
has been expended through December 31, 2004 and an additional $23,500 has been
committed to at December 31, 2004.

(2) This amount includes $121,706 for SARs expense based on the Company closing
stock price of $215.00 at December 31, 2004.

(3) This amount primarily represents the estimated development and guarantee
fees due to Vornado for the Lexington Avenue project. These fees are to be paid
upon the earlier of January 3, 2006 or the payment in full of the Construction
Loan encumbering the property.

Stock Appreciation Rights

      As of December 31, 2004, 850,000 SARs were outstanding and exercisable at
a weighted-average exercise price of $71.82. The agreements for these SARs
require that they be settled in cash. Had the holders of these SARs chosen to
exercise their rights as of December 31, 2004, the Company would have had to pay
$121,706,000 in cash. Further appreciation in the Alexander's, Inc. stock price
from the closing stock price of $215.00 at December 31, 2004 will increase the
cash the Company would have to pay upon exercise and may impact liquidity by
requiring the Company to secure additional borrowings to replace such a cash
outflow.

CASH FLOWS

Year Ended December 31, 2004

      Net cash provided by operating activities of $27,853,000 was comprised of
(i) the net change in operating assets and liabilities of $86,643,000, partially
offset by (ii) a net loss of $33,469,000 and (iii) non-cash items of
$25,321,000. The adjustments for non-cash items were comprised of (a) the effect
of straight-lining of rental income of $43,327,000, (b) the gain on sale of real
estate of $3,862,000, partially offset by (c) $18,818,000 of depreciation and
amortization and (d) $3,050,000 resulting from the write-off of unamortized
deferred debt expense.

      Net cash used in investing activities of $138,942,000 was comprised of (i)
capital expenditures of $146,232,000, partially offset by (ii) net cash
restricted for operating liabilities of $2,996,000 and (iii) proceeds from the
sale of real estate of $4,294,000. The capital expenditures were primarily
related to the 731 Lexington Avenue project.

      Net cash provided by financing activities of $218,627,000 resulted
primarily from (i) borrowings collateralized by 731 Lexington Avenue of
$477,798,000, partially offset by (ii) debt repayments of $256,755,000 and (iii)
debt issuance costs of $3,330,000.

Year Ended December 31, 2003

      Net cash provided by operating activities of $7,023,000 was comprised of
(i) non-cash items of $4,568,000 and (ii) the net change in operating assets and
liabilities of $20,197,000, partially offset by (iii) a net loss of $17,742,000.
The adjustments for non-cash items include depreciation and amortization of
$11,310,000, partially offset by the effect of straight-lining of rental income
of $6,742,000.

      Net cash used in investing activities of $218,604,000 was largely
comprised of capital expenditures of $215,158,000. The capital expenditures are
primarily related to the Lexington Avenue development project.

      Net cash provided by financing activities of $187,678,000 resulted from
borrowings of $190,399,000, mainly to fund expenditures for the Lexington Avenue
development project, offset by debt repayments of $2,721,000.

                                      -27-
<PAGE>

Year Ended December 31, 2002

      Net cash provided by operating activities of $7,643,000 was comprised of
(i) net income of $23,584,000, partially offset by (ii) non-cash items of
$4,600,000 and (iii) the net change in operating assets and liabilities of
$11,341,000. The adjustments for non-cash items include (a) the gain on the sale
of the Third Avenue property of $10,366,000, (b) the effect of straight-lining
of rental income of $3,099,000 and (c) the gain on the sale of air rights of
$169,000, partially offset by depreciation and amortization of $9,034,000.

      Net cash used in investing activities of $114,028,000 (includes cash
provided by discontinued operations of $13,176,000) was largely comprised of
capital expenditures of $133,250,000, partially offset by the proceeds from the
sale of the Third Avenue property of $13,176,000. The capital expenditures were
primarily related to the Lexington Avenue development project.

      Net cash provided by financing activities of $16,366,000 resulted mainly
from debt proceeds of $55,500,000, partially offset by debt repayments of
$27,524,000 and debt issuance costs of $11,110,000.

FUNDS FROM OPERATIONS ("FFO") FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

      FFO was a negative $18,014,000, or $3.60 per share in the year ended
December 31, 2004, compared to a negative $10,245,000, or $2.05 per share in the
year ended December 31, 2003. FFO for the year ended December 31, 2004 includes
(i) accrued compensation expense for SARs of $76,789,000, based on the Company's
closing stock price of $215.00 at December 31, 2004, (ii) $3,862,000 resulting
from the gain on the sale of non-depreciable real estate in White Plains, New
York and (iii) $3,050,000 resulting from the write-off of unamortized deferred
debt expense in connection with the reduction of the principal amount of the
Construction Loan for the 731 Lexington Avenue project. FFO for the year ended
December 31, 2003 includes (i) accrued compensation expense for SARs of
$44,917,000, based on the Company's closing stock price of $124.66 at December
31, 2003, (ii) $1,289,000 resulting from the recognition as income of the
non-refundable deposit from the planned sale of the Flushing property of
$1,875,000, net of $586,000 for costs associated with this transaction and (iii)
income from discontinued operations of $1,206,000 representing the reversal of
previously accrued contingent liabilities.

      The following table reconciles Net loss to FFO.

<TABLE>
<CAPTION>
                                                                        FOR THE YEAR
      (amounts in thousands except per share amounts)                ENDED DECEMBER 31,
                                                               ------------------------------
                                                                   2004               2003
                                                               -----------        -----------
<S>                                                            <C>                <C>
Net loss.................................................      $   (33,469)       $   (17,742)
Depreciation of real property............................           15,455              7,497
                                                               -----------        -----------
FFO......................................................      $   (18,014)       $   (10,245)
                                                               ===========        ===========

FFO per common share - basic and diluted.................      $     (3.60)       $     (2.05)
                                                               ===========        ===========
</TABLE>

      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 in the United States of America
("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 is used by management, investors and industry analysts as a
supplemental measure of operating performance of equity REITs. FFO should be
evaluated along with GAAP net earnings and net earnings 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 is helpful
to investors as a supplemental performance measure because this measure excludes
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 have instead 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 the Company's Statements of Cash Flows. FFO should
not be considered as an alternative to net loss as an indicator of the Company's
operating performance or as an alternative to cash flows as a measure of
liquidity.

                                      -28-
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The following table summarizes the Company's exposure to a change in
interest rates.

                (amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                   EFFECT OF
                             AT DECEMBER     WEIGHTED-AVERAGE      CHANGE IN
                               31, 2004       INTEREST RATE     BASE RATES OF 1%
                             -----------     ----------------   ----------------
<S>                          <C>             <C>                <C>
Variable rate.............   $   189,168           7.59%          $     1,892
Fixed rate................       763,360           6.18%                   --
                             -----------                          -----------
                             $   952,528                          $     1,892
                             ===========                          ===========

Total effect on the
Company's annual
net earnings per share -
diluted...................                                        $      0.38
                                                                  ===========
</TABLE>

      The fair value of the Company's debt, estimated by discounting the future
cash flows using the current rates available to borrowers with similar credit
ratings for the remaining terms of such debt, exceeds the aggregate carrying
amount by approximately $1,095,000 at December 31, 2004. Such fair value
estimates are not necessarily indicative of the amounts that would be paid upon
liquidation of the Company's debt.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                     Number
                                                                                     ------
<S>                                                                                  <C>
Report of Independent Registered Public Accounting Firm.........................       30

Consolidated Balance Sheets at December 31, 2004 and 2003.......................       31

Consolidated Statements of Operations for the
  Years Ended December 31, 2004, 2003 and 2002..................................       32

Consolidated Statements of Stockholders' Equity for the
  Years Ended December 31, 2004, 2003 and 2002..................................       33

Consolidated Statements of Cash Flows for the
  Years Ended December 31, 2004, 2003 and 2002..................................       34

Notes to Consolidated Financial Statements......................................       35
</TABLE>

                                      -29-
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Alexander's, Inc.
Paramus, New Jersey

We have audited the accompanying consolidated balance sheets of Alexander's,
Inc. (the "Company") as of December 31, 2004 and 2003, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2004. Our audits also
included the financial statement schedules included in the index at item
15(a)(2). These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Alexander's, Inc. at December 31,
2004 and 2003, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2004, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of December 31, 2004, based on the
criteria established in Internal Control -- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated February 23, 2005 expressed an unqualified opinion on management's
assessment of the effectiveness of the Company's internal control over financial
reporting and an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.

DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 24, 2005

                                      -30-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
            (amounts in thousands except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                         ------------------------
                                                                                             2004        2003
                                                                                         -----------  -----------
<S>                                                                                      <C>          <C>
ASSETS
Real estate, at cost:
   Land................................................................................  $    91,677  $    91,496
   Buildings, leaseholds and leasehold improvements....................................      466,593      371,353
   Construction in progress............................................................      379,306      346,166
   Air rights for 731 Lexington Avenue.................................................       17,531       17,531
                                                                                         -----------  -----------
     Total.............................................................................      955,107      826,546
   Accumulated depreciation and amortization...........................................      (74,028)     (62,744)
                                                                                         -----------  -----------
Real estate, net.......................................................................      881,079      763,802
Asset held for sale....................................................................           --          432
Cash and cash equivalents..............................................................      128,874       21,336
Deposits on the sale of condominiums units and restricted cash.........................       66,930       16,291
Accounts receivable, net of allowance for doubtful accounts of $379 and $55............        4,872        3,101
Receivable arising from the straight-lining of rents...................................       70,739       27,412
Deferred lease and other property costs (including unamortized leasing fees to Vornado
   of $38,819 and $31,021), net........................................................       68,148       61,594
Deferred debt expense, net.............................................................       15,027       10,806
Other assets...........................................................................        9,132       16,222
                                                                                         -----------  -----------
TOTAL ASSETS                                                                             $ 1,244,801  $   920,996
                                                                                         ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt (including $124,000 due to Vornado in 2004 and 2003)..............................  $   952,528  $   731,485
Amounts due to Vornado.................................................................       49,225       34,427
Accounts payable and accrued expenses..................................................       37,706       47,402
Liability for stock appreciation rights................................................      121,706       44,917
Other liabilities......................................................................       65,268       11,842
                                                                                         -----------  -----------
TOTAL LIABILITIES                                                                          1,226,433      870,073
                                                                                         -----------  -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock: $1.00 par value per share; authorized, 3,000,000 shares; issued, none.           --           --
Common stock:  $1.00 par value per share; authorized, 10,000,000 shares; issued,
    5,173,450 shares...................................................................        5,174        5,174
Additional capital.....................................................................       25,685       24,843
(Accumulated deficit) retained earnings................................................      (11,603)      21,866
                                                                                         -----------  -----------
                                                                                              19,256       51,883
Treasury shares: 159,600 and 172,600 shares at cost....................................         (888)        (960)
                                                                                         -----------  -----------
Total stockholders' equity.............................................................       18,368       50,923
                                                                                         -----------  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $ 1,244,801  $   920,996
                                                                                         ===========  ===========
</TABLE>

                 See notes to consolidated financial statements.

