Alexander's files workout.

Alexander's Inc. filed a plan with the bankruptcy court last month that includes detailed plans for its real estate interests in the metropolitan area. The company owns six locations, including the former flagship store site on 59th Street and Lexington Avenue and one in Rego Park, while four remaining stores are rented. Certain properties are being taken over by Caldor's in whole or in part, subject to improvements paid for by Alexander's, Inc. while others are in a state of flux with some prospects for rental.

The plan provides an itemized look at Alexander's leases and subleases as well as a glimpse into the future.

A study developed for the vacant Lexington Avenue property indicated it should be leased or sold rather than developed by the company.

Alexander's owns an 82 percent interest in the limited partnership that owns the property. The partnership is not a debtor in the bankruptcy case. The other 18 percent interest was acquired by the Guss family in a land swap for the former Woolworth's site. The family could require Alexander's to purchase its interest for $35 million. Looked at another way, the Guss family would receive $35 million from any sale before its partners were paid. Chemical Bank also holds a $4.1 million mortgage on another portion of the site.

In the plan submitted to the court, Alexander's states it intends to demolish the older Lexington Avenue and Third Avenue buildings. These will be replaced with modern stores that would be integrated into the main building. The lower floors are expected to be subdivided and rented to about ten mid-sized retailers in spaces of 20,000 to 50,000 square feet. Office users would be sought for the upper three floors.

Mark Finkelstein, president of Retail Strategies who is a broker and publishes a retail space newsletter, said the Manhattan store presents fabulous opportunities. Steven Roth, chairman of Interstate Properties which owns 29 percent of Alexander's, he added, would be looking for top dollar leases comparable to what Levi's recently paid - about $200 per square foot - for space across the street in the Cohen Brothers new building. "I was working on a site with a tenant and it got too rich for our blood," Finkelstein noted. Roth's company, Vornado, was appointed as a special real estate advisor by the bankruptcy court.

Any new development there would also be faced with "astronomical" costs to protect the subway lines that converge under the site, Finkelstein added.

Faith Consolo, a retail broker with Garrick- Aug Associates Store Leasing Inc. said, "There is an absolute demand for more retail in that area. It's a no brainer."

She believes Roth "will be able to put it all together."

Some stores rented

In Rego Park, Alexanders owns 375,000 square in a three-story building with a vacant lot across the street. The third story of approximately 120,000 square feet is leased to Caldor as part of a six store transaction, for 25-year term that is expected to begin between October of 1993 and November 1994. The term will not commence, however, until after Alexander's has begun the construction of a three-level parking structure and refaced the building at a cost estimated at $15 million. Alexander's has not yet arranged financing for the work. The company also expects to lease the remaining floors.

Caldor's lease payments will range from $2.8 million to $3.6 million in years 21 through 25 plus a 2 percent surcharge on the amount gross sales exceeds a percentage rent breakpoint.

In Flushing, the Alexander's store was subleased to Caldor with rents ranging upwards from $2.2 million to $4.2 million for years 30 through 33. Alexander's has a rental commitment there of $496,000 until August of 1997 whereupon it can exercise three ten-year options, each at two-thirds of the prior term's rent. Alexander's is retaining the garage which generates about $120,000 per year in net income.

Over at Kings Plaza in Brooklyn, a subsidiary of Alexander's and a subsidiary of R.H. Macy own the site as tenants in common. Each also owns a department store of 320,000 square feet.

Macy's, which does $100 million in sales at that site according to Finkelstein, filed for bankruptcy protection in January 1992 while the Alexander's subsidiary filed in May, 1992. Alexander's intends to lease its store while Macy's has not filed a business plan yet for the site.

Finkelstein believes both the Limited and an A&S are possibilities for that Alexander's site while The Gap already has two large spaces in the mall. "That store will definitely be leased," he said.

In the Bronx, the Alexander's Third Avenue store was net leased to an affiliated corporation of the Conway Stores for 30 years. That building, constructed in 1928, has 173,000 square feet on four floors. The rental payments that began May 1, will be $1.15 million for each of the first five years and then increase by 10 percent every five years.

An adjacent property had been leased through June of 2011 and was assigned to the subtenant, Esco Equity Corp., in January for $400,000.

The major Fordham Road store in the Bronx, that dates to 1930, was leased to Caldor for 20 years as part of the six store transaction. Lease payments range from $3.5 million to $4.18 million in years 16 through 20, and contains a 15-year renewal option which brings rents to $5.3 million in years 31 to 35. Caldor will also pay percentage rent over a breakpoint, similar to the Rego Park deal.

Alexander's was leasing a property on Bruckner Boulevard in the Bronx and that lease was assigned to Caldor for $12.556 million.

In Valley Stream, Long Island, Alexander's had a lease on property on Sunrise Highway which was assigned to Caldor for $2 million. It also assumed the obligations and liabilities with regard to the repair of the parking deck which is estimated at $4 million to $5 million.

In Yonkers, a sublease from S. Klein Department Stores was assigned to Bradlees for $16.5 million. Originally a part of the Caldor arrangement, that store was opened this month as a Bradlees and competes with the Caldor store less than one mile south on Central Avenue.

Goverrunental approvals will be needed to raze the existing Paramus building and enter into leases with two box type retailers. Alexander's anticipates spending $8 million for demolition and site work on the property. It would also construct a third building of at least 80,000 square feet at a cost of $5 million and lease 240,000 to 50,000 square feet to other mid-size retailers.

The bankruptcy court is expected to approve the plan within the year.