Vornado moves to create Alexander's REIT.

Alexander's Inc. and Vornado Realty Trust announced that they have agreed in principle to enter into a number of transactions designed to provide Alexander's with great financial flexibility and resources. Among other things, Alexander's will become a real estate investment trusts, will obtain new financing; will extend its existing easing arrangement; and will enter into a comprehensive management and development agreement. Alexander's also had previously received an extension date for its final payment to creditors.

Vornado has agree to provide Alexander's with up to $75 million of secured financing for a three-year term. Alexander's has agreed to extend for three years an exclusive leasing agreement with Vornado. Vornado will also serve as Alexander's manager and developer, and Steven Roth, chairman and chief executive officer of Vornado, will become CEO of Alexander's. Stephen Mann will remain chairman of Alexander's. Among other conditions, these transactions are subject to the closing of the stock acquisition described below and to bankruptcy court approval.

Alexander's will use the proceeds of the financing to repay allowed general unsecured credit claims, to repay certain loans and for working capital and real estate development costs and activities. Alexander's stated that to complete its planned development activities additional financing will be required. These financings are in various stages of negotiation.

Vornado, which owns 2.3 percent of Alexander's common stock, also announced that it has entered into an agreement to acquire all of the 1,353,468 Alexander's shares (27.1 percent) owned by Citibank, N.A. for $40.50 per share in cash. Roth and interstate Properties, a partnership in which Roth is a general partner, together won 34.5 percent of the outstanding common shares of beneficial interest of Vornado and 27.2 percent of Alexander's common stock. Upon consummation of this acquisition, which is conditioned upon Alexander's becoming a REIT, Vornado and its affiliates will own 56.4 percent of the outstanding common stock Alexander's. Vornado and affiliates will be restricted for three years from owning in excess of two-thirds of Alexander's common stock without the consent of the Independent directors of Alexander's. This transaction is subject to bankruptcy court of the management and development agreement and financing referred to above. Vornado may seek participants for its loan to Alexander's and anticipates it will seek to augment its cash balances with additional borrowings.

These various transactions are expected to close in the first half of 1995.

Alexander's also announced that it had entered into an agreement with the Official Committee of Unsecured Creditors on terms for an extension of up to March 31, for the final payment of approximately $28 million due general unsecured creditors under the company's plan of reorganization. Alexander's will be required to auction properties if creditors are not repaid by March 31. The agreement was approved by the bankruptcy court on Jan. 4.