                                      -31-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,
                                                                               ------------------------------
                                                                                 2004       2003       2002
                                                                               --------   --------   --------
<S>                                                                            <C>        <C>        <C>
REVENUES
  Property rentals.........................................................    $110,541    $56,785    $50,630
  Expense reimbursements...................................................      38,354     30,377     26,170
                                                                               --------   --------   --------
Total revenues.............................................................     148,895     87,162     76,800
                                                                               --------   --------   --------

EXPENSES

  Operating (including fees to Vornado of $1,937, $1,475 and $1,442).......      47,615     37,984     33,042
  General and administrative (including fees to Vornado of $2,160 in each
    year)..................................................................      81,285     48,921      3,980
  Depreciation and amortization............................................      15,527      7,497      6,668
                                                                               --------   --------   --------
Total expenses.............................................................     144,427     94,402     43,690
                                                                               --------   --------   --------

OPERATING INCOME (LOSS)....................................................       4,468     (7,240)    33,110

Interest and other income, net.............................................       1,571      1,983      2,178
Interest and debt expense (including interest on loans from Vornado).......     (40,320)   (13,691)   (22,888)
Write-off of unamortized deferred debt expense.............................      (3,050)        --         --
                                                                               --------   --------   --------

(Loss) income from continuing operations...................................     (37,331)   (18,948)    12,400

Gain on sale of real estate................................................       3,862         --         --
                                                                               --------   --------   --------
(Loss) income before discontinued operations...............................     (33,469)   (18,948)    12,400

Income from discontinued operations........................................          --      1,206     11,184
                                                                               --------   --------   --------

NET (LOSS) INCOME..........................................................    $(33,469)  $(17,742)  $ 23,584
                                                                               ========   ========   ========

Net (loss) income per common share (basic and diluted):
  (Loss) income from continuing operations.................................    $  (7.45)  $  (3.79)  $   2.48
  Gain on sale of real estate..............................................        0.77         --         --
  Income from discontinued operations......................................          --       0.24       2.24
                                                                               --------   --------   --------
  Net (loss) income........................................................    $  (6.68)  $  (3.55)  $   4.72
                                                                               ========   ========   ========
</TABLE>

                 See notes to consolidated financial statements.

                                      -32-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                    RETAINED
                                                                    EARNINGS                     TOTAL
                                                      ADDITIONAL  (ACCUMULATED   TREASURY    STOCKHOLDERS'
                                        COMMON STOCK    CAPITAL     DEFICIT)      SHARES         EQUITY
                                        ------------  ----------  ------------  ---------    -------------
<S>                                     <C>           <C>         <C>           <C>          <C>
Balance, January 1, 2002.............    $    5,174   $   24,843  $   16,024    $     (960)    $   45,081

Net income...........................            --           --      23,584            --         23,584
                                         ----------   ----------  ----------    ----------     ----------
Balance, December 31, 2002...........         5,174       24,843      39,608          (960)        68,665

Net loss                                         --           --     (17,742)           --        (17,742)
                                         ----------   ----------  ----------    ----------     ----------
Balance, December 31, 2003...........         5,174       24,843      21,866          (960)        50,923

Net loss.............................            --           --     (33,469)           --        (33,469)
Common shares issued under
   share option plan.................            --          842          --            72            914
                                         ----------   ----------  ----------    ----------     ----------
Balance, December 31, 2004...........    $    5,174   $   25,685  $  (11,603)   $     (888)    $   18,368
                                         ==========   ==========  ==========    ==========     ==========
</TABLE>


                 See notes to consolidated financial statements


                                      -33-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                           ------------------------------------
                                                                              2004         2003        2002
                                                                           ----------   ----------   ----------
<S>                                                                        <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) income from continuing operations: ..............................   $ (33,469)   $ (18,948)   $  12,400
Adjustments to reconcile (loss) income from continuing operations to net
     cash provided by continuing operations:
     Write-off of unamortized deferred debt expense ....................       3,050           --           --
     Gain on sale of real estate .......................................      (3,862)          --           --
     Depreciation and amortization (including debt issuance costs) .....      18,818       11,310        8,999
     Straight-lining of rental income ..................................     (43,327)      (6,742)      (3,099)
     Gain on sale of air rights ........................................          --           --         (169)
Change in operating assets and liabilities:
     Accounts receivable, net ..........................................      (1,771)        (593)        (974)
     Amounts due to Vornado ............................................       9,977       14,012       (3,115)
     Accounts payable and accrued expenses .............................       5,564         (379)      (2,845)
     Liability for stock appreciation rights ...........................      76,789       44,917           --
     Other liabilities .................................................        (210)     (33,725)        (789)
     Other .............................................................      (3,706)      (2,829)      (3,618)
                                                                           ---------    ---------    ---------
Net cash provided by continuing operations .............................      27,853        7,023        6,790
                                                                           ---------    ---------    ---------

Income from discontinued operations ....................................          --        1,206       11,184
     Depreciation and amortization .....................................          --           --           35
     Change in other liabilities .......................................          --       (1,206)          --
     Gain on sale of Third Avenue property .............................          --           --      (10,366)
                                                                           ---------    ---------    ---------
Net cash provided by discontinued operations ...........................          --           --          853
                                                                           ---------    ---------    ---------
Net cash provided by operating activities ..............................      27,853        7,023        7,643
                                                                           ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from continuing operations:
     Additions to real estate ..........................................    (146,232)    (215,158)    (133,250)
     Cash restricted for operating liabilities .........................       2,996       (3,446)       4,171
     Net proceeds from sale of real estate .............................       4,294           --           --
     Deposit on sale of Flushing property ..............................          --           --        1,875
                                                                           ---------    ---------    ---------
Net cash used in continuing operations .................................    (138,942)    (218,604)    (127,204)
Cash flows from discontinued operations:
     Net proceeds from sale of Third Avenue property ...................          --           --       13,176
                                                                           ---------    ---------    ---------
Net cash used in investing activities ..................................    (138,942)    (218,604)    (114,028)
                                                                           ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings (including $5,000 from
       Vornado in 2003) ................................................     477,798      190,399       55,500
     Repayments of borrowings ..........................................    (256,755)      (2,721)     (27,524)
     Deferred debt expense .............................................      (3,330)          --      (11,110)
     Exercise of share options .........................................         914           --           --
     Payment of acquisition obligation .................................          --           --         (500)
                                                                           ---------    ---------    ---------
Net cash provided by financing activities ..............................     218,627      187,678       16,366
                                                                           ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents ...................     107,538      (23,903)     (90,019)
Cash and cash equivalents at beginning of year .........................      21,336       45,239      135,258
                                                                           ---------    ---------    ---------
Cash and cash equivalents at end of year ...............................   $ 128,874    $  21,336    $  45,239
                                                                           =========    =========    =========

SUPPLEMENTAL INFORMATION
Cash payments for interest (of which $25,087, $37,516 and $23,788 have
    been capitalized) ..................................................   $  60,968    $  46,861    $  45,818
                                                                           =========    =========    =========
</TABLE>

             See notes to consolidated financial statements.

                                      -34-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    ORGANIZATION AND BUSINESS

      Alexander's, Inc. (the "Company") is a real estate investment trust
("REIT"), incorporated in Delaware, engaged in leasing, managing, developing and
redeveloping properties. Alexander's activities are conducted through its
manager, Vornado Realty Trust ("Vornado").

      Alexander's has six properties in the greater New York City metropolitan
area consisting of:

Operating properties

      (i)   the 731 Lexington Avenue property, a 1,300,000 square foot multi-use
            building which comprises the entire square block bounded by
            Lexington Avenue, East 59th Street, Third Avenue and East 58th
            Street in Manhattan, New York;

      (ii)  the Kings Plaza Regional Shopping Center, located on Flatbush Avenue
            in Brooklyn, New York, which contains 1,098,000 square feet and is
            comprised of a two-level mall containing 470,000 square feet, a
            289,000 square foot department store leased to Sears and another
            anchor department store owned and operated as a Macy's by Federated
            Department Stores, Inc.;

      (iii) the Rego Park I property, located on Queens Boulevard and 63rd Road
            in Queens, New York, which contains a 351,000 square foot building
            that is 100% leased to Sears, Circuit City, Bed Bath & Beyond,
            Marshalls and Old Navy;

      (iv)  the Paramus property, which consists of 30.3 acres of land located
            at the intersection of Routes 4 and 17 in Paramus, New Jersey, which
            is leased to IKEA Property, Inc;

      (v)   the Flushing property, located at Roosevelt Avenue and Main Street
            in Queens, New York, which contains a 177,000 square foot building
            that is currently vacant; and

Property to be developed

      (vi)  the Rego Park II property, which comprises one and one-half square
            blocks of vacant land adjacent to the Rego Park I property.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation - The accompanying consolidated financial statements
include the accounts of the Company and all of its wholly owned subsidiaries.
All significant intercompany amounts have been eliminated. The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management 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.

      The Company defines each of its properties as an individual operating
segment. It has determined that all properties have similar economic
characteristics and meet the other criteria which permit the properties to be
aggregated into one reportable segment (the leasing, management, development and
redeveloping of properties in the greater New York City metropolitan area). The
Company's chief operating decision-maker assess and measure segment operating
results based on a performance measure referred to as net operating income at
the individual operating segment. Net operating income for each property
represents its net rental revenues less its real estate operating expenses.

      Real Estate - Real estate is carried at cost, net of accumulated
depreciation and amortization. Depreciation is provided on a straight-line basis
over the assets' estimated useful lives, which range from seven to 50 years.
Betterments, significant renewals and certain costs directly related to the
acquisition, improvement and leasing of real estate are capitalized. Maintenance
and repairs are charged to operations as incurred. As real estate is undergoing

                                      -35-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

development activities, all property operating expenses, including interest
expense, are capitalized to the cost of the real property to the extent that
management believes such costs are recoverable through the value of the
property.

      The Company's properties are reviewed for impairment if events or
circumstances change indicating that the carrying amount of the property may not
be recoverable. In such an event, a comparison is made of the current and
projected operating cash flows of each such property into the foreseeable future
on an undiscounted basis to the carrying amount of the property. The carrying
amount of an asset would be adjusted, if necessary, to reflect an impairment in
the value of the asset.

      Cash and Cash Equivalents - Cash and cash equivalents consist of highly
liquid investments purchased with original maturities of three months or less.
Cash and cash equivalents do not include deposits received on sales of
condominium units at the Lexington Avenue property or cash restricted under
financing arrangements. Such cash is reflected on the consolidated balance
sheets as "Deposits on the sale of condominium units and restricted cash."

      Allowance for Doubtful Accounts - The Company periodically evaluates the
collectibility of amounts due from tenants and maintains an allowance for
doubtful accounts for estimated losses resulting from the inability of tenants
to make required payments under the lease agreements. The Company also maintains
an allowance for receivables arising from the straight-lining of rents. This
receivable arises from earnings recognized in excess of amounts currently due
under the lease agreements. Management exercises judgment in establishing these
allowances and considers payment history and current credit status in developing
these estimates.

      Deferred Charges - Direct financing costs are deferred and amortized over
the terms of the related agreements as a component of interest and debt expense.
Direct costs related to leasing activities are capitalized and amortized on a
straight-line basis over the lives of the related leases. All other deferred
charges are amortized on a straight-line basis, which approximates the effective
interest rate method, in accordance with the terms of the agreements to which
they relate.

      Fair Value of Financial Instruments - The fair value of the Company's
debt, estimated by discounting the future cash flows using the current rates
available to borrowers with similar credit ratings for the remaining terms of
such debt, exceeds the aggregate carrying amount by approximately $1,095,000 at
December 31, 2004. Such fair value estimates are not necessarily indicative of
the amounts that would be paid upon liquidation of the Company's debt.

      Revenue Recognition - The Company has the following revenue sources and
revenue recognition policies:

      Base rent (revenue arising from tenant leases) - These rents are
recognized over the non-cancelable term of the related leases on a straight-line
basis which includes the effects of rent steps and free rent abatements under
the leases.

      Percentage Rents (revenue arising from retail tenant leases that is
contingent upon the sales of tenants exceeding defined thresholds) - These rents
are recognized in accordance with Staff Accounting Bulletin No. 104, Revenue
Recognition, which states that this contingent revenue is only to be recognized
after the contingency has been removed (i.e., the sales threshold has been
achieved).

      Expense Reimbursements (revenue arising from tenant leases which provide
for the recovery of all or a portion of the operating expenses and real estate
taxes of the respective properties) - This revenue is accrued in the same
periods as the expenses are incurred.

      Condominium Sales (income arising from the sales of condominium units at
the Lexington Avenue property) - Income on deposits received for sales of
condominium units has been deferred in accordance with the deposit method of
Statement of Financial Accounting Standards ("SFAS") No. 66, Accounting for
Sales of Real Estate.

      Income Taxes - The Company operates in a manner intended to enable it to
continue to qualify as a REIT under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"). Under the Code, the Company's net
operating loss carryovers ("NOLs") generally would be available to offset the
amount of the Company's REIT taxable income that would otherwise be required to
be distributed as dividends to its stockholders.

                                      -36-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      At December 31, 2004 the Company has reported NOLs for federal tax
purposes of approximately $49,211,000, expiring from 2007 to 2020. The Company
also has investment and targeted jobs tax credits of approximately $2,755,000
expiring from 2008 to 2014.

      The following table reconciles net (loss) income to REIT taxable income
for the years ended December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                                 ---------------------------------
                       (amounts in thousands)                      2004        2003        2002
                                                                 --------    ---------   ---------

<S>                                                              <C>         <C>         <C>
Net (loss) income .............................................  $(33,469)   $(17,742)   $  23,584
Straight-line rent adjustments ................................   (43,327)     (6,668)      (2,953)
Depreciation and amortization timing differences ..............     1,480       2,859        2,985
Interest expense ..............................................    (2,733)     (2,837)      (2,972)
Stock appreciation rights compensation expense ................    76,789      44,917           --
Interest income ...............................................    17,684      10,439           --
Differences on gain of sale of assets .........................        --          --        1,345
Other .........................................................    (1,117)     (1,422)         988
                                                                 --------    --------    ---------
Taxable income ................................................    15,307      29,546       22,977
NOL carry forward beginning balance ...........................   (64,518)    (94,064)    (117,041)
                                                                 --------    --------    ---------
NOL carry forward ending balance ..............................  $(49,211)   $(64,518)   $ (94,064)
                                                                 ========    ========    =========
</TABLE>

      The net basis of the Company's assets and liabilities for tax purposes is
approximately $13,000,000 higher than the amount reported for financial
statement purposes.

      The Company has elected to treat its wholly owned subsidiary, 731
Residential LLC ("Residential"), as a taxable REIT subsidiary ("TRS"). A TRS is
subject to income tax at regular corporate tax rates. The Company's NOLs will
not be available to offset taxable income of Residential. Residential owns the
assets comprising the residential condominium units at the Company's 731
Lexington Avenue Property. Residential paid no income taxes in the years ended
December 31, 2004, 2003 and 2002. TRS deferred income taxes, where applicable,
are accounted for in accordance with SFAS 109 "Accounting For Income Taxes"
using the asset and liability method. Under this method, deferred income taxes
are recognized for temporary differences between the financial reporting bases
of assets and liabilities and their respective tax bases and for operating loss
and tax credit carry forwards based on enacted tax rates expected to be in
effect when such amounts are realized or settled. However, deferred tax assets
are recognized only to the extent that it is more likely than not that they will
be realized based on consideration of available evidence, including tax planning
strategies and other factors. Residential's net basis in its assets and
liabilities for tax purposes is approximately $52,000,000 higher than the amount
for financial reporting purposes. In addition, the TRS has incurred certain
costs for which it has not recognized an income tax benefit for financial
reporting purposes. This benefit will be recorded at such time that the
uncertainties with respect to the realization have been resolved.

      Amounts Per Share - Basic earnings per share are computed based on
weighted average shares outstanding. Diluted earnings per share consider the
effect of outstanding stock options.

      Stock Options - The Company accounts for stock-based compensation using
the intrinsic value method. Under the intrinsic value method, compensation cost
is measured as the excess, if any, of the quoted market price of the Company's
common stock at the date of grant over the exercise price of the option granted.
Compensation cost for stock options, if any, is recognized ratably over the
vesting period. The Company's policy is to grant options with an exercise price
equal to the quoted market price of the Company's common stock on the grant
date. Accordingly, no compensation expense has been recognized for the Company's
stock options.

                                      -37-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      If compensation cost for stock option awards had been determined based on
the fair values at the grant dates, net (loss) income and net (loss) income per
share would have been the pro forma amounts shown below in the years ended
December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                             ----------------------------------------------
          (amounts in thousands except                           2004             2003            2002
               per share amounts)                            -------------    -------------    ------------
<S>                                                          <C>              <C>              <C>
Net (loss) income:
  As reported..............................................  $     (33,469)   $     (17,742)   $     23,584
  Less: stock - based compensation expense determined
  underfair value method...................................             --               --             384
                                                             -------------    -------------    ------------
  Pro forma................................................  $     (33,469)   $     (17,742)   $     23,200
                                                             =============    =============    ============
Net (loss) income per common share (basic and diluted):
  As reported..............................................  $       (6.68)   $       (3.55)   $       4.72
  Pro forma................................................  $       (6.68)   $       (3.55)   $       4.64
</TABLE>

      On December 16, 2004, the FASB issued SFAS No. 123: (Revised 2004) -
Share-Based Payment ("SFAS No. 123R"). SFAS 123R replaces SFAS No. 123, using
the prospective method, and supersedes APB Opinion No. 25: Accounting for Stock
Issued to Employees. SFAS No. 123R requires that the compensation cost relating
to share-based payment transactions be recognized in financial statements and be
measured based on the fair value of the equity or liability instruments issued.
SFAS No. 123R is effective as of the first interim or annual reporting period
that begins after June 15, 2005. The Company does not believe that the adoption
of SFAS No. 123R will have a material effect on the Company's consolidated
financial statements.

      Stock Appreciation Rights - Stock appreciation rights ("SARs") are granted
at 100% of the market price of the Company's common stock on the date of grant.
SARs vest ratably, becoming fully vested 36 months after grant, and generate
compensation expense measured by the excess of the stock price over the exercise
price at the balance sheet date. On subsequent balance sheet dates, if the stock
price falls, the previously recognized expense is reversed, but not below zero.

      Other Recently Issued Accounting Literature - On December 16, 2004, the
FASB issued SFAS No. 153: Exchanges of Nonmonetary Assets - An Amendment of APB
Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. Further, the amendments eliminate the narrow exception
for nonmonetary exchanges of similar productive assets and replace it with a
broader exception for exchanges of nonmonetary assets that do not have
"commercial substance." SFAS No. 153 is effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. The Company
does not believe the adoption of SFAS No. 153 will have a material effect on the
Company's consolidated financial statements.

3.    RELATED PARTY TRANSACTIONS

Vornado Realty Trust

      The Company is managed, and its properties are leased and developed, by
Vornado pursuant to agreements with one-year terms, expiring in March of each
year, which are automatically renewable except for the 731 Lexington Avenue
property which provides for a term lasting until substantial completion of the
development of the property.

Management Agreements

      The annual fee payable to Vornado for management of the Company is equal
to the sum of (i) $3,000,000, (ii) 3% of gross income from the Kings Plaza
Regional Shopping Center, and (iii) 6% of development costs with minimum
guaranteed fees of $750,000 per annum.

Leasing Agreements

      Vornado also provides all leasing services for the Company for a fee of 3%
of rent for the first ten years of a lease term, 2% of rent for the eleventh
through the twentieth year of a lease term, and 1% of rent for the twenty-first
through thirtieth year of a lease term, subject to the payment of rents by
tenants. In the event of the sale of an asset, the fee is 3% of the gross
proceeds, as defined. Such amounts are payable annually in an amount not to
exceed $2,500,000, until the present value of such installments, calculated at a
discount rate of 9% per annum, equals the amount that would have been paid had
they been paid at the time the transactions which gave rise to the commissions
occurred. Pursuant

                                      -38-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to the leasing agreement, in the event third party real
estate brokers are used, the fees to Vornado increase by 1% and Vornado is
responsible for the fees to the third party real estate brokers, except in
connection with the Bloomberg L.P. lease, where the tenant paid the third party
broker directly.

731 Lexington Avenue Fees

      Pursuant to the management agreements discussed above, Vornado is entitled
to a development fee for the construction of the Company's 731 Lexington Avenue
project, estimated to be $26,300,000, payable on the earlier of January 3, 2006
or the date of payment in full of the construction loan encumbering the
property. Further, Vornado has agreed to guarantee to the construction lender,
the lien free, timely completion of the construction of the 731 Lexington Avenue
project and funding of project costs in excess of a stated budget, if not funded
by the Company (the "Completion Guarantee"). The fee payable by the Company to
Vornado for the Completion Guarantee is 1% of construction costs, as defined.
This fee is estimated to be $6,300,000 and is due at the same time that the
development fee is due. In addition, if Vornado should advance any funds under
the Completion Guarantee in excess of $21,000,000, which was the amount
available at December 31, 2004 under the line of credit with Vornado (see "Debt
and Contractual Obligations"), interest on those advances would be at 15% per
annum.

      On May 27, 2004, Alexander's entered into an agreement with Vornado under
which it provides property management services at 731 Lexington Avenue for an
annual fee of $0.50 per square foot of the tenant-occupied office and retail
space. The Company entered into an agreement with Building Maintenance Services
("BMS"), a wholly-owned subsidiary of Vornado, to supervise the cleaning,
engineering and security at the 731 Lexington Avenue property for an annual fee
of 6% of costs for such services. In addition, in October 2004, the Company
entered into an agreement with BMS to provide the same services at the Kings
Plaza Regional Shopping Center. These agreements were negotiated and approved on
behalf of the Company by a committee of directors of the Company unaffiliated
with Vornado.

      In July 2002, Alexander's Tower LLC, a wholly owned subsidiary of the
Company, purchased 28,821 square feet of air rights from a joint venture
developing a property at Lexington Avenue and 30th Street in Manhattan, and
owned by Vornado and an unrelated third party (the "30th Street Venture") for a
purchase price of $3,459,000 ($120 per square foot). The Company purchased these
air rights in order to increase the amount of square footage that it could
develop for the residential portion of its Lexington Avenue project to the
maximum amount permitted for residential use by the New York City zoning code.
The 30th Street Venture also identified third party buyers for an additional
28,111 square feet of air rights which it owned. These third party buyers
desired to use the air rights for the development of two projects located in
upper Manhattan in the general area of 86th Street. However, the air rights held
by the 30th Street Venture could not be transferred to the applicable sites
because they were not within the required geographical limited radius nor were
they in the same Community Board District as the 30th Street Venture. The 30th
Street Venture asked the Company to sell 28,111 square feet of its existing air
rights to these third party buyers, who could use them; the 30th Street Venture
would replace them with 28,111 square feet of the 30th Street Venture's air
rights. In October 2002, the Company purchased 28,111 square feet of air rights
from the 30th Street Venture in two transactions for an aggregate purchase price
of $3,058,000 (an average of $109 per square foot). The Company then sold an
equal amount of air rights it previously owned at the Lexington Avenue project
to the third party buyers for a sales price of $3,339,000, resulting in a gain
of $169,000. This gain is included in "Interest and other income, net" in the
Company's 2002 consolidated statement of operations.

      At December 31, 2004, the Company owed Vornado (i) $18,635,000 for
development fees, (ii) $23,748,000 for leasing fees, (iii) $4,894,000 for the
guarantee fee, (iv) $537,000 for interest, and (v) $1,411,000 for management
fees and property management and cleaning fees.

      The following table shows the amounts incurred under the management,
leasing and development agreements.

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                      -------------------------------
(amounts in thousands)                                   2004       2003       2002
                                                      ---------  ---------  ---------
<S>                                                   <C>        <C>        <C>
Company management fees...........................    $   3,000  $   3,000  $   3,000
Development fee, guarantee fee and rent for
  development office..............................        5,955     10,292     10,769
Leasing fees......................................       12,156     17,919      3,056
Property management fees and payments for cleaning,
  engineering and security services...............        2,481        887        602
                                                      ---------  ---------  ---------
                                                      $  23,592  $  32,098  $  17,427
                                                      =========  =========  =========
</TABLE>

                                      -39-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      In addition to the fees and costs described above, the Company was
indebted to Vornado in the amount of $124,000,000 at December 31, 2004 and 2003
and $119,000,000 at December 31, 2002 (see Note 8). The Company incurred
interest (including a 1% unused commitment fee on the line of credit) on this
debt of $12,650,000, $15,633,000 and $15,547,000 for the years ended December
31, 2004, 2003 and 2002, respectively.

Other

      In the years ended December 31, 2004, 2003 and 2002, Winston & Strawn LLP,
a law firm in which Neil Underberg, a director of the Company, is of counsel,
performed legal services for the Company for which it was paid $323,000,
$100,000 and $480,000, respectively.

4. 731 LEXINGTON AVENUE PROPERTY

      731 Lexington Avenue is a 1.3 million square foot multi-use building. The
building contains approximately 885,000 net rentable square feet of office
space, approximately 174,000 net rentable square feet of retail space and
approximately 248,000 net saleable square feet of residential space consisting
of 105 condominium units (through a taxable REIT subsidiary ("TRS")). Of the
construction budget of $630,000,000 (which excludes $29,000,000 for development
and guarantee fees to Vornado), $489,400,000 has been expended through December
31, 2004 and an additional $23,500,000 has been committed to at December 31,
2004. The remaining construction is expected to be completed by the end of 2005.

      At December 31, 2004, the Company has leased 697,000 square feet of office
space to Bloomberg L.P. and 144,000 square feet of retail space to, among
others, The Home Depot (excluding 14,800 square feet of the mezzanine also
leased to The Home Depot), Hennes & Mauritz and The Container Store. On January
25, 2005, the Company leased an additional 176,000 square feet of office space
to Citibank N.A. As a result, 100% of the property's 885,000 square feet of
office space has been leased.

      The residential space is comprised of 105 condominium units. The original
offering plan filed for these units, as amended for price increases through
December 31, 2004, would produce an aggregate sale price of approximately
$500,000,000 (reflecting the value of existing contracts and the offering price
for the remaining units). As of December 31, 2004, the Company has received
deposits of $64,060,000 on sales of the condominium units.

      On January 24, 2005, the condominium offering plan was declared effective
by the State of New York at which time 83 units were under sales contract.
Accordingly, the Company will recognize approximately $38,000,000 of income
after taxes in 2005 from these sales for the units under contract. In the first
quarter of 2005, $32,000,000 of this income will be recognized using the
percentage of completion method.

      During the year ended December 31, 2004, the Company transferred
approximately $94,800,000 from "Construction in progress" to "Land" and
"Buildings, leaseholds and leasehold improvements," representing the space
delivered to tenants and placed into service during such period.

      On February 13, 2004, the Company closed a $400,000,000 mortgage financing
on the office space. The loan bears interest at 5.33%, matures in February 2014
and beginning in the third year, provides for principal payments based on a
25-year amortization schedule such that over the remaining eight years of the
loan, ten years of amortization will be paid. Of the loan proceeds, $253,529,000
was used to repay the entire amount outstanding under the previously existing
Construction Loan.

      The Construction Loan was modified on February 13, 2004, so that the
remaining availability was $237,000,000, which was approximately the amount
estimated to complete the 731 Lexington Avenue project at the closing date (not
including the development and guarantee fees to Vornado). The interest rate on
the Construction Loan of LIBOR plus 2.5% (4.92% at December 31, 2004) and the
maturity date of January 2006, with two one-year extensions, were not changed.
The collateral for the Construction Loan is the same except that the office
space has been removed from the lien. Further, the Construction Loan permits the
release of the retail space for a payment of $15 million and requires all
proceeds from the sale of the residential condominium units to be applied to the
Construction Loan balance until it is finally repaid. In connection with
reducing the principal amount of the Construction Loan, the Company wrote-off
$3,050,000, the proportionate share of unamortized deferred financing costs, in
the first quarter of 2004 (shown in the Consolidated Statement of Operations as
"Write-off of unamortized deferred debt expense"). Vornado has agreed to
guarantee to the construction lender, the lien free, timely completion of the
construction of 731 Lexington Avenue and funding of project costs in excess of a
stated loan budget, if not funded by the Company. If

                                      -40-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Vornado should advance any funds under the Completion Guarantee in excess of
$21,000,000, which was the amount available at December 31, 2004 under the line
of credit with Vornado, interest on those advances would be at 15% per annum.

      While the project is nearing completion, there can be no assurance that
the remainder of the project will be completed on time or completed for the
budgeted amount. Any failure to complete the 731 Lexington Avenue project on
time or within budget may adversely affect future cash flows, funds from
operations and financial condition.

5. GAIN ON SALE OF LAND

      On August 12, 2004, the Company sold 1.29 acres of land in White Plains,
New York for $4,500,000, resulting in a gain of $3,862,000. The Company paid a
commission of $135,000 to Vornado, which is included in the expenses relating to
the sale.

6. LEASES

As Lessor

      The Company leases space to tenants in retail centers and an office
building. The rental terms range from approximately five to 25 years. The leases
provide for the payment of fixed base rents payable monthly in advance as well
as reimbursements of real estate taxes, insurance and maintenance costs. Retail
leases also provide for the payment by the lessee of additional rents based on a
percentage of their sales.

      Future base rental revenue under these non-cancelable operating leases
(other than leases which have not commenced, including the lease with Citibank,
N.A.) is as follows:

<TABLE>
<CAPTION>
(amounts in thousands)
Year Ending December 31,
<S>                                             <C>
2005.........................................   $  91,774
2006.........................................      90,030
2007.........................................      87,427
2008.........................................      90,229
2009.........................................      85,817
Thereafter...................................   1,403,068
</TABLE>

      These future minimum amounts do not include additional rents based on a
percentage of tenants' sales. For the years ended December 31, 2004, 2003 and
2002, these rents were $911,000, $945,000 and $977,000, respectively.

      Bloomberg L.P. and Sears accounted for 36% and 11% of the Company's
consolidated revenues for the year ended December 31, 2004, and Sears accounted
for 18% and 19% in 2003 and 2002, respectively. No other tenant accounted for
more than 10% of revenues.

As Lessee

      The Company is a tenant under long-term leases. Future minimum lease
payments under these operating leases are as follows:

<TABLE>
<CAPTION>
(amounts in thousands)
Year Ending December 31,
<S>                                            <C>
2005.........................................  $ 416
2006.........................................    416
2007.........................................    315
2008.........................................    315
2009.........................................    323
Thereafter...................................  3,894
</TABLE>

      Rent expense was $416,000 for each of the years ended December 31, 2004,
2003 and 2002.

                                      -41-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. DISCONTINUED OPERATIONS

      On August 30, 2002, the Company sold its Third Avenue property, located in
Bronx, New York. The 173,000 square foot property was sold for $15,000,000,
resulting in a gain of $10,366,000. Included in the expenses relating to the
sale, the Company paid a commission of $600,000, of which $350,000 was paid to
Vornado.

      Discontinued operations reflect the Third Avenue property and the reversal
of liabilities:

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------
(amounts in thousands)                                      2004             2003             2002
                                                        ------------     ------------     ------------
<S>                                                     <C>              <C>              <C>
Total revenues.......................................   $         --     $         --     $      1,198
Less: total expenses.................................             --               --              380
                                                        ------------     ------------     ------------
                                                                  --               --              818
Reversal of previously accrued contingent liabilities             --            1,206               --
Gain on sale of Third Avenue property................             --               --           10,366
                                                        ------------     ------------     ------------
Income from discontinued operations..................   $         --     $      1,206     $     11,184
                                                        ============     ============     ============
</TABLE>

8. DEBT

      The following is a summary of the Company's outstanding debt.

<TABLE>
<CAPTION>
                                                                  INTEREST
                                                                  RATE AT         BALANCE AT DECEMBER 31,
              (amounts in thousands                               DECEMBER     -----------------------------
             except for percentages)               MATURITY       31, 2004         2004             2003
                                                   ---------      --------     --------------   ------------
<S>                                                <C>            <C>          <C>              <C>
First mortgage, secured by the 731 Lexington
  Avenue office space (see Note 4)...............  Feb. 2014       5.33%       $      400,000   $         --
Construction loan, secured by the Lexington
  Avenue property (see Note 4)...................  Jan. 2006       4.92%               65,168        240,899
First mortgage, secured by the Kings Plaza
  Regional Shopping Center (1)...................  June 2011       7.46%              213,699        216,586
Term loan and line of credit to Vornado (2)......  Jan. 2006       9.00%              124,000        124,000
First mortgage, secured by the Rego Park I
  Shopping Center (3)............................  June 2009       7.25%               81,661         82,000
First mortgage, secured by the Paramus property..  Oct. 2011       5.92%               68,000         68,000
                                                                               --------------   ------------
                                                                               $      952,528   $    731,485
                                                                               ==============   ============
</TABLE>

--------------------------
(1) This mortgage loan, which is an obligation of a wholly owned subsidiary,
bears interest at a fixed rate of 7.46% and provides for monthly principal
payments based on a 27-year amortization schedule.

(2) At December 31, 2004 and 2003, the Company was indebted to Vornado in the
amount of $124,000, comprised of (i) a $95,000 note and (ii) $29,000 under a
$50,000 line of credit (which carries a 1% unused commitment fee). The current
interest rate on the loan and line of credit is 9.00% and resets quarterly using
a 6.00% spread to one-year treasury with a 3% floor for treasuries. On July 3,
2002, in conjunction with the original closing of the Construction Loan, the
maturity of the Vornado debt was extended to the earlier of January 3, 2006 or
the date the Lexington Avenue Construction Loan is finally repaid.

The Company's wholly owned subsidiary, Residential, is the borrower with respect
to $40,000 of these loans, which are guaranteed by the Company. The Company is
the borrower for the remaining $84,000. The existing collateral for each of
these loans is (i) back-up guaranties given by the Company's wholly owned
subsidiaries, Alexander's of Rego Park II, Inc. ("Rego II"), Alexander's of Rego
Park III, Inc. ("Rego III") and Alexander's of Flushing, Inc. ("Flushing"), (ii)
a pledge given by the Company of its interest in the entities holding the
commercial parcel of the Lexington Avenue property, Residential, Rego II, Rego
III and Flushing, (iii) a lockbox agreement between the Company and Vornado,
giving Vornado a security interest and springing control of the Company's
corporate bank account into which, among other things, any distributions to the
Company from its subsidiaries owning the Kings Plaza Shopping Center, the Rego
Park I Shopping Center, and the Paramus property are deposited, and (iv)
unrecorded mortgages on the Rego II and Rego III properties given by such
entities to secure their guaranties.

                                      -42-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) This mortgage loan, which is an obligation of a wholly owned subsidiary and
is guaranteed by the Company, bears interest at a fixed rate of 7.25%. The
amortization of principal begins in July 2004 based on a 30-year schedule.

At December 31, 2004, the principal repayments for the next five years and
thereafter are as follows:

<TABLE>
<CAPTION>
(amounts in thousands)
Year Ending December 31,
<S>                                             <C>
2005.........................................   $  3,895
2006.........................................    200,134
2007.........................................     14,088
2008.........................................     14,850
2009.........................................     93,304
Thereafter...................................    626,257
</TABLE>

      All of the Company's debt is secured by mortgages and/or pledges of the
stock of the subsidiaries holding the properties. The net carrying value of real
estate collateralizing the debt amounted to $881,079,000 at December 31, 2004.

      The Company's existing financing documents contain restrictive covenants
which limit the ability to incur indebtedness, make prepayments of indebtedness,
pay dividends, make investments, engage in transactions with affiliates, issue
or sell capital stock of subsidiaries, create liens, sell assets, acquire or
transfer property and engage in mergers and acquisitions.

9. COMMITMENTS AND CONTINGENCIES

      Neither the Company nor any of its subsidiaries is a party to, nor is
their property the subject of, any material pending legal proceeding other than
routine litigation incidental to their businesses. The Company believes that
these legal actions will not be material to the Company's financial condition or
results of operations.

Insurance

      The Company carries comprehensive liability and all-risk property
insurance (fire, flood, extended coverage and rental loss insurance) with
respect to its assets but is at risk for financial loss in excess of the
policies' limits. Such a loss could be material.

      Pursuant to the Terrorism Risk Insurance Act of 2002, regulated insurers
must offer coverage through 2005 in their commercial property policies for
losses resulting from defined "acts of terrorism." As a result of the
legislation, since June 2003, the Company has maintained $500,000,000 of
coverage per occurrence for certified terrorist acts, as defined in the
legislation, and $200,000,000 per occurrence for non-certified acts. The Company
is at risk for financial loss in excess of these limits, which loss could be
material.

      The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), contain
customary covenants requiring the Company to maintain insurance. There can be no
assurance that the lenders under these instruments will not take the position
that a future exclusion from all-risk insurance coverage for losses due to
terrorist acts is a breach of these debt instruments, allowing the lenders to
declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks and the Company is unable to obtain
coverage if the Terrorism Risk Insurance Act of 2002 is not extended, it may
adversely affect the Company's ability to finance and/or refinance its
properties and businesses.

Environmental Remediation

      In June 1997, the Kings Plaza Regional Shopping Center commissioned an
Environmental Study and Contamination Assessment Site Investigation (the "Phase
II Study") to evaluate and delineate environmental conditions disclosed in a
Phase I study. The results of the Phase II Study indicated the presence of
petroleum and bis (2-ethylhexyl) phthalate contamination in the soil and
groundwater. The Company has delineated the contamination and

                                      -43-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

has developed a remediation approach, which is ongoing. The New York State
Department of Environmental Conservation ("NYDEC") has approved a portion of the
remediation approach. The Company accrued $2,675,000 in previous years, of which
$2,550,000 has been paid as of December 31, 2004, for its estimated obligation
with respect to the cleanup of the site, and which includes costs of (i)
remedial investigation, (ii) feasibility studies, (iii) remedial design, (iv)
remedial action and (v) professional fees. Costs of future expenditures for
these environmental remediation obligations were not discounted to their present
value. If NYDEC insists on a more extensive remediation approach, the Company
could incur additional obligations.

      The Company has concluded that the large majority of the contamination at
the site is historic and the result of past activities of third parties.
Although the Company is pursuing claims against potentially responsible third
parties, and negotiations are ongoing with a former owner of the property, there
can be no assurance as to the extent that the Company will be successful in
obtaining recovery from such parties of the remediation costs incurred. In
addition, the costs associated with further pursuit of responsible parties may
be prohibitive. The Company has not recorded an asset as of December 31, 2004
for possible recoveries of environmental remediation costs from potentially
responsible third parties. On January 31, 2005, the Company received a
settlement of $337,500 from one of the responsible parties.

Flushing Property

      In the fourth quarter of 2003, the Company recognized $1,289,000 of income
representing a non-refundable deposit of $1,875,000 from a party that had agreed
to purchase the Company's Flushing property, net of $586,000 of costs associated
with the transaction, as the party had not met its obligations under a May 30,
2002 purchase contract. On September 10, 2002, November 7, 2002, and July 8,
2004, the Company received letters from the party demanding return of the
deposit. The Company, after consulting with its legal counsel, does not believe
the party is entitled to a return of the deposit. There can be no assurance that
the party will not institute legal action and, if it does, that it will not be
successful in requiring the Company to return all or a portion of the deposit.

Kings Plaza

      The Company plans to construct a two-story freestanding building adjacent
to the Mall of approximately 200,000 square feet. The first story of
approximately 120,000 square feet will be operated as a Lowe's Home Improvement
Warehouse ("Lowe's"). The Lowe's lease is expected to commence in 2006. The cost
of the project will be approximately $21 million, net of the Lowe's
reimbursement and before reimbursement, if any, from the second story tenant(s).
There can be no assurance that this project will be completed, completed on time
or completed for the budgeted amount.

Letters of Credit

      Approximately $4,130,000 of standby letters of credit were issued at
December 31, 2004.

10. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

      Under the Company's Omnibus Stock Plan (the "Plan"), originally approved
by the Company's stockholders in May 1996, directors, officers and employees of
the Company and Vornado, and any other person or entity as designated by the
Omnibus Stock Plan Committee of the Company's Board of Directors, are eligible
for grants of incentive and non-qualified options to purchase common shares.
Options granted have exercise prices equal to 100% of the market price of the
Company's common stock at the date of grant, vest on a graduated basis, becoming
fully vested 36 months after grant, and expire ten years after grant. The Plan
also provides for the award of SARs, performance shares and restricted stock, as
defined.

      The 92,000 options which were outstanding and exercisable at December 31,
2004 have a remaining contractual life of 4.2 years and an exercise price of
$70.38. In 2004, 13,000 options were exercised. No options were exercised in
2003 and 2002. Shares available for future grant under the Plan at December 31,
2004 were 1,745,000.

      At December 31, 2004, 850,000 SARs were outstanding and exercisable. The
consolidated statement of operations for the year ended December 31, 2004 and
2003 includes $76,789,000 and $44,917,000, respectively of compensation expense
based on the Company's closing stock price of $215.00 at December 31, 2004 and
$124.66 at December 31, 2003. Since the closing stock prices at December 31,
2002 was less than the weighted-average strike

                                      -44-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

price of $71.82, there was no compensation expense in the statement of
operations for the year ended December 31, 2002. SARs, unlike options, are not
aggregated under the REIT rules.

11. EARNINGS PER SHARE

      The following table sets forth the computation of basic and diluted (loss)
income per share.

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
(amounts in thousands except                                 --------------------------------------------------
shares and per share amounts)                                    2004               2003               2002
                                                             ------------       ------------       ------------
<S>                                                          <C>                <C>                <C>
Numerator:
  (Loss) income from continuing operations.................  $    (37,331)      $    (18,948)      $     12,400
  Gain on sale of real estate..............................         3,862                 --                 --
  Income from discontinued operations......................            --              1,206             11,184
                                                             ------------       ------------       ------------
  Net (loss) income........................................  $    (33,469)      $    (17,742)      $     23,584
                                                             ============       ============       ============

Denominator (basic and diluted) - weighted-average shares..     5,008,222          5,000,850          5,000,850

Net (loss) income per common share (basic and diluted):

  (Loss) income from continuing operations.................  $      (7.45)      $      (3.79)      $       2.48
  Gain on sale of real estate..............................          0.77                 --                 --
  Income from discontinued operations......................            --               0.24               2.24
                                                             ------------       ------------       ------------
  Net (loss) income........................................  $      (6.68)      $      (3.55)      $       4.72
                                                             ============       ============       ============
</TABLE>

      Options to purchase 92,000 and 105,000 shares of the Company's common
stock were not included in the calculations of loss per share in the years ended
December 31, 2004 and 2003, respectively, as they are anti-dilutive in those
cases and income per share in the year ended December 31, 2002 as the average
market prices of the Company's common stock during that year were less than the
exercise prices.

12. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
    (amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                                     (LOSS) INCOME PER COMMON SHARE
                                                (LOSS) INCOME                             (BASIC AND DILUTED)
                                   ----------------------------------------      ----------------------------------------
                                   CONTINUING    DISCONTINUED                   CONTINUING      DISCONTINUED
                     REVENUE       OPERATIONS     OPERATIONS        TOTAL       OPERATIONS       OPERATIONS       TOTAL
                     --------      ----------    ------------     ---------     ----------      ------------    ---------
<S>                  <C>           <C>           <C>              <C>           <C>             <C>             <C>
       2004
First quarter......  $ 33,765      $ (22,992)      $    --        $ (22,992)     $   (4.60)       $    --       $   (4.60)
Second quarter.....    34,799          2,523            --            2,523           0.50             --            0.50
Third quarter......    38,835        (11,693)           --          (11,693)         (2.33)            --           (2.33)
Fourth quarter.....    41,496         (1,307)           --           (1,307)         (0.26)            --           (0.26)

       2003
First quarter......  $ 19,723      $   4,804       $    --        $   4,804      $    0.96        $    --       $    0.96
Second quarter.....    20,156         (4,396)           --           (4,396)         (0.88)            --           (0.88)
Third quarter......    19,902        (13,560)           --          (13,560)         (2.71)            --           (2.71)
Fourth quarter.....    27,381         (5,796)        1,206           (4,590)         (1.16)          0.24           (0.92)
</TABLE>

                                      -45-
<PAGE>

ITEM  9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

      Not applicable.

ITEM  9A. CONTROLS AND PROCEDURES

      (a) Disclosure Controls and Procedures - The Company's management, with
the participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this Annual Report on Form 10-K. Based on such evaluation, the
Company's Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the Company's disclosure controls and
procedures are effective.


                  MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER
                               FINANCIAL REPORTING

      Management of Alexander's, Inc., together with its consolidated
subsidiaries (the "Company"), is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company's internal
control over financial reporting is a process designed under the supervision of
the Company's principal executive and principal financial officers to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of the Company's financial statements for external reporting
purposes in accordance with U.S. generally accepted accounting principles.

      As of December 31, 2004, management conducted an assessment of the
effectiveness of the Company's internal control over financial reporting based
on the framework established in Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on this assessment, management has determined that the Company's internal
control over financial reporting as of December 31, 2004 is effective.

      Our internal control over financial reporting includes policies and
procedures that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect transactions and dispositions of assets;
provide reasonable assurances that transactions are recorded as necessary to
permit preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that receipts and expenditures are being
made only in accordance with authorizations of management and the directors of
the Company; and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on our financial statements.

      Management's assessment of the effectiveness of the Company's internal
control over financial reporting as of December 31, 2004 has been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their report appearing on page 47 which expresses unqualified opinions
on management's assessment and on the effectiveness of the Company's internal
control over financial reporting as of December 31, 2004.


                                      -46-
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Alexander's, Inc.
Paramus, New Jersey

We have audited management's assessment, included within this December 31, 2004
Form 10-K of Alexander's, Inc. at Item 9A under the heading "Management's Report
on Internal Control Over Financial Reporting," that Alexander's, Inc., together
with its consolidated subsidiaries (the "Company") maintained effective internal
control over financial reporting as of December 31, 2004, based on criteria
established in Internal Control -- Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Company's management
is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective
internal control over financial reporting as of December 31, 2004, is fairly
stated, in all material respects, based on the criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements and the related financial statement schedules as of and for the
year ended December 31, 2004 of the Company and our report dated February
23, 2005 expressed an unqualified opinion on those financial statements and
financial statement schedules.

DELOITTE & TOUCHE LLP

Parsippany, New Jersey
February 24, 2005

                                      -47-
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information concerning directors of the Company will be contained in a
definitive Proxy Statement involving the election of directors and pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended. The
Company will file the Proxy Statement with the Securities and Exchange
Commission not later than 120 days after December 31, 2004. Such information is
incorporated by reference herein. For information concerning the executive
officers of the Company, see "Executive Officers of the Registrant" in Part I of
this Annual Report on Form 10-K. Also incorporated herein by reference is the
information under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" of the Proxy Statement.

      The Company has adopted a code of business conduct and ethics that applies
to each of its Chief Executive Officer and Executive Vice President and Chief
Financial Officer, among others. The code is posted on the Company's website at
www. Alx-Inc.com. The Company intends to satisfy its disclosure obligation
regarding amendments and waivers of this code applicable to its Chief Executive
Office and Executive Vice President and Chief Financial Officer by posting such
information on its website at www.Alx-Inc.com.

ITEM 11. EXECUTIVE COMPENSATION

      Information concerning executive compensation will be contained in the
Proxy Statement referred to above in "Item 10. Directors and Executive Officers
of the Registrant." Such information is incorporated by reference herein.

                                      -48-
<PAGE>

ITEM  12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

      Information concerning security ownership of certain beneficial owners and
management and related stockholder matters, except as set forth below, will be
contained in the Proxy Statement referred to above in "Item 10. Directors and
Executive Officers of the Registrant." Such information is incorporated by
reference herein.

      A summary of the Company's equity compensation plans follows.

<TABLE>
<CAPTION>
                                      Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------
                                           Number of                                  Number of securities
                                            securities                                remaining available for
                                          to be issued upon                           future issuance under
                                          exercise of           Weighted-average      equity compensation
                                          outstanding           exercise price of        plans (excluding
                                            options,            outstanding options,   securities reflected in
           Plan Category              warrants and rights(a)    warrants and rights         column (a))
-----------------------------------   ----------------------    --------------------  ------------------------
<S>                                   <C>                       <C>                   <C>
Equity compensation plans approved
by security holders                          92,000                $70.38                 1,745,000

Equity compensation plans not
approved by security holders                  N/A                    N/A                     N/A
                                             ------                ------                 ---------

Total                                        92,000                $70.38                 1,745,000
                                             ======                ======                 =========
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Information concerning certain relationships and related transactions will
be contained in the Proxy Statement referred to above in "Item 10. Directors and
Executive Officers of the Registrant." Such information is incorporated by
reference herein.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Information concerning principal accountant fees and services will be
contained in the Proxy Statement referred to above in "Item 10. Directors and
Executive Officers of the Registrant." Such information is incorporated by
reference herein.

                                      -49-
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)   Documents filed as part of this Annual Report

      1.    The consolidated financial statements are set forth in Item 8 of
            this Annual Report on Form 10-K.

      2.    The following financial statement schedules should be read in
            conjunction with the financial statements included in Item 8 of this
            Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                                 PAGES IN THIS
                                                                                 ANNUAL REPORT
                                                                                 ON FORM 10-K
                                                                                 -------------
<S>                                                                              <C>
Schedule II - Valuation and Qualifying Accounts - years ended
  December 31, 2004, 2003 and 2002..........................................          52
Schedule III - Real Estate and Accumulated Depreciation as of
  December 31, 2004.........................................................          53
</TABLE>

      All other financial statement schedules are omitted because they are
      inapplicable, not required, or the information is included elsewhere in
      the consolidated financial statements or the notes thereto.

3. Exhibits:

   See Exhibit Index on page 55.

                                      -50-
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                       ALEXANDER'S, INC.

                       By: /s/ Joseph Macnow
                           -------------------------------------------
                          Joseph Macnow
                          Executive Vice President and Chief Financial Officer

                       Date: February 24, 2005

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
      SIGNATURE                               TITLE                              DATE
<S>                        <C>                                              <C>
/s/ Steven Roth            Chairman of the Board of Directors and Chief     February 24, 2005
-------------------------
Steven Roth                Executive Officer (Principal Executive Officer)

/s/ Michael D. Fascitelli  President and Director                           February 24, 2005
-------------------------
Michael D. Fascitelli

/s/ Joseph Macnow          Executive Vice President and Chief Financial     February 24, 2005
-------------------------
Joseph Macnow              Officer (Principal Financial and Accounting
                           Officer)

/s/ Thomas R. DiBenedetto  Director                                         February 24, 2005
-------------------------
Thomas R. DiBenedetto

/s/ David Mandelbaum       Director                                         February 24, 2005
-------------------------
David Mandelbaum

/s/ Stephen Mann           Chief Operating Officer and Director             February 24, 2005
-------------------------
Stephen Mann

/s/ Arthur I. Sonnenblick  Director                                         February 24, 2005
-------------------------
Arthur I. Sonnenblick

/s/ Neil Underberg         Director                                         February 24, 2005
-------------------------
Neil Underberg

/s/ Richard R. West        Director                                         February 24, 2005
-------------------------
Richard R. West

/s/ Russell B. Wight, Jr.  Director                                         February 24, 2005
-------------------------
Russell B. Wight, Jr.
</TABLE>

                                      -51-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                       COLUMN B         COLUMN C        COLUMN D         COLUMN E
                                                      -----------      -----------    -------------     ----------
                                                                        ADDITIONS:      DEDUCTIONS:
                   (amounts in thousands)              BALANCE AT        CHARGED      UNCOLLECTIBLE      BALANCE
                                                       BEGINNING         AGAINST         ACCOUNTS         AT END
                                                        OF YEAR        OPERATIONS      WRITTEN OFF       OF YEAR
                                                      -----------      -----------    -------------     ----------
               COLUMN A - DESCRIPTION
               ----------------------
<S>                                                   <C>              <C>            <C>               <C>
Allowance for doubtful accounts:
Year Ended December 31, 2004.....................     $        55      $       384     $        60      $       379
                                                      ===========      ===========     ===========      ===========

Year Ended December 31, 2003.....................     $        96      $       112     $       153      $        55
                                                      ===========      ===========     ===========      ===========

Year Ended December 31, 2002.....................     $       929      $      (191)    $       642      $        96
                                                      ===========      ===========     ===========      ===========
</TABLE>

                                      -52-
<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2004
                             (amounts in thousands)

<TABLE>
<CAPTION>
     COLUMN A             COLUMN B                 COLUMN C                 COLUMN D                COLUMN E
--------------------     -----------      -----------------------------    --------------   --------------------------
                                                                                              GROSS AMOUNT AT WHICH
                                          INITIAL COST TO COMPANY(1)                        CARRIED AT CLOSE OF PERIOD
                                          -----------------------------                     --------------------------
                                                            BUILDING,          COST                      BUILDINGS,
                                                           LEASEHOLDS       CAPITALIZED                   LEASEHOLD
                                                          AND LEASEHOLD    SUBSEQUENT TO                AND LEASEHOLDS
   DESCRIPTION           ENCUMBRANCES       LAND          IMPROVEMENTS     ACQUISITION(2)    LAND       IMPROVEMENTS
--------------------     ------------     ---------       ------------     --------------   --------    -------------
<S>                      <C>              <C>             <C>              <C>              <C>         <C>
Commercial Property:
 New York, NY
  Rego Park I            $    81,661      $   1,647        $   8,953       $   57,641       $  1,647     $    66,594
  Rego Park II                    --          3,906            1,467            2,224          3,906           1,566
  Flushing                        --             --            1,660            2,167             --           3,213
  Lexington Ave.             465,168         14,432           12,355          704,234         49,720         288,424
  Kings Plaza
  Regional
  Shopping Center            213,699            497            9,542          120,655         24,483         104,990
 Paramus, NJ                  68,000          1,441               --           10,313         11,754              --
 Other properties                 --            167            1,804                2            167           1,806
                                          ---------        ---------       ----------       --------     -----------
 Other debt (4)              124,000
                         -----------

TOTAL                    $   952,528      $  22,090        $  35,781       $  897,236       $ 91,677     $   466,593
                         ===========      =========        =========       ==========       ========     ===========
</TABLE>

<TABLE>
<CAPTION>
     COLUMN A                        COLUMN E           COLUMN F       COLUMN G       COLUMN H       COLUMN I
--------------------     --------------------------   ------------    ------------   ----------   ---------------
                           GROSS AMOUNT AT WHICH
                         CARRIED AT CLOSE OF PERIOD
                         --------------------------
                                                                                                   LIFE ON WHICH
                                                      ACCUMULATED                                 DEPRECIATION IN
                                                      DEPRECIATION                                 LATEST INCOME
                          CONSTRUCTION                    AND           DATE OF        DATE        STATEMENT IS
DESCRIPTION                IN PROGRESS     TOTAL(2)   AMORTIZATION    CONSTRUCTION   ACQUIRED(1)     COMPUTED
--------------------     -------------    --------    ------------    ------------   ----------   ---------------
<S>                      <C>              <C>         <C>             <C>            <C>          <C>
Commercial Property:
 New York, NY
  Rego Park I              $     --       $  68,241   $     22,305         1959         1992       15-39 years
  Rego Park II                2,125           7,597          1,486         1965         1992       38-39 years
  Flushing                      614           3,827          1,859         1975(3)      1992          26 years
  Lexington Ave.            392,877         731,021          7,401         2003         1992        5-39 years
  Kings Plaza
  Regional
  Shopping Center             1,221         130,694         39,171         1970         1992        7-50 years
 Paramus, NJ                     --          11,754             --           --         1992         --
 Other properties                --           1,973          1,806      Various         1992        7-25 years
                           --------       ---------   ------------
 Other debt (4)
TOTAL                      $396,837       $ 955,107   $     74,028
                           ========       =========   ============
</TABLE>

--------------------------
(1) Initial cost is as of May 15, 1 992 (the date on which the Company commenced
its real estate operations) unless acquired  subsequent to that date. See Column
H.

(2) The net basis of the Company's  assets and  liabilities  for tax purposes is
approximately   $13,000,000  higher  than  the  amount  reported  for  financial
statement purposes.

(3) This date represents the lease acquisition date.

(4) This debt is payable to Vornado Realty Trust (see Note 8 of the consolidated
financial statements).

                                      -53-

<PAGE>

                       ALEXANDER'S, INC. AND SUBSIDIARIES
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                              ---------------------------------------------
                                                                  2004             2003             2002
                                                              ----------        ----------       ----------
<S>                                                           <C>               <C>              <C>
REAL ESTATE:
Balance at beginning of period..........................      $  826,546        $  600,661       $  436,742
Additions during the period:
  Land..................................................             181             1,160               --
  Buildings, leaseholds and leasehold improvements......          95,240           194,772            4,608
  Construction in progress..............................          33,140            30,385          164,948
                                                              ----------        ----------       ----------
                                                                 955,107           826,978          606,298
Assets sold.............................................              --              (432)          (5,637)
                                                              ----------        ----------       ----------
Balance at end of period................................      $  955,107        $  826,546       $  600,661
                                                              ==========        ==========       ==========

ACCUMULATED DEPRECIATION:
Balance at beginning of period..........................      $   62,744        $   57,686       $   56,383
Additions charged to operating expenses.................          11,284             5,058            4,563
                                                              ----------        ----------       ----------
                                                                  74,028            62,744           60,946
Assets sold.............................................              --                --           (3,260)
                                                              ----------        ----------       ----------
Balance at end of period................................      $   74,028        $   62,744       $   57,686
                                                              ==========        ==========       ==========
</TABLE>

                                      -54-
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
  NO.
-------
<S>       <C>                                                                             <C>
3.1       Amended and Restated Certificate of Incorporation. Incorporated herein by
           reference from Exhibit 3.1 to the registrant's Registration Statement on
           Form S-3 filed on September 20, 1995.......................................    *

3.2       By-laws, as amended. Incorporated herein by reference from Exhibit 10.1 to
           the registrant's Quarterly Report on Form 10-Q for the quarter ended March
           31, 2000...................................................................    *

10.1      Limited Liability Company Operating Agreement of 731 Residential LLC,
           dated as of July 3, 2002, among 731 Residential Holding LLC, as the sole
           member, Domenic A. Borriello, as an Independent Manager and Kim Lutthang,
           as an Independent Manager. Incorporated herein by reference from Exhibit
           10(i)(A)(1) to the registrant's Quarterly Report on Form 10-Q for the
           quarter ended June 30, 2003................................................    *

10.2      Limited Liability Company Operating Agreement of 731 Commercial LLC, dated
           as of July 3, 2002, among 731 Commercial Holding LLC, as the sole member,
           Domenic A. Borriello, as an Independent Manager and Kim Lutthang, as an
           Independent Manager. Incorporated herein by reference from Exhibit
           10(i)(A)(2) to the registrant's Quarterly Report on Form 10-Q for the
           quarter ended June 30, 2003................................................    *

10.3      Amended and Restated Credit Agreement dated July 3, 2002 between 59th
           Street Corporation and Vornado Lending, LLC (evidencing $40,000,000 of
           debt on which 59th Street Corporation became the direct borrower).
           Incorporated herein by reference from Exhibit 10(i)(B)(1) to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2003.......................................................................    *

10.4      Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado
           Lending LLC evidencing a $20,000,000 loan. Incorporated herein by
           reference from Exhibit 10(i)(B)(2) to the registrant's Quarterly Report on
           Form 10-Q for the quarter ended June 30, 2003...............................   *

10.5      Amended and Restated Credit Agreement, dated July 3, 2002, between
           Alexander's Inc. and Vornado Lending LLC evidencing a $50,000,000 line of
           credit facility. Incorporated herein by reference from Exhibit 10(i)(B)(3)
           to the registrant's Quarterly Report on Form 10-Q for the fiscal quarter
           ended June 30, 2003........................................................    *

10.6      Credit Agreement, dated July 3, 2002, between Alexander's Inc. and Vornado
           Lending LLC evidencing a $35,000,000 loan. Incorporated herein by
           reference from Exhibit 10(i)(B)(4) to the registrant's Quarterly Report on
           Form 10-Q for the quarter ended June 30, 2003...............................   *

10.7      Building Loan Agreement, dated as of July 3, 2002, by and between 731
           Commercial LLC and 731 Residential LLC, collectively as Borrower, and
           Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the
           Lenders. Incorporated herein by reference from Exhibit 10(i)(C) to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2003.......................................................................    *

10.8      Project Loan Agreement, dated as of July 3, 2002, by and between 731
           Commercial LLC and 731 Residential LLC, collectively as Borrower, and
           Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the
           Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(1) to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2003.......................................................................    *
</TABLE>

---------------------------
* Incorporated by reference

                                      -55-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
  NO.
-------
<S>       <C>                                                                            <C>
10.9      Supplemental Loan Agreement, dated as of July 3, 2002, by and
           between 731 Commercial LLC and 731 Residential LLC, collectively as
           Borrower, and Bayerische Hypo-und Vereinsbank AG, New York Branch,
           as Agent for the Lenders. Incorporated herein by reference from
           Exhibit 10(i)(C)(2) to the registrant's Quarterly Report on Form 10-Q
           for the quarter ended June 30, 2003......................................     *

10.10     Consolidated, Amended and Restated Building Loan Mortgage, dated as of
           July 3, 2002, by and between 731 Commercial LLC and 731 Residential LLC,
           collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York
           Branch, as Agent for the Lenders. Incorporated herein by reference from
           Exhibit 10(i)(C)(3) to the registrant's Quarterly Report on Form 10-Q for
           the quarter ended June 30, 2003...........................................    *

10.11     Consolidated, Amended and Restated Building Loan Note, dated as of July 3,
           2002 by and between 731 Commercial LLC and 731 Residential LLC,
           collectively as Borrower, and Bayerische Hypo-und Vereinsbank AG, New York
           Branch, as Agent for the Lenders. Incorporated herein by reference from
           Exhibit 10(i)(C)(4) to the registrant's Quarterly Report on Form 10-Q for
           the quarter ended June 30, 2003...........................................    *

10.12     Guaranty of Completion, dated as of July 3, 2002, executed by Vornado
           Realty L.P. for the benefit of Bayerische Hypo-und Vereinsbank AG, New
           York Branch, as Agent for the Lenders. Incorporated herein by reference
           from Exhibit 10(i)(C)(5) to the registrant's Quarterly Report on Form 10-Q
           for the quarter ended June 30, 2003.................. ....................    *

10.13     Guaranty of Carry Obligations, dated as of July 3, 2002, executed by
           Alexander's, Inc. for the benefit of Bayerische Hypo-und Vereinsbank AG,
           New York Branch, as Agent for the Lenders. Incorporated herein by
           reference from Exhibit 10(i)(C)(6) to the registrant's Quarterly Report on
           Form 10-Q for the quarter ended June 30, 2003.................. ..........    *

10.14     Environmental Indemnity Agreement, dated as of July 3, 2002, executed by
           Alexander's, Inc., 731 Residential LLC and 731 Commercial LLC in favor of
           Bayerische Hypo-und Vereinsbank AG, New York Branch, as Agent for the
           Lenders. Incorporated herein by reference from Exhibit 10(i)(C)(7) to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2003......................................................................    *

10.15     Reimbursement Agreement, dated as of July 3, 2002, by and between
           Alexander's, Inc., 731 Commercial LLC, 731 Residential LLC and Vornado
           Realty, L.P. Incorporated herein by reference from Exhibit 10(i)(C)(8) to
           the registrant's Quarterly Report on Form 10-Q for the quarter ended June
           30, 2003..................................................................    *

10.16     First Omnibus Amendment to Loan Documents, dated March 5, 2003, among 731
           Commercial LLC and 731 Residential LLC, collectively as Borrower, and Hypo
           Real Estate Capital Corporation, as Agent for the Lenders. Incorporated
           herein by reference from Exhibit 10.16 to the registrant's Annual Report
           on Form 10-K for the year ended December 31, 2003.........................    *

10.17     Second Omnibus Amendment to Loan Documents, dated February 13, 2004, among
          731 Commercial LLC and 731 Residential LLC, collectively as Borrower, and
          Hypo Real Estate Capital Corporation, as Agent for the Lenders.
          Incorporated herein by reference from Exhibit 10.17 to the registrant's
          Annual Report on Form 10-K for the year ended December 31, 2003............    *
</TABLE>

---------------------------
* Incorporated by reference

                                      -56-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
  NO.
-------
<S>       <C>                                                                           <C>
10.18     First Amendment to Building Loan Agreement, dated March 5, 2003, between
           731 Commercial LLC and 731 Residential LLC, * collectively as Borrower,
           and Hypo Real Estate Capital Corporation, as Agent for the Lenders.
           Incorporated herein Incorporated by reference from Exhibit 10.18 to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2003......................................................................   *

10.19     Second Amendment to Building Loan Agreement, dated February 13, 2004,
           between 731 Commercial LLC and 731 Residential LLC, collectively as
           Borrower, and Hypo Real Estate Capital Corporation, as Agent for the
           Lenders. Incorporated herein by reference from Exhibit 10.19 to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2003.....................................................................    *

10.20     Loan and Security Agreement, dated as of February 13, 2004, between 731
           Office One LLC, as Borrower and German American Capital Corporation, as
           Lender. Incorporated herein by reference from Exhibit 10.20 to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2003.....................................................................    *

10.21     Amended, Restated and Consolidated Mortgage, Security Agreement, Financing
           Statement and Assignment of Leases, Rent and Security Deposits by and
           between 731 Office One LLC as Borrower and German American Capital
           Corporation as Lender, dated as of February 13, 2004. Incorporated herein
           by reference from Exhibit 10.21 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................   *

10.22     Amended, Restated and Consolidated Note, dated as of February 13, 2004, by
           731 Office One LLC in favor of German American Capital Corporation.
           Incorporated herein by reference from Exhibit 10.22 to the registrant's
           Annual Report on Form 10-K for the year ended December 31, 2003...........   *

10.23     Assignment of Leases, Rents and Security Deposits from 731 Office One LLC
           to German American Capital Corporation, dated as of February 13, 2004.
           Incorporated herein by reference from Exhibit 10.23 to the registrant's
           Annual Report on Form 10-K for the year ended December 31, 2003...........   *

10.24     Account and Control Agreement, dated as of February 13, 2004, by and among
           German American Capital Corporation as Lender, and 731 Office One LLC as
           Borrower, and JP Morgan Chase as Cash Management Bank. Incorporated herein
           by reference from Exhibit 10.24 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................   *

10.25     Manager's Consent and Subordination of Management Agreement dated February
           13, 2004 by 731 Office One LLC and Alexander's Management LLC and German
           American Capital Corporation. Incorporated herein by reference from
           Exhibit 10.25 to the registrant's Annual Report on Form 10-K for the year
           ended December 31, 2003...................................................   *

10.26     Note Exchange Agreement dated as of February 13, 2004 by and between 731
           Office One LLC and German American Capital Corporation. Incorporated
           herein by reference from Exhibit 10.26 to the registrant's Annual Report
           on Form 10-K for the year ended December 31, 2003.........................   *

10.27     Promissory Note A-1 dated as of February 13, 2004 and 731 Office One LLC
           in favor of German American Capital Corporation. Incorporated herein by
           reference from Exhibit 10.27 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................   *
</TABLE>

---------------------------
* Incorporated by reference

                                      -57-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
  NO.
-------
<S>       <C>                                                                            <C>
10.28     Promissory Note A-2 dated as of February 13, 2004 and 731 Office One LLC
           in favor of German American Capital Corporation. Incorporated herein by
           reference from Exhibit 10.28 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................    *

10.29     Promissory Note A-3 dated as of February 13, 2004 and 731 Office One LLC
           in favor of German American Capital Corporation. Incorporated herein by
           reference from Exhibit 10.29 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................    *

10.30     Promissory Note A-4 dated as of February 13, 2004, and 731 Office One LLC
           in favor of German American Capital Corporation. Incorporated herein by
           reference from Exhibit 10.30 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................    *

10.31     Promissory Note A-X dated as of February 13, 2004, and 731 Office One LLC
           in favor of German American Capital Corporation. Incorporated herein by
           reference from Exhibit 10.31 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................    *

10.32     Promissory Note B dated as of February 13, 2004, and 731 Office One LLC in
           favor of German American Capital Corporation. Incorporated herein by
           reference from Exhibit 10.32 to the registrant's Annual Report on Form
           10-K for the year ended December 31, 2003.................................    *

10.33     Guaranty of Recourse Obligations dated as of February 13, 2004, by
           Alexander's, Inc. to and for the benefit of German American Capital
           Corporation. Incorporated herein by reference from Exhibit 10.33 to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2003......................................................................    *

10.34     Environmental Indemnity dated as of February 13, 2004, by Alexander's,
           Inc. and 731 Office One LLC for the benefit of German American Capital
           Corporation. Incorporated herein by reference from Exhibit 10.34 to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2003......................................................................    *

10.35     Amended, Restated and Consolidated Mortgage and Security Agreement, dated
           May 12, 1999, between The Chase Manhattan Bank, as mortgagee, and
           Alexander's Rego Shopping Center Inc., as mortgagor. Incorporated herein
           by reference from Exhibit 10(i)(E) to the registrant's Quarterly Report on
           Form 10-Q for the quarter ended June 30, 2000............. ...............    *

10.36     Real Estate Retention Agreement dated as of July 20, 1992, between Vornado
           Realty Trust and Keen Realty Consultants, Inc., each as special real
           estate consultants, and the Company. Incorporated herein by reference from
           Exhibit 10(i)(O) to the registrant's Annual Report on Form 10-K for the
           fiscal year ended July 25, 1992...........................................    *

10.37     Extension Agreement to the Real Estate Retention Agreement, dated as of
           February 6, 1995, between the Company and Vornado Realty Trust.
           Incorporated herein by reference from Exhibit 10(i)(G)(2) to the
           registrant's Annual Report Form 10-K for the year ended December 31,
           1994......................................................................    *

10.38     Amendment to Real Estate Retention Agreement, dated as of July 3, 2002, by
           and between Alexander's, Inc. and Vornado Realty, L.P. Incorporated herein
           by reference from Exhibit 10(i)(E)(3) to the registrant's Quarterly Report
           on Form 10-Q for the quarter ended June 30, 2002..........................    *
</TABLE>

---------------------------
* Incorporated by reference

                                      -58-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
  NO.
-------
<S>       <C>                                                                           <C>
10.39     59th Street Real Estate Retention Agreement, dated as of July 3, 2002, by
           and between Vornado Realty, L.P., 731 * Residential LLC and 731 Commercial
           LLC. Incorporated herein by reference from Exhibit 10(i)(E)(4) to the
           Incorporated registrant's Quarterly Report on Form 10-Q for the quarter

10.40     Amended and Restated Management and Development Agreement, dated as of
           July 3, 2002, by and between Alexander's, Inc., the subsidiaries party
           thereto and Vornado Management Corp. Incorporated herein by reference from
           Exhibit 10(i)(F)(1) to the registrant's Quarterly Report on Form 10-Q for
           the quarter ended June 30, 2002..........................................    *

10.41     59th Street Management and Development Agreement, dated as of July 3,
           2002, by and between 731 Commercial LLC and Vornado Management Corp.
           Incorporated herein by reference from Exhibit 10(i)(F)(2) to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2002........................................................... .........    *

10.42     Kings Plaza Management Agreement, dated as of May 31, 2001, by and between
           Alexander's Kings Plaza LLC and Vornado Management Corp. Incorporated
           herein by reference from Exhibit 10(i)(F)(3) to the registrant's Quarterly
           Report on Form 10-Q for the quarter ended June 30, 2002...................   *

10.43     Agreement of Lease for Rego Park, Queens, New York, between Alexander's,
           Inc. and Sears Roebuck & Co. Incorporated herein by reference from Exhibit
           10.1 to the registrant's Quarterly Report on Form 10-Q for the quarter
           ended March 31, 1994.....................................................    *

10.44     Lease for Roosevelt Avenue, Flushing, New York, dated as of December 1,
           1992, between the Company, as landlord, and Caldor, as tenant.
           Incorporated herein by reference from Exhibit (ii)(E)(7) to the
           registrant's Annual Report on Form 10-K for the fiscal year ended July 25,
           1992.....................................................................    *

10.45     First Amendment to Sublease for Roosevelt Avenue, Flushing, New York,
           dated as of February 22, 1995 between the Company, as sublandlord, and
           Caldor, as tenant. Incorporated herein by reference from Exhibit
           10(ii)(A)(8)(b) to the registrant's Annual Report on Form 10-K for the
           year ended December 31, 1994.............................................    *

10.46     Lease Agreement, dated March 1, 1993 by and between the Company and Alex
           Third Avenue Acquisition Associates. Incorporated by reference from
           Exhibit 10(ii)(F) to the registrant's Annual Report on Form 10-K for the
           fiscal year ended July 31, 1993..........................................    *

10.47     Agreement of Lease for Rego Park, Queens, New York, between the Company
           and Marshalls of Richfield, MN, Inc., dated as of March 1, 1995.
           Incorporated herein by reference from Exhibit 10(ii)(A)(12)(a) to the
           registrant s Annual Report on Form 10-K for the year ended December 31,
           1994.....................................................................    *

10.48     Guaranty, dated March 1, 1995, of the Lease described in Exhibit
           10(ii)(A)(6)(a) above by the Company. Incorporated herein by reference
           from Exhibit 10(ii)(A)(12)(b) to the registrant's Annual Report on Form
           10-K for the year ended December 31, 1994................................    *

10.49     Employment Agreement, dated February 9, 1995, between the Company and
           Stephen Mann. Incorporated herein by reference from Exhibit 10(iii)(B) to
           the registrant's Annual Report on Form 10-K for the year ended December
           31, 1994.................................................................    *

10.50     Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997.
           Incorporated herein by reference from Exhibit 10 to the registrant's
           Quarterly Report on Form 10-Q for the quarter ended June 30, 1997........    *
</TABLE>

---------------------------
* Incorporated by reference

                                      -59-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
  NO.
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<S>       <C>                                                                            <C>
10.51     Amended and Restated Consolidated Mortgage and Security Agreement dated as
           of May 31, 2001 among Alexander's Kings Plaza LLC as mortgagor,
           Alexander's of King LLC as mortgagor and Kings Parking LLC as mortgagor,
           collectively borrower, to Morgan Guaranty Trust Company of New York, as
           mortgagee. Incorporated herein by reference from Exhibit 10(v) A1 to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2001......................................................................    *

10.52     Amended, Restated and Consolidated Promissory Note, dated as of May 31,
           2001 by and between Alexander's Kings Plaza LLC, Alexander's of Kings LLC,
           and Kings Parking LLC collectively borrower, and Morgan Guaranty Trust
           Company of New York, lender. Incorporated herein by reference from Exhibit
           10(v) A2 to the registrant's Quarterly Report on Form 10-Q for the quarter
           ended June 30, 2001.......................................................    *

10.53     Cash Management Agreement dated as of May 31, 2001 by and between
           Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings Parking
           LLC collectively borrower, and Morgan Guaranty Trust Company of New York,
           lender. Incorporated herein by reference from Exhibit 10(v) A3 to the
           registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
           2001......................................................................    *

10.54     Note modification and Severance Agreement dated as of November 26, 2001,
           between Alexander's Kings Plaza LLC, Alexander's of Kings LLC, and Kings
           Parking LLC collectively borrower and JP Morgan Chase Bank of New York,
           lender. Incorporated herein by reference from Exhibit 10(v)(A)(4) to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2001......................................................................    *

10.55     Agreement of Lease dated as of April 30, 2001 between Seven Thirty One
           Limited Partnership, landlord, and Bloomberg L.P., tenant. Incorporated
           herein by reference from Exhibit 10(v) B to the registrant's Quarterly
           Report on Form 10-Q for the quarter ended June 30, 2001...................    *

10.56     First Amendment of Lease, dated as of April 19, 2002, between Seven Thirty
           One Limited Partnership, landlord and Bloomberg L.P., tenant. Incorporated
           herein by reference from Exhibit 10(v)(B)(2) to the registrant's Quarterly
           Report on Form 10-Q for the fiscal quarter ended June 30, 2002............    *

10.57     Loan Agreement dated as of October 2, 2001 by and between ALX of Paramus
           LLC as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender.
           Incorporated herein by reference from Exhibit 10(v)(C)(1) to the
           registrant's Annual Report on Form 10-K for the year ended December 31,
           2001......................................................................    *

10.58     Mortgage, Security Agreement and Fixture Financing Statement dated as of
           October 2, 2001 by and between ALX of Paramus LLC as borrower, and SVENSKA
           HANDELSBANKEN AB (publ), as lender. Incorporated herein by reference from
           Exhibit 10(v)(C)(2) to the registrant's Annual Report on Form 10-K for the
           year ended December 31, 2001..............................................    *

10.59     Environmental undertaking letter dated as of October 2, 2001 by and
           between ALX of Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB
           (publ), as lender. Incorporated herein by reference from Exhibit
           10(v)(C)(3) to the registrant's Annual Report on Form 10-K for the fiscal
           year ended December 31, 2001..............................................    *

10.60     Lease dated as of October 2, 2001 by and between ALX of Paramus LLC, as
           Landlord, and IKEA Property, Inc. as Tenant. Incorporated herein by
           reference from Exhibit 10(v)(C)(4) to the registrant's Annual Report on
           Form 10-K for the year ended December 31, 2001............................    *
</TABLE>

---------------------------
* Incorporated by reference

                                      -60-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
  NO.
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<S>       <C>
21        Subsidiaries of Registrant

23        Consent of Deloitte & Touche LLP

31.1      Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) of
            the Securities Exchange Act of 1934, as amended

31.2      Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) of
            the Securities Exchange Act of 1934, as amended

32.1      Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section
            1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2      Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section
            1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

--------------------------
*Incorporated by reference

                                      -61